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Officials Soft On China

  • Companies pushing Congress to pass the China trade legislation have worked behind the scenes to ensure soft investigations and mild rebukes for repeated U.S. arms export violations. In return, they've become the "cash cows" for key U.S. officials and their kin.
Exclusive to The SPOTLIGHT
By Tom Flocco

An examination of Federal Election Commission (FEC), Center For Respon sive Politics (CRP) and Justice Depart ment agents of foreign principals lobby records regarding contributions to House and Senate members reveals startling conflicts of interest among legislators charged with oversight of communist China's obtaining American military research and development secrets.

McDonnell-Douglas (Boeing), Lock heed Martin, Loral Space (Lockheed) and Hughes Electronics (General Mo tors) are all under indictment, awaiting indictment or under current investigation by the Justice Depart ment for illegally passing rocket and satellite technology to China.

But the illegalities may have little effect upon the outcome of the looming vote to extend permanent most favored status to China -- now called permanent "normal" trade relations (PNTR).

Each company also plays a significant role in the political dealings and donor machinations of representatives who must now return favors connected to the PNTR vote -- legislators who are also charged with investigating espionage and campaign finance scandals related to China.


Sen. Fred Thompson (R-Tenn.), chair man of the Senate Government Af fairs Committee charged with investigating the illegal Chinese political campaign contributions, was criticized by some for his soft probe, hastily shutting down his hearings in late October, 1997.

The suspension of Thompson's failed campaign finance hearings occurred at a time when a variety of revelations were building momentum which would result in the impeachment of President Clinton. But on Oct. 30, 1998, at the apex of the House impeachment proceedings, the Tennessee senator's son, Fred D. "Tony" Thompson Jr., was hired as a congressional lobbyist for Lockheed Martin. Other Lockheed lobbyists were making six-figure salaries at the time.

Democratic presidential candidate Al Gore's former key staff member and Clinton-Gore DNC fund-raiser, Peter Knight, is also listed with Thompson's son as a current Lockheed lobbyist. Federal election documents list Lock heed as the Tennessee Senator's top contributor with $27,000 in 1996 and $16,000 in 1998 -- both substantial sums for an individual company in an election cycle.

Clinton-connected political appointments began falling into the laps of family members of key Republican legislators. Sen. Arlen Specter (R-Pa.) let his wife Joan accept a six-figure appointment directly from Clinton just six months be fore the impeachment vote. Mrs. Specter would conveniently be serving with Democratic National Committee Chair man Steven Gross man's wife on the National Endowment for the Arts Board.

Then influential House Republican anti-impeachment leader, Rep. Chris Shays (R-Conn.), was able to avoid public notice when his wife Betsy quietly accepted a six-figure appointment as director of Ameri-Corps from close Clinton confidant and early damage-control aide Mark Gearan, now director of the Peace Corps. The job came through on Oct. 8, 1998 -- just four weeks before the House impeachment vote.


Lockheed is also under contract to manage the Oak Ridge National Energy Labs in Tennessee, a subject that House Select Chinese espionage investigation committee chairman Christopher Cox (R-Calif.) and ranking minority member Norman Dicks (D-Wash.) declined to comment upon during a C-SPAN-televised Senate Judiciary Committee hearing.

The two legislators had been asked by Specter about security problems similar to those at New Mexico's Los Alamos Labs. Specter never pressed the issue.

Tony Thompson's main area of congressional lobby responsibility is reportedly related to the Oak Ridge National Energy Laboratories.

On April 19, the State Department announced that it would accuse Lock heed Martin of 30 separate export violations for transferring satellite technology to China. The Washington Post reported that Lockheed violated the Arms Export Control Act -- a separate law governing the State Department licensing of military exports. State Department officials did not report whether Lockheed had also transferred any Oak Ridge Labs-related technology to China.

Former Reagan defense official Larry M. Wortzel asserted that China improved its ballistic missile technology through dealings with Lockheed and two other heavy political contributors, Hughes Electronics Corporation and Loral Space and Communications. The Cox committee maintained that Lock heed scientists discussed technology issues with Chinese scientists without defense department monitors present.

Although Loral and Hughes have not yet been formally charged, they are still under investigation for allegedly sharing a scientific evaluation report of a Chinese made satellite motor with Hong Kong-based client, Asia SatelliteTele communications, without informing the De partment of Defense.

According to the Post, the military information Loral and Hughes transferred to China was so sensitive that 45 of the report's 50 pages were blacked out and shielded from public scrutiny.

Lockheed's military technology ties to China became even more visible when Loral president and heavy Clinton-Gore donor Bernard Schwartz was tapped as vice president of Lockheed after the company bought out most of Loral in early 1996.

On Oct. 19, 1999, a federal grand jury issued a 16-count indictment accusing another pro-China-trade defense corporation, McDonnell-Douglas, along with a Chinese-run company, of conspiring to violate U.S. export laws in the sale of aerospace equipment that wound up at a Chinese military plant.

In 1994 McDonnell sold the China National Aero-Technology Import and Export Corporation (CATIC) 13 pieces of sophisticated machining equipment used to build aircraft parts -- used in some applications with Silkworm missiles. CATIC is a Chinese-run defense firm that is the Chinese military's main purchasing arm.

The indictment alleged that CATIC intended to "divert the equipment to the military plant and that McDonnell-Douglas acted with 'willful blindness' in arranging the sale." The indictment also charged a history of false statements and omissions on the part of McDonnell.

If convicted of the charges, the corporation could be fined millions of dollars and the individuals involved could face up to five years in prison.


According to FEC and CRP records, Rep. Curt Weldon (R-Pa.), chairman of the highly sensitive House Armed Services Subcommittee on Military Research and Development, also serves as an example of how soft investigations and mild rebukes could seem suspect when legislators charged with protecting national security have conflicts of interest.

Weldon accepted $170,000 in campaign contributions during the same time period from the same corporations now either under federal indictment or investigation for shipping military secrets to China. Con tributions included many subsidiary companies doing subcontract work for the companies in question.

As a member of the House Select Committee investigating Chinese espionage chaired by Cox, Weldon received political contributions from corporations that were represented by FARA-registered U.S. foreign lobbyists, Cassidy Associates -- a firm which employed Maeley Tom, a China-tied Lippo Group operative-consultant, as vice president.

Cassidy Associates is the largest congressional lobby firm in the United States and one of the top political cash cows.

Five Cassidy lobby representatives periodically contributed small personal checks totaling $5,750 to Weldon in addition to the money he received from the Cassidy-represented corporations either indicted or under investigation.

Cassidy also sent Ms. Tom to Indo nesia with Commerce Secretary Ron Brown on a trade mission, accompanied by White House "bag-man" Charlie Trie and DNC donors Pauline Kanchanalak and Nora Lum. All three have been investigated. Trie and Lum were convicted regarding illegal foreign contributions.

Center For Responsive Politics documents reveal Cassidy's income as $18 million in 1997 and $20 million in 1998. The firm's substantial total of $416,700. in legislative contributions to key Repub lican and Democratic congressman oc curred during the important 1995-96 election cycle from which many of the national security allegations sprang.

However, no congressional committee has yet questioned the source of Cas sidy's money, given the various Chinese campaign finance scandals, Peking espionage, congressional links and the suspect handling of national security at the State Department building.

Cassidy, as Justice Department-registered "agents of foreign principals," represents three military technology corporations extremely interested in "permanent normal trade relations" with China. The lobby firm has donated princely sums to influence congressmen like Weldon regarding defense contracts and military exports as they relate to China policy: i.e. Lockheed Martin and Loral subsidiary, United Space Alliance ($460,000 in 1998), McDonnell-Douglas parent company, Boeing ($340,000 in 1997 and $400,000 in 1998) and Lock heed Defense Systems' (combat vehicles) and Armament Systems (gun systems) parent company, General Dynamics ($600,000 in 1997 and $440,000 in 1998).

Weldon contributors such as Hughes, Raytheon, TRW, Madison Research, Texas Instruments, Teledyne, Northrop-Grumman and Rockwell have ongoing co-mingled defense and missile projects that require them to work together on a contractor/subcontractor basis to develop their highly sophisticated military projects.

Ms. Tom had recommended Clinton-Gore fund-raiser and Lippo Group employee John Huang for a Commerce Department position.

The Senate Government Affairs Committee on Aug. 6, 1997, identified Huang as "the political power that advises the Riady family (Lippo Group) on issues and where to make contributions," and the Riady family's "top priority for placement because he is like one of their own."

The Riadys, a Chinese family based in Indonesia, were one of the largest benefactors to Clinton's campaign in 1996.

In June 1997, House Rules Chairman Gerald Solomon (R-N.Y.) alleged publicly what committee staffs were saying privately -- that intelligence intercepts of Huang's phone calls while at the Commerce Department revealed that he had "committed economic espionage and breached our national security."


Some might question whether there is anyone left to depose legislators under oath who would never subpoena themselves to offer explanations for their conflicts of interest.

Chicago Sun-Times/CNN political analyst Robert Novak reported on Aug. 2, 1999 that the Reno Justice Depart ment may be blackmailing some Republicans by holding the threat of indictment and/or further investigation of campaign contributions over their heads.

While every import from China is made under conditions not subject to American law, Congress is attempting to offer PNTR to China when their workers don't pay a penny into our Social Security and Medicare programs, or into U.S. school districts, streets, highways and defense.

American companies that build factories in China to make goods to send here are evading U.S. laws and taxes. With the help of a docile American citizenry, Congress is planning to give China the equivalent of billions of dollars in foreign aid at taxpayer expense while our ballooning China trade deficit accounts for losses in production, income, wealth, jobs, higher living standards, savings, capital formation and tax revenue.

For the more on the China connection and the role the Riadys played in getting Bill Clinton into office order Year of the Rat by Edward Timperlake and William C. Triplett II by contacting Noontide Press.