Thu, Mar 06, 2003
December Lawsuit Over Tech Aid to Red Chinese Comes to End:
Damage is Done; Now It's Just About the Money
On March 4,
2003, the Assistant Secretary of State for Political-Military
Affairs, Lincoln P. Bloomfield, Jr., signed a consent agreement
imposing a $32 million fine on Hughes Electronics Corporation and
Boeing Satellite Systems, Inc., in a civil settlement of the 123
charges against them for violations of the Arms Export Control Act
and the International Traffic in Arms Regulations.
The charges against these two companies, which are delineated in
the Department's December 26, 2002 Charging Letter, were brought in
connection with their conduct related to the January 1995 failed
launch of the Long March 2E rocket carrying the APSTAR II
Spacecraft, the February 1996 failed launch of the Long March 3B
rocket carrying the INTELSAT 708 Spacecraft, and other
satellite-related matters involving the People s Republic of China.
The U.S. Customs Service was also a party to the settlement.
Under the terms of the consent agreement, the $32 million fine
will be levied as follows:
-
$20 million cash penalty of which $12 million will
go to the U.S. Treasury and $8 million will go to the U.S. Customs
Service to settle a separate claim against these companies*;
- $12 million will be suspended on the condition that over a
five-year period, Boeing will apply $6 million and Hughes will
apply $2 million to offset the costs associated with remedial
compliance measures required in the consent agreement;
-
$4 million of the $12 million suspended portion,
consisting of $2 million each from Hughes and Boeing, has been
credited to them for investments already undertaken to strengthen
compliance measures.
Additionally, both companies are required to appoint special
compliance officials who will be responsible for oversight of the
companies activities in China and the countries of the Former
Soviet Union, and ensuring that the companies comply with the
consent agreement. These officials cannot be employees of Boeing or
Hughes.
The Department again stresses the importance
compliance with export control laws has to the security and foreign
policy interests of the United States and the risk of harm when
companies fail to follow these laws.
* Editor's note: with US Customs Service integration into the
new Department of Homeland Security, it is unclear from this
official message just where the "Customs" money will go. The old US
Treasury-run Customs has now become "Bureau of Immigration and
Customs Enforcement" and "Bureau of Customs and Border
Protection."
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