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U.S. duo fined over China dealings
WASHINGTON (CNN) -- Two U.S. companies, Hughes Electronics Corp. and Boeing Co.'s Boeing Satellite Systems unit, have agreed to a $32 million fine for allegedly sharing missile-related information with Chinese officials. The fine includes a $20 million cash penalty, $12 million of which goes to the U.S. Treasury. The remaining $8 million goes to the U.S. Customs Service to settle a separate claim against the companies. The agreement calls for $12 million of the penalty to be suspended if, over a five-year period, Boeing applies $6 million and Hughes applies $2 million to offset the costs associated with remedial compliance measures Of that $12 million, $4 million -- $2 million each from Hughes and Boeing—has been credited to them for money they already have spent to strengthen their own compliance measures. Both companies agreed to appoint third-party compliance officials to oversee their activities in China and the countries of the former Soviet Union and to make sure they comply with the consent agreement. Jack Shaw, Hughes Electronics president and chief executive officer, and Dave Ryan, vice president and general manager of Boeing Satellite Systems, released a joint statement acknowledging responsibility. "We recognize that it is crucial to the security and foreign policy of the United States to prevent the unauthorized provision of protected information or defense services that would or could promote the illicit development of missile system technology," Shaw and Ryan's statement read. Failed missile launchesThe penalty comes from failed missile launches in 1995 and 1996. The missiles carried satellites. The state department alleged the two companies violated the Arms Export Control Act and the International Traffic in Arms Regulations by sharing information about the launch failure analysis with the Chinese or the international insurance community. The state department alleged that sharing information with China about the design, development, operation, maintenance, modification or repair of launch vehicles, systems, or facilities could help China develop its own missile system and have a negative affect on U.S. national security, according to the agreement. In October 2000, Hughes Electronics sold Hughes Space and Communication Co. to Boeing but maintained responsibility for resolving the issue, the company said. The company, now known as Boeing Satellite Systems, is a division of Boeing.
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