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Satellite Launches in the PRC: Loral

page 2

Long-Term Recommendations31

1) Quality control philosophy and practice of the fabrication, assembly and test of the inertial measurement unit should be strengthened. Personnel should be trained periodically in careful handling and cleanliness concerns. Cleanliness and careful test handling should be emphasized and maintained at all times.

2) Good design and good quality control can achieve the desired reliability of hardware. However, a design with adequate redundancy can also achieve the same desired reliability. Therefore, it should be strongly considered in avoiding critical single point (or path) failure.

The Report Goes to the PRC On May 7, 1996, Loral's Nick Yen, the Secretary of the Independent Review Committee, faxed the draft Preliminary Report to the committee members, and to China Great Wall Industry Corporation.

On May 10, 1996, the final Independent Review Committee Preliminary Report, less attachments, was faxed by Yen to China Great Wall Industry Corporation.32 The same day, the complete Preliminary Report was express-mailed by Yen to the Independent Review Committee members.33

On May 13, Yen also faxed the Preliminary Report to a hotel in Beijing for Paul O'Connor of J & H Marsh & McLennan, who was a guest there.34

None of these transmitted documents was submitted to the U.S. Government for review prior to its transmission to the PRC.35

Defense Department Analyst Discovers the Activities of the Independent Review Committee The May 13-19, 1996, issue of Space News, a widely-read industry publication, contained an article stating that Wah Lim, as Chairman of the Independent Review Committee, had faxed the committee's report of the failure review to the PRC.36

On or about May 14, 1996, Robert Kovac, an Export Analyst in the Defense Department's Defense Technology Security Administration (DTSA), read the Space News article and became concerned that the Independent Review Committee's activities were not conducted under a license. Kovac was particularly alarmed that, according to the article, a failure review report had been distributed to the PRC.

Kovac immediately acted on his concern. He called Loral's Washington representative and asked whether the Independent Review Committee's activities had been conducted under a license. Loral's response was to propose a meeting with Kovac and others for the following day.

On May 15, 1996, Loral's Export Control Officer met with licensing personnel at the State Department and the Defense Department to report on the Independent Review Committee's activities.

The Defense Department advised the Loral officials to halt all Independent Review Committee activity and consider submitting a "voluntary" disclosure to the State Department.

The State Department made similar recommendations, and sent letters to both Loral and Hughes soon afterward that reported that the State Department had reason to believe that the companies may have participated in serious violations of the International Traffic in Arms Regulations.

The State Department also requested that the companies immediately cease all related activity that might require approval, provide a full disclosure, and enumerate all releases of information that should have been controlled under the International Traffic in Arms Regulations.

Loral and Hughes Investigate the Matter On May 23, 1996, Loral engaged the law firm of Feith & Zell of Washington, D.C., to conduct a limited investigation, as counsel for Loral, of the events related to the Independent Review Committee. That investigation included document collection and review, and interviews of Loral employees. On June 17, 1996, a "voluntary" disclosure was submitted to the State Department by Feith & Zell on behalf of Loral.37

In that disclosure, Loral stated that its procedures for implementing export control laws and regulations were deficient, but that Loral was implementing corrective measures. Also, Loral's disclosure concluded that "Loral personnel were acting in good faith and that harm to U.S. interests appears to have been minimal." 38

Hughes' General Counsel's office began an investigation into the Independent Review Committee matter in early June 1996, after receiving the State Department letter advising that Hughes may have been a party to serious violations of the International Traffic in Arms Regulations. Hughes' investigation report was submitted to the State Department on June 27, 1996. The Hughes report concluded that there was no unauthorized export as a result of the participation of Hughes employees in the Independent Review Committee.

The Hughes employees reportedly advised Loral employees to obtain the appropriate State Department approvals prior to furnishing the documents to the PRC.39

The Aftermath: China Great Wall Industry Corporation Revises Its Findings on the Cause of the Accident In September 1996, China Great Wall Industry Corporation discarded its original analysis, and in October 1996 made its final launch failure presentation to officials at Loral.

China Great Wall Industry Corporation determined that the root cause of the failure was a deterioration in the gold-aluminum wiring connections within a power amplifier for the follow-up frame torque motor in the inertial measurement unit. This was the very problem the Independent Review Committee had identified in their meetings with PRC officials and in the Preliminary Report.

U.S. Government Assessments of the Independent Review Committee's Report, and Referral to the Department of Justice The materials submitted by both Loral and Hughes in their 1996 disclosures to the State Department were reviewed by several U.S. Government offices, including the State Department, the Defense Department, the Central Intelligence Agency, and an interagency review team.

The 1997 Defense Department assessment concluded that "Loral and Hughes committed a serious export control violation by virtue of having performed a defense service without a license . . . ."

Based on this assessment, the Defense Department recommended referral of the matter to the Department of Justice for possible criminal prosecution.

In July 1998, a U.S. Government interagency team conducted a review of the Independent Review Committee's activities and reported the following:

  • The actual cause of the Long March 3B failure may have been discovered more quickly by the PRC as a result of the Independent Review Committee's report
  • Advice given to the PRC by the Independent Review Committee could reinforce or add vigor to the PRC's design and test practices
  • The Independent Review Committee's advice could improve PRC rocket and missile reliability
  • The technical issue of greatest concern was the exposure of the PRC to a Western diagnostic process40

The interagency review also noted that the Long March 3B guidance system on which Loral and Hughes provided advice is not a likely candidate for use in future PRC intercontinental ballistic missiles. The Long March 3B guidance system is well suited for use on a rocket.

Details of the Failed Long March 3B-Intelsat 708 Launch and Independent Review Committee Activities

The specific details of the events surrounding the Long March 3B-Intelsat 708 launch failure and the Independent Review Committee are described in the remainder of this Chapter.

Background on Intelsat and Loral

Intelsat The International Telecommunications Satellite Organization (Intelsat), headquartered in Washington, D.C., is an international not-for-profit cooperative of 143 member nations and signatories that was founded in 1964. Intelsat is the world's largest commercial satellite communications services provider. Its global satellite systems bring video, Internet, and voice/data services to users in more than 200 nations and on every continent.41

The member nations contribute capital in proportion to their relative use of the Intelsat system, and receive a return on their investment. Users pay a charge for all Intelsat services, depending on the type, amount, and duration of the service. Any nation may use the Intelsat system, whether or not it is a member. Intelsat operates as a wholesaler, providing services to end-users through the Intelsat member in each country. Some member nations have chosen to authorize several organizations to provide Intelsat services within their countries. Currently, Intelsat has more than 300 authorized customers.42

Intelsat includes two members from the PRC: China Telecom is a signatory, and Hong Kong Telecom is an investing entity. Their investment shares are 1.798 percent and 1.269 percent, respectively, giving the PRC a country total of 3.067 percent, which makes it the eighth largest ranking member nation.43

On January 2, 1999, Intelsat had a fleet of 19 high-powered satellites in geostationary orbit. These satellites include the Intelsat 5 and 5A, Intelsat 6, Intelsat 7 and 7A, and the Intelsat 8 and 8A families of satellites. The newest generation of Intelsat satellites, the Intelsat 9 series, is in production.44

Nine satellites were manufactured in the Intelsat VII and VIIA series. Loral manufactured this series of satellites, and they were launched during the period from 1993 to 1996.45

Intelsat VII and VIIA Series Satellites46

Satellite Rocket Launch Date Launch Results

701 Ariane 44 (France) 22 October 1993 Success 702 Ariane 44 LP(France) 17 June 1994 Success 703 Atlas II AS (US) 6 October 1994 Success 704 Atlas II AS (US) 10 January 1995 Success 705 Atlas II AS (US) 22 March 1995 Success 706 Ariane 44 LP(France) 17 May 1995 Success 707 Ariane 44 P (France) 14 March 1996 Success 708 Long March 3B (PRC) 15 February 1996 Failure 709 Ariane 44 LP (France) 15 June 1996 Success

Loral Space and Communications Loral Space and Communications, Ltd., is one of the world's leading satellite communications companies and has substantial interests in the manufacture and operation of geosynchronous and low-earth-orbit satellite systems. The company is headquartered in New York City and is listed on the New York Stock Exchange. Bernard Schwartz is its Chairman. The company employs approximately 4,000 people.47

Loral Space and Communications, Ltd., owns Space Systems/Loral, one of the world's leading manufacturers of space systems. It also leads an international joint venture for the Globalstar system of satellites that is expected to be placed in service in 1999. Globalstar will support digital telephone service to handheld and fixed terminals worldwide. Loral Space and Communications, Ltd., together with its partners, will act as the Globalstar service provider in Canada, Brazil, and Mexico. Together with Qualcomm, it holds the exclusive rights to provide in-flight phone service using Globalstar in the United States. Loral Skynet, acquired from AT&T in March 1997, is a leading domestic satellite service provider.48

Space Systems/Loral Space Systems/Loral (Loral) designs, builds, and tests satellites, subsystems, and payloads; provides orbital testing, launch services, and insurance procurement; and manages mission operations from its Mission Control Center in Palo Alto, California. Loral was formerly the Ford Aerospace and Communications Corporation. In 1990, Ford Aerospace was acquired by a group including Loral Space and Communications, Ltd., and re-named Space Systems/Loral. Loral is located in Palo Alto, California, and Robert Berry is its President.49

At the time of the Intelsat 708 failure, Loral was 51 percent owned by Loral Space and Communications, Ltd. The remainder was owned equally by four European aerospace and telecommunications companies: Aerospatiale, Alcatel Espace, Alenia Spazio S.p.A., and Daimler-Benz Aerospace AG. In 1997, Loral Space and Communications, Ltd. acquired the foreign partners' respective ownership interests in Loral.50

Loral is the leading supplier of satellites to Intelsat. Loral's other significant customers include the PRC-controlled Asia Pacific Telecommunications Satellite Co., Ltd., CD Radio, China Telecommunications Broadcast Satellite Corporation, Globalstar, Japan's Ministry of Transport, Mabuhay Philippines Satellite Corporation, MCI/News Corp., the National Aeronautics and Space Administration (NASA), the National Oceanic and Atmospheric Administration, PanAmSat, Skynet, and TCI. Loral employs approximately 3,100 people, has annual sales of approximately $1.4 billion, and has a backlog of orders for approximately 80 satellites.51

Intelsat 708 Launch Program On April 24, 1992, Intelsat awarded a contract to China Great Wall Industry Corporation for the launch of Intelsat VIIA satellites into geosynchronous transfer orbit.52

On or about September 18, 1992, the State Department issued a license to Loral for the export to the PRC of technical data in support of technical discussions for the launch of an Intelsat VIIA satellite.53 On or about July 14, 1993, the State Department issued an export license to Loral for the export of the Intelsat VIIA (708) satellite and associated equipment necessary for the launch.54

Sometime in 1994, representatives from Intelsat and Loral performed a site survey at the Xichang launch facility in the PRC. One of the Intelsat representatives who was involved in the launch described the facility as "primitive but workable."

On or about January 11, 1996, the Intelsat 708 satellite was shipped to Xichang.

The Intelsat 708 Launch Failure On February 15, 1996, at approximately 3:00 a.m. local time, a PRC-manufactured Long March 3B rocket carrying the Intelsat 708 satellite crashed into a mountain side approximately 22 seconds after liftoff from the Xichang launch site. 55 Employees and family members of Loral witnessed the launch failure from Palo Alto through a video feed from the launch site.56

Members of the Intelsat and Loral team in the PRC were not allowed by PRC officials to visit the rocket debris field until late in the afternoon of that same day.

At least three different explanations have been offered as to why the Loral and Intelsat employees were not allowed onto the debris field for approximately 12 hours:

  • The first explanation was that Loral and Intelsat employees were kept away from the debris field until safety hazards from the crash site could be neutralized
  • The second, as reported in the news media, was that the delay had been imposed to give PRC officials time to seek out satellite encryption devices intended to protect the satellite command processor from unauthorized messages once the satellite was in orbit57
  • The third explanation, offered by at least one Loral employee, was that the time delay gave the PRC an opportunity to clean up the probable human carnage that resulted from the crash

Once they were allowed to go to the site, members of the Loral team began collecting and separating satellite debris from the rocket debris. A rough inventory was done, and the satellite debris subsequently was crated and shipped back to Loral in Palo Alto for analysis.58

Upon examination by Loral engineers in Palo Alto, it was determined that the satellite's encryption devices had not, in fact, been recovered from the crash site.

Events Leading Up to the Creation of the Independent Review Committee On or about February 27, 1996, two weeks after the failure, PRC engineers announced that they believed that the cause of the Intelsat 708 launch failure was the inertial platform of the control system.59 This information was made public in an attempt to demonstrate that the PRC had identified the cause of the launch failure.

The interested parties included the aerospace industry in general, but particularly Loral, Hughes Space and Communications Corporation (Hughes), and the space launch insurance industry.

Hughes was scheduled to launch its Apstar 1A satellite on a Long March 3 rocket on or about April 1, 1996, less than two months after the Intelsat 708 crash. Even though the Apstar 1A satellite was scheduled for a different rocket, concern was still high in the insurance community.

On March 14, 1996, a meeting was held in Beijing involving Hughes; the PRC-controlled Asia Pacific Telecommunications Satellite Co., Ltd., owner of the Hughes-manufactured Apstar 1A; and the insurance underwriters for the Apstar 1A.60

The main information the PRC authorities, including the Asia Pacific Telecommunications representatives, sought to convey to the insurance underwriters was that their failure investigation relating to the Intelsat 708 launch had shown the cause to be a failure of the inertial measurement unit.61 This is the rocket subsystem that provides attitude, velocity, and position measurements for guidance and control of the rocket.62

The PRC representatives stated that the inertial measurement unit used on the Long March 3B that failed was different from the unit used on the Long March 3, which was the rocket that would be used to launch the Apstar 1A. They concluded, therefore, that there should be no cause for concern regarding the Apstar 1A launch.63

Nonetheless, representatives of the insurance underwriters stated that insurance on the Apstar 1A launch would be conditioned on delivery of a final report on the root causes of the Long March 3B failure and a review of that report by an independent oversight team.64

Paul O'Connor, Vice President of J & H Marsh & McLennan space insurance brokerage firm, later reported to Feith & Zell, a law firm representing Loral on possible export violations, that insurers had paid out almost $500 million in claims involving prior PRC launch failures, and wanted the PRC to provide full disclosure about the cause of the Intelsat 708 failure.65

From April 10 through 12, 1996, China Great Wall Industry Corporation held a meeting in Beijing concerning the Long March 3B failure investigation.66 Loral sent three engineers to the meeting: Dr. Wah Lim, Vice President and General Manager of Manufacturing; Nick Yen, Integration Manager, Intelsat 708 Program; and Nabeeh Totah, Manager of Structural Systems.67 Intelsat sent as its representative, Terry Edwards, Manager of Intelsat's Launch Vehicle Program Office. China Great Wall Industry Corporation provided Intelsat and Loral with three volumes of data and eight detailed reports on the current status of the failure investigation. The PRC's Long March 3B Failure Analysis Team presented the failure investigation progress, and the preliminary results up to that date, to Intelsat and Loral.68

On or about April 10, 1996, Bansang Lee, Loral's representative in the PRC, on behalf of China Great Wall Industry Corporation, asked Lim to be the Chairman of an independent oversight committee.

On or about April 10, 1996, Lim telephoned Robert Berry, Loral's President, from the PRC. Lim reportedly told Berry that representatives of China Great Wall Industry Corporation had asked him to chair an independent oversight committee reviewing the PRC analysis of the Intelsat 708 launch failure.69

Berry says he gave permission for Lim to act as the chairman of the independent oversight committee because of serious safety issues associated with the PRC launch site that had been brought to his attention after the Intelsat 708 failure.70

Before leaving Beijing, Lim created a charter for the committee, and he changed its name to the "Independent Review Committee." 71 Eventually, the Independent Review Committee was constituted with the following members and staff:

Membership of the Independent Review Committee72

Name
Employer
Position on IRC

Wah Lim
Senior VP & GM of Engineering & Manufacturing, Loral
Chairman

John A. Holt
Retired Managing Director, Space Systems Group, British Aerospace
Member

Karl Kachigan
Retired, Chief Engineer & Director of ATLAS Launch Vehicle, General Dynamics
Member

Frederick Ormsby
Retired Department Manager, Spacecraft Engineering & Launch Vehicle Program Office, Intelsat
Member

John Smay
Chief Technologist, Hughes
Technical Staff

Robert Steinhauer
Chief Scientist, Hughes
Member

Reinhard Hildebrandt
Team Leader, Flight Operations & Post Flight Evaluation, DASA Daimler-Benz Aerospace
Member

Nick Yen
Department Manager, Launch Vehicle & Launch Operations, Loral
Secretary

Nabeeh Totah
Director, Spacecraft Engineering Laboratory, Loral
Technical Staff

Jack Rodden
Principal Engineer, Loral
Technical Staff

Fred Chan
Director, Controls Engineering, Loral
Technical Staff

The Government Security Committee Meeting at Loral On April 11, 1996, a quarterly Government Security Committee meeting was held at Loral.73

The Government Security Committee was established by Loral in cooperation with the Department of Defense in 1991, when 49% of Loral's stock was owned by foreign investors.74 The express purpose of the Government Security Committee was to monitor Loral's practices and procedures for protecting classified information and technology controlled under the International Traffic in Arms Regulations.75

The meeting attendees recounted to the Select Committee that Loral President Berry arrived at the April 11 Government Security Committee meeting after most of the others had gathered for it.76 Berry announced at that time that he had just finished with a telephone call from Lim (in the PRC) and had given Lim the authority to chair the Independent Review Committee.77

According to Berry, he told the meeting that Lim had advised him that the PRC was interested in Lim chairing the Independent Review Committee. Berry testified that he approved Lim's request to participate during that telephone conversation. Berry testified that he was aware that a report would be prepared and distributed to the PRC and insurance companies. However, he had an understanding with Lim that the report would not contain any technical data or technical assistance.78 A discussion among the meeting attendees ensued.

The minutes reflect that Dr. Stephen Bryen, an outside member of the Government Security Committee, recommended that "any report prepared as a result of [Loral's] participation in the failure review be submitted to the State Department prior to dissemination to the Chinese." 79

Bryen testified that he was disturbed by the idea of a failure investigation involving the PRC, and that this would involve technology transfer which required State Department approval. Bryen testified that there was a lot of discussion on the matter, but all agreed that nothing would happen without State Department approval.80

Duncan Reynard, Loral's Export Control Manager, recalls that Bryen said:

You know, if there's anything written generated by this group of people, you should run it by ODTC [Office of Defense Trade Controls, Department of State] before you release it.81

Reynard says Loral Technology Transfer Control Manager William Schweickert, Loral General Counsel and Vice President Julie Bannerman, and he attended the Government Security Committee meeting. All three agreed with Bryen's statement. Reynard says that he felt some responsibility in connection with Bryen's comment; however, there was no indication from anyone that a report was going to be prepared. Reynard says that if he had known that a report was going to be prepared, with the intention of disseminating it to foreigners, Loral would have sought the appropriate U.S. Government approval.82

Reynard says that neither he, as Export Control Manager, nor Bannerman, the General Counsel, nor Schweickert, the Technology Control Manager, took any proactive measures to follow up on this matter.

Reynard says that "we didn't know what was happening - we didn't - we were waiting for somebody to tell us." 83 According to interview notes of Reynard prepared by an attorney from Loral's outside counsel, Feith & Zell, Reynard said that no one asked him to look into the matter raised by Dr. Bryen.84

Loral's General Counsel, Julie Bannerman, testified that no one conducted any research to determine whether the intended activities of the Independent Review Committee were legal, or within Loral's company policy. Bannerman also testified that the primary responsibility for matters relating to Bryen's statements would have rested with Loral's export control office, namely Reynard and Schweickert.85

Even though there was a formal mechanism for assigning action items in Government Security Committee meetings, no action item was generated at the April 11 meeting in connection with the Independent Review Committee. No one was assigned to inform Lim of the Government Security Committee's decision that Loral's participation in the Independent Review Committee needed to be approved by the Department of State.86

One of the participants at the Government Security Committee meeting was Steve Zurian of Trident Data Systems. Zurian says that Trident has been a security advisor to Loral for nine years and provides export consulting to the company. Trident's responsibilities include attending the Government Security Committee meetings, taking notes, and drafting the minutes. Zurian says that he and Caroline Rodine, another Trident employee, attended the April 11, 1996, and the July 11, 1996, Government Security Committee meetings.

Zurian says that it was the consensus of the attendees at the April 11, 1996, Government Security Committee meeting that Loral should seek and obtain approval from the Department of State before participating in the Independent Review Committee, and that Loral President Berry agreed with the decision.

Zurian says that at the July 11, 1996, Government Security Committee meeting, Berry said that Loral had followed up on Bryen's recommendation to obtain State Department approval to participate in the Independent Review Committee. (As Loral admitted in its June 27, 1996 disclosure to the Department of State, however, this was not the case.)87

Zurian's draft of the July 11, 1996, meeting minutes reflects Berry's remarks about obtaining State Department approval. Zurian says that he and Rodine reviewed their notes of the meeting, specifically regarding Berry's remarks, and both agree that the draft minutes are accurate.

Zurian says that it is possible that Loral's management failed to tell Berry that they had not obtained the appropriate State Department approval. He attributes Berry's erroneous understanding to his staff's failure to advise him of the facts.

But numerous Loral personnel, including Berry, Bannerman, and Reynard, were aware of Loral's deliberations with the Department of State regarding the limits on Loral's participation in PRC failure analyses.88

On April 3, 1996, for example, Loral proposed to the State Department certain language that restricted Loral's participation in possible failure analyses in connection with two upcoming Long March launches from the PRC, for the Mabuhay and Apstar satellites. Loral's proposal was that it would not comment or ask questions in the course of those failure analyses.89

It also should be noted that on or about January 24, 1996, a few weeks prior to the Intelsat 708 failure, Loral received and reviewed the Apstar technical data export license, which stated:

Delete any discussion or release under this license of any technical data concerning launch vehicle [rocket] failure analysis or investigation.90

On or about February 22, 1996, a week after the Intelsat 708 failure, Loral received and reviewed the Mabuhay technical data export license that also stated:

Delete any discussion or release under this license of any technical data concerning launch vehicle [rocket] failure analysis or investigation.91

The Apstar 1A Insurance Meeting On April 15 and 16, 1996, a meeting of representatives of companies providing reinsurance for the upcoming Apstar 1A satellite launch took place in Beijing. The Apstar 1A launch, and the issues arising from the Long March 3B rocket failure, were discussed. The launch failure presentations by PRC representatives made substantially the same points as had been made at the March 14, 1996, meeting: that the Long March 3B failure was due to the inertial measurement unit, and that this was not a concern for the Apstar 1A launch because it would be launched by a Long March 3 rocket utilizing a different inertial measurement unit with a previous record of successful launches.92

At the same meeting, in response to the requirement that had been stated by the insurance underwriters at the March 14 Beijing meeting, the PRC representatives announced the creation of an independent oversight committee (shortly thereafter named the Independent Review Committee) to review the findings and recommendations of the PRC's failure investigation.93

Wah Lim and Nick Yen of Loral, the designated Chairman and Secretary of the Independent Review Committee, were present at the meeting and discussed the role of the committee and its members. The two prospective members from Hughes - John Smay, the company's Chief Technologist, and Robert Steinhauer, its Chief Scientist - were also present, as was Nabeeh Totah of Loral, who would serve as one of four Loral technical staff members to the Independent Review Committee.94

During the April 15 and 16 insurers' meeting, the participants were taken on a tour of the Long March rocket assembly area. They were also shown, in a partially opened state, units described by the PRC as the older Long March 3 inertial measurement unit and the newer Long March 3B inertial measurement unit. Thus, almost half of the Independent Review Committee participants had exposure at this time to the findings and views of the PRC derived from their failure investigation, prior to the first official Independent Review Committee meeting.95

On April 17, 1996, Wah Lim sent a letter to all Independent Review Committee members and to China Great Wall Industry Corporation, confirming that the first meeting of the committee would be in Palo Alto, California from April 22 to 24, 1996.

The April 1996 Independent Review Committee Meetings in Palo Alto Meeting on April 22, 1996 On April 22, 1996, the first Independent Review Committee meeting convened at Loral in Palo Alto. The foreign committee members, John Holt and Reinhard Hildebrandt, were not present. No PRC officials were present, due to a delay caused by visa problems.

Wah Lim called the meeting to order, and the meeting began without a technology transfer briefing.

The matter of a technology transfer briefing was subsequently raised, which prompted Lim to leave the meeting. Approximately ten minutes later, William Schweickert, Loral's Technology Control Manager, arrived and provided a technology export briefing to the Independent Review Committee members who were present. According to one of the participants, it appeared that Schweickert gave a presentation concerning the rules that should be followed at a PRC launch site, rather than a briefing covering technical data exchanges.

Schweickert provided the Independent Review Committee members with a three-page technology export briefing.96 Schweickert says that he had never prepared a briefing for a failure review before. Thus, he says he used the export licenses for the launch of the Intelsat 708 as a basis for the briefing. (Schweickert says that he learned about the imminent arrival of the PRC visitors only a few days earlier.) However, according to notes of an interview of Schweickert prepared by an attorney from Feith & Zell, Loral's outside attorneys, Schweickert looked at the licenses relating to the Mabuhay and Apstar IIR satellite programs for assistance in preparing the Independent Review Committee briefing. Those licenses were more current than the Intelsat 708 license issued in 1992.

Schweickert stated that these two licenses required the presence of Defense Department monitors during any discussions with the PRC. He said he knew Defense Department monitors would not be present at the Independent Review Committee meeting. As a result, he said, he would have to be "careful" in preparing his export briefing. Schweickert also said that there was not enough time to get a license.

Schweickert told the Independent Review Committee members that Loral did not have a license for the meeting. According to Schweickert, he discussed what he thought the Independent Review Committee could do without a license - such as receive technical information from China Great Wall Industry Corporation, request clarification of certain items, ask questions, and indicate acceptance or rejection of the PRC's conclusions.

Schweickert did not attend any of the Independent Review Committee meetings, other than to give the briefing on the first day.

Duncan Reynard, Loral's Export Control Manager, did not learn of the Independent Review Committee meeting on April 22, 1996 until Schweickert told him that same day. Reynard says that Schweickert told him he had prepared a briefing for the meeting, and he asked Reynard to review it. According to interview notes of Reynard prepared by an attorney from Feith & Zell, Reynard did not see Schweickert's briefing until late in the day on April 22, 1996.97 Reynard says he reviewed Schweickert's briefing and said it was "okay." 98

Reynard says he was not surprised to find out that PRC representatives would be visiting Loral. Reynard says he "assumed the briefing and the people that would normally attend something like that were knowledgeable enough to know how to handle that kind of a meeting." 99

Reynard also says that his understanding of the meeting was that the PRC representatives were going to make a presentation concerning their failure investigation of the Intelsat 708 satellite.100

It should be noted that, during this first Independent Review Committee meeting at Loral's offices, Loral's President, Executive Vice President, and Export Control Manager were all absent. They had traveled to Europe in connection with an unrelated business trip, and for vacation.101

The Independent Review Committee members who were present spent the first day at Palo Alto reviewing the PRC failure analysis. The documents consisted of approximately 14 reports dealing with technical material, analysis, and failure modes.102

Meeting on April 23, 1996
On April 23, 1996, the two foreign members of the Independent Review Committee and the PRC engineers arrived at Loral. The PRC representatives included:

  • Huang Zouyi, China Great Wall Industry Corporation
  • Professor Chang Yang, Beijing Control Device Institute
  • Li Dong, China Academy of Launch Vehicle Technology
  • Shao Chunwu, China Academy of Launch Vehicle Technology103

The majority of this second day was spent trying to understand the PRC failure investigation. Many Independent Review Committee members say there was difficulty in understanding the PRC representatives' presentation because of language problems. As a result, many clarifying questions were asked of the PRC representatives. However, Feith & Zell interview notes of one Independent Review Committee member specifically stated that a "good translator" was present at that meeting.

The PRC officials stated that they believed the failure mode was located in the inertial guidance system of the Long March 3B rocket.104 Specifically, they believed the failure was caused by a break in a wire to a torque motor controlling the inner gimbal in the inertial measurement unit. While the Independent Review Committee members told the PRC representatives that they did not necessarily disagree with this analysis, the minutes of the Palo Alto meeting reflect that the committee recommended additional investigation by the PRC to verify its failure analysis.105

During the meeting, the PRC representatives presented information about the Long March 3B rocket design. The Independent Review Committee members asked questions to better understand the technology used by the PRC, as it was not as advanced as Western designs. Hughes Chief Scientist Robert Steinhauer described the afternoon session as a "tutorial." 106


COX REPORT

Overview
pages 1 | 2 | 3 | 4

PRC Acquisition of U.S. Technology
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9

PRC Theft of U.S. Nuclear Warhead Design Information
pages 1 | 2 | 3 | 4 | 5

High Performance Computers
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10

PRC Missile and Space Forces
pages 1 | 2 | 3 | 4 5 | 6 | 7 | 8 | 9

Satellite Launches in the PRC: Hughes
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9

Satellite Launches in the PRC: Loral
pages 1 | 2 | 3 | 4 | 5 | 6

Launch Site Security in the PRC
pages 1 | 2 | 3 | 4 5 | 6

Commercial Space Insurance
pages 1 | 2 | 3 | 4

U.S. Export Policy Toward the PRC
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9

Manufacturing Processes
pages 1 | 2 | 3 | 4 | 5 | 6 | 7 | 8 | 9 | 10

Recommendations
pages 1 | 2 | 3

Appendices
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