U.S. Dept. of State - IIP: The United States and China

Text: Customs Service Probe Hits Loral With $20 Million Fine
(Loral passed technology to China to improve missile systems)

The U.S. Customs Service announced January 10 that its four-year probe of Space System/Loral has resulted in that company paying a $20 million fine.

The Customs Service charged Loral with violating the Arms Export Control Act, which governs the transfer of sensitive U.S. technology to foreign governments, by turning over technology to China that allowed it to improve the guidance systems for its missiles, according to a news release from the U.S. Customs Service on its probe of the satellite manufacturer.

In an agreement reached between Loral and the State Department, the company agreed to pay the fine without admitting or denying the government's charges.

While the $20 million fine is the largest paid by an American company under the Arms Export Control Act, Loral will use approximately $6 million from the fine "to implement better export controls," according to the news release.

Thursday, January 10, 2002

U.S. Customs Probes Into Satellite Manufacturer Results in Record $20 Million Fine

Washington, D.C. -- The U.S. Customs Service today announced that Space System/Loral, a U.S. satellite manufacturer, has agreed to pay a $20 million fine for allegedly passing licensable technology to China to improve its missile guidance systems. The Customs Special-Agent-in-Charge Office in Baltimore investigated the case.

The four-year investigation began in May 1996 after reports surfaced that Loral had released sensitive technical data to the Chinese. Earlier that year, Loral had undertaken a review of a failed launch of one of its satellites in China. The satellite was built for Intelset and was being launched by a Chinese rocket. Loral later admitted to the U.S. State Department of having unintentionally released sensitive information to Chinese authorities after the review.

Loral was charged with violating the Arms Export Control Act, which governs the transfer of sensitive U.S. technology to foreign governments. Under the terms of an agreement reached between Loral and the State Department, the company agreed to pay the fine without admitting or denying the government's charges.

The $20 million fine is the largest paid by an American company under the Arms Export Control Act. Approximately $6 million will be used by Loral to implement better export controls, and $14 million in cash will be paid to the government.

The U.S. Customs Service is charged with preventing the illegal movement of U.S. munitions and technology having sensitive civil and military applications to proscribed destinations around the world, and to terrorist organizations that pose a threat to the national security of the United States.

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)