The Cox Report - U.S. Companies' Motivations to Launch Satellites in the PRC

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The international space launch services industry is very competitive. Europe, China, Russia, Ukraine, and Japan are active competitors in this market. The main competitor to U.S. companies for commercial launch services is Europe’s Arianespace. The Congressional Research Service reports that "Europe has a 50-60% share of the commercial launch services market, while the United States has 30-40%, and China and Russia share the rest." Ukraine and Japan have not yet launched satellites on a commercial basis, although both have contracts to do so.241

Several factors motivate U.S. companies to launch satellites in the PRC. International consortia with PRC investors can apply pressure for, or force the use of, PRC launch services. The backlog of available rockets elsewhere is a factor, and the comparatively low price is also an inducement.242

Launch Backlog

Rocket	Wait (yrs.)	# of Satellites	Launch Rate in Backlog per year
Delta II	3.2	42	13
Zenit	3.0	3	1
Atlas	2.9	26	9
Long March	2.7	16	6
Ariane	2.4	41	17
Proton	2.3	21	9

Source: Aerospace Industries Association datasheet titled "China/Satellite Launch Fact Sheet" dated 6/3/98.

The PRC offers several versions of its Long March rockets for commercial launch services through China Great Wall Industry Corporation. According to the Congressional Research Service, "China reportedly has about 10% of the worldwide market for commercial space launches." 243

The PRC is the locus of an expanding marketplace for satellite-based telecommunications services, including mobile telephone services, direct broadcast television and digital data services. This has spawned numerous enterprises that hope to capitalize on this market and that include PRC investment.

Frequently, these wholly or partly PRC-owned customers for launch services require that their satellites be launched by China Great Wall Industry Corporation. Examples include the Asia Pacific Telecommunications Satellite Company, Mabuhay, and Asiasat. This is the leading reason for U.S. satellite manufacturers to launch their satellites in the PRC.

Because of the PRC’s non-market economy, the potential for technology transfer, and political concerns, the United States agreed in 1989 to grant export licenses for launches of U.S.-built satellites in China only on several conditions. These conditions included an agreement by the PRC "to price its launch services ‘on a par’ with Western companies." 244

That six-year agreement was signed in 1989 and expired in 1994. A new seven-year agreement was signed on March 13, 1995.

According to the Congressional Research Service, the "Bilateral Space Launch Services Trade Agreement" with the PRC specifies:

According to the U.S. Trade Representative, "Arabsat became the first in a series of PRC bids that have been as low as half those offered by Western bidders." 249

The Intelsat VIIA launch services were won by China Great Wall Industry Corporation "with a bid of $56 million, far below the $100-110 million bid by Arianespace." 250

The price China Great Wall Industry Corporation bid for launching the Loral-built Mabuhay satellite was 22-26% below Western prices.251

Additionally, the PRC bids to launch the Apstar-1, Apstar-2, Asiasat-2, and Echostar satellites were all 22-36% below Western bids.252

In May 1997, the U.S. Trade Representative stated that it believed the PRC had violated the pricing provisions of the bilateral agreement in connection with the launch of the Loral-built Mabuhay satellite. The PRC disagreed with this allegation.253

1988
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October 4 Intelsat awards Intelsat VII contract to Loral for up to nine satellites. This fixed-price contract had a total value of nearly $1 billion. Intelsat had released the RFP for this procurement on October 1, 1987.

April 24 Intelsat awards contract to China Great Wall Industry Corporation (CGWIC) for launch services — eventually covering the launch of the Intelsat 708 satellite in February 1996. Intelsat had released an RFQ for this procurement on July 16, 1991.

May 11 Loral submits export license application to State Department covering export to the PRC of technical data supporting launch.254

September 18 State Department issues export license No. 533593 for Loral export of technical data supporting a satellite launch (Form DSP-5).255

September 4 Loral submits export license application to State Department for export of the Intelsat 708 satellite to the PRC.256

Mid-1993 Intelsat exercises option for Intelsat 708 satellite from Loral. The 708 satellite is identical to the 706 and 707 units. The 706 was the first in the Intelsat VIIA program.

July 14 State Department issues license No. 544724 for export of Intelsat satellite to the PRC for launch (Form DSP-5).257

1994 Loral and Intelsat employees take site survey trip to Xichang, PRC to inspect facilities for upcoming Intelsat 708 launch. Facilities described as primitive but workable.

April 7-8 Loral briefing package is provided to China Aerospace Corporation (CASC) describing Loral and its capabilities, along with a proposed ten-year joint technology development program between Loral and CASC.258

June 6 Loral requests waiver to transport the Intelsat 708 satellite on a foreign flag aircraft to the PRC.

June 9 Loral signs Memorandum of Agreement with CASC for a ten-year joint technology development program.259

November 2 Loral sends letter to CASC "In Furtherance of the Technology Cooperation Agreement," enclosing performance specification documents for a solar panel, a propellant tank and a pressurant tank, and expressing interest in CASC manufacturing such articles for future Loral satellite programs.260

January 11 Intelsat 708 satellite is shipped to Xichang, PRC, launch site.261

January 16 Loral Export Control Manager William Schweickert sends e-mail to Loral Export Control Officer Duncan Reynard describing security issues/infractions that Col. Nicholas Alexandrow of the Defense Technology Security Administration (DTSA) discussed with Schweickert that morning. The issues were raised by DTSA monitor Steven Prichard at the Xichang launch site and include unescorted PRC nationals, violations of the Site Security Plan and the Technology Transfer Control Plan (TTCP), and lack of cooperation by Loral staff.262

January 24 Loral received and reviewed the Apstar technical data export license, which prohibited any discussion or release under the license of any technical data concerning rocket failure analysis or investigation.

February 15 Intelsat 708 launch failure occurs in Xichang at 3 a.m. local time.263 U.S. personnel taken to crash site at 10 a.m.264 Not allowed to visit the debris field until late in the afternoon.

February 16 Debris recovery operation begins at crash site and includes Loral, Intelsat, Pinkerton, and PLA personnel. 265

February 17 Loral memorandum from Muhammad Wahdy of Loral and acknowledged by DTSA’s Prichard documents debris recovery. This report estimated that 30 percent of the command processors, which contain the encryption electronics, were recovered.

February 21 Johnson & Higgins (J & H) Vice President Paul O’Connor sends letter to China Great Wall Industry Corporation (CGWIC) suggesting CGWIC implement an aggressive public relations campaign for underwriters.266

February 22 J & H Manager in Paris, Jacques Masson, sends letter to O’Connor reporting discussions with French insurance community regarding the impact of Intelsat 708 failure on future insurance programs. Mentions need to create an "independent inquiry board." 267

Loral received and reviewed the Mabuhay technical data export license, which prohibited any discussion or release under the license of any technical data concerning rocket failure analysis or investigation.

February 26 Insurance underwriters for Apstar-1A program become increasingly disappointed regarding the lack of an independent and international failure review committee.268

Paul O’Connor (J & H) provides CGWIC with a failure review committee schedule modeled after an Ariane failure review plan.269 O’Connor urged CGWIC to allow J & H to obtain failure review conclusions first.270

February 27 CGWIC issues a press release that identifies the cause of the launch failure to be the inertial platform in the Long March 3B control system.271

February 28 O’Connor (J & H) outlines for CGWIC minimum requirements for the Apstar-1A reinsurance program to continue.272

March 4 Intelsat engineer Daniel Lilienstein writes memorandum to Intelsat management documenting unsafe conditions at Xichang launch site during Intelsat 708 launch. 273

March 9 Hughes personnel Pulcher, Lanzit, Arthur, Yiu, and Dome visit Xichang launch site in connection with upcoming Apstar-1A launch.274

March 10 Hughes personnel Pulcher, Lanzit and Arthur meet with representatives of CGWIC, China Launch and Tracking Control General Administration (CLTC), China Academy of Launch Vehicle Technology (CALT), Asia Pacific Telecommunications (APT), and several insurance underwriters in Xichang regarding the upcoming Apstar-1A satellite launch.275

March 14 Apstar-1A insurance meeting is held in Beijing, involving representatives of APT, CGWIC, J & H, Hughes, CLTC, and CALT. J & H official O’Connor presents insurance demands: (1) a final PRC report on the cause of the Long March 3B launch failure, and (2) an independent review of the PRC investigation.276

CGWIC sends letter to Loral President Berry inviting Loral to attend meeting of the PRC Failure Investigation Committee in Beijing on March 20-22, 1996.277

March 18 Loral letter to CGWIC advises that Loral and Intelsat cannot attend the Failure Investigation Committee meeting on such short notice.278

March 20 CGWIC sends letter to Loral inviting Loral and Intelsat to the Failure Investigation Committee meeting in Beijing at the end of March or beginning of April.279

J & H Manager Jacques Masson in Paris identifies potential participants in an independent review committee for the Intelsat 708 failure investigation.280

March 21 Loral letter to CGWIC advises that Loral can only attend the Failure Investigation Committee meeting if invited by Intelsat.281

Insurance underwriter, ACE Ltd., advises J & H that CGWIC’s actions regarding the Intelsat 708 failure investigation were unacceptable and the Apstar-1A insurance contract was in jeopardy.282

March 27 CGWIC letter to Loral invites Loral to Failure Investigation Committee meeting in Beijing from April 10-12 as guests of Intelsat.283

March 28 CGWIC issues press release listing four possible failure modes: (1) broken wire to inner torque motor, (2) blocking of inner frame axis, (3) open loop of follow-up frame, (4) environmental stress.284

March 29 Loral letter to CGWIC advises that Loral will attend the Failure Investigation Committee meeting and will send Loral personnel Wah Lim, Nabeeh Totah and Nick Yen.285

March Intelsat Board of Governors decides to terminate all existing launch service agreements with CGWIC.

April 3 Letter to U.S. Department of Commerce, Bureau of Export Administration and U.S. Department of State, Office of Defense Trade Controls (ODTC), wherein Duncan Reynard, Loral, requests clarification as to which agency has licensing jurisdiction over matters concerning the Mabuhay and Apstar IIR programs.

Additionally, Loral recommends that ODTC re-issue licenses for these two programs to include the following language: "Questions and comments about Long March launch failures or investigations must be reviewed and approved prior to release in accordance with the procedures in the Technology Transfer Control Plan which was provided with the applicant’s license application."

April 4 CGWIC letter invites Hughes to participate in an Independent Oversight Team.286

April 5 CGWIC reports to J & H that an Independent Review Committee is being established to meet the insurance community’s minimum requirements to insure the upcoming Apstar-1A launch.287

April 10-12 Intelsat and Loral personnel are observers at the Failure Investigation Committee meeting in Beijing. PRC presents the results of their investigation into the launch failure (three volumes of data, reports, and conclusions). Loral personnel present: Lim, Totah, and Yen. Intelsat personnel present: Terry Edwards.288

April 11 CGWIC contacts Bansang Lee (Loral’s representative in the PRC) to invite Lim to chair an Independent Review Committee (IRC). Lee passes invitation to Lim.289

Government Security Committee (GSC) meeting at Loral in Palo Alto. Loral President Robert Berry reports that he and others have been invited to review the PRC investigation into the Intelsat 708 launch failure. The U.S. review team will not provide advice or direction on how to correct deficiencies, but will advise the PRC that it must be more open and truthful about their launch problems. GSC member Steven Bryen suggests that Loral obtain State Department approval for any responses provided to the PRC by this review team.290

April 14 The Independent Review Committee (IRC) charter is established to review the work of the PRC’s Failure Investigation Committee. A copy of the charter is faxed to Hughes IRC member Robert Steinhauer.291

April 15-16 Apstar-1A reinsurance meeting is held in Beijing, including representatives of APT, Hughes, CGWIC, and the insurance industry.292 Specific attendance includes: Hughes personnel Steinhauer, John Smay, Pulcher, Lanzit, Wong, Guan, and Lang; Loral personnel Wah Lim and Nick Yen; J & H personnel Swanson, O’Connor, Quinn, Davis, Zhang, Masson, and Chan.

April 16 Wah Lim briefs the Apstar-1A reinsurance meeting audience on the IRC creation, membership, and charter.293 One of Lim’s briefing charts states: "IRC Objectives — To ensure the success of future Long March series launches: . . . Recommend to China Aerospace Corporation & CGWIC any other areas of improvement." 294

April 17 Lim sends a letter to CGWIC inviting the PRC to attend an IRC meeting in Palo Alto, on April 22-23, 1996.295

Lim sends a letter to Steinhauer at Hughes confirming the dates for the IRC meetings in Palo Alto and Beijing.296

April 19 Loral legal counsel Julie Bannerman, Export Control Officer Duncan Reynard, and Technology Control Manager William Schweickert learn of imminent arrival of PRC visitors.297

April 22 Reynard first learns that morning about PRC visitors coming (that day) for an IRC meeting. He learns this from Schweickert.

The IRC meeting in Palo Alto begins.298 Short technology export briefing given by Schweickert at the beginning of the first day. The briefing advises the IRC members that they have no export license for the activity, and what actions are permitted.299 The PRC visitors are not present on the first day. IRC members John Holt and Reinhard Hildebrandt are not present on the first day. The IRC members discuss the PRC launch failure investigation as documented in reports previously furnished by the PRC. Also, the IRC members draft numerous questions for the PRC.300

April 23 The IRC meeting in Palo Alto continues for a second day. The PRC visitors are present. British IRC member Holt is present. The IRC questions regarding the PRC failure analysis are presented.301

Loral’s Yen briefs U.S. Government officials, including State Dept. staff: Oldenberg, Bemis, and Chih; Dept. of Transportation: Welles; Dept. of Commerce: Farmer, Chandler; and Dept. of Treasury: Murphy on the Long March 3B failure, the IRC and the intent of the IRC to issue a report.303

April 24 The IRC meeting in Palo Alto adds a third day to accommodate the PRC visitors’ delayed arrival. Hughes IRC members John Smay and Robert Steinhauer are not present.304

April 25 Steinhauer meets with Professor Huang in Torrance, California, to learn what happened at IRC meeting on April 24. Also discussed PRC manufacturing processes for the inertial measurement unit (IMU) on the Long March 3B.305

May 1 nationals are present to answer questions from the IRC. U.S. participants are Loral’s Lim, Totah, and Yen, Smay from Hughes, and Frederick Ormsby.307

April 30 The IRC meets in Beijing. Meeting covers introductions, overview, and answers to the IRC questions from the first meeting in Palo Alto.308 That evening the IRC members caucus at their hotel to discuss issues and plan for the next day.309 They decide during the caucus to ask for a splinter meeting.

May 1 The IRC meeting in Beijing continues. Splinter meeting held on subject of control systems and the inertial platform. Splinter meeting attended by Fred Chan, Jack Rodden, Holt, and Yen. The IRC members are given tours of several facilities: IMU assembly and IMU test facilities.310 That evening they dine as guests of the PRC.311

May 2 Rodden, Chan, and Smay go sightseeing with Madame Zhou, the PRC representative for the Asia Pacific Telecommunications Company.312

May 2-5 British IRC member Holt sends draft he wrote by e-mail to Hughes IRC member Smay on May 2. On May 4, Smay sends e-mail to Holt providing comments on the draft — that e-mail message is also faxed to Lim at Loral.313 On May 5, Holt sends e-mail to Smay thanking him for his comments.314

May 3 Totah sends memorandum to Lim including comments, conclusions and short-term and long-term recommendations concerning the failure.315

Totah sends handwritten memorandum to Lim advising that he has made comments on Holt’s draft, and that the draft was incomplete.316

Holt sends fax to Lim, including four pages of draft material on the cause of the failure.317

Smay writes 20 pages of draft material for the IRC Preliminary Report, including an outline and brief paragraphs for a few sections. Smay assigns a section titled "Recommended Design Fixes" to Steinhauer for drafting.318

May 4 Ormsby sends letter to Lim with comments on IRC meetings in Beijing, and includes three recommendations for PRC investigation and analysis.319

Smay sends e-mail to Holt with comments on Holt’s draft. This e-mail was also faxed to Lim.320

May 5 German IRC member Hildebrandt sends fax to Lim with his contributions to the "Preliminary Assessment Report," including stating the need for "an intensive quality inspection" in the PRC IMU integration process and describing Western methodologies for reducing wiring connection problems. Lim’s secretary faxes a copy to Yen.321

May 6 Holt sends five-page fax to Lim with comments and contributions to the IRC report.322

May 7 Yen faxes a draft of the Preliminary IRC Report to CGWIC and to the IRC members.325 Lim directed Yen to do this.326

Lim sends a letter to CGWIC, including minutes of IRC meetings on April 30 and May 1, along with action items and preliminary assessments that were made during and after those meetings. Lim indicates that the IRC will provide a formal report to CGWIC by May 10, 1996.

May 8 Holt sends a fax to Yen with comments and contributions to the IRC report, and thanking Yen for the draft of the Preliminary Report.327

Steinhauer sends a one-page fax to Yen with comments and contributions to the IRC report, mentioning "de-emphasis of safety issues." Steinhauer states: "In general, I agree with report and its findings." 328

May 9 Holt sends a one-page "urgent" fax to Yen with Holt’s final thoughts on the IRC review. Holt does not concur with CALT’s theory about an intermittent wire break because there is no evidence of reconnection.329

Hildebrandt sends a one-page fax to Yen stating that he has just received the fax of the draft IRC Preliminary Report. Hildebrandt offers a minor proofreading comment and states that he agrees with the draft.330

Steinhauer sends an e-mail to other Hughes employees saying that the IRC Preliminary Report is going to Beijing that night.331

May 10 Lim provides a copy of the draft Preliminary Report to Loral General Counsel Bannerman for her review, and he assumes that the draft was okay since he receives no comments from her.332

Yen faxes a cover letter and final version of IRC Preliminary Report, less attachments, to CGWIC. Yen also ships complete copies to all IRC members via express mail.333

Loral General Counsel Bannerman attempts to halt distribution of the IRC report after Yen faxes the report to the PRC.334

Lim sends a letter to IRC members advising of Yen’s completion of the "formal IRC Preliminary Report" and that a copy has been sent to them. Lim states that the report is currently being reviewed by the Loral General Counsel’s office and asks the IRC members not to discuss the report with non-IRC members.335

May 13 Yen faxes the final IRC Preliminary Report to a hotel in Beijing, for O’Connor of the Johnson & Higgins insurance brokerage firm.336

Yen also sends a copy of the Preliminary Report to O’Connor’s office in Washington, D.C.337

Reynard first learns that the report has been sent to IRC members and possibly to J & H.338

Lim sends letter to He Xing of CGWIC advising that the IRC has completed the formal Preliminary Report and the report is currently under review by Loral legal counsel. Says he is sending a copy of the report to O’Connor.339

Lim sends letter to O’Connor advising that the report will not be furnished to CGWIC until an "export license or an equivalent authorization is obtained." 340

May 14 Reynard sends memorandum to Berry criticizing the IRC draft report as poorly organized, poorly written, and filled with inaccurate statements and illogical conclusions. Says that the Loral employees involved in this IRC work have already committed serious violations of the International Traffic in Arms Regulations (ITAR) and and the Missile Technology Control Regime (MTCR).341

Bob Kovac of DTSA reads article in Space News about Loral IRC investigation and calls Loral’s Harold Bradshaw, who subsequently sets up a meeting the next day.

May 15 Yen sends fax to IRC members announcing that the IRC Preliminary Report has been submitted to the U.S. Government for review. During that review, the IRC members are not to disclose or discuss the content of this report with anyone, especially the PRC. The letter also asks that Holt and Hildebrandt (the non-U.S. IRC members) return all correspondence previously received from the IRC Secretary. Distribution: Lim, Ormsby, Steinhauer, Holt, Totah, Kachigan, Smay, Hildebrandt, Chan, and Rodden.342

Yen writes trip report to Keer for his April 23, 1996 meeting at the U.S. Trade Representative offices in Washington, D.C.343

Reynard notifies DTSA (Kovac) and State Department’s Office of Defense Trade Controls (Kenneth Peoples) in person and in writing about the IRC and its report. He tells them that an executive summary section of the draft IRC report has been mistakenly sent to CGWIC. Bradshaw (from Loral’s Washington, D.C. office) is also present.

Reynard denies that the IRC report has been sent to the PRC. Kovac tells Reynard that Loral may have violated the law, that they must halt all IRC activity, and that they should submit a voluntary disclosure to State Department. Reynard furnishes a copy of the report to Kovac.

Reynard meets with Peoples. Loral’s presentation to Peoples is very general. Reynard may have told Peoples that some part of the IRC report was sent to the PRC — Peoples’ recollection is unclear.

Reynard sends handwritten fax to Berry summarizing advice from State and DTSA. Includes the words: "Question: did anything go to CASC or CGWIC? — we need an honest answer to this." 344

Bannerman sends memorandum to Loral Counsel Zahler reporting Reynard’s meetings with U.S. government.345

May 16 Steinhauer sends fax to Lim confirming plans to attend IRC meeting in Beijing on June 4-5. The fax further says Steinhauer is in agreement with the preliminary report dated May 10 and "Don’t really believe that there is a lot of technology transfer present . . . Hope that your filter at SS/Loral understands situation." 346

May 17 Bradshaw sends fax to Reynard with copies of export licenses #544724 and #533593, commenting that DOD is upset and Loral seems to fail to take provisos seriously.347

Reynard receives from Bannerman several boxes of documents that have been collected from Loral personnel re the IRC activity. Reynard decides to generate an index of these documents over the weekend with the aid of his son.

May 20 Reynard advises Bannerman of his catalogue of the documents. Bannerman tells Reynard to stop that activity. She intends to have outside counsel perform that job. Reynard stores the documents and later turns them over to Poliner of Feith & Zell.

Lim and Yen admit to Reynard that they sent the IRC report to the PRC on May 10.

May 21 Reynard sends letter to William Lowell at the State Department, which briefly describes the circumstances of the IRC and its meetings with the PRC, and Reynard’s recent meetings with State Department and DTSA. It says each agency received a copy of the IRC report and that Loral subsequently discovered that the executive summary of the report was mistakenly faxed to CGWIC. Loral is investigating the matter.348

May 23 Loral outside counsel, Feith & Zell, commences investigation of the IRC matter.349

May 27 Yen sends letter to all IRC members advising of Loral correspondence with State Department, and that all future IRC activities are on hold.350

May 29 State Department’s William Lowell faxes a letter to Higgins, Corporate General Counsel, Hughes Electronics, to notify Hughes that the State Department has reason to believe that Hughes may have participated in serious violations of the ITAR by providing unauthorized defense services to the PRC in relation to the February 1996 launch failure of a Long March rocket. Lowell recommends Hughes take immediate steps: cease all related activity that may require approval, provide a full disclosure and enumerate all releases that would be controlled under ITAR.351

Lowell also sends a letter to Zahler, VP, Secretary and General Counsel, Loral, advising that there is reason to believe that Loral may have participated in serious violations of ITAR. Lowell recommends Loral take immediate steps: cease all related activity that may require approval, provide a full disclosure and enumerate all releases that would be controlled under ITAR.352

May 29-31 Feith & Zell attorneys visit Loral offices in Palo Alto to interview Loral personnel.353

May 30 Loral representative in Washington, D.C., Bradshaw and Loral outside counsel Feith meet with Lowell at State.354

May 31 Loral Counsel Zahler sends a letter to Lowell at State Department advising of Loral investigation, retention of outside counsel and stating that Loral personnel will be interviewed.355

June 3 Reynard sends a memorandum to Lim instructing him and Yen to retrieve all copies of anything sent out to the IRC Members. Also to ask the IRC Members to certify that no derivative copies were made or distributed.356

June 4-6 Feith & Zell attorneys conduct follow-up interviews in Palo Alto.357

June 4 Kuelbs from Hughes General Counsel’s office sends a letter to Lowell responding to his letter dated May 29. Hughes reports that they are beginning an internal investigation of the matter.358

June 6 Lim sends letter to O’Connor asking him to retrieve all IRC-generated documents that the IRC transmitted to him by fax, express mail, or by distribution at any meetings, and to confirm that no derivative copies were made.359

Lim sends a letter to all IRC Members asking them to return all IRC-generated documents and to confirm that no derivative copies were made.360

Lim sends a letter to Zhixiong, CGWIC, asking that they return IRC documents and confirm no derivative copies were made.361

June 12 Smay and Steinhauer send a letter to Lim advising they cannot comply with request to return the IRC documents, per Hughes Counsel’s instructions.362

June 17 Loral submits a Voluntary Disclosure to State Department through outside counsel, Feith & Zell, regarding suspected ITAR violations surrounding the activities of the IRC.363

CIA submits report to State Department on Independent Review Committee Preliminary Report in response to State Department request. No proliferation concerns.

June 27 Hughes documents its internal investigation into activities related to the IRC: "Report of Investigation of Alleged Violations of International Traffic in Arms Regulations (ITAR)" for hand delivery to Lowell (State Department).364

July 18 CGWIC sends a letter to IRC members advising closure of IRC due to U.S. Government ban.365

August Department of Defense issues assessment of Independent Review Committee activity. Moderate harm to national security.

September 26 Hughes furnishes the State Department a list of nearly 150 names referenced in the June 27, 1996 Hughes report on the IRC and its exhibits. This was in response to a request from the State Department dated September 23, 1998.366

October 21-22 PRC presents a report on the Long March 3B Failure Investigation by CGWIC at a Mabuhay program meeting at Loral in Palo Alto. DTSA monitor, Major Smith, was invited to that meeting.367

March 19 Central Intelligence Agency issues assessment of IRC matter that conflicts with the Defense Department assessment.

March 25 The State Department issues assessment based on Defense Department and CIA analyses. Significant improvement to the Long March 3 guidance system. State also reviewed the CIA’s assessment and disagreed with it.

May 16 DOD/DTSA assessment on the IRC matter is issued. DTSA finds that the IRC performed an unauthorized defense service that are likely to lead to improvements in reliability of rockets and missiles. Recommended referral to the Justice Department for criminal prosecution.368

August 19 Agila 2 satellite, formerly named Mabuhay, is successfully launched from Xichang, PRC, on a Long March 3B. Loral manufactured the satellite.369

October 16 Apstar-2R satellite is successfully launched from Xichang, PRC. Loral manufactured the satellite.370

February 18 President Clinton approves a waiver for the Loral-built Chinasat 8 satellite to be exported to the PRC for launch.

May 7 Hughes documents background information regarding the IRC activities. This report is furnished to the Space Subcommittee of the House Science Committee on May 8, 1998.371

June 15 Congressional staffs from the House National Security Committee, International Relations Committee, and Science Committee are briefed on the export control process by officials from the State Department. David Tarbell, Director of DTSA, testifies that a rocket failure analysis was a defense service and therefore subject to license.372

October Hughes reports on its Internet web site that "Hughes employees drafted no portion of the report that was prepared by the committee . . ." and the "Hughes employees did not write any portion of this [IRC] report."