Boeing and Hughes receive $32 million fine

Hughes Electronics Corporation and Boeing Satellite Systems have agreed to pay $32 million to settle allegations of transferring rocket and satellite data to China in the 1990’s.

The US Assistant Secretary of State for Political-Military Affairs, Lincoln P. Bloomfield Jr, has imposed a $32 million fine on Hughes Electronics Corporation and Boeing Satellite Systems, formerly known as Hughes Space and Communication (HSC) for transferring rocket and satellite data to China in the 1990’s.

In January 1995 and February 1996 China suffered setbacks with the failed launch of the Long March 2E rocket carrying the APSTAR II Spacecraft and the failed launch of the Long March 3B rocket carrying the INTELSAT 708 Spacecraft.

Hughes Electronics Corporation and Boeing Satellite Systems are said to have violated the US Arms Export Control Act and the International Traffic in Arms Regulations by assisting China with the supply of rocket and satellite data.

Jack Shaw, President and CEO of Hughes Electronics, and Dave Ryan, Vice President and General Manager of Boeing Satellite Systems said in a joint statement: ‘The companies acknowledge that HSC should have sought and obtained a State Department license before disclosing to Chinese nationals or to the international insurance community any launch failure analysis, or disclosing any information or providing any assistance pertaining to design, development, operation, maintenance, modification or repair of launch vehicles, systems, or facilities.

‘The companies further acknowledge that assistance to a launch operator in any of these areas could aid in the development of missile system technology and, thus, have a negative impact on national security.’

Under the terms of the agreement, the $20 million cash portion of the penalty is to be paid in eight equal instalments over the next seven years.

In addition, Hughes and Boeing Satellite Systems each will appoint a separate third party to serve as a Special Compliance Officer (SCO) for export compliance.

The duties of the SCO will include monitoring compliance with the Consent Agreement and oversight of exports regulated by the State Department including, in particular, exports to China and several other countries.