The price is right: © 2000 WorldNetDaily.com Much has been said and written about the theft of United States nuclear technology at Los Alamos. However, as detailed in a recently obtained document produced in a Judicial Watch case by the Defense Threat Reduction Agency of the Department of Defense, an equally key aspect of the Chinagate scandal involves the sale of U.S. high technology to the Chinese in exchange for campaign contributions. A memorandum written on July 7, 1998 by Defense Department official Michael Maloof reveals how U.S. national security has been compromised, and how American companies knew or should have known they were participating in Chinese intelligence operations. In 1996, Judicial Watch sparked the Chinagate scandal with its continuing case against the Clinton Commerce Department, uncovering John Huang and exposing revelations about the compromise of U.S. national security information. It was the Clinton Commerce Department, then run by Ron Brown, later by Mickey Kantor, and now by the tainted Secretary Bill Daley (see Judicial Watch Press Release of Jan. 14, 2000, at JudicialWatch.org, that lowered barriers to export of high technology -- thanks in large part to campaign contributions from American high-tech companies wishing to cash in on the huge Chinese market. Most of these companies participated in and continue to profit from Clinton Commerce Department overseas trade missions, where they paid large campaign contributions to make the initial contact with foreign officials. The memorandum of Mr. Maloof details the severe damage done to the United States brought about by the corrupt practices of the Clinton administration. Judicial Watch is working hard to make sure that dishonest government officials and their American high tech corporate co-conspirators are held legally accountable. Congress has not and will not take any real enforcement action against them, because these companies are in large part currently funding the 2000 elections for both political parties. Below is the text of the Maloof memorandum in its entirety. It speaks for itself and details this treasonous national disgrace brought about by the criminal conduct of the Clinton administration, and abetted by a "do-nothing" Republican Congress. The Maloof Memorandum: After considerable research, you need to know that cumulative exports of selected sophisticated U.S. technology to China since 1994 have provided the Chinese military with a nationwide integrated command, control, communications, computers, and intelligence (C4I) encrypted network that will serve it well into the next century. This sophisticated communications infrastructure stems from the integrated combination of satellite sales, high performance computers and Asynchronous Transfer Mode (ATM) and Synchronous Digital Hierarchy (SDH) telecommunications switching technology. Together, they provide the PLA with a communications infrastructure that it could not have developed on its own. In addition to aiding China in switching technology for fiber optic telecommunications nationwide, HPC's are also capable of being used to develop or perform encryption for secure messages. China also has obtained production equipment to manufacture fiber optic cable and associated technologies as well as sophisticated microelectronics manufacturing without U.S. licenses. These technologies are integral to the implementation of a complete C4I nationwide system. This network is expansive enough not only to insure the military a command, control, and communications capability to quell domestic instability. It also will allow for power projection throughout the region. In addition to the military, evidence of the use of this C4I network by Chinese border security forces could raise serious compliance issues regarding its possible use contrary to munitions license prohibitions. In addition to military use, the PLA also will be able to use this telecommunications infrastructure to its economic advantage. With PLA controlling access to U.S. origin satellites it has purchased (Asiasat and various Apstars), for example, it also will be able to intercept business transactions to bolster its own. This development could put the PLA at a competitive advantage to entities throughout Asia whose telephones use those satellites under China's ownership to conduct business. Based on available data, the array of exports of HPCs, ATMs, and SDH technologies, satellites and fiber optic and microelectronic manufacturing technologies provided that infrastructure on which the Chinese military relies today. The systematic liberalization of U.S. export controls since 1993 and the subsequent lack of licensing data suggest the cumulative strategic impact of these exports may be greater than first thought. In addition, the intelligence community has not been privy to a good portion of the available licensing data in order to make any detailed threat assessment. High Performance Computers (HPCs) Prior to a change in U.S. law earlier this year, no record was kept on HPC exports between 2000MTOPs and 7000 MTOPs to so-called benign end-users in such third tier countries as China. With the recent change in law, however, export license applications were mandated by Congress for HPCs from 2000 MTOPs to 7000MTOPs to China and other third tier countries. Prior to the change in Law, congressional testimony revealed that at least 47 and possibly more HPCs were exported to China. A review by Commerce, however, only covered certain U.S. HPC manufacturers known to have exported directly to PRC. It did not include U.S. companies to which those known U.S. manufacturers first sold HPC but then may have exported to China. Estimates by at least one Office of Export Enforcement agent at the Department of Commerce estimates that the number of HPCs exported to China without a license could number more than 100. Nevertheless, in looking at the reported 47, many went to Chinese Post, Telephone and Telegraph (PTT) facilities. The type of HPCs exported to China is capable of adding on some 32 processors to each HPC. The reason given for exporting HPCs to Chinese PTTs was for billing of telephone services. While this end-use on its face seems reasonable in the larger cities, information available to us reveals that PTTs are part of the Ministry of Post and Telegraph, which works closely with COSTIND. While our databases reveal no information about individual PTTs -- derogatory or otherwise -- they do acknowledge the COSTIND-MPT relationship. Nevertheless, the PTTs for which we have received notification of an HPC are all located in Chinese military districts. Some of these PTTs may be some of those which received HPCs prior to the change in law last year. This would suggest that the Chinese are seeking upgrades in some cases. Preliminary research conducted by TSO also reveals that there is considerable military research and development in the vicinity of these PTTs. This puts PTTs in the position of being convenient gateways for a number of military users to plug into the HPCs at the PTTs. Because of a lack of U.S. Government information on Chinese PTTs and certain other entities in China, I have requested that we obtain license applications on them in an effort to begin keeping a record. As you are aware, DIA has been attempting since enactment of the law to obtain what information it could from Commerce on what HPCs already had been exported and on the end users. At this writing, that information has not been forthcoming. Because we lack a record of these exports, I suggested that we seek a license application on those HPCs exported to entities, including PTTs on which we have no information. To date, that request has been turned down. The argument I have received is to the effect that because license requests need to be signed off by the Under Secretary for Policy, he doesn't want to look at a request unless there is a "smoking gun" on the ultimate consignee. As you also are aware, China has refused numerous requests for either pre-license or post-delivery shipment checks to Chinese entities. Consequently, our ability to acquire any information on an end-user in China without separate data can only be done through an export license application. ATM and SDH Switching Technology Acting as gateways for Chinese military communications and R&D, the PTTs also serve as the location for ATM and SDH switching and transmission equipment. HPCs are needed to operate the ATM and SDH switching technology. In 1994, ATM and SDH switching technology was declared GLX. This means that an exporter does not have to obtain a license application to export this state-of-the-art switching equipment software and test equipment to Chinese "civil end-users." Under GLX, an exporter only has to keep a record of ultimate consignees, subject to call from Commerce. The Defense Department has no review role, since a license application is never sought. Nor does DoD have the legal basis to seek that information from the U.S. company. The 1994 decision to allow SDH and ATM switching technology in 1994 occurred over the objections of DoD technical experts. Despite initial NSA concerns, it was silent when the decision finally occurred. To date, there is no way to know how much ATM or SDH equipment China has acquired. From recent published reports, however, it appears that sufficient technology for ATM and SDH switching has been exported to allow the Chinese to begin production themselves. Given the increasing number of HPCs being sought by Chinese PTTs, however, it would seem reasonable to expect that China has acquired a considerable number of the ATM switches and SDH transmission terminals for its fiber optic land lines and microwave links. In many cases, they parallel Chinese military command, control and communications links. Separate research is underway to look into this. Use of U.S. Satellites for Encrypted Communications With the demise of their satellites in 1996, the Chinese were desperate to find a substitute for military communications. They had no choice but to resort to the use of previously purchased U.S. satellites for their encrypted communications. They were the Asiasat and Apstar 1, Apstar 1A and Apstar 2r, all made by Hughes. This decision was just a step in the continuing process to integrate Hughes equipment for its military -- a decision which goes back to at least 1992. Various munitions license applications during 1995 and 1996 reveal an export pattern of Hughes satellite-related equipment through PLA front companies. They include SCL, CESEC, and Huaying. Ironically, many of these exports did not identify these front companies as being associated with the PLA. From what we now know, Hughes employees in China were knowledgeable that they were PLA-associated entities. None of those license applications was referred either to TSO or DIA for proper end use checks. The VSAT ground station terminal equipment for use with the Apstar and Asiasat satellites was supplied and wittingly installed by Hughes for Chinese ground and rocket forces and the PLAAF. This equipment also was available to the Ministry of State Security which, among other things, oversees VIP protection, border security and the rounding up of political opponents. The VSAT terminals are supplied with an additional port for encryption equipment which the Chinese can produce. A great boost for the Chinese to develop encryption also has come from the U.S. high performance computers it has received and the training in software development. TSO also had objected to Hughes' Asia-Pacific Mobile Telecommunications satellite export applications because of an anonymous tip it received in late May 1998 that the son of the deputy director of COSTIND was project manager of APMT at Hughes' U.S. facility (A 02 Jul 98 news story reveals that State has suspended that license in view of previous published reports and Pentagon information which we supplied to State). The son's name is Shen Jun. His father, the deputy director of COSTIND, is Shen Rongjun. The APMT satellite would service some 20 countries in Asia as well as provide mobile telecommunications throughout China. It would supplement where fiber optic lines are few, if non-existent. And because it is COSTIND, which controls APMT/China, the APMT satellite would give the Chinese military access to telephone intercepts in those 20 Asian countries. Here, Hughes knowingly provided only partial information in seeking approval in 1996 for Shen Jun to work at Hughes, even though he had been at the Hughes facility since 1994. The application stated that he would only be a translator, although as it turned out he was an APMT project director. In addition, Hughes reportedly was knowledgeable of who the son's father was prior to seeking approval of the license. In fact, the father, in his capacity as COSTIND deputy director, internally had been pressing for approval of APMT over competitive systems. And there is every reason to believe that father and son corroborated on the APMT project. In seeking approval of APMT, Hughes provided only the Singapore address of the APMT joint venture between China and Singapore. This had the deceptive effect of attempting to disassociate the APMT project from the Chinese military and make it look benign, even though the Chinese sought configurations on the APMT satellite that would allow for eavesdropping. However, in April 1998, it was Feng Ruming, a major general at COSTIND, who publicly announced the APMT project. In case after case, Hughes has not fully disclosed information which would have had a bearing on the outcome of a number of its license applications. Judging from this pattern of behavior, it is my opinion that Hughes purposely has sought to mislead Defense Department licensing officials. In addition, it had come to TSO's attention that those Chinese who receive training at the Hughes satellite facility are members of PLA. Separately, we have found no visas for their coming and going to Hughes. One disturbing aspect of this is that DIA hasn't seen visa applications for Chinese visiting U.S. businesses since March 1998. The reason is unclear, although I am in the process of checking it out. And there have been further indications of Chinese military involvement in high technology exports, particularly with U.S. aerospace entities, including Hughes. Liu Chouying, a Lieutenant Colonel in the PLA, had visited the United States in July 1996 ostensibly to attend a fundraiser for President Clinton in California. It reportedly was a $10,000-a-person function where she also had her picture taken with President Clinton. Her father, Liu Huaqing, until last year was the vice chairman of the Chinese Central Military Commission, which oversees such Chinese military entities as CLTC (China Launch and Tracking Control), CASIL (China Aerospace International Holdings, Ltd), CPMIEC (China Machine Import Export Company), and Great Wall. All these entities come under COSTIND, the Commission of Science, Technology and Industry for National Defense, of which Shen Rongjun is deputy director. Liu Chaoying is vice president of CASIL, which is subordinate to COSTIND. CASIL is involved in launching satellites. It is Johnny Chung, under investigation for laundering Chinese money to the Clinton presidential campaign in 1996, who sponsored her July 1996 visit. Her visit came one month after President Clinton granted a waiver for the Asia-Pacific Mobile Telecommunications (APMT) project. This approval followed considerable pressure from Hughes to the White House to grant it. Liu Chaoying's July 1996 U.S. visit also followed technical data assistance. Hughes-Loral had provided to Great Wall on behalf of the APT Satellite Company earlier that year on identifying the China Long March-3B's failed attempt to launch a Loral satellite. Her visit then gave me pause, for it told me that there in fact may be other things that the Chinese military was targeting now that their rocket problem had been resolved. The tip-off on the APMT that I received helped put the puzzle together. The Chinese needed help with their satellite communications, since their own telecommunications satellites weren't functioning any longer. Indeed, open source data reveal that they basically stopped functioning or no longer were reliable by the end of 1996. In addition to the fundraiser for President Clinton, Liu Chaoying reportedly also was to visit with U.S. aerospace representatives, appointments set up by Chung. In addition, Liu Chaoying,a Lieutenant Colonel in the PLA, had set up a company in 1996 in Torrence, Ca., called Marswell. It was co-located with Johnny Chung's fax company in Torrence. Marswell mirrored the company she created a year earlier called Marswell Investment, Ltd, in Hong Kong. According to Hong Kong incorporation documents, Marswell Investment Ltd was created in 1995 with two subscribers, Timeway Ltd and Cheerfit, both of which are located at the same address as Silver Faith Holdings on Hong Kong Island. Cheerfit and Timeway are the same two companies which were parent subscribers of Carrie Enterprises (HK) Ltd. and Carrie Enterprises Overseas Ltd. Carrie Enterprises is a known PLA front for the PLA's General Political Department (GPD), a PLA intelligence unit. The subscriber's list for Marswell Investment Ltd in Hong Kong reveals a direct link to the PLA's GPD and thereby links Liu to GPD intelligence business operations in Hong Kong. Liu's involvement also suggests a direct Chinese intelligence link to acquire U.S. satellite technology in addition to revealing possible PLA financial contributions to President Clinton's's 1996 reelection. A further link of China's telecommunications satellites to the PLA is through the company which was set up to provide high quality satellite transponder services for international and Asia-Pacific broadcasting and telecommunication sectors, APT Satellite Holdings Ltd. APT Satellite Holdings and APT Satellite Co. own and operate the Hughes Apstar I and Apstar IA satellites. APT Satellite Co. also had sought Hughes-Loral assistance in identifying the LM-3B rocket failure. Some of the principal APT shareholders include China Satellite Launch and Tracking (CLTC) and China Aerospace Corporation (CASC). It is CASC which owns Liu Chaoying's CASIL (China Aerospace International Holdings Ltd). Both entities are subordinate to COSTIND. In addition, the vice-chairman and President of APT Satellite Holdings Ltd is He Ke Rang, who similarly is associated with COSTIND. Before the Gulf War, China didn't have an adequate C4I system. Since 1991, China has sought to form a national integrated C4I system, thereby giving it a highly advanced national telecommunications infrastructure. Since 1992, PLA communications network reportedly has increased 10 fold. In addition, the PLA is working hard to integrate its telecommunications network into civilian communications networks. In addition to serving the civilian sector, such a C4I network is essential in warfare to link targeting data with strike assets. The ingredients for this system include high capacity fiber optics, switching systems, satellite communications systems and systems integration. The combination of Hughes satellites and terminals, along with the pending Hughes APMT satellite export, combined with other U.S. exports of fiber optic and sophisticated telephone switching technologies and high performance computers give China such an integrated telecommunications infrastructure. This development raises the further question of whether the ultimate return for U.S. national security is worth this policy approach toward China. Michael Maloof 07 Jul 1998
