RICO lawsuit filed on China-gate

On the day Attorney General Janet Reno declined, as expected, to order an independent counsel investigation of Vice President Al Gore over campaign fund raising, a public-interest legal group filed an explosive, omnibus racketeering lawsuit against Gore, President Clinton, the Loral Corp. executives, John Huang and the Democratic National Committee over what has become known as the “China-gate” scandal.

Judicial Watch filed the civil lawsuit on behalf of Loral Space and Communications, Ltd., shareholders, whose rights and holdings may have been violated and jeopardized by Loral management’s dealings with the Clinton administration and the Chinese government.

Named as defendants in the shareholder derivative, civil conspiracy and RICO action are Loral Chairman and CEO Bernard Schwartz, Clinton, first lady Hillary Clinton, Gore, Huang, the DNC, the Democratic Senatorial Campaign Committee, the Democratic Congressional Campaign Committee and others.

The lawsuit charges Schwartz with allegations of breach of fiduciary duty and negligence. It charges the DNC, DSCC and DCCC with unjust enrichment and all the named parties with civil conspiracy and violation of the Racketeering Influenced and Corrupt Organizations Act.

“The scandal which has become known as ‘China-gate’ is perhaps the most serious of all those involving the Clinton administration,” said Larry Klayman, chairman and chief counsel for Judicial Watch. “The lawsuit we’ve filed today will mark a significant step toward getting to the bottom of ‘China-gate.’ There is an egregious pattern of abuse in this case that runs the gamut from influence peddling and illegal campaign contributions to selling out and endangering the national security of the United States.”

Congressional investigations into China-gate have gone nowhere — leading to speculation that the scandal reaches across party lines and threatens both Democrats and Republicans in power. Earlier, Rep. Chris Cox, R-CA, was appointed by Speaker Newt Gingrich to head an inquiry into the sale of sensitive technology, the flow of campaign contributions from China and the possibility of bribes and influence peddling.

Of most interest has been the links between Schwartz, the single largest contributor to his successful 1996 re-election campaign, and White House decisions to share U.S. satellite technology with Beijing. In addition, a close Clinton friend, Johnny Chung, has admitted donating to the Democratic National Committee at least $100,000 of a fund he secured from Chinese military intelligence. Other key players include the family of Mochtar and James Riady, Chinese-Indonesian billionaires and suspected Beijing intelligence agents who have funded Clinton campaigns since he first ran for Arkansas attorney general in the 1970s.

Loral was under investigation by the Justice Department for sharing satellite technology with their Chinese business partners — information that may have allowed Beijing to improve its capability of launching intercontinental ballistic missiles. China currently targets 13 such nuclear-tipped missiles at the United States.

After the Chung donations, Clinton approved a waiver that allowed Loral to launch one of its satellites on top of a Chinese rocket. Clinton defended the waiver, saying it “was in the national interest, and supportive of our national security.”

Schwartz, too, has denied any wrongdoing and taken exception to accusations that his conduct was “treasonous.”

“Allegations that Space Systems/Loral provided missile guidance technology to the Chinese are false,” he said. “SS/L makes commercial communications satellites, not launch vehicles. The company did not advise the Chinese on how to fix any problems with the Long March rocket.
All company employees were specifically instructed not to provide any such assistance, and the company believes that its employees acted in good faith to comply with the strict and complex requirements of the export control laws.”

Yet, revelations by WorldNetDaily about the relationship between the Chinese government and Loral raise questions about how the U.S.-based company could or would withhold such sensitive information from its own business partners.

Only weeks before the national security scandal over the propriety of a relationship between Loral and China broke, a subsidiary of the U.S. company was accepting full partnerships and a $37.5 million investment by two Chinese government-front companies.

On April 21, Loral’s Globalstar Limited Partnership division finalized a deal with China Telecom and CHINASAT, both wholly owned by Beijing’s new Ministry of Information Industry.

“The addition of China Telecom as a full partner solidifies Globalstar’s commitment to bringing the promise of mobile satellite communications to China’s 1.2 billion people,” said Schwartz, chairman and chief executive officer of both Loral and Globalstar, in a public statement. Loral remains the largest equity holder in Globalstar with 42 percent.

Beijing’s government companies will manage all Globalstar operations in China, according to Schwartz. With the world’s largest population and one of the fastest-growing economies, the deal reportedly will mean additional revenues of about $250 million annually for Loral.

The telecommunications deal was the result of a meeting between Schwartz and top Chinese officials made possible by a trade mission coordinated by the late Commerce Secretary Ron Brown.

Besides construction, operation and maintenance of a Chinese telecommunications infrastructure, China Telecom lists among its specific responsibilities “emergency communication during wartime;” the construction and operation of government communications networks; ensuring security in communication; exercising “centralized control over public satellite communication” and “any duty that may be entrusted by MPT” (Ministry of Posts and Telecommunications) or the new Ministry of Information Industry.

“Our cases on this matter, which uncovered John Huang and sparked the ‘China-gate’ scandal, have already succeeded far beyond anything done by anyone else,” said Klayman in filing his lawsuit yesterday. “Neither Congress nor the Clinton Justice Department is willing to look into this matter, but Judicial Watch is. We will get to the bottom of ‘China-gate’ and bring those responsible to justice.”

Meanwhile, in a 19-page court filing yesterday, Reno said, “There are no reasonable grounds to believe that further investigation is warranted” into an allegation that Gore lied to investigators last year about how a Democratic media fund was financed.

“Today’s determination does not mean that our work has ended,” Reno said in a statement. “We will continue to vigorously investigate all allegations of illegal activity.”

She is in the midst of 90-day preliminary inquiries about President Clinton and his former deputy White House chief of staff Harold Ickes. She must decide within two weeks whether independent counsels are needed to continue those probes. Officials say no counsel is likely to be named in the Clinton matter, which involves the financing of issue advertisements during his 1996 re-election campaign.