Loral: Going to the Schwartz side

In June of 1994, presidential aide and Democrat Party fund-raiser
Mark Middleton received a letter from Loral Chairman Bernard Schwartz --
a million-dollar donor to the Democrat Party and a donor to Mrs.
Clinton's New York Senate bid -- in which he thanked Middleton for a
1994 meeting at the White House with another top Clinton aide "Mr.
McLarty." This reporter obtained the letter from the U.S. Commerce
Department by using the Freedom of Information Act.

While Schwartz says his company never sought special treatment, the
meeting, according to a Loral attachment, was to ask Russia to change
their "GLONASS" navigation satellite system to another radio frequency.
According to Loral, "international aviation interests are considering
using GLONASS for position-location, navigation and precision landing of
civil aircraft, either alone or in conjunction with the U.S. GPS
system."

The "problem" was that the U.S. GPS system "could interfere with the
receipt of GLONASS signals used by aircraft for precision landings. ...
The Russian administration is very interested in the use of GLONASS by
the aviation community as part of a Global Navigation Satellite System
(GNSS) which would utilize both the U.S. GPS system and GLONASS."

"Russia has stated it is willing to consider such a frequency shift
over the next few years. It is critical that the Russians make a
commitment that the frequency shift will occur, and provide a timetable
for implementation of this change."

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For someone who sought no special treatment, Schwartz seemed to ask
for a lot of effort. For example, Schwartz traveled often overseas on
government missions. In August 1994, Bernard
Schwartz flew to China only two months after writing Middleton. Schwartz
traveled to China under a "Presidential Business Development Mission"
with Commerce Secretary Ron Brown.

In 1994, just prior to traveling to China, Mr. Schwartz had his
company staff prepare a list of Loral products for Ron Brown to review.
The items Loral carried to the meeting with Ron Brown
resemble a Jane's Defense catalog of high-tech weapons.

Some of the items Schwartz displayed to Brown included "Airborne
Reconnaissance Cameras, Weapon Delivery, Target Acquisition, Missile
Guidance, Shipboard Target Acquisition, Radar Warning, Missile Warning,
RF Jamming, IR Jamming. ..."

During the August 1994 trade trip to China, Schwartz met with Liu
Ju-Yuan the minister of China Aerospace Corporation. China Aerospace
makes both the civilian Long March rocket and the
nuclear tipped CSS missile for the Second Artillery Corps of the
People's Liberation Army.

Minister Liu is also the official boss of PLA Col. Liu Chao Ying who
contributed thousands of dollars to the DNC through convicted China-Gate
figure Johnny Chung. Liu's real boss, however, turned out to be Gen. Ji,
the Military Intelligence Director of the PLA.

Schwartz also met directly with a Chinese general at his own request.

In 1994, Chinese army Lt. Gen. Shen Rougjun was second in command at
the Chinese Commission for Science, Technology and Industry for National
Defense and during that time attended several business meetings with
Hughes and Loral.

In August 1994, Shen met and consummated a series of satellite deals
with Schwartz. The Beijing meeting was requested by Schwartz, arranged
by President Clinton and included Commerce Secretary Ron Brown. The
technology obtained from Loral included advanced rocket guidance and
encrypted satellite telemetry systems.

During 1994, Shen had time to visit the United States. During that
visit, Gen. Shen's son, Shen Jun, attended a business lunch with his
father and Frank Taormina of Hughes. Taormina later assisted Shen Jun in
obtaining a job at Hughes.

However, Shen Jun was hired at Hughes in August of 1994 at the same
time when Loral CEO Bernard Schwartz was visiting with the elder Shen in
Beijing. It was no coincidence that a division of Space Systems/Loral
was also considering hiring Shen for a position that would have allowed
him access to classified information.

Nor does the story end with Shen and his son. The Loral saga
continued two years later, in March 1996, when Loral Defense Systems
President Jerald A. Lindfelt wrote Commerce Secretary Ron Brown.
Lindfelt sought Brown's help in the export of Synthetic Aperture Radar
or SAR radar technology to China.

Lindfelt's appeal also included a direct request for Ron Brown to
overrule the Department of Defense, the State Department and even
Brown's own Commerce Department which had all previously denied the
advanced radar export to China.

"We've worked hard trying to resolve these problems with the
Department of State, the Department of Commerce and the Defense
Technology Security Administration (DTSA)," Loral's Lindfelt
wrote to Brown.

"But someone in these organizations always manages to block our
participation. ... Over the years we have found that this type of
obstacle often comes from lower levels of management rather than
by people willing to look at the bigger picture. Could you help us by
identifying someone in the Commerce Department high enough in the
organization to help us resolve these issues and open
this marketplace. ..."

Of course, Lindfelt knew he was writing to someone "high enough" in
the Commerce Department who could appreciate Loral's plight. By 1996,
Brown had already established a long working
relationship to Lindfelt's boss, Bernard Schwartz.

Loral's Lindfelt also had his own contacts inside the Chinese
government. Lindfelt attached a letter for Brown from Mrs. Zheng
Lizhong, Deputy Director of the National Remote Sensing Center for the
State Science and Technology Commission of China.

According to the letter, Mrs. Zheng requested that Loral Defense help
China upgrade old radar sold to the PRC during the Reagan
administration. The radars were installed on "highly modified"
Lear jets and, according to Mrs. Zheng were used to "give our officials
up to date news" on flooding in areas of China.

Left unsaid is the fact that SAR radars are used to find targets and
attack them in any weather. Furthermore, according to a recently
declassified document on Chinese laser technology, the
"Institute of Remote Sensing" is actually a front for the PLA missile
laboratories.

The Institute of Remote Sensing is "a developer of optical precision
and photoelectric guidance systems for surface-to-air missiles." The
Chinese missile electronics design bureau is run by Li Hui, the Director
of the Beijing Institute of Remote Sensing Equipment. Director Li Hui
recently stated that "laser technology as the only effective means to
counter cruise missiles."

And what of the joint U.S./Russian system pushed by Schwartz? The
shared Russian GLONASS and U.S. GPS system sought by Schwartz succeeded.
Russia moved their satellite frequencies and a whole new line of
avionics were developed for the market. The global military market.

It is not civilian airliners that guide themselves for "precision
landings." Instead, both U.S. and Russian military forces depend on
accurate GPS and GLONASS satellite signals for weapons. The most
accurate U.S. bombs that fell on Serbia used GPS satellite to land
within inches of their intended targets. Russian made GLONASS guided
bombs also continue to fall inside Chechnya with devastating accuracy.

Still, the largest buyer of dual GLONASS/GPS guided weapons is China.
Ashtech, a maker of Global Positioning Satellite receivers, gave Chinese
army air force officers a demonstration
in Sunnyvale, Calif. The briefing for the Chinese air force and Chinese
navy officers states, "Ashtech produces a receiver that uses both the
U.S. GPS signals and the Russian GLONASS signals resulting in
significantly greater availability and integrity."

According to a 1997 Rand Corp. report on the Chinese defense
industry, "more accurate GPS systems would enhance the PLA's ability to
carry out attacks against Taiwan's military and industrial facilities,
potentially reducing the ability of the Taiwanese military to defend
itself against PRC coercive diplomacy."

"The use of GPS to enhance the accuracy of long-range Chinese cruise
missiles, coupled with long-range sensors, would raise serious concerns
for the U.S. Seventh Fleet in the Pacific, and possibly circumscribe
their ability to provide an effective deterrent in a crisis over
Taiwan," concluded the Rand report.

Despite the denials, Bernard Schwartz was clearly involved on a
global scale in military affairs. The Oval Office became an extension
of the boardroom and national security came second to corporate profits.

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