One Billion Customers - James McGregor [93]
Using its remaining power to regulate “technical assistance,” the State Department, along with the Pentagon and CIA, launched an investigation into the Loral failure review. An export analyst in the Pentagon’s Defense Technology Security Administration decided that the Loral and Hughes investigators should have obtained a “technical assistance” export license from the State Department to conduct the review. The State Department ordered them to halt the investigation of the Long March malfunction.
Anti-Chinese sentiment rose in the summer of 1996 when news stories began appearing, alleging that several Chinese-American hustlers had raised significant funds for Clinton’s 1996 reelection campaign from overseas Chinese and Mainland Chinese sources. Republicans in Congress, intent on embarrassing Clinton, questioned whether he had been making it easier for U.S. satellites to be launched in China because Loral CEO Bernard Schwartz and Hughes CEO C. Michael Armstrong were heavy Democratic Party donors. With House Speaker Newt Gingrich and his allies pummeling the White House on the issue, the Pentagon determined in 1997 that “Loral and Hughes committed a serious export control violation by virtue of having performed a defense service without a license…” The companies were accused of helping China determine the true source of the missile failure (a power amplifier in the guidance system) and exposing China to Western diagnostic processes that could lead to reliability improvements in all Chinese missile and rocket programs. In May 1997, the case was turned over to the Justice Department for possible criminal action.
Even as Special Prosecutor Kenneth Starr was filling the headlines with his probe of Clinton’s affair with Monica Lewinsky, Gingrich in June 1998 formed a “select committee” to investigate whether China had illegally received sensitive U.S. missile and space technology from companies that had received favorable treatment from Clinton. The House committee of five Republicans and four Democrats was chaired by conservative Republican Representative Christopher Cox of California. The McDonnell Douglas machine tool case got swept into the investigation, as did alleged security problems and possible espionage at U.S. nuclear weapons labs. As the committee gathered testimony from more than 150 individuals and sifted through tens of thousands of pages of documents, Washington was seized by Chinese spy mania.
On December 30, 1998, the Cox committee approved its seven-hundred-page classified report. Gingrich and Cox were unable to make a declassified version of the report public before Clinton’s upcoming Senate impeachment trial as they had hoped. But Cox and other Republicans were very eager to tell reporters that the committee concluded that China was sucking up U.S. technology secrets.
The “Donorgate” scandal turned out to be a case of four Chinese Americans, dishonest, low-grade hustlers, who used aggressive and poorly policed Clinton-Gore fund-raising for the 1996 election to enrich themselves by pocketing much of the money or promoting themselves as White House insiders to Chinese officials and businesses in Asia. But the scandal had raised the specter of Chinese Americans being willing to sell out their country. Leaks from the Cox committee hearings further inflamed public sentiment. A Department of Energy intelligence analyst told the committee that a 1995 Chinese underground nuclear test indicated that China may have obtained the design of a miniature nuclear warhead from American’s weapons labs and suggested