China

By Elaine Shannon/Washington

Steve Bryen is the Yoda of the arms trade. Formerly the Defense Department's export czar, he knows every sinkhole in the regulatory swamp. Ignore him at your peril--as executives of Space Systems/Loral found out. A 700-page report to be issued this week by a select House committee chaired by Republican Representative CHRISTOPHER COX of California tells how, on April 11, 1996, Bryen warned Loral President Robert Berry not to give China any technical help without first getting State Department permission. Berry had just announced the assignment of top company engineer Wah Lim to head a panel of Western scientists who would advise China on possible causes of three rocket failures, the most recent of which had destroyed a Loral satellite. Fixing glitches in China's rocket-guidance system was in Loral's interest, but, Bryen cautioned, it could also improve the reach and accuracy of the country's ballistic missiles, in violation of U.S. laws.

Berry and his senior team agreed but did almost nothing to alert Wah Lim, according to the report. On May 7, 1996, without informing State, Lim assistant Nick Yen faxed the panel's draft conclusions to scientists in Beijing. Soon after, the rockets' reliability improved dramatically. State and Defense Department officials found out about the Loral fax, went ballistic and called in the Justice Department. Loral executives insist the fax was a clerical error, but federal and congressional investigators want answers: Did Loral vips deliberately choose not to know too much so China could get what it wanted?

--By Elaine Shannon/Washington