Clinton profiteers sell high-tech to China

0 Comments | Insight on the News, Dec 22, 1997 | by Charles Smith

Is the Clinton administration's dollar diplomacy to China compromising national security? Recently declassified documents and testimony of Commerce Department officials add to the mounting evidence that it is. Take the case of Richard Barth a former White House official who used his personal influence in a successful effort to export technologically advanced communications equipment to China. Barth, an executive of Motorola and a former National Security Council, or NSC, director of nonproliferation and export controls under presidents Bush and Clinton, wrote in 1995 to George Tenet, then NSC director for security, to request a waiver for Motorola to export encrypted radio equipment, highly sought by the Chinese military, to the Peoples' Republic of China.

"Such a waiver would not reduce NSA's [National Security Agency's] oversight over all encryption containing exports to China," noted Barth in the fax addressed to Tenet. "Current controls remain, only the need to notify Congress of each sale is removed. We currently have about $100 million worth of two-way radio business tied up by the lack of a waiver for China and face losing a market of about $500 million.... Finally, while we now are not yet applying for licenses for encrypted systems for satellite positioning, we may within months be applying for such licenses for our Iridium [Inc.] systems."

Barth, who did not return calls requesting an interview, suggests in his letter that the administration should take into account the competitive advantage given some European vendors of encryption products by a British intelligence agency, General Communications Head Quarters, or GCHQ: "European firms have for a number of months been able to market and sell encryption in China as a result of a decision taken by the U.K. intelligence agency, GCHQ. I understand that our National Security Agency is aware of this change in GCHQ's position and would support our request for a change in U.S. requirements for export licenses for China. The NSA has agreed that there should be a level playing field' in regard to China.... European firms, including Nokia, Ericsson, Alcatel and Siemens, have for a number of months been able to market and sell GSM cellular systems with encryption in China as a result of a decision taken by the U.K. intelligence agency GCHQ."

The letter gives evidence of the extraordinary access to the spy agency some private citizens have after leaving a high post in the Clinton administration. After all, which ordinary citizen can write to friends inside the White House, quoting unnamed sources in the NSA saying there needs to be "a level playing field" for an American company that has business links with China? Motorola blames a U.K. intelligence agency - GCHQ - for its lost exports to China and suggests that the NSA be at least as accommodating to Motorola. Why, it may be asked, would the NSA, tasked by law with intelligence activities, be in the business of going to bat for a U.S. company trying to beat its foreign competitors? And, if the NSA is taking on the mission of helping U.S.-based high-tech companies, why hasn't it said so publicly so that Motorola's competitors could be given the same opportunity?

It would appear that Motorola and the Clinton administration have a cozy relationship, to say the least. Motorola's chief executive officer flew with former commerce secretary Ron Brown on a Far East trade mission in 1994. Motorola's Hong Kong vice president had coffee in the White House in 1996 with Clinton. And Motorola's CEO had dinner with Chinese President Jiang Zemin and Clinton in October in the White House. No small company could match this -- neither the high-paying lobbyist jobs, the Commerce trips to China, the White House coffees nor the state dinners.

Consider as well the personalities that have passed from the company to White House service. Hoyt Zia, an ex-Motorola employee and a close friend of Democratic fund-raiser John Huang, was in charge of Commerce exports to China during 1995. Chief legal counsel of the Commerce Department Bureau of Export Affairs, or BXA, Zia was charged with overseeing sensitive exports, such as Iridium satellites and encrypted radios, for China at the time Barth wrote to Tenet in 1995. Note that Zia had spent more than six years at Motorola specializing in cellular and radio exports to Asia prior to taking his job in the Commerce Department. Zia stated under oath during a Judicial Watch deposition that he had contact with Motorola official and ex-Commerce Department employee Charlotte Kee on more than one occasion.

Several former Clinton administration officials now have high-paying jobs with Motorola or Iridium, including Kee and Iridium's Lauri Fitz-Pegado. Pegado was a close associate of Brown and tripped with him to China. Pegado is employed as an executive at Iridium, even though she has admitted that she has little knowledge of satellite technology (see "Commerc-ial Espionage," Sept. 1). This revolving-door exchange of personnel is like a game of musical chairs, with the players occasionally changing titles on six-figure jobs as they rotate from industry to bureaucracy to political staff and back again.