Lockheed Martin Consents To Pay Fine For Export Violation Charges

Lockheed Martin Corp. has consented to pay a US$13 million fine for charges that it illegally helped the Chinese government correct critical defects in a rocket motor used in an upper stage for the Long March 2E launch vehicle. Lockheed Martin was not required to admit guilt to settle the case. The government could have imposed a maximum fine of US$15 million, and a ban on exporting satellites or satellite technology for up to three years, if the government had prevailed on all 30 counts of the charges in a proceeding before an administrative law judge.

The U.S. State Department had charged that Lockheed Martin engineers (formerly General Electric AstroSpace, and later Martin Marietta AstroSpace), in August 1994, conducted a detailed study of a Chinese rocket motor, and after completing a 50-page report, sent copies of the uncensored report to Asia Satellite, Hong Kong, even though the Pentagon cleared only five of the pages for export. The State Department alleged Lockheed Martin did not disclose the violation, as required by federal contracting rules, until it was caught by the U.S. Customs Service. The charges said that in 1992, the company was given permission to provide technical data and drawings to the Chinese government-owned rocket company concerning the use of the Long March 2E to launch satellites for Asia Satellite. However, the State Department charged that the 1992 contract did not call for the sort of technical evaluation conducted by Lockheed Martin in 1994.

The motor in question, the SpaB-17 solid rocket perigee kick motor, is built by Hexi Company, and was used to send AsiaSat-2 into its final orbit. The motor is capable of firing only once, and was, for export control purposes, a commercial commodity regulated by the U.S. Department of Commerce. Other, more sophisticated kick motors, capable of firing multiple times and repositioning satellites once they are in their final orbits are considered defense technologies subject to regulation by the U.S. State Department. 

The State Department did not charge that Lockheed Martin's actions advanced China's military missile program. The formal charges said the company violated multiple sections of the Arms Export Control Act and the International Traffic in Arms Regulations (ITAR). In statements issued after the formal charges were filed, Lockheed Martin said the alleged violations were technical, not criminal, and that there was no direct technology transfer to the Chinese.

Lockheed Martin consented to pay US$8 million in fines through 2004, including US$1.5 million this month, US$1.5 million in each of the next three years and US$2 million in 2004. The State Department suspended the remainder of the fine, authorizing Lockheed Martin to use the remaining US$5 million to install, at its major plants, a computerized monitoring system to track export compliance.
  

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