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"The Arms Control Association’s work is an important resource to legislators and policymakers when contemplating a new policy direction or decision."

– General John Shalikashvili
former Chairman of the Joint Chiefs of Staff
State and Lockheed Settle Export Control Dispute
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July/August 2000

The State Department and the Lockheed Martin Corporation reached a settlement in their dispute over the company's alleged transfer of technical reports detailing sensitive rocket information to a company partially owned by the Chinese government, the State Department reported June 14. The aerospace company will have to pay $13 million in fines, the highest civil penalty ever imposed under the Arms Control Export Act and the International Traffic in Arms Regulations.

The State Department charged Lockheed Martin April 4 with the violations, contending that the firm had supplied the Chinese Asia Satellite Telecommunications Corporation with an illegal technical assessment of a Chinese Long March rocket kick motor in 1994. The Long March rocket had failed twice in 1992 to properly deliver satellites to its targets but successfully launched a satellite in 1995, after Lockheed Martin provided its report. The U.S. government was concerned that Lockheed Martin's appraisal may have identified weaknesses that could have helped China's ballistic missile program. (See ACT, May 2000.)

Under the terms of the settlement, Lockheed Martin will have to pay $8 million in fines over four years and is required to spend $5 million on specified measures to upgrade its internal security procedures, State Department spokesman Richard Boucher explained June 14. One such measure is the institution of a computer control system that will "cover all technical data and technical assistance in any form to all foreign persons," according to the settlement. The departments of State and Defense will have access to this computer system for the next four years, Boucher said.

The settlement neared the maximum penalty of $15 million but did not include the harshest punishment: denial of satellite export licenses for up to three years. Lockheed Martin was not required to admit or deny guilt as a result of the settlement. In a statement made June 15, the Chinese Foreign Ministry characterized the charges as "entirely groundless."