DATE=10/19/1999 TYPE=CORRESPONDENT REPORT TITLE=MCDONNELL DOUGLAS - CHINA - L-ONLY NUMBER=2-255250 BYLINE=JON TKACH DATELINE=WASHINGTON INTERNET=YES CONTENT= VOICED AT: INTRO: A federal grand jury has indicted U-S aerospace giant McDonnell Douglas and one of China's largest government-owned companies for conspiring to violate U-S export controls. Federal prosecutors say the companies lied when applying for export permits - allowing sophisticated machine tools to be diverted to a Chinese military facility. V-O-A's Jon Tkach has more from Washington. TEXT: The 16-count indictment wraps up a three-year Justice Department investigation into how McDonnell- Douglas equipment wound up at a Chinese military factory that makes Silkworm cruise missiles. McDonnell-Douglas sold the surplus machine tools to a Chinese company, CATIC, (China National Aero- Technology Import Export Corporation) in 1994. Under the terms of the export licenses, the equipment was to be used to produce civilian aircraft. But U-S Attorney Wilma Lewis says McDonnell-Douglas, in order to secure the five-million dollar sale, knowingly concealed the fact that the Chinese company was interested in using the tools in a military project - not just for civilian purposes /// LEWIS ACT /// Moreover, even prior to filing the export license application, CATIC had sold a portion of the licensable equipment to a factory that was not associated with the contract and known to be used for military production. /// END ACT /// Prosecutor Lewis says this amounted to a criminal conspiracy, which jeopardized U-S national security. In a statement, the Boeing Company, which now owns McDonnell Douglas, denied any wrongdoing. It added that it was, in fact, McDonnell Douglas officials who alerted Washington to the fact that some tools had ended up at a Chinese military facility (Nanchang Aircraft Corporation). Prosecutors say McDonnell-Douglas only notified the government after trade officials inquired about the parts. /// OPT /// In addition to the conspiracy counts, a McDonnell-Douglas official and two Chinese nationals also face charges for making false and misleading statements to U-S trade officials. /// END OPT /// Officials at CATIC, the Chinese company, were unavailable for comment. No date has been set for the trial. Guilty verdicts could cost the companies up to 10 million dollars and individuals named in the indictments could face up to five years in jail. (signed) NEB/JON/JO 19-Oct-1999 17:16 PM EDT (19-Oct-1999 2116 UTC) NNNN Source: Voice of America .
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