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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 
/// 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) 
19-Oct-1999 17:16 PM EDT (19-Oct-1999 2116 UTC)
Source: Voice of America

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