Weapons of Mass Destruction (WMD)

QUESTION: Can you give us the details of the Lockheed agreement?

MR. BOUCHER: Yes. We reached a consent agreement with Lockheed. Let me get my stuff. We reached a consensual settlement with Lockheed Martin over their transfer to China of space launch assistance. The settlement involves $13 million in total penalties; $8 million will be paid over a four-year period, $5 million of which has been suspended. Lockheed can draw on this amount, the suspended $5 million, to fund a series of remedial compliance measures that are specified in the consent agreement and the annex to the agreement.

The remedial compliance measures include institution of a comprehensive computer control system throughout the country, the company's missile and space launch sector. Lockheed Martin has eight months to build a computer system. State and Defense will have access to this system over the next four years, which is the duration of the consent agreement, including all of the company's overseas activities involving missiles and space that are subject to regulation under the Arms Export Control Act and the International Traffic in Arms Regulations.

Other measures include restructuring of reporting relationships within the missile and space sector to provide for stronger headquarters oversight by Lockheed's legal department and establishment of a new procedure for Lockheed to audit new corporate acquisitions for Arms Export Control Act violations and then to report them promptly.

I should make you aware that the consent agreement, the order approving the agreement and the State Department's charging letter are all available for public inspection in the Department's reading room, which is at 515 22nd Street, first floor.

QUESTION: It's my understanding that Lockheed does not accept any - well, that they're not admitting that they did anything wrong. But it seems to me that in the very least, by accepting this $5 million portion which is to improve their security, that they are admitting that they could have done things better. Is that fair?

MR. BOUCHER: I think that's a fair characterization. We certainly think that these remedial measures and better oversight measures are necessary to ensure that violations don't occur in the future.

QUESTION: But can I ask - I know it'll get technical but I'm willing to risk it. This computer business, I mean, you know the central complaint was out of Martin Marietta. Martin Marietta, which was absorbed eventually by Lockheed in its growing monolithic control of the industry, was providing Asia Sat with technology or at least know-how. You know, part of what you're saying here suggests - and I know we can draw our own inferences - that headquarters didn't have too good an idea what the fellows out in the field were doing.

But how would a stronger - a better computer system address what was the central complaint; that this Hong Kong company with strong ties to China received information from, you know, Martin Marietta? I don't know if it was a subsidiary but --

MR. BOUCHER: I think the way I'd put it, Barry, is that we think that the information that was transferred was inappropriate, and that the reports that were transferred were not appropriate, and that there was a serious problem here that information had the potential to be used to be applied to missile development. That's no exception in this case.

So the computer system will allow us, as they plan their technology transfer and information activities, will allow us to see what's going on so that we and they can compare notes before things are transferred. And having a better collective centralized oversight within the company means that when we and they talk about what's going on and decide which parts are appropriate and which aren't, they'll have all the information and we'll be able to look at it too and decide what ought to go and what shouldn't.

QUESTION: Could you just explain a bit about the $5 million suspended? Then you said they can draw on this? So they don't pay the $5 million, but how can they draw on it if it's suspended?

MR. BOUCHER: I would imagine some of that detail is in the consent agreement so I won't try to do it from here.

QUESTION: (Inaudible) -- what exactly it means.

MR. BOUCHER: Well, it means there's $5 million somewhere that they would draw on to finance things like the computer system and the other remedial measures.

QUESTION: For them to spend up to $5 million on these various --

MR. BOUCHER: I don't know if it's actually deposited in escrow somewhere and then drawn on. That's something I'd have to look in the consent agreement for.

QUESTION: Who gets the 8 million?

MR. BOUCHER: I assume the US Treasury. Who do you pay these things to? I'll double check on who gets the 8 million. That's a very good question; I should have asked. Let me check.

QUESTION: And this is basically case closed then, right?

MR. BOUCHER: Yes.

QUESTION: There's no way that they're subject to any further --

MR. BOUCHER: It's a settlement, yes.

(The briefing was concluded at 1:05 p.m.)

(###)

[end of document]