U.S. suspects Chinese after encoded circuit board disappeared from rocket New York Times WASHINGTON -- A secret encoded circuit board containing sensitive American technology was missing from a Chijese rocket that exploded in 1996 and American officials said Tuesday they suspect that Chinese authorities took it. American military monitors had watched the launch of a Chinese rocket from southern China as it streaked toward space carrying a $200 million American communications satellite. But 22 seconds after liftoff on Feb. 15, 1996, the Long March rocket exploded, showering fiery debris, burning fuel, and chaos on a nearby Chinese village, where, by American accounts, as many as 200 civilians were killed. For five hours, American officials said, Chinese authorities barred them from rushing to the crash site, saying it was for their own safety. When the Americans finally reached the area and opened the satellite's battered but intact control box, a secret encoded circuit board was missing. Now congressional investigators are asking whether there could be any explanation for the missing technology other than that the Chinese took it. ``The box is recovered, but the card is gone,'' Rep. Curt Weldon, R-Penn., said on Tuesday. ``We better call the Chinese on this issue. That is a very serious concern.'' Weldon quoted a statement he said was given to him by the National Security Agency, which warned that: ``If the encryption board were reverse-engineered, the knowledge gained cowld be used to strengthen adversaries' knowledge'' of the devices the United States uses to safeguard its communications systems. A senior Defense Department official said on Tuesday night that he was not aware that the government had demanded that the Chinese account for the missing encoded card. ``We're not 100 percent sure they filched this encryption card,'' the official said. ``It may have just fallen out, but we have to assume they do have it.'' At the hearing, Congress also disclosed that the Justice Department has begun an investigation of a second failed China missile launch that also involved an American satellite. This second inquiry is centered on the possible sharing of sensitive information with the Chinese without American government supervision. The disclosure of the missing encryption board was made at an unusual joint hearing of the House National Security and International Relations committees, opening a new front in Congress' inquiry into whether sensitive American space technology was transferred to the China and assisted Beijing's military. The new evidence promised to be a main focus of a special select committee the House created last weeks to investigate the wide-ranging China accusations, Weldon said. The new revelation also adds a new dynamic to an ongoing Justice Department inquiry into the matter. Federal investigators are trying to determine if the two satellite-makers, Loral Space & Communications and Hughes Electronics, divulged sensitive technology to Chinese rocket scientists during an analysis of the failed launch. The encoded circuit board, a 64-bit card, tells an orbiting satellite which way to point to receive and transmit signals to and from Earth. The State Department oversees exports of the encoded boards as militarily sensitive technology. But when the same components are embedded in a satellite, the whole unit falls under the export controls of the Commerce Department. A government auditor told a Senate inquiry earlier this month that the Commerce rules are looser than the State rules. Government officials insist that American satellites launched on Chinese rockets are protected with armed, 24-hour American guards. But the Commerce rules provide little protection against sensitive technology being released in accidents like the February 1996 explosion. William Reinsch, an undersecretary of commerce for export administration, told a House hearing last Thursday that there ``there would not have been any effect on national security'' if Chinese engineers illegally obtained the encoded device. But the Defense Department said in a statement it provided to Weldon that the ``loss of the chips'' would actually have a ``minimal impact'' -- not no impact at all -- on national security. In addition, according to Weldon, the National Security Agency, the government's code makers and code breakers, said that it had changed the encoded algorithms in satellite circuit boards after the failed February, 1996, launch. ``If there was only 'minimal impact' to national security, why did the NSA change the algorithms?'' Weldon asked today's witnesses from the State, Defense and Commerce departments, which included Reinsch. The administration officials did not have a ready answer. Tuesday's hearing also provided new details into the Justice Department's investigation of the role of American satellite makers in helping China's troubled rocket program. One year before the 1996 accident, a Chinese rocket containing a Hughes satellite failed, and Hughes did a study of that failure. The Commerce Department permitted Hughes to provide the study to the Chinese after the company assured the department that its review was done ``independently'' of the Chinese and the department determined that the review compliee with the license, according to testimony by Reinsch. Reinsch said the Justice Department had recently requested all its documents on the 1995 accident. Bert Brandenburg, a Justice Department spokesman, said the department's review of the 1995 study was part of their investigation into the 1996 study by Loral and Hughes. Marcy J.K. Tiffany, general counsel for Hughes, said company employees had held meetings with the Chinese to obtain data for the 1995 study and that the Commerce Department had reviewed the scope of those meetings to assure they would be in compliance with the license. Reinsch told the panel that the Hughes study would not help China's missile program because it only involved the integration of the Hughes satellite with the Chinese rocket. But Rep. Benjamin Gilman, R-N.Y. and chairman of the House International Relations Committee, questioned why the Commerce Department didn't seek advice from other agencies before allowing Hughes to share the report with China. ``You quietly authorized a United States company to share information regarding a Chinese launch failure in 1995 without sharing that decision with any other agency,'' he said. Reinsch replied, ``This was a judgment we made on our own.'' Rep. Tillie K. Fowler, R-Fla., questioned why a Pentagon agency didn't seek additional expertise on another technology sale to China, which congressional and industry officials said involved Hughes. Ms. Fowler asked Pentagon officials about why they approved the 1996 sale of encrypted ground station terminals to a Chinese military company, China Electronics Systems Engineering Corp. The terminals, called Vsats, are the heart of a clgsed telecommunication network in which the users, typically businesses, transmit data via satellite. The communications can be coded through separate equipment. Ms. Fowler wondered why officials from the Defense Intelligence Agency, who are supposed to be consulted on such technology transfers, were apparently not consulted. David Tarbel, the head of the Defense Technology Security Administration, the Pentagon agency responsible for reviewing technology transfers, said he would reply later to the inquiry. Tarbel did not return a reporter's phone call. Ms. Tiffany, the Hughes lawyer, said ``we comply with all American laws and restrictions in our overseas sales and those laws do not prohibit the sale of Vsats to the Chinese military.''
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