14 July 1998
Source: Hardcopy The New York Times, July 9, 1998, p. A21

## U.S. Review Seems to Absolve the Chinese on Missing Devices

By ERIC SCHMITT

WASHINGTON, July 8--A Pentagon review has concluded that two sensitive encoded circuit boards that disappeared after a failed launching of an American communications satellite in China two years ago were probably destroyed in the fiery crash.

Last month several Defense Department officials said they suspected that Chinese officials had stolen the devices from the wreckage of a $200 million Loral Space and Communications satellite that was obliterated when the Chinese rocket carrying it exploded shortly after launching.

But a review by the National Security Agency, the military's supersecret code makers and code breakers, found no evidence of wrongdoing by the Chinese authorities.

"It is highly unlikely that the devices survived the crash because of the crash impact and high temperatures produced by burning rocket propellants," said the review, which noted that the devices were housed close to the rocket's fuel tank.

In the off chance that the Chinese recovered the circuit boards, each of which contained scores of individual computer chips, they would not have learned much, the review concluded.

"It is highly unlikely that these items could have been recovered in sufficient detail" to enable the Chinese to reproduce them, it said.

Moreover, Clinton Administration and industry officials said the Chinese would have had no way to know which of the chips were encoded because they all look alike. Loral employees could tell them apart by comparing company records with code numbers on the circuit boards. None of the recovered chips were encoded, the officials said.

The Administration ordered the review after House Republicans, notably Representative Curt Weldon of Pennsylvania, expressed fears at a hearing last month that the loss of the encoded circuit boards might have harmed national security. The encoded technology tells an orbiting satellite which way to point to receive and transmit signals.

The case of the missing circuit boards became part of Congress's multipronged inquiry into whether sensitive American satellite technology was given to China that might ultimately enhance Beijing's military.

After the House hearing last month, the White House released a statement from the National Security Agency that said the loss of the House select committee looking into accusations involving China, today expressed skepticism over the Administration's explanation.

"The whole thing is very suspicious," he said. "Why didn't they have these answers a month ago?"

The Pentagon provided a copy of the one-page review today after Franklin Miller, a senior Pentagon official, testified before a Senate Governmental Affairs subcommittee on the export of sensitive technology to China. Mr. Miller had expected questions on the missing circuit boards, but none were asked.

When asked about the issue after the hearing, Mr. Miller said, "The Government's position is that the devices almost certainly did not survive." American officials had said that only one circuit board was missing, but the report today made it clear that two encoded circuit boards were involved.

Mr. Miller said the Administration never asked China for an accounting of the missing technology because an American team of industry and military observers concluded the day after the accident that the devices were probably lost in the crash.

On Feb. 15, 1996, at the launching of the Loral satellite in southern China, the Chinese rocket exploded 22 seconds after liftoff, showering debris and burning fuel on a nearby village. By American accounts, as many as 200 civilians were killed.

For five hours, American officials said, the Chinese authorities barred American monitors at the launching center from visiting the crash site, purportedly for their own safety.

According to an industry official, an American inspection team, made up of representatives from the Pentagon, Loral and Intelsat, the communications consortium that had planned to use the satellite, finally was able to comb the crash site for pieces of the satellite.

The team recovered pieces that made up about one-third of the satellite, but many parts were mangled or melted beyond recognition, the industry official said.

The Loral satellite contained about 100 circuit boards that resembled trays. About 1,000 computer chips were built into the circuit boards, but the industry official said only two chips--each on a separate circuit board--were actually encoded.

The American team found parts of 12 trays, and three of them were battered but mostly intact. Loral sent these parts back to its laboratory in Palo Alto, Calif., for analysis.

The American inspection team concluded the Chinese had not taken anything because they were too busy dealing with the emergency, and had made no apparent effort to pick up any of the circuit boards. "If they were trying to search the field for something, they'd have collected every recognizable piece and sent it to a lab," an industry official said.

The China investigation pushed ahead elsewhere on Capitol Hill today. George J. Tenet, the Director of Central Intelligence, and Louis J. Freeh, the Director of the Federal Bureau of Investigation, testified before at a closed hearing of the Senate Intelligence Committee.