February 02, 2012 | Case

Chinagate

Meng v. Schwartz

Judicial Watch filed this important political corruption lawsuit on behalf of shareholders of a well-connected U.S. corporation that transferred sensitive U.S. missile technology to China in the 1990s. From approximately 1994 to 1998, Bernard Schwartz, who was the chairman of Loral Space & Communication Ltd., became the single largest donor to the Democratic Party by making contributions totaling approximately $1.5 million to various Democratic Party entities, including President Clinton’s 1996 reelection campaign.

During this same time period, Schwartz and Loral also persuaded the Clinton Administration to transfer technology export licensing authority from the State Department to the more politically-influenced Commerce Department. Schwartz and Loral then obtained licenses from the Commerce Department that were needed to launch Loral-manufactured communications satellites into orbit from China.

Congressional and other related investigations subsequently found that, when a Chinese rocket attempting to launch a Loral-manufactured satellite failed, Loral helped China to identify the cause of the failure, thereby advancing China’s missile program and threatening U.S. national security. Loral subsequently paid a $14 million fine relating to this transfer of sensitive U.S. technology.

Judicial Watch’s shareholder lawsuit sought to hold Schwartz and the Clinton Administration accountable under federal racketeering law, arguing that Schwartz’s campaign contributions constituted a form of bribery. The lawsuit ultimately did not go forward, but it succeeded in bringing additional public scrutiny to this very serious case of political corruption.