An Inside Job at Commerce?
Satellite secrets left department with official
Michael Chapman
Copyright 1998, Investor's Business Daily
June 19,1998
When the White House in '96 abruptly gave the Commerce Department power to control exports of sensitive technology to China, it came as a shock. Unlike the State Department, which served as the technology gatekeeper in the past, Commerce isn't equipped to guard properly against national security breaches.
"It was tantamount to a complete overthrow of the old export-control regime," said Henry Sokolski, a top defense expert in the Bush administration. Even more shocking is that, during that same year, Commerce had a hard time controlling breaches of security within its own building.
In fact, shortly after the transfer of controls, a former Commerce employee walked in, put classified files about encryption and satellites in a box, and walked out the door.
That former employee was Ira Sockowitz, who had been special general counsel at Commerce. Without authorization, he took 136 files -- a total of 2,800 pages. It's unclear how those files were used. But the trove Sockowitz took contained data vital to U.S. security -- and valuable to rival nations. And they may be linked to the current probe of whether technology was illegally transferred to China.
Encryption data, for instance, are used by U.S. intelligence to keep government communications -- including instructions sent to satellites or nuclear missiles -- secret. The CIA deemed the material so sensitive that it tried to seize Sockowitz's files as soon as it learned what had happened.
Despite the security breach, the justice Department has decided there is no case against Sockowitz, and Commerce's own inspector general also balked at a probe. Sockowitz claims his reasons for taking the files were innocent.
Still, the Sockowitz affair raises troubling questions about the connection between national security and the White House's drive to raise campaign cash in '96.
And the Sockowitz matter came to light only after an anonymous tip to the public-interest group Judicial Watch in October '96. (As part of a lawsuit, the group was looking into whether Commerce sold seats on trade trips for campaign donations.) U.S. Judge Royce Lamberth subpoenaed Sockowitz's files.
Judicial Watch then deposed Sockowitz, a former New York state administrative law judge. Sockowitz disclosed that he was an "advance person" for the '92 Clinton-Gore campaign. He was put on the '93 inaugural committee at the request of Vice President Al Gore's office.
That office also OK'd Sockowitz's appointment as Commerce's special general counsel in November '93. There, he worked under Ginger Lew, a confidant of John Huang, who also worked for Commerce. Huang is the central figure in the growing Chinagate scandal.
Sockowitz said he had no international trade experience. Yet he was put in charge of "vetting" or screening, companies that wanted to go on government trade missions. Vetting was not classified work. One such mission vetted by Sockowitz was a now-controversial '94 trip to China.
The White House demanded the trip take place, according to Nolanda Hill, a former business partner and close friend of then Commerce Secretary Ron Brown. During the trip, a deal to build a power plant was struck among Huang's former employer, the Lippo Group; the Chinese government; and Entergy Corp., which has offices in Arkansas. The deal has since gone sour.
Also on the trip were Huang and Melinda Yee, the mission's official note-taker. (Yee now says she accidentally destroyed those notes.)
Sockowitz said he didn't recall seeing either Yee or Huang on the trip. Nor did he recall vetting Lippo.
But he did recall sitting next to Loral Corp. CEO Bernard Schwartz at a dinner in Beijing with Chinese officials during the trip.
Huang reportedly pushed for Schwartz to be on the China trip. And soon after the trip Schwartz won the satellite-transmission rights for a multibillion-dollar mobile telephone network in China.
Schwartz lobbied hard to get satellite export controls moved from State to Commerce. He has given $1.9 million to Democrats since '92 and was the party's largest donor in '97.
Congress and justice are now investigating Loral for passing sensitive data on a satellite launch to China Aerospace, which is controlled by the People's Liberation Army. (The company is also a source of illegal campaign donations, according to former Democratic fundraiser Johnny Chung.)
The Pentagon later reported Loral's data disclosure "harmed" U.S. security.
Far from being an isolated incident, the White House's dealings with China seem to be business as usual. Hill told Judicial Watch the trade missions raised $17 million in political donations but that the amount was minuscule compared with the value of other deals on the trips.
While at Commerce, Sockowitz held a top-secret clearance and kept classified files in a safe. Among these papers was "A Study of the International Market for Computer Software With Encryption."
The CIA marked portions of this report "secret" and the U.S. Bureau of Export Administration said disclosure could "damage the national security by revealing export control problems that could be exploited to the detriment of the United States."
The secret sections could reveal weaknesses in U.S. encryption defenses, David Sobel, general counsel of the Electronic Privacy information Center, told IBD.
Other papers Sockowitz locked away covered "remote sensing satellites," presidential waivers for satellite launches, "space commerce," and country files on China, Russia and India.
Sockowitz also got documents on satellite encryptions from Hoyt Zia, chief counsel for Commerce's Bureau of Export Administration. Zia is a former Democratic National Committee fund-raiser and close friend of Huang.
In May '96, Sockowitz's boss, Lew, moved to the Small Business Administration. He followed as her senior adviser on May 27.
Three days after he moved to the SBA, Commerce OK'd a Sensitive Compartmentalized Information clearance for Sockowitz, a level above top secret. It let Sockowitz view the government's most tightly classified papers on encryption.
Sockowitz didn't get an SBA top-secret clearance until July 29. The agency never gave him SCI.
Sockowitz returned to Commerce for a visit on Aug. 2, 1996. While his successor there, Jeffrey May, was out of the office, Sockowitz removed 136 files from his old safe. He told a secretary only that he was gathering some personal items.
Sockowitz wasn't debriefed when he left Commerce, something that would have required him to return any classified papers he held. Commerce says Sockowitz violated his clearance by not returning the files.
But Sockowitz says his clearance traveled with him to the SBA and that nothing in the security manual prevented him from taking files. Sockowitz also says he never disclosed the papers and they never left his possession.
He claims he needed the files for his SBA job. But the SBA told the conservative weekly Human Events that it knew of no projects that Sockowitz was working on that involved encryption, remote-sensing satellites or China.
Sockowitz left the SBA In November '96. Again. he was not debriefed.
He now works for the Strategic Planning Group in Bethesda, MD, an international business consulting firm. The company didn't respond to repeated requests by IBD to speak with Sockowitz.
Justice stopped looking into the matter in December '96 without ever talking to Sockowitz, Lew or May.
Hill told Judge Lamberth in March of this year that Brown worried that Sockowitz might have "funneled information to others."
Larry Klayman, chairman of Judicial Watch, told IBD some of the files may have made their way to "a consortium like Iridium." Iridium is a global satellite mobile-phone business with partners such as China Aerospace. It competes with Loral's partly owned subsidiary Globalstar.
At least four of Sockowitz's ex-Commerce colleagues work for Iridium.
"Sockowitz was the first evidence that there may be an espionage element to this," Klayman said, adding that "Hill can confirm a lot that went on on those trips that dealt with matters that were not legal."
For her part, Hill has said that Brown talked to her about how Commerce wanted to end satellite-export controls and how "encryption was a big issue," Klayman said.
"Hill can confirm that this whole transfer of satellite technology (abroad) was a major initiative of the Clinton administration, and particularly in the encryption area," Klayman said. "All these companies were competing. And we know from Hill that satellites were what they were after -- the big bucks. Brown was very interested."
In a 409-10 vote last Thursday, the House gave the go-ahead to a new investigation into Clinton administration satellite export policy to see if it harmed national security.
Brown met with Wang Jun, chairman of the state-owned China International Trust & Investment Corp., on Feb. 6, 1996. That same day, Wang attended a White House coffee with Charlie Trie, a suspected conduit for political donations to the Democratic Party from China. President Clinton was host for the coffee. Trie is his old friend.
Hill said that Wang and Brown discussed lowering export controls. She warned Brown to stay away from Wang, one of Beijing's top arms dealers.
That same day, Feb. 6, 1996, President Clinton approved the launch of four U.S. satellites on China Aerospace-owned rockets.
Reprinted with permission of
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