Papers: Clinton Knew Of Waiver Risk

Before he gave permission for a Democratic donor's company to launch a satellite in China, President Clinton was cautioned that Justice Department prosecutors feared such a decision would jeopardize an ongoing criminal investigation of the company, national security documents show.

The documents show White House security advisers had concluded that Loral Space & Communications' satellite would not give the Chinese any technology to aid their military capability. But before a waiver was given to the company, they had to weigh the additional concerns of prosecutors.

"The criminal division of the Justice Department has cautioned that a national interest waiver in this case could have a significant adverse impact on any prosecution that might take place based on a pending investigation of export violation," National Security Adviser Sandy Berger wrote the president on Feb. 12.

Mr. Clinton granted the waiver just six days later a decision justice and congressional investigators now are probing to determine if it was influenced by nearly $1 million in donations to Democrats from Loral's chairman, Bernard L. Schwartz, since 1995.

Documents detailing the internal White House deliberations were sent to congressional investigators. The Associated Press reviewed them Friday.

Schwartz, a lifelong Democrat and early supporter of Mr. Clinton, was at the White House just two weeks before the decision to attend a state dinner Feb. 5 for British Prime Minister Tony Blair.

A week later, the documents show, a top executive from his company wrote the White House, pleading for the waiver.

"If a decision is not forthcoming in the next day or so, we stand to lose the contract," Thomas Ross, Loral's vice president for governmental affairs, wrote on Feb. 13.

"Bernard Schwartz had intended to raise this issue with you at the Blair dinner, but missed you in the crowd," the letter added.

The same day, White House counsel Charles F.C. Ruff wrote a memo suggesting Justice Department concerns could not be too serious, because there had not been any concerns raised by officials above the criminal division.

"The department had every opportunity to weigh in against the waiver at the highest levels and elected not to do so," Ruff wrote.

Ruff suggested the White House could weigh the concerns on their own, and that Berger could weigh the "balancing of our national security and criminal justice interests."

At the time of the waiver, the Justice Department was investigating whether Loral had improperly assisted the Chinese in 1996 by advising them after one of the rockets carrying a satellite exploded.

Loral has acknowledged it had not told the State Department before it provided the help, but it denies the assistance did anything to help the Chinese with their military capabilities.

Both the White House and Schwartz have denied any connection betweehis donations and this year's waiver, which was for a different satellite.

And the memos reviewed by the Associated Press show clearly that national security advisers had concluded that Loral's satellite project "will not contribute to Chinese military capabilities."

On Tuesday, the CIA provided information to the Senate, showing that information China may have gained about improving its commercial satellite-launch rockets likely would be useful in its long-range nuclear missiles, including those pointed at the United States.

Written by John Diamond