By John Mintz
Washington Post Staff Writer
Thursday, July 30, 1998; Page A06

Two current and former high-ranking executives of Hughes Electronics Corp. defended their company's patriotism before a Senate committee yesterday, disputing suggestions in recent congressional hearings that their practice of launching satellites in China helped Beijing's ballistic missile program.

The former Hughes chief executive, C. Michael Armstrong, and the current vice chairman, Steven D. Dorfman, testified that their aggressive and successful lobbying to persuade the Clinton administration to loosen controls on Chinese launches of U.S. satellites was intended only to protect the company's multibillion-dollar contracts in China. The executives explained that they resorted to Chinese rockets to launch their spacecraft because of inadequate U.S. launch capabilities.

"Hughes management and employees have been deeply distressed by the allegations that Hughes engaged in activities with respect to our satellite launches in China that have strengthened Chinese military capability and weakened the national security," Dorfman told the Senate Governmental Affairs Committee.

"So much of the company's life, history and future are dedicated [to protecting the United States] that Hughes would never endanger the security of this country," said Armstrong, who interrupted his schedule of deal-making as chairman of AT&T Corp. In recent weeks he has arranged that firm's $48 billion purchase of cable colossus Tele-Communications Inc. and a massive global joint venture with British Telecommunications.

The committee called the pair to testify about their successes in lobbying President Clinton, including their 1993 effort to win permission to launch commercial satellites atop Chinese rockets despite the punishing trade sanctions imposed on China because of its missile sales to Pakistan.

Senators cited a series of letters Armstrong wrote Clinton. In one, written in October 1993, Armstrong listed numerous issues on which he had supported the president, before adding that he needed Clinton's help on the export matter, lest Hughes lose jobs in politically crucial California.

"This will be public and political shortly," Armstrong wrote.

"I'm concerned about people who are very powerful and in contact with the president politically urging him to do something," Sen. Pete V. Domenici (R-N.M.) told him. "You need some help in letter-writing."

Armstrong replied that he was worried that the satellite restrictions then in place would cause the loss of $1 billion in Chinese satellite deals to Germany, which was precisely what happened. "This was all about policy, not politics," he said.

Soon after the writing of the October 1993 letter, Clinton named Armstrong chairman of the President's Export Council, a position from which he helped persuade Clinton in 1996 to transfer authority over satellite exports from the State Department to the more flexible Commerce Department.

Sen. Fred D. Thompson (R-Tenn.), the committee chairman, said it is understandable that Hughes would move to protect its interests, but he expressed alarm that a company with a huge financial stake would engage in the delicate diplomatic talks with top Chinese officials that it did in 1993.

"It points out the need for a strong counterbalance [to industry pressure] within our government," he said.

Armstrong said he was in close contact with U.S. government officials in all his discussions with Beijing about reining in its overseas weapons sales.

Dorfman supported granting the relatively strict State and Defense departments more power in monitoring Chinese launches, especially the contacts U.S. companies have with the Chinese after their rockets blow up and U.S. satellites are destroyed.

The Hughes executive pleaded with the senators not to end U.S. satellite deals in China. In particular, he asked for prompt Commerce licensing of a $500 million satellite deal there to create a cellular phone network in 22 Asian countries, despite fears it would strengthen the Chinese military's communications. Delays beyond August could cost the firm hundreds of millions of dollars already invested.

"It is in the interests of national security" to have a vibrant U.S. satellite industry, he said. "I strongly urge the members to take particular care when legislating in this area."