Sources say the report will claim that Hughes Space and Telecommunications and Space Systems Loral exchanged data with Chinese launch vehicle designers which they knew violated U.S. restrictions.

The report will say that the data was given to better improve the rocket's reliability so that U.S. satellite makers could use the rockets to launch their satellites.

The companies did not know that the data would also improve Chinese ballistic missiles, "although that was in effect the results of their actions," a source told this service Thursday.

If the charges contained in the final Cox Commission Report are validated, the issue of U.S. space launch technology transfer to China will likely explode again as it did last summer, triggering another round of finger pointing in Washington and possible legal sanctions. A U.S. Justice Dept. investigation into similar charges is ongoing.

Potential responses to the issue by the administration are serious. Should either Hughes or Loral suffer a suspension of their export capabilities for satellites, the effect would be damaging to U.S. commercial space business, which accounts for nearly 70% of the sales of satellites worldwide.

The Cox panel was formed last year when accusations were made that Hughes and Loral improperly transferred space launch technology to Chinese launch officials following Long March launch vehicle failures in 1995 and 1996.

The failures resulted in loss of the company's satellite payloads. Both firms have denied heatedly any charges of improper actions, although Hughes immediately contacted the Defense Department in 1996 following a round of Chinese discussions, asking for clarifications of the boundaries of the technology talks then underway, according to a 1998 Congressional hearing.

The Cox report, expected by early next week, does not claim that senior managers of either company knew of the exchanges or approved of them, sources that have seen the report say.

Some members of Congress have claimed that the space launch technology allegedly transferred could improve China's ballistic missile accuracy and directly threaten U.S. interests. A recent U.S. Senate report said that China's missile programs had been aided by the commercial rocket exchanges but not as a result of any deliberate effort by the U.S. industry.

The Cox report is expected to lay out specific details on the 1995 and 1996 exchanges. A news report by the Washington Post Sunday suggested that the report will also say that space insurers have exchanged technology data with China in an attempt to learn of the reliability and accuracy of Chinese space boosters for insurance purposes.

Much of this information, needed for insurers of the Chinese rocket payloads, was similar in nature to the data allegedly exchanged by the two aerospace firms, the report will say.

MilSpace - SpaceDaily Special Report

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