Justice Department Declines Further ActionPayment of Fine Spread over Seven Years
Loral Space &
Communications announced today that it has reached a
settlement with the U.S. government in a case relating to the
company’s involvement in a review of a Chinese rocket launch failure
in 1996.
Loral also announced that it has been informed that the Justice
Department has terminated its investigation of the company and has
declined to pursue the matter further.
Loral has agreed to pay a civil fine of $14 million to the State
Department without admitting or denying the government’s charges. The
cost of the fine (approximately $0.04 per share) will be reflected in
Loral’s 2001 fourth quarter results. Under the terms of the agreement
the fine is to be paid over seven years, without interest, resulting
in a cash impact annually of approximately $2 million.
Loral also has strengthened its export compliance program. The
company’s past and future compliance costs, as agreed to with the
government, will total at least $6 million, $2 million of which has
already been expensed.
Loral’s chairman and chief executive officer, Bernard L. Schwartz,
said:
“Loral and its employees are patriotic, law-abiding citizens and
we take this matter very seriously. We historically have had an
excellent security record and are committed to vigorous compliance
with export control laws. The company has instituted an extensive new
training program, significantly expanded staff, and greatly improved
oversight in the area of export control.
“This matter grew out of the activities of an Independent Review
Committee (IRC) set up to inform the insurance industry about the
causes of a 1996 Chinese rocket failure. The IRC was organized at the
request of the insurance underwriters and was composed of
representatives from Loral and five other satellite and satellite
launch companies.
“Upon learning that a copy of the IRC’s preliminary report was
mistakenly sent to the Chinese by a Loral employee, the company made
an immediate and voluntary disclosure to the State Department noting
that an effort had been made to delete all sensitive material in
advance. Nonetheless, Loral accepts full responsibility for the matter
and expresses regret for its failure to obtain appropriate State
Department approval.”
Loral Space & Communications is a high-technology
company that concentrates primarily on satellite manufacturing and
satellite-based services. For more information, visit Loral’s web site
at www.loral.com.
This document contains forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. In
addition, from time to time, Loral Space & Communications Ltd. or its
representatives have made or may make forward-looking statements,
orally or in writing. Such forward-looking statements may be included
in, but are not limited to, various filings made by the company with
the Securities and Exchange Commission, press releases or oral
statements made with the approval of an authorized executive officer
of the company. Actual results could differ materially from those
projected or suggested in any forward-looking statements as a result
of a wide variety of factors and conditions. These factors and
conditions have been described in the section of Loral’s annual report
on Form 10-K for the fiscal year ended December 31, 2000, entitled
“Certain Factors That May Affect Future Results,” and the company’s
other filings with the Securities and Exchange Commission. The reader
is specifically referred to these documents regarding the factors and
conditions that may affect future results.
