Mamco: Victim Of China Anger? -- Firm May Have Been Target Of Opportunity

Mamco Manufacturing Inc., the Ballard aerospace company whose sale to the Chinese government was vetoed by President Bush last Friday, apparently fell victim to lingering anger against China.

The sale of Mamco to the China National Aero-Technology Import and Export Corp. (CATIC) was scuttled because U.S. intelligence agencies were angered that CATIC had tried to steal advanced metallurgical technology used in a U.S. jet engine, congressional sources said.

The engines and their metallurgical technology could have military applications.

The sources, who spoke on condition that they not be identified, said that when CATIC purchased two CFM-56 engines from General Electric in 1984, it agreed not to disassemble them and not to pass the engines on to the Chinese military.

But, the sources said, the engines were given to the military and disassembled.

``While they were messing around, they broke them,'' one source said. ``Then the military agency had the chutzpah to contact GE and ask for parts and service.''

The source said the CFM-56 incident would have led to sharp questioning of Bush administration officials at congressional hearings later this year had the president not ordered the Chinese last Friday to divest themselves of Mamco within 90 days.

The New York Times reported that the Chinese were interested in the technology of fuel-mixing chambers and other components.

Jane's, the authoritative aviation reference, describes the CFM-56 as a high-bypass-ratio turbofan engine. It is jointly produced by General Electric and Snecma of France. Various versions of it are in use on the Air Force's Boeing-built KC-135 aerial tanker and the Navy E-6 communications plane, as well as on some commercial aircraft.

In vetoing the sale, Bush said that ``confidential information available to me concerning some of CATIC's activities raises serious concerns regarding CATIC's future actions.''

Mamco, which manufactures parts and assemblies for Boeing commercial airliners, has no classified contracts. Kenneth Keller, Mamco president, has described his company as a machine shop with no national-security implications.

William Abnett, executive director of the Washington State China Relations Council and a former Beijing-based U.S. government trade official, said people he knew in the Bush administration had told him that the Defense Department and intelligence agencies objected to the sale on the ground that Mamco would offer CATIC ``a firm position in Seattle to conduct its operations.''

But he questioned whether the technology in the CFM-56 was advanced enough to have national-security implications or whether the Chinese would be able to duplicate it.

Abnett also said he had received indications that Bush may have agreed to veto the Mamco sale as part of the political deal in securing enough Senate votes to sustain his veto of a bill that would allow Chinese students in the United States to extend their visas.

In addition, he said, the Mamco sale may simply have been a target of opportunity for government officials who were angered and disappointed that China had not taken more steps to lift the atmosphere of oppression in that country after promising emissaries Brent Scowcroft and Lawrence Eagleburger that it would do so.

The Chinese government lifted martial law in Beijing and released 583 people arrested after last June's crackdown on protesters, but the steps were regarded in Washington largely as window dressing that did little to cool congressional outrage over human-rights violations in China.

As a result, Bush has been sharply criticized in Congress for ``kowtowing'' to the Chinese leadership. That, in turn, has created ``a hell of a lot of animosity'' in the administration toward China, Abnett said.

Keller, the Mamco president, said yesterday that the company's board had decided to decline further comment on Bush's action until its lawyers conferred with administration officials.