BEIJING, July 7 -- The US government is poised to sue Boeing Co. for selling jets to China equipped with a computer chip that has military applications, a report said.

    

Visitors speak near models of the Airbus A380 at the Paris Air Show at Le Bourget, near Paris, June 17, 2005. [Reuters]

The aviation giant, whose production base is in Seattle, could be hit with up to 47 million dollars in fines if found guilty of 94 violations of the Arms Control Act, according to the Seattle Times report.

    Boeing and government officials could not be reached for comment on the report, which could be another blow to the company's standing in Washington after a series of corruption scandals.

    Aside from the fines, Boeing faces a "potential but unlikely three-year suspension from government contracts", the newspaper said.

    Boeing failed to get export licenses for some microchips used in 96 jets it sold to China and other countries between 2000 and 2003, government officials maintained in civil charges cited by the report.

    The State Department charges against Boeing relate to the export of jets that contain a gyroscopic chip called QRS-11, used as a backup system in determining a plane's orientation in the air.

    The Times cited a Boeing document that refers to the chip as "relatively unsophisticated" technology, but notes that the gyrochip also has been used to help stabilize and steer guided missiles.

    The State Department's Directorate of Defense Trade Controls claims the company sold the technology to China "deliberately and repeatedly" even after it had been warned to stop, the Seattle Times said.

    Boeing "was aware that a Department export license was required but chose to export without authorization by using false statements on documents", it quoted the charges as saying.

Boeing eventually acknowledged to the State Department it had exported 96 aircraft and 27 spare gyrochip-equipped flight boxes without export licenses, according to the report.

The QRS-11 chip, made by a unit of BEI Technologies in Concord, California, was described as being just over 1-1/2 inches (3.8 centimeters) in diameter and sells for between 1,000 and 2,000 dollars. The chip reportedly works in tandem with one made by the French firm Thales.

The newspaper reported that the State Department's charging letter contends that Thales told Boeing in 2000 that an export license was needed for the gyroscope system.

Such systems require a license every time they are moved to another country. In addition, in China's case, sanctions introduced after the 1989 Tiananmen Square crackdown mean that exports of military items require a specific presidential waiver from the White House.

The US Air Force in March lifted a ban on business with three Boeing units, clearing the way for them to compete for satellite launches worth billions of dollars.

The ban was slapped on the Boeing units in July 2003 after they were discovered with proprietary information belonging to Lockheed Martin that helped them win a 1998 rocket contract.

The suspension came just two weeks after Boeing's chief financial officer, Michael Sears, was sentenced to four months in prison for his role in hiring a top Air Force procurement official who had favored Boeing in contract negotiations.

The official, Darleen Druyun, is serving a nine-month prison term.

(Source: China Daily/Agencies)