Allison Kilkenny: Unreported

Clinton blasts Bush for not stopping a project her husband approved

Posted in Bush, politics by allisonkilkenny on April 30, 2008

Source: Steven Thomma, McClatchy Newspapers

INDIANAPOLIS — It’s a story Hillary Clinton loves to tell, about how the Chinese government bought a good American company in Indiana, laid off all its workers and moved its critical defense technology work to China.

And it’s a story with a dramatic, political ending. Republican President George W. Bush could have stopped it, but didn’t.

If she were president, she says, she’d fight to protect those jobs. It’s just the kind of talk that’s helping her win support form working-class Democrats worried about jobs and paychecks, not to mention their country’s security.

What Clinton never tells in the oft-repeated tale is the role prominent Democrats played in selling the company and its technology to the Chinese. She never mentions that big-time Democratic contributor George Soros helped put together the deal to sell the company, or that the sale was approved by the administration of her husband. “Hillary Clinton must have been hoping we Hoosiers have short memories,” Ed Dixon of Valparaiso said in a letter to a local newspaper after a recent Clinton visit. “Her husband was president at the time and allowed this to happen.”

“They would have us believe Bush was behind this sale,” added Fred Sliger of Valparaiso in another letter, “when in fact the Clinton administration rubber-stamped this along with the sale of numerous other high-tech secrets to the Chinese. …Let’s get the facts straight.”

Here’s how Clinton tells it in a recent television ad she aired in Indiana.

“Right here, over 200 Hoosiers built parts that guided our military’s smart bombs to their targets,” the New York senator says.

“They were good jobs, but now, they’re gone to China. And now America’s defense relies on Chinese spare parts. George Bush could have stopped it, but he didn’t. As your president, I will fight to keep good jobs here, and to turn this economy around. I’m Hillary Clinton and I approve this message because American workers should build America’s defense.”

Here’s how she told it a few weeks ago at a union meeting in Washington.

“A Chinese company bought the company, called Magnequench, and they wanted to move the jobs to China. The people in Indiana protested, did everything they could to convince the Bush administration that this was a terrible mistake. Couldn’t even get a hearing,” she said.

“The jobs went to China, but so did the technology. And now the United States military has to buy the magnets we need for the smart bombs we invented from China,” she said as the union members booed.

Here’s the complete story:

In 1995, General Motors decided to sell the Indiana-based Magnequench to a Chinese-American consortium. The consortium included:

  • San Huan New Materials and Hi-Tech Co, a company owned by the Chinese Academy of Sciences;
  • Onfem Holdings, a company controlled by the State Nonferrous Metals Industry Administration in the Peoples Republic of China;
  • Soros Fund Management, headed by George Soros;
  • The Sextant Group, founded by Archibald Cox Jr.;

Soros, of course, is the wealthy investor who has contributed vast sums to Democratic candidates and liberal causes.

He’s given more than $250,000 to Democratic campaign committees, tens of thousands to individual Democratic candidates, and about $2.5 million to the liberal group, Moveon.org, according to Federal Election Commission records.

He’s also contributed to Hillary Clinton’s Senate campaign, and to Obama’s Senate and presidential campaigns. He contributed to Republican Sen. John McCain’s first presidential campaign, in 1999, when he was running against Bush for the Republican nomination.

Because Magnequench made magnets for smart bombs, the sale to a group including foreign owners required approval under a 1988 law.

After a 30-day review, the Clinton administration’s Committee on Foreign Investment in the United States, which includes representatives of the Pentagon, approved the sale in 1995.

The buyers reportedly promised to keep manufacturing in the United States.

Yet in 1998, they started building a new plant in China, close to the source of the raw materials used in the magnets.

The company reorganized in 1999, buying out Soros as well as Onfem Holdings.

In 2000, Magnequench bought a magnet factory in Valparaiso, Indiana, the same year it started operations at its China plant.

In 2001, it closed its original plant in Anderson, Indiana.

And in 2003, it decided to close the Valparaiso plant, laying off its 225 workers.

Indiana politicians asked the Bush administration to intervene.

Sen. Evan Bayh, D-Ind., and Rep. Pete Visclosky, D-Ind., said the move would leave the United States without a significant domestic source of rare-earth magnets used in smart bombs. The Valparaiso plant made about 80 percent of the magnets bought by the Pentagon, they said.

The administration did not block the move.

The Clinton campaign did not respond to requests for comment.

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