Bernard L. Schwartz (with Irene)
March 5, 2001 Bernard L. Schwartz, CEO of Loral Space & Communications, and his wife Irene are veterans of the Mother Jones 400 (ranked third in 1998, first in 1997, and seventh in 1996). They have historically been big supporters of Bill Clinton and his party. This year they gave $1,317,000 -- nearly every penny of it to the Democrats. In 1997 Schwartz celebrated his 71st birthday with the Clintons at the White House. The next year, he became the focus of a controversy when Clinton's critics suggested that the president had rubberstamped Loral's satellite launches in China. Mother Jones reported that the company had apparently ignored security procedures by faxing Beijing a draft report about a rocket crash that destroyed a Loral satellite (see "Heavy Metal"). An extensive federal investigation into the matter has since concluded there was "not a scintilla of evidence -- or information -- that the president was corruptly influenced by Bernard Schwartz," according to an internal document obtained by the Los Angeles Times. Congress responded to the controversy by transferring regulatory authority over satellite exports from the Commerce Department to the State Department, which was perceived to be less sympathetic to companies like Loral. Prudential Securities analyst Charles Gabriel predicted before the election that a Gore win could "reopen doors that were closed in the wake" of the scandal, boosting Loral's stock. The company's profits have long been tied to the government. The Loral Corporation, once a major defense contractor, changed its name to Loral Space & Communications and its business to telecommunications during the 1990s. Over the past year, Globalstar, a satellite communications company in which Loral claims a 38 percent stake (and of which Schwartz serves as president and CEO), has halted payments on its debts and is struggling to avoid bankruptcy, a fate that befell its competitor, Iridium. At first, Schwartz told worried investors not to fear: Globalstar would find a market for mobile phone service via satellites. "I can't argue with the premise that Iridium didn't find the customers," he told AFX News. "But we will find the customers." But in February, Schwartz announced that it was halting its investments in Globalstar, which had attracted only 32,100 subscribers. The company was founded by Loral and wireless technology developer Qualcomm, Inc., run by Irwin M. Jacobs (No. 100, $333,000). -- Amy Paris | | |
