U.S. Charges Five Individuals, Five Firms with Stealing Trade Secrets from DuPont to Sell to Chinese Firms

Feb. 8, 2012
A grand jury indictment contains charges in a 'long-running effort to obtain U.S. trade secrets for the benefit of companies controlled by the government of the People's Republic of China.'

U.S. authorities Wednesday unveiled charges against five people and five companies in an espionage scheme aimed at stealing trade secrets for Chinese-controlled firms from chemical giant DuPont.

A grand jury indictment unsealed in San Francisco contains charges in a "long-running effort to obtain U.S. trade secrets for the benefit of companies controlled by the government of the People's Republic of China," the Justice Department said.

In the latest in a series of industrial espionage cases, the indictment said the Beijing government had "identified as a priority" the development of chloride-route titanium dioxide (TiO2) production capabilities. TiO2 is a valuable white pigment used in paint, plastics and paper.

"The theft of America's trade secrets for the benefit of China and other nations poses a substantial and continuing threat to our economic and national security, and we are committed to holding accountable anyone who robs American businesses of their hard-earned research," said Lisa Monaco, assistant attorney general for national security.

Among those charged was the Pangang Group Company Ltd., a state-owned enterprise in Sichuan Province, and three subsidiaries, and USA Performance Technology Inc., a Calif.-based engineering consulting company.

According to the indictment, USA Performance Technology entered into a contract worth more than $20 million to convey TiO2 trade secret technology to Pangang Group companies.

The scheme conducted over several years helped develop large-scale TiO2 production capability in China, including a planned 100,000-ton capacity factory at Chongqing, the Justice Department said.

The individuals charged included Singapore-born Walter Lian-Heen Liew, also known as "Liu Yuanxuan," 54, a naturalized U.S. citizen and co-owner of USAPTI, along with his wife and Chinese-born co-owner Christina Hong Qiao Liew, known as "Qiao Hong," 49.

Also charged was Chinese national and Pangang executive Hou Shengdong, 42; former DuPont engineer Robert Maegerle, 76; and another former DuPont employee, Tze Chao, 77.

Walter Liew was arrested in August and has been detained as a flight risk, officials said. His wife was arrested at the same time and was released under travel restrictions and electronic monitoring.

Maegerle was arrested Wednesday in Delaware and Chao was served with a summons to appear in court March 1. A warrant has been issued for Hou's arrest, officials said.

According to the indictment, China was a major importer of the chemical ,and DuPont was unwilling to sell its technology to Chinese firms.

DuPont invented the chloride-route process for manufacturing TiO2 in the late-1940s and since then has invested heavily in research and development to improve that production process. The global titanium dioxide market has been valued at roughly $12 billion, and DuPont has the largest share of that market, officials said.

The chloride-route process is more efficient and cleaner than the sulfate-route process prevalent in China.

The FBI opened an investigation after DuPont reported that its TiO2 trade secrets had been misappropriated.

In a separate industrial espionage case, a Chinese scientist was sentenced in December to more than seven years in prison for stealing secrets on organic insecticides from Dow AgroSciences, where he worked from 2003-2008.

Copyright Agence France-Presse, 2012

See Also:

Guilty Verdict in Theft of Motorola Secrets for China

Three Lessons From DuPont Trade Secret Case

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