US charges China company with conspiracy to steal DuPont TiO2 tech

08 February 2012 22:06  [Source: ICIS news]

TiO2 is used in paintHOUSTON (ICIS)--The US government has charged several executives and China-based Pangang Group with conspiracy to steal DuPont's titanium dioxide (TiO2) technology, according to documents made available on Wednesday.

The indictments are the latest development of what the US government alleged was a scheme by a Chinese-state-controlled company to obtain a chloride route to produce TiO2.

The US accused Walter Liew, a businessman based in California, of acting as a middle man through his company, USA Performance Technology. He allegedly provided the stolen DuPont technology to a Pangang Group subsidiary, which was developing a 100,000 tonne/year TiO2 plant in Chongqing in China.

Liew, a US citizen who was arrested in August, allegedly acquired DuPont's chloride-route TiO2 technology from Robert Maegerle, a process engineer for DuPont from 1956 to 1991, the US said.

Pangang also allegedly received help from Tze Chao, another former DuPont employee whom it hired as a consultant.

Liew, his wife and business partner Christina Liew, Maegerle and Chao have all been charged with either conspiracy to commit espionage, conspiracy to commit theft of trade secrets or both.

In addition, the US filed conspiracy charges against the Pangang Group, along with its subsidiaries Pangang Group Steel Vanadium and Titanium; Pangang Group Titanium Industry; and Pangang Group International Economic & Trading.

The US also charged Hou Shengdong, who served as Pangang Titanium's vice director of the chloride process of TiO2 project department.

According to the US, the Pangang Group is a Chinese state-owned enterprise controlled by the government's State-Owned Assets Supervision and Administration Commission of the State Council (SASAC).

The SASC, in turn, is under direct control of the State Council, the nation's highest government authority, the US alleged.

The events leading up to the indictments date back to the 1990s, when Walter Liew learned that the Chinese government was eager to develop a chloride route to make TiO2, the US alleged.

DuPont had the technology, and Liew put together a team of former DuPont employees who could help him obtain it and sell it to companies controlled by the Chinese government, according to the US charges.

By 1998, Maegerle had joined Liew's team, the US alleged. Maegerle had detailed knowledge of DuPont's TiO2 technology.

Starting in 2003, Liew began writing to a subsidiary of the Pangang Group, claiming that he possessed the technology needed to build a new TiO2 plant, the US alleged.

Pangang then hired Chao, whom it instructed to contact Liew about the TiO2 technology, the US alleged.

In 2008, Pangang put out a request for proposal for a 100,000 tonne/year TiO2 project in Chongqing. Only Liew and Chao's companies submitted bids, the US alleged.

By 2009, Liew's company was hired to design the TiO2 project in Chongqing, the US alleged. The basic design information that Liew's company provided to the Pangang Group contained several features based on technology that the US alleged was stolen from DuPont.

Pangang then requested that Chang review Liew's designs and make improvements, the US alleged. Chao's suggestions relied, in part, on DuPont trade secrets, the US alleged.

US prosecutors said they have evidence showing that Walter Liew allegedly obtained over $20m (€15m) from the sale of TiO2 technologies to Chinese companies.

In August 2010, DuPont received an anonymous letter indicating that Liew had embezzled the company's TiO2 technology, according to court documents.

In April 2011, DuPont sued Liew, and his company, accusing them of stealing the company's TiO2.

DuPont then referred the alleged theft to law enforcement, which ultimately led to the indictments.

($1 = €0.75)


By: Al Greenwood
+1 713 525 2645



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