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PPG, Paint Subsidiary to Pay $4M For Exports to Pakistan Nuclear Agency

Wednesday, December 22, 2010

PPG Industries and its Chinese paint subsidiary will pay more than $4 million to settle federal criminal and civil violations involving shipments of protective coatings to Pakistan for the construction of a nuclear power plant.

PPG announced Tuesday (Dec. 21) that both the parent company and PPG Paints Trading Shanghai (China) (SPT) had reached settlement with the U.S. Department of Justice and the U.S. Department of Commerce’s Bureau of Industry and Security (BIS) in the 2006 case.

Under the agreement, SPT has pleaded guilty in U.S. District Court to four charges under U.S. export control laws for shipping “small quantities of protective coatings” to the Pakistan Atomic Energy Commission “without the required export license,” PPG said in a statement.

PPG Avoids Prosecution

SPT will pay a $3 million fine for civil and criminal violations as well as $32,319 in criminal forfeitures, and will serve five years of corporate probation, PPG said.

In addition, PPG Industries has entered into a cooperation and non-prosecution agreement (NPA) with the Justice Department, under which the U.S. government has agreed not to bring charges related to this matter against PPG or its affiliates.

The settlement requires PPG to meet the conditions of the NPA for two years, including reporting any future violations and maintaining an ethics and export compliance program. PPG will also pay a $750,000 civil penalty to resolve the BIS investigation and “to satisfy certain compliance and reporting obligations,” the company said.

PPG said it would record a charge in the fourth quarter of 2010 equal to the amount of the agreed-upon payments.

‘Commitment to Compliance’

PPG issued this statement:

“PPG stated that it acted promptly once it learned of the wrongdoing. With the assistance of outside counsel, the company immediately began an internal investigation, quickly responded to administrative and federal grand jury subpoenas, and cooperated with the DOJ and BIS on their investigation.”

“PPG noted that it has a long and sustained commitment to compliance with the law and to operating in accordance with the highest ethical standards throughout its organization. The company added that this includes a commitment to compliance with U.S. export control laws and that the company will continue its efforts to enhance its export compliance program.”

Pittsburgh-based PPG, a global coatings and specialty products provider, operates in more than 60 countries. Sales in 2009 were $12.2 billion.