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Ex-PPG Director Admits Nuclear Paint Smuggling

Wednesday, November 16, 2011

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The former managing director of PPG Industries’ Chinese subsidiary has pleaded guilty in federal court to conspiring to ship protective coatings to Pakistan for the construction of a nuclear reactor.

Dr. Xun Wang, 51, former managing director of PPG Paints Trading Co. of Shanghai (SPT), entered her plea Tuesday (Nov. 15) before U.S. District Judge Emmet Sullivan in Washington, DC.

 Nuclear power plant
China is helping Pakistan build and expand its Chashma 2 nuclear power plant. Xun Wang, the former PPG director who admitted shipping coatings for the project, is a Chinese citizen.

Wang, who earlier denied involvement in any secret deal, has also agreed to cooperate in what authorities call a continuing investigation and to pay $200,000 to the Commerce Department, whose Bureau of Industry and Security (BIS) has been investigating the case.

Wang still faces up to five years in prison and a $250,000 fine. She had faced more serious charges that carried up to 65 years in prison.

Company Settlement

In December 2010, PPG Paints Trading and parent company PPG Industries of Pittsburgh agreed to pay a total of more than $4 million to settle federal criminal and civil violations in the case, which involved shipments of protective coatings to Pakistan in 2006 for use at a nuclear power plant.

Under that settlement, PPG Paints Trading pleaded guilty in U.S. District Court to four charges under the International Emergency Economic Powers Act and U.S. Commerce Department Export Administration Regulations. PPG said the case involved “small quantities of protective coatings.”

Justice Department documents said the charges stemmed from “the illegal export, re-export and/or transshipment of high-performance coatings from the U.S. to the Chashma 2 Nuclear Power Plant in Pakistan (Chashma 2), via the People’s Republic of China without the required export license.”

3 Illegal Shipments

Chashma 2 is a Pakistan Atomic Energy Commission power plant in Punjab province. Some U.S. experts say there is evidence that the plant, which began operation in May, will process spent reactor fuel into weapons-grade plutonium. The nuclear plant is Pakistan’s third, and the country plans two more by 2030.

In November 1998, following Pakistan’s first detonation of a nuclear device, the U.S. Commerce Department placed PAEC and its plants and reactors on a list of prohibited end users.

At that time, Wang and her husband owned a paint import-export business, which they sold to PPG Industries in 2006 for more than $17 million. PPG then hired Wang to run the new subsidiary.

Shortly thereafter, the company sought a license to “sell paint to an unnamed government-owned Chinese company, for use on the steel lining of the containment area of Chashma II,” the Associated Press reported.

When the U.S. government denied the application, the company sent three shipments of coatings from the United States to Pakistan through a third-party distributor in China without the required license, Wang admitted.

PPG: ‘Commitment to Compliance’

Wang, who has a doctorate in physics, is a Chinese citizen and lawful U.S. permanent resident. She was arrested in July.

“PPG has a long and sustained commitment to compliance with the law and to operating in accordance with the highest ethical standards throughout the organization,” PPG said in a statement at the time of Wang’s arrest.

“PPG’s commitment to compliance includes compliance with U.S. export control laws, and PPG is continuing its efforts to enhance its export compliance program.”

The company said it would make no further statement in the case.

‘Ongoing Investigation’

Wang’s plea silenced her lawyers’ initial contention that the charges against her were more “technical” than substantive.

In a statement Tuesday, U.S. Attorney Ronald Machen noted the earlier corporate pleas in the case and said: “Today we are pleased to see the former managing director of that subsidiary accept responsibility for her role in the crime.

“We also welcome the defendant’s decision to cooperate with the government in our ongoing investigation of this blatant violation of U.S. export laws.”


Tagged categories: Containment; Epoxy; High-performance coatings; Linings; Nuclear Power Plants; PPG; Protective coatings

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