PaintSquare.com


The First Word in Protective & Marine Coatings

A Product of Technology Publishing / PaintSquare
JPCL | PaintSquare News | Durability + Design | Paint BidTracker

Download the FREE Equipment and Rental Resource Guide

Paint and Coatings Industry News

Main News Page


Chinese TiO2 Firm Fights Spy Charges

Tuesday, April 3, 2012

More items for Coating Materials

Comment | More

One of China’s largest titanium dioxide suppliers is fighting a U.S. indictment alleging that it conspired with former DuPont employees to steal TiO2 secrets from DuPont, the world’s leading producer of the pigment.

The Pangang Group Co., based in Sichuan Province, and several related Pangang companies have filed a federal-court motion in San Francisco to dismiss an indictment charging them with conspiring to buy and/or steal trade secrets to benefit the Chinese government.

 Titanium dioxide
“The People’s Republic of China publicly identified the development of chloride-route titanium dioxide (TiO2) production as a scientific and economic priority,” the indictment says.

“The People’s Republic of China publicly identified the development of chloride-route titanium dioxide (TiO2) production”—a process developed exclusively by DuPont—“as a scientific and economic priority,” says the indictment.

Indeed, the case is the first in the U.S. to essentially indict a foreign country for stealing trade secrets from a U.S. company.

Production Secrets

The Pangang companies include Pangang Titanium, which claims to have “the largest integrated titanium complex in China” and to be one of the country’s largest titanium pigment producers. Other Pangang companies produce steel and aluminum.

The U.S. government alleges that the companies contracted with a California couple and several former DuPont employees of Chinese ethnicity to steal production secrets from their longtime employer. Over many years, the government says, DuPont developed a proprietary production process for TiO2 that was more efficient and more environmentally friendly than the conventional process being used in China.

DuPont supplies about one-fifth of the world’s $12 billion TiO2 market. The pigment, used in many paints and coatings, is in short supply worldwide.

In a recent filing in U.S. District Court in San Francisco, the Pangang companies argue that the indictment against the company should be dismissed because the summons was not delivered correctly.

Summons Challenged

The U.S. government “delivered summonses to an uncharged U.S. corporation that is not authorized to accept service on their behalf,” the company’s lawyers contend.

The summons for Pangang was delivered to a New Jersey company called Pan America Inc., which Pangang argues is a “separate and distinct legal entity” and was thus not a valid proxy for Pangang.

 Pangang Titanium offers views of its titanium dioxide factories on its website.

Pangang Titanium

Pangang Titanium offers views of its titanium dioxide factories on its website.

On its website, Pan America Inc. identifies itself as “a subsidiary of Pangang Group Ltd., which is one of the largest iron and steel conglomerats [sic] in southwest of China.”

Pan America specializes in “import and export of steel products and related commodities and services,” the site says.

Pleas, Contracts

Last month, a 36-year DuPont titanium dioxide research scientist pleaded guilty to participating in the scheme, and he is now cooperating with prosecutors in the case.

In his guilty plea, Tze Chao, 77, of Newark, DE, said CCP officials personally appealed to his ethnic Chinese pride in sharing DuPont information that he knew to be—and had sworn to keep—secret. The officials, who were also company officials of Pangang, told Chao that he should “work for the good of the PRC.”

The Pangang companies signed nearly $30 million in contracts with California businessman Walter Liew and others to establish TiO2 projects in China using DuPont’s exclusive “chloride-route” process, the indictment says.

407 Pages of Plans

Prosecutors say the plot dates to at least 2003, when the Pangang companies decided to build a new TiO2 factory featuring the chloride-route technology.

In 2004, they said, the companies recruited Chao, who had retired from DuPont and started his own consulting firm. Chao then contacted Liew, who had already offered to sell his services to Pangang, and Chao and Liew then flew to China to meet with Pangang officials about building the new factory.

Both agreed to provide information they had obtained from DuPont, and Chao agreed to recruit other former DuPont employees. One of them was Robert Maegerle, who agreed to turn over 407 pages of plans for a new TiO2 factory DuPont was then building in Taiwan, prosecutors say. Maegerle, now 76, of Harbeson, DE, has also been indicted in the scheme.

Another DuPont employee accused of working with Liew was engineer Timothy Spitler, of Reno, NV, considered a TiO2 expert. Spitler was not indicted in the case, but he was identified in Chao’s guilty plea and was expected to be a government witness. Spitler, however, he took his own life in January, reports said.

The U.S. Attorney’s office has not yet responded to the Pangang motion. The company has requested a hearing June 7.

   

Tagged categories: DuPont; Pigments; Raw materials; TiO2; Titanium dioxide

Comment from peter gibson, (4/4/2012, 12:56 PM)

It is astounding ,that a big corporation like Dupont ,does not take steps to control their trade secrets. We all know how devious the Chinese are.How come,Dupont is so oblivious,especially regarding scarce Ti02. DuPont deserves to be ripped off.


Comment Join the Conversation:

Sign in to our community to add your comments.

Wasser High-Tech Coatings Inc.
Wasser Coatings Protect

some of the most important bridges in the country; learn about our NEPCOAT-approved system and our entire range of MCU & Polyurea coatings. 1-800-627-2968 www.wassercoatings.com


Sherwin-Williams
Nova-Plate® 325

• Extends Service Life
• Single Coat Application
• Cure to Service in 24 Hours


Mitsubishi Gas Chemical America
Performance Amine 1,3-BAC

A highly reactive cycloaliphatic diamine offering superior performance. Reasonable cost and curing efficacy makes it suitable for all types of epoxy resin applications.


Polyval Coatings
POLYFLEX brand Polyurea

high chemical resistant membranes are used extensively to protect our environment in secondary containment applications.


International Paint LLC

International Paint Engineered Coatings

Learn about our solutions for:
  • Structural Steel
  • Piping & Equipment
  • Storage Tanks
  • Pressure Vessels
  • Secondary Containment


    BASF
    New resins from BASF will have metals loving water:

    Excellent corrosion resistance, low VOC, high gloss, thin films basf.us/industrialcoatings
    polyorders@basf.com
    800-231-7868


    Polygon
    POLYGON - Temporary Humidity Control

    We specialize in innovative climate control solutions for industrial painting, utilizing alternative energy sources and combining desiccants with heating or cooling.

  •  
     
     
    Technology Publishing

    The Technology Publishing Network

    The Journal of Protective Coatings & Linings (JPCL) PaintSquare
    Durability + Design Paint BidTracker JPCL Europe

     
    EXPLORE:      JPCL   |   PaintSquare News   |   Interact   |   Buying Guides   |   Webinars   |   Resources   |   Classifieds
    REGISTER AND SUBSCRIBE:      Free PaintSquare Registration   |   Subscribe to JPCL   |   Subscribe to PaintSquare News
    MORE:      About PaintSquare.com   |   Privacy policy   |   Terms & conditions   |   Site Map   |   Search   |   Contact Us
     

    © Copyright 2000-2014, Technology Publishing / PaintSquare, All rights reserved
    2100 Wharton Street, Suite 310, Pittsburgh PA 15203-1951; Tel 1-412-431-8300; Fax 1-412-431-5428; E-mail webmaster@paintsquare.com