Former DuPont Scientist Pleads Guilty to Economic Espionage for China
On March 2, 2012, the U.S. Attorney's Office for the Northern District of California announced that Tze Chao, a former scientist with DuPont, pleaded guilty to conspiracy to commit economic espionage. He admitted that he provided trade secrets concerning DuPont's proprietary information to companies controlled by the Chinese government.
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Chao Tried to Satisfy China’s Interest in TiO2 Technology
Chao, who was employed by DuPont from 1966 to 2002, admitted that he provided trade secrets concerning DuPont’s proprietary titanium dioxide (TiO2) manufacturing process to companies he knew were controlled by the Chinese government. Chao admitted that beginning in 2003, the year after he left DuPont, he began consulting for the Pangang Group, a Chinese government-controlled company that produces TiO2.
According to his plea agreement, Chao had “learned that the [Chinese] government had placed a priority on developing chloride-process TiO2 technology in a short period of time and wished to acquire this technology from western companies.”
(According to DOJ, Titanium dioxide pigment (TiO2) is a commercially valuable white pigment with numerous uses, including coloring paint, plastics and paper. DuPont invented the chloride-route process for manufacturing TiO2 in the 1940s and has since invested heavily in research and development to improve that production process. The global TiO2 market has been valued at roughly $12 billion and DuPont has the largest share of that market. The chloride-route process is more efficient and cleaner than the sulfate-route process prevalent in China.)
Provided DuPont’s Trade Secrets to Pangang Group
In 2008, Chao submitted a bid to design a 100,000-ton per year TiO2 facility for the Pangang Group. In connection with his bid, Chao provided DuPont information to the Pangang Group, including information that, according to his plea agreement, he “understood to be secret to DuPont and not available to the public.” Chao did not win the contract but in 2009 was asked by Pangang Group to review design work done by USA Performance Technology, Inc. He did so, and in the course of this review, provided additional DuPont trade secret information to Pangang Group.
Pangang Group and Others Indicted for their Efforts to Sell DuPont Trade Secrets
Chao’s plea comes in connection with the superseding indictment returned in February 2012 charging Walter Liew, Christina Liew, Robert Maegerle, and USA Performance Technology, Inc., among others, for their efforts to sell DuPont trade secrets to companies controlled by the Chinese government. Those companies—the Pangang Group and three subsidiaries—also were named as defendants in the indictment and charged with conspiracy to commit economic espionage and attempted economic espionage.
As part of his plea agreement, Chao agreed to cooperate in the investigation and prosecution of this case.
(See ITT's Online Archives 12020913 for summary of Pangang Group and its subsidiaries being charged for trade secret theft.)