Nuclear Construction Company Becomes 1st Chinese SOE to Plead Guilty to U.S. Export Violations
The China Nuclear Industry Huaxing Construction Co. (Huaxing) became the first state-owned entity to plead guilty to U.S. export violations after it pleaded guilty to violating the International Emergency Economic Powers Act and the Export Administration Regulations, the Department of Justice said. The company assisted in the illegal export of controlled high-performance epoxy casings from the U.S. to Pakistan for use in a nuclear power plant that Huaxing was building as part of a China-Pakistan nuclear cooperation pact. The company will pay at least $2 million in fines, and will be required to implement an export compliance and training program and undergo third-party audits of its compliance efforts.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
Huaxing’s guilty plea is related to the December 2010 guilty plea of PPG Paints Trading (Shanghai) Co., a Chinese subsidiary of Pittsburgh-based PPG Industries, DOJ said. Together, PPG Paints Trading and its parent company, PPG Industries, paid $3.75 million in criminal and administrative fines and more than $32,000 in restitution. In November 2011, Xun Wang, the highest ranking executive at the Chinese PPG subsidiary, pleaded guilty to conspiracy and agreed to cooperate with the government’s investigation, it said.
Beginning in or about June 2006 through in or about March 2007, Huaxing conspired to export PPG Industries’ high-performance coatings from the United States to the Pakistani nuclear plant Chashma II, via China, without first having obtained the required export license from the Bureau of Industry and Security, in violation of the EAR. The organization in control of the Pakistani power plant, PAEC, has been a restricted end-user since the 1998 first successful detonation of a Pakistani nuclear device. Exports of EAR items to PAEC were subject to Bureau of Industry and Security licensing requirements.
In January 2006, PPG Industries sought such an export license for the shipments of coatings to Chashma II, DOJ said. Following BIS denial, Huaxing agreed upon an arrangement whereby the high-performance coatings would be sold to a third-party distributor in China which, in turn, would deliver the coatings to Huaxing for application at Chashma II, DOJ said. Further, members of the conspiracy said, or caused to be said, that the coatings were to be used at a nuclear power plant in China, the export of goods to which did not require a BIS license.
Huaxing also pleaded guilty to violating the IEEPA and the EAR when it willfully exported, reexported, and transshipped and/or attempted to export, reexport and transship three shipments of the high-performance coatings destined for Chashma II between June 2006 and March 2007 without the required BIS license, DOJ said. The total value of the three illegal exports in question was approximately $32,000.