Former Managing Director of PPG Paints Trading (Shanghai) Co., Ltd,
Pleads Guilty to Conspiring to Illegally Export
High-Performance Coatings to Nuclear Reactor in Pakistan

     WASHINGTON - Xun Wang, a former Managing Director of PPG Paints Trading (Shanghai) Co., Ltd., a wholly-owned Chinese subsidiary of United States-based PPG Industries, Inc., pled guilty today to conspiring to violate the International Emergency Economic Powers Act, announced Ronald C. Machen Jr., U.S. Attorney for the District of Columbia, and Eric L. Hirschhorn, U.S. Department of Commerce Under Secretary for Industry and Security.

     Wang, 51, entered the guilty plea before the Honorable Emmet G. Sullivan of the U.S. District Court for the District of Columbia. She faces a maximum sentence of five years of incarceration and a fine of up to $250,000. No sentencing date was set. As part of her plea agreement with the government, Wang has agreed to cooperate with law enforcement.

     “At the end of last year, the Chinese subsidiary of a U.S. company pleaded guilty to illegally exporting high-performance coatings for use in a Pakistani nuclear reactor,” said U.S. Attorney Machen. “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.”

     Concurrently, Wang has settled an administrative proceeding brought by the Department of Commerce regarding the same subject matter as her criminal case. As part of her settlement agreement, Wang has agreed to pay a civil penalty of $200,000 with another $50,000 payment suspended, and to be placed on the Department of Commerce's Denied Persons List for a period of five years with an additional five years suspended. As a Denied Person, Wang will be prohibited from directly or indirectly participating in any transaction involving a commodity, software or technology exported, or to be exported, from the United States that is subject to Department of Commerce regulations.

     “Today's plea agreement and civil settlement highlight the fact that individuals -- and not just companies -- face the denial of export privileges, fines, and imprisonment for violations of our export control laws," said Under Secretary Hirschhorn. “Our Special Agents will continue to employ our unique authorities to investigate and disrupt illegal procurement and proliferation networks anywhere in the world.”

     In both the criminal and administrative cases, Wang is accused of conspiring to export, reexport, and transship high-performance epoxy coatings to the Chashma 2 Nuclear Power Plant (Chashma II) in Pakistan, a nuclear reactor owned and/or operated by the Pakistan Atomic Energy Commission (PAEC), an entity on the Department of Commerce’s Entity List.

     The Pakistan Atomic Energy Commission is the science and technology organization in Pakistan responsible for Pakistan’s nuclear program, including the development and operation of nuclear power plants in Pakistan. In November 1998, following Pakistan’s first successful detonation of a nuclear device, the Commerce Department’s Bureau of Industry and Security added the Pakistan Atomic Energy Commission, as well as its subordinate nuclear reactors and power plants, to the list of prohibited end users under the Export Administration Regulations.

     As a restricted end-user, a United States manufacturer seeking to export, reexport or transship any items subject to the Export Administration Regulations to the Pakistan Atomic Energy Commission, or its nuclear power plants or reactors, would first need to obtain a license from the Department of Commerce in the District of Columbia.

     Wang’s guilty plea is related to the December 21, 2010, guilty plea of PPG Paints Trading to a four-count information in the U.S. District Court for the District of Columbia. 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. The combined amount of criminal and civil fines represented one of the largest monetary penalties for export violations in the history of the U.S. Department of Commerce’s Bureau of Industry and Security.

     According to Wang’s plea documents, in January 2006, PPG Industries sought an export license for the shipments of coatings to Chashma II. In June 2006, the Department of Commerce denied that license application. Following that denial, Wang and her co-conspirators agreed upon a scheme to export, reexport and transship PPG Industries’ high-performance epoxy coatings from the United States to Chashma II, via a third-party distributor in the People’s Republic of China, without first having obtained the required export license from the Department of Commerce.

     The plea documents further allege that from around June 2006 through around March 2007, Wang and her co-conspirators intentionally concealed from PPG Industries that the paint would continue to be delivered to Chashma II. Further, members of the conspiracy stated, or caused to be stated, that the coatings were to be used at a nuclear power plant in China, the export of goods to which did not require a license from the Department of Commerce. Through these means, Wang and her co-conspirators allegedly exported three shipments of coatings from the United States to Chashma 2 without the required Commerce Department license.

     In announcing today’s guilty plea, U.S. Attorney Machen and Under Secretary Hirschhorn commended Special Agents James Fuller and Donald Pearce, who worked under the direction of Special Agent in Charge Sidney M. Simon and Assistant Special Agent in Charge Jonathan Carson, as well as Attorney Advisor R. Elizabeth Abraham, all of the Department of Commerce’s Bureau of Industry and Security. They also thanked Assistant U.S. Attorneys G. Michael Harvey and John Borchert of the U.S. Attorney’s Office for the District of Columbia, who prosecuted this matter.

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