Former PPG Paints Director Charged for Pakistan Entity List Exports
On July 8, 2011, the Bureau of Industry and Security announced that Xun Wang, a former managing director of PPG Paints Trading Co., Ltd., has been indicted on a charge of conspiring to and causing the export and reexport of high performance coatings to a nuclear reactor in Pakistan owned by an entity on the Entity List, and other related offenses, in violation of the International Emergency Economic Powers Act and the Export Administration Regulations.
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Pakistan Nuclear Plant Owned by Entity on the Entity List, Export Requires License
Wang allegedly conspired to and caused the export and reexport of specially designed, 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 Commission1, an entity on the Entity List. As a restricted end-user, a U.S. manufacturer seeking to export or reexport any items subject to the EAR to the Pakistan Atomic Energy Commission, or its nuclear power plants or reactors, would first need to obtain a license from the Commerce Department.
PPG's License Denied, Wang Conspired to Export via 3rd Party in China
PPG Paints Trading is a wholly-owned Chinese subsidiary of U.S.-based PPG Industries, Inc. According to the indictment, in January 2006, PPG Industries sought an export license for the shipments of coatings to Chashma II. In June 2006, the Commerce Department denied that license application. Following that denial, Wang and her co-conspirators agreed upon a scheme to export and reexport the high-performance epoxy coatings from the U.S. to Chashma II, via a third-party distributor in China, without first having obtained the required export license from the Commerce Department.
Falsely Stated Coatings to be Used at Nuclear Plant in China
The indictment further alleges that from around June 2006 through around March 2007, Wang and other co-conspirators intentionally concealed from PPG Industries that the paint would be delivered to Chashma II. Specifically, they falsely stated that the coatings were to be used at a nuclear power plant in China, the export of goods to which would not require a license from the Commerce Department. The indictment alleges that, through these means, Wang and her co-conspirators took part in three shipments of coatings from the U.S. to Chashma II without the required Commerce license.
Indictment is Related to a Dec 2010 Guilty Plea, PPG Paid $3.75M in Fines
The indictment is related to the December 21, 2010, guilty plea of PPG Paints Trading to illegally exporting high-performance coatings from the U.S. to Chashma II via a third-party distributor in China. Together, PPG Paints Trading and PPG Industries paid $3.75 million in criminal and administrative fines and over $32,000 in restitution. The combined amount of criminal and civil fines represented one of the largest monetary penalties for export violations in BIS history.
1In November 1998, BIS 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 EAR.
(See ITT's Online Archive or 12/23/10 news, 10122319, for BP summary of PPG Paints Trading's December 2010 guilty plea and agreement to pay $3.75 million in fines.)