Former PPG Exec Pleads Guilty to Illegal Exports to Nuclear Reactor in Pakistan

(PPG Paints is a wholly-owned Chinese subsidiary of U.S.-based PPG Industries, Inc.)

Accused of Conspiring to Export Coatings to Reactor on Commerce's Entity List

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 Commerce Department's Entity List.¹

As a restricted end-user, a U.S. manufacturer seeking to export, reexport or transship any items subject to the Export Administration Regulations to the PAEC, or its nuclear power plants or reactors, would first need to obtain a license from the Commerce Department.

Conspired to Export via 3rd Party in China After Export License Denied

According to Wang’s plea documents, in January 2006, PPG Industries sought an export license for shipments of coatings to Chashma II, which Commerce denied. 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 U.S. to Chashma II, via a third-party distributor in China, without first having obtained the required export license from Commerce.

Intentionally Concealed Exports from Parent Company

From around June 2006 through around March 2007, Wang and her co-conspirators allegedly intentionally concealed from PPG Industries that the paint would continue to be delivered to Chashma II. Further, members of the conspiracy stated that the coatings were to be used at a nuclear power plant in China, for which the export of goods did not require a license. Through these means, Wang and her co-conspirators allegedly exported three shipments of coatings from the U.S. to Chashma II without a license.

Agreed to Pay $200K Under Related Commerce Case, Placed on Denied Persons List

Concurrently, Wang has settled an administrative proceeding brought by the Commerce Department regarding the same issues. 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 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 U.S. that is subject to Commerce regulations.

Now Faces Max Sentence of 5 Yrs, $250,000 Fine at Sentencing

Wang faces a maximum sentence of five years of incarceration and a fine of up to $250,000. As part of her plea agreement with the government, Wang has agreed to cooperate with law enforcement.

PPG Companies Were Fined Largest Penalties for Export Violations in Dec 2010

Wang’s guilty plea is related to the December 21, 2010, guilty plea of PPG Paints Trading. 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 BIS' history. (See ITT's Online Archives 10122319 for summary.)

¹The PAEC 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, BIS added the PAEC, as well as its subordinate nuclear reactors and power plants, to the list of prohibited end users under the Export Administration Regulations (EAR).

(See ITT's Online Archives 11071223 for summary of Xun Wang's indictment for these charges.)