Spy Scandal Shakes Orinda

Reese Levine, Staff Writer

The United States Justice Department has accused an Orinda couple of conspiring to steal trade secrets from Dupont, a company based in Wilmington, Del., and giving them to companies directly supported by the People’s Republic of China.

Walter and Christina Liew, both Orinda residents, were charged with conspiracy to commit economic espionage, conspiracy to commit theft of trade secrets, possession of trade secrets, conveying trade secrets, conspiracy to obstruct justice, witness tampering, conspiracy to tamper with evidence, and false statements.

Along with three other individuals and five companies, four of which belong to the Pangang Group, a state-owned enterprise located in China, the Lieuws allegedly conspired to illegally obtain the means to make chloride-route titanium dioxide (TiO2), a valuable white pigment used to color paints and plastics.

One of the companies in the FBI report, USA Performance Technology Inc., which is owned by the Lieuws and specializes in high technology and fine chemicals, including TiO2 pigments is at the center of the federal investigation.

According to the FBI report on the investigation so far, the Pangang Group companies were going to use the information to open a chloride-route TiO2 plant in Chongqing, China, replacing their older, less efficient sulfate-route method.

“This case demonstrates how technology developed by U.S. companies is vulnerable to concerted efforts by competitors—both at home and abroad—to steal that technology,” U.S. attorney Melinda Hagg wrote in a report.

The FBI opened their investigation in March 2011 after Dupont reported that its TiO2 trade secrets had been misappropriated. In April 2011, Dupont sued USAPTI after trade secrets were found on one of the Lieuw’s computers.

In a press release by the FBI, Special Agent in Charge Stephanie Douglas wrote, “This [scheme] is not only unfair, but it does great damage to the U.S economy and as a result undercuts on national security.”

The Lieuws allegedly received over $20 million from Pangang Group companies. The money was wired to bank accounts in the names of relatives of Christina Lieuw as a reward for providing information used to develop mass TiO2 production.

On March 8, Christina Lieuw, who remains free on bail of $100,000, pleaded not guilty to selling secrets to the Chinese companies. An attorney for her husband, who remains jailed after being arrested in August 2011, said he plans to plead “not guilty,” as well. If found guilty on all counts, the Lieuws could face a sentence of up to 160 years each.

This case is also the first time U.S. officials have indicted a foreign state-owned company for criminal espionage, bringing up obvious questions of relations between China and the U.S. However, a spokesman for the Chinese embassy in Washington told the Wall Street Journal the case is a business dispute and is in no way connected to the Chinese government.