Whatever else Xun Wang (51) might have been, one thing is for sure — she was brazen. The Chinese national and lawful permanent resident in the U.S. actually thought she could get away with exporting 360 gallons of high-performance nuclear reactor paint to Pakistan for use in its Chinese-made Chashma reactor.
And she nearly did get away, at least until the U.S. Department of Commerce's (DOC) Bureau of Industry and Security closed its net around her and her shady trading counterparts including two Chinese companies working on the construction of Chashma, one of which is owned by the Chinese government.
Lifting the veil on a case that has rocked the nuclear establishment, the U.S. District Attorney for the District of Columbia announced charges against Xun on July 8, 2011, including conspiring to export and re-export, and actually exporting and re-exporting, specially designed, epoxy coatings to the Chashma II plant, a nuclear reactor owned and operated by the Pakistan Atomic Energy Commission, which is an entity on the Department of Commerce's Entity List.
The indictment that “raises the question of whether China knowingly conducts illicit nuclear trade in violation of other countries' laws... [and] illustrates that China remains a problem in global efforts to prevent illicit nuclear trade and bears special scrutiny by all concerned about goods being diverted to banned purposes,” according to the Institute for Science and International Security, a think-tank.
How did Xun think she could escape the attention of U.S. export controllers while engaging in such a massive violation of nuclear trading norms? The subterfuge deployed, according to the DOC, was that the company at which she used be the Managing Director, PPG Industries, sought to obtain orders from the two Chinese companies involved in the Chashma reactor.
This was done in order to create the illusion of exports to Chinese nuclear firms, which is permitted under BIS export control restrictions. Thus, from May 2006 until September 2007 Zhongyuan Engineering and Shanghai-based, Chinese-government-owned, Huaxing Construction submitted requests to PPG Paints Trading in Shanghai – a PPG Industries subsidiary – for coatings that Huaxing Construction needed to provide to Chashma.
PPG Paints Trading then placed the orders with PPG Industries in the U.S., an ISI study explained, and then “[Xun] Wang and the companies allegedly conspired to list Dalian Shi Zi Kou nuclear power station in China as the end-user because the U.S. would not require an export license to ship the goods.” Prosecuting authorities said Xun allegedly indicated in her communications, “If [the United States does] not know where the paint [is] going to end up it [is] okay to sell the paint.” Specific illegal acts committed as part of this illicit trade included falsification of export documents, including purchase requests, shipping, and end-user documents, officials noted.
Yet unbeknownst to Xun and company the BIS was monitoring these deals closely and earlier this year they tightened the noose around PPG. While documents do not state this, it is quite possible the authorities struck a deal with one PPG employee, regional sales manager Curtis Hickcox, who agreed to an out-of-court settlement with the BIS on June 8. According to official documents quoted by ISIS, Hickcox allegedly arranged for a February 2006 shipment of 290 gallons of paint coatings to Chashma and “knew the epoxy was headed for the Pakistani [Chashma] reactor but told his bosses it ‘would not be used by PAEC.'”
While Hickcox reportedly agreed to pay a settlement of $500,000, $485,000 of which would be dismissed if $15,000 was paid by June 29, Wang was not so lucky. She was arrested in June in Atlanta and transferred to the Washington, DC DA's office, which is said to be prosecuting the case.
After a court appearance in July she was released to serve house arrest at her home in California and is presently undergoing electronic monitoring until her next court date on September 28. As she is considered a flight risk, until such time as ordered otherwise Wang is not allowed to go within 1,000 feet of an airport.
Additionally her company, PPG Industries, in December 2010 “pled guilty to four counts of export-related violations... [and] was fined $3.75 million in criminal and administrative fines and will pay $32,000 in restitution,” ISIS reported. Further PPG Paints Trading was fined $1 million and faces five years of corporate probation and cannot do business with the United States during that time.