California Man Gave DuPont Secrets to China, U.S. Says

A California businessman stole DuPont Co. (DD) trade secrets for a Chinese Company, prosecutors told jurors in San Francisco as they are set to deliberate in a case that’s part of a U.S. crackdown on industrial espionage to benefit China.

Walter Liew, an engineering consultant, stole secret DuPont technology about a manufacturing process for titanium dioxide, a white pigment used in paper, paint and plastics, and gave it to China’s Pangang Group Co. (000629), Assistant U.S. Attorney Peter Axelrod said in closing arguments after an almost five-week trial.

Liew, 56, began the work after a 1991 meeting with Luo Gan, who as secretary general of China’s state council at the time, encouraged Liew to obtain technologies beneficial to the nation, Axelrod said. Liew and a former DuPont engineer who is also charged were found out in 2011 and didn’t come clean, he said.

“When the wheels came off, they lied about it,” Axelrod said yesterday. During the trial, the U.S. called 33 witnesses, including engineers from Wilmington, Delaware-based DuPont, the world’s largest producer of the pigment, and rival manufacturers Tronox Ltd. and Cristal Global.

Liew and his Oakland, California-based consulting company were paid $28 million from 2006 to 2011 for contracts to design a titanium dioxide plant for Pangang, prosecutors said at trial. He used process-flow diagrams and parts of a DuPont internal report about plant equipment, both trade secrets, in his work, Axelrod said, citing documents on Liew’s computers seized by federal agents in 2011 that referenced “stolen prints.”

Photographer: Jim Graham/Bloomberg

Signage sits on the grounds of Dupont Co.'s Chestnut Run site in Wilmington, Delaware. Close

Signage sits on the grounds of Dupont Co.'s Chestnut Run site in Wilmington, Delaware.

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Photographer: Jim Graham/Bloomberg

Signage sits on the grounds of Dupont Co.'s Chestnut Run site in Wilmington, Delaware.

Spy Agencies

Liew, a Malaysian farmer’s son who emigrated to the U.S. in 1980, is charged with conspiracy, economic espionage and trade-secret theft. He is among more than 20 people charged in recent years with stealing U.S. technology for China. The Obama administration has said Chinese spy agencies are involved in a far-reaching industrial espionage campaign targeting biotechnology, telecommunications, clean energy and nanotechnology industries.

Liew’s lawyer told the jury yesterday that his client used patents he obtained and publicly available information, not trade secrets, to come up with his own titanium dioxide plant design to compete with DuPont’s technology. An anonymous letter to DuPont by a fired employee of Liew’s company set in motion a federal investigation of the small businessman dictated by DuPont, said Stuart Gasner, his attorney.

The letter was like pouring “bloody meat in front of a great white shark,” with DuPont “spoon-feeding” the Justice Department information to build a case against “this little company, this man,” Gasner said.

FBI Raid

The Federal Bureau of Investigation, which raided Liew’s home in 2011, ignored files showing Liew had patents and his own research and instead “bought into DuPont’s view of the world,” Gasner said. He said the most important witness in the case was a titanium dioxide expert who testified that the DuPont information Liew used was “readily ascertainable and generally known,” which means it wasn’t a trade secret.

“Not everything they have stamped confidential is a trade secret,” Gasner said.

Gasner said earlier in the trial that Liew’s alleged connection to Luo Gan, referenced in a letter found in his safe deposit box, was a “piece of puffery” written when Liew was trying to win business.

Prosecutors asked the jury to convict Liew on 22 counts of economic espionage, trade-secret theft, witness tampering, filing false tax returns and making false statements in a bankruptcy proceeding. The panel could begin deliberations this week.

The case is U.S. v. Liew, 3:11-cr-00573, U.S. District Court, Northern District of California (San Francisco).

To contact the reporter on this story: Karen Gullo in federal court in San Francisco at kgullo@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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