Chinese Spy Pleads Guilty to Stealing Biotech Secrets

October 18, 2011 8:52 pm Last Updated: October 19, 2011 3:07 pm

While he was working for two American chemical companies, a Chinese scientist was stealing trade secrets and sending them to accomplices for further research, assisting the Chinese Communist Party’s (CCP) long-term strategic goals in the science field, according to court documents in a recent case.

The man, Kexue Huang, pleaded guilty to economic espionage and theft of trade secrets in August, according to an Oct. 18 FBI press release. He faces up to 15 years in prison if his plea is accepted.

Huang carried out the thefts at both Dow AgroSciences and Cargill Inc., companies involved in biotechnology, chemicals, and agriculture, at which he held positions of responsibility and oversaw research projects.

In July 2010 Huang was charged for the first theft, from Dow; in November 2010 he was charged under seal for the theft from Cargill. His plea admits guilt to both crimes.

In 2005, during his 2003 to 2008 stint at Dow, Huang led the company’s research in a particular strain of organic pesticide.

But he also smuggled out biological material he was researching to accomplices in Germany and China, then directed them to conduct further research to benefit the Hunan Normal University in China.

Huang worked with scientists at Hunan Normal University, the National Natural Science Foundation of China, and the 863 Program. All three are funded by the Chinese state; the latter is a long-term, high-level CCP project to catch up with, and then compete against, Western countries in science and technology.

The research stolen from Dow helped Hunan Normal University get grant money from the National Natural Foundation of China. They then hired graduate students to conduct further research on the stolen material, directed by Huang.

The researchers published their findings based on the stolen trade secrets in scientific journals in China, boosting Hunan Normal University’s reputation and “position[ing] the university for tactical and strategic gain,” according to the plea document.

Huang also attempted to identify manufacturing facilities in China where his stolen research could be turned into products and sold on the world market. Court documents did not state whether state-run companies or private companies would have managed that operation.

If successful, it would have put Chinese firms in direct competition with Dow, using the latter’s own stolen trade secrets—a tactic common to China’s state-directed economic development, and its striving with the West.

After Huang’s employment with Dow was terminated, he was employed by Cargill a month later, in March 2008.

About a year later, Cargill caught him removing DNA sequences from a shared network drive to his own drive. He also copied files to a USB flash drive, which was detected by Cargill’s computer systems. He was fired in July and sent a letter on July 10 reminding him of his confidentiality obligations.

In October he sent the stolen DNA sequence to a student at Hunan Normal University in China, whom he was mentoring while he worked in Boston.

The companies worked with the FBI and prosecutors to assemble the evidence necessary for a conviction. As can be gleaned from court documents, this included reading his e-mails and conducting at least one seizure operation in Germany in Aug. 2010, where one of the Chinese graduate students that Huang had given stolen trade secrets to was stationed.

Huang’s thefts cost the companies $7–$20 million total, according to court documents.

“Mr. Huang used his insider status at two of America’s largest agricultural companies to steal valuable trade secrets for use in his native China … These crimes present a danger to the U.S. economy and jeopardize our nation’s leadership in innovation,” said Assistant Attorney General Breuer, according to the FBI press release.

The FBI, Dow Agrochemical, and Cargill could not be reached by press time; Jamie Edgar, the lawyer for Huang, had no comment.