Taiwan Charges 5 BASF Employees for Selling Trade Secrets to China

A general view of BASF at the Antwerp port in Antwerp, Belgium, on Oct. 26, 2006. (Mark Renders/Getty Images)
A general view of BASF at the Antwerp port in Antwerp, Belgium, on Oct. 26, 2006. (Mark Renders/Getty Images)
BY EVA FU

Taiwan prosecutors on July 24 have charged five current and former senior staff members at German chemical giant BASF for stealing company secrets and selling them to its Chinese rival Jianghua Micro.

BASF manager Huang Yilin, 45, and the four former employees he allegedly recruited were charged with breach of trust, and violating the Trade Secrets Act, the Copyright Act, and the Criminal Code, according to a press release (pdf) from the Taiwan Taoyuan District Prosecutors Office on July 24.

Known as the world’s largest chemicals group, BASF produces petrochemicals, coatings, catalytic converters, and foams, with hundreds of production facilities worldwide, including in Europe, the United States east coast., and China’s coastal city of Nanjing.

The BASF case is the latest incident of suspected Chinese industrial espionage on the self-ruled island.

Taiwan authorities arrested six current and former managers and engineers from the company in January after launching an investigation over suspected corporate technology theft.

The technology involved includes detailed instructions on making electronic-grade sulfuric acid—a crucial element in the semiconductor manufacturing process—which has an estimated market value of $111.5 million, according to Taiwan’s state-owned Central News Agency.

BASF said in a January statement that it suspended its contract with Huang, but did not identify him.

A cyclist rides past the entrance of the BASF plant and former Ciba production site in Schweizerhalle near Basel, Switzerland, on July 7, 2009. (Reuters)
A cyclist rides past the entrance of the BASF plant and former Ciba production site in Schweizerhalle near Basel, Switzerland, on July 7, 2009. (Reuters)

Alleged Theft of Trade Secrets

Taiwan prosecutors said that the five under prosecution had teamed up to establish Yang Yi International Co. in June 2016, with all except for Huang listed as shareholders.

The company then signed contracts with BASF’s competitor, Jiangyin Jianghua Microelectronics Materials Co. (also known as Jianghua Micro), based in the Chinese coastal province of Jiangsu. Jianghua Micro had offered 40 million yuan ($5.8 million) to Yang Yi to build a factory in China.

Four of the former employees ended up working for Jianghua Micro, while Huang remained at BASF and did work for Jianghua Micro under a pseudonym.

Jianghua Micro, the press release said, agreed to pay the four individuals annual salaries ranging from 600,000 yuan ($87,200) to 1.1 million yuan ($160,000), while Huang pocketed 144,000 yuan ($20,900) in consultancy fees from the company.

The prosecutor said the employees passed on confidential information via emails and cloud server uploads, including the complete versions of the equipment diagrams, flowcharts, standard procedures, and work instruction manuals.

Only seven people from the global BASF Group has electronic access to the piping and instrumentation diagram (P&ID), the prosecutor said.

The team, the statement said, also asked a Japanese firm JCEM to recreate the P&ID adapted to Jianghua Micro’s manufacturing needs, which they then used to build a chemical production line for the company in Jiangsu Province.

Evidence of Theft

According to the statement, police, who were monitoring Huang’s phone and internet activities, detected a large amount of CASF’s classified data transferred through the email server at his resident.

The police also searched the homes of the four other co-conspirators and confiscated a “large amount of information containing Taiwan BASF’s trade secrets,” according to the statement.

“Huang … and others were well aware that the BASF SE’s core technology for producing ‘electronic-grade’ sulfuric acid has considerable economic value, and that BASF Taiwan has been taking strict measures to guard the content of the technology,” the prosecutor stated.

In a July 24 statement, BASF’s Taiwan branch said they have also filed a criminal lawsuit against the former employees, adding that the company has instituted an enhanced information protection system and will conduct regular staff training to prevent similar incidents from occurring.

 

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