US nuclear secrets trial cools co-operation with China

Allen Ho was still reeling from his arrest during a conference in Atlanta, Georgia, when armed Federal Bureau of Investigation agents began interrogating the nuclear energy consultant about his work in China, without any lawyer present. 

That business involved hiring retired US nuclear engineers and consultants to advise China General Nuclear Power Corp, the state-owned company that plans to invest in an £18bn reactor in the UK.

Mr Ho, born in Taiwan and a US citizen since 1983, was charged with violating a statute designed to prevent American scientists from helping other countries develop an atomic bomb. The case comes during an era of unprecedented nuclear co-operation between the west and China, but also a time of growing trade friction and accusations of cyber crime and espionage.

After his arrest in April, Mr Ho’s imprisonment for six monthsin a maximum security cell in Tennessee has chilled Chinese technical co-operation with the international nuclear industry and raised accusations of racial profiling in the US.

Along with Mr Ho, CGN was also indicted on charges of producing “special nuclear material” outside the US without the required approval from the US Department of Energy.

The company said in an emailed statement that it “has long been adhering to the principle of lawfulness and compliance in all our business operation and international exchanges and will carry on following such a principle”.

Wary of being indicted if they step foot on US soil, CGN executives have since skipped meetings run by the American Society of Mechanical Engineers (Asme), which sets international standards for everything from school heating boilers to nuclear reactors.  

This is an issue because engineering decisions made in China affect the world’s reactor fleet. China is the furthest ahead in constructing the European Pressurized Reactor destined for Hinkley Point in the UK as well as the AP1000, an American-designed reactor under construction in China and the US. And under bilateral accords CGN and other Chinese groups will supply components for US and UK reactors.

“China is the only country that can provide the information at present” for the AP1000, said Zhang Qiang, Asme’s chief representative in China. Other forms of international co-operation continue. 

Mr Ho does not deny helping CGN improve operations at its nuclear plants but his defence insists that is a far cry from making material for nuclear weapons. Frank Wu, chairman of the Committee of 100, an advocacy group, said the indictment had inflamed fears of “racial profiling” in the Chinese-American scientific community. 

The engineers Mr Ho employed told the FBI that they shared only publicly available information with Chinese nuclear companies, according to court documents. Some helped inexperienced Chinese engineers decipher technical manuals at Daya Bay, the French-designed reactor that supplies electricity to Hong Kong.

Others advised on developing a nuclear fuel process so that CGN could avoid paying hefty royalties to the French. They have not been publicly charged.

The case against Mr Ho will rest on testimony from a Taiwanese-American consultant he employed who secretly pleaded guilty 18 months ago to selling subscription-only research reports on nuclear power to China.

Mr Ho might face a fine or jail if he did not secure DoE approval for all his China consulting. Defence filings show Mr Ho did seek DoE approval for his most recent consulting work. He received a letter in November 2013 stating that his efforts “do not fall within the scope” of prohibited activities.

The case comes amid growing alarm at Chinese state-backed hacking and theft or copying of valuable intellectual property. 

“The government has certainly had some success in prosecuting individuals who have some connection to China,” said Peter Toren, a former prosecutor who has handled industrial espionage cases. “On the other hand — and it’s a big on the other hand — there have been a number of very high-profile prosecutions that should have never been brought in the first place.”

Since the 1990s, the US government has prosecuted 173 cases under the economic espionage act, including 48 involving China. Mr Ho is one of seven people charged with spying for China under other statutes.

“There’s a certain suspicion when you’ve got a Chinese person involved in this kind of activity. It just raises the level of suspicion in a way that it wouldn’t otherwise,” added Mr Toren, a partner at Weisbrod Matteis & Copley in Washington.

Two prosecutions of US citizens of Chinese birth have already unravelled. The Department of Justice in March dropped all charges against Sherry Chen, a hydrologist accused of illegally sharing information about US dams with Chinese contacts. Months earlier, prosecutors abandoned an espionage case against Xi Xiaoxing, acting head of Temple University’s physics department.

“There’s nothing about this case that’s normal,” said Peter Zeidenberg of Arent Fox, Mr Ho’s lawyer who also represented Mr Xi. “There's an undercurrent running through all these cases and it's because of these individuals' association with China.”

Additional reporting by Luna Lin