Caixin
Jan 08, 2019 02:15 PM
BUSINESS & TECH

Taiwan Arrests Six Accused of Leaking BASF Tech to Mainland

Six current and former BASF engineers have been accused of accepting bribes and sharing the German chemical giant's technology with a company on the Chinese mainland. Photo: Bloomberg
Six current and former BASF engineers have been accused of accepting bribes and sharing the German chemical giant's technology with a company on the Chinese mainland. Photo: Bloomberg

(Bloomberg) — Taiwan has arrested six current and former BASF SE engineers accused of accepting bribes and sharing the German company’s technology with Jiangyin Jianghua Microelectronics Materials Co. Ltd., in one of the more elaborate cases involving alleged Chinese intellectual property theft.

Jianghua offered them 40 million yuan ($5.8 million) in return for help building a new factory in the eastern Chinese province of Jiangsu, Criminal Investigation Bureau official Lu Sung-hao told reporters at a briefing Monday. The Chinese mainland company had already wired NT$40 million ($1.3 million) to two accounts in Samoa controlled by the group, he added.

American and Taiwanese officials have long accused mainland companies of purloining intellectual property in a quest to climb the technology ladder, something Beijing’s consistently denied. Such leaks, which American officials say include the forced transfer of technology, are a key complaint of Washington’s as the world’s two largest economies open talks to avert a damaging trade war.

The amount involved in the case is unusually large. Taiwanese officials have in the past accused mainland corporations of appropriating trade secrets by poaching talent, but Lu said Jianghua offered direct payment in return for proprietary technology. Calls to Jianghua’s main line and an email to a corporate address went unanswered.

BASF CEO Martin Brudermueller, who took the helm in May, has made expansion on the Chinese mainland a central pillar of his strategy. Two months into his tenure, he announced BASF plans to build a second chemical complex in the country, at a cost of up to $10 billion.

BASF’s losses from the alleged theft could top out at 100 million euros ($114 million) per year, Lu said. A representative of BASF said the company doesn’t provide an estimate on losses and the amount can’t be confirmed by the company.

According to police, only one of the six accused was a current employee, though the others formerly worked for BASF. The German chemicals maker said it suspended the employee and has taken steps to support the investigation and protect its intellectual property.

“To this end we have established systems and policies which minimize risks,” BASF said in a statement. “In light of this situation, we will further reinforce these information protection systems.”

Jianghua, which went public only in 2017, says it develops and sells materials for products from solar panels to electronics displays. The company, which has a market value of about $348 million, is estimated to have grown revenue more than 10% to about 400 million yuan in 2018. Taiwan police ran down an anonymous tip and discovered a senior ex-BASF engineer was getting about 90,000 yuan a month from the mainland company to recruit employees, Lu said.

U.S. companies and officials have long argued that the mainland uses a range of tactics to acquire industrial designs and patents, and that mainland entities engage in widespread theft of U.S. trade secrets. A report released in November by U.S. Trade Representative Robert Lighthizer’s office accused Beijing of waging a state-backed campaign of intellectual property theft, reiterating alarm about the country’s “Made in China 2025” ambition to dominate key future technologies.

One of the more recent allegations that came to light involved Huawei Technologies Co., Ltd. which has repeatedly denied it steals technology. American carrier T-Mobile filed a lawsuit in 2014 describing an incident in which a Huawei engineer allegedly stole a robot’s fingertip.

Contact editor Yang Ge (geyang@caixin.com)

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