Taoyuan prosecutors yesterday charged five former managers and engineers of the Taiwanese subsidiary of German chemical giant BASF for technology theft and passing the information on to a Chinese competitor.
Former senior manager Huang Yi-lin (黃奕霖), 45, and four others were indicted on charges of breach of trust, along with contravening the Trade Secrets Act (營業秘密法), the Copyright Act (著作權法) and the Criminal Code.
Huang had allegedly recruited other managers and engineers to steal proprietary technology for Jiangyin Jianghua Microelectronics Materials Co in China’s Jiangsu Province, resulting in estimated annual losses of NT$3.5 billion (US$112.6 million at the current exchange rate) for BASF, Taoyuan deputy head prosecutor Yang Ting-hung (楊挺宏) said.
BASF Group, headquartered in Germany, set up its Taiwanese subsidiary in 1990, while Jiangyin Jianghua was founded in 2001.
Huang, who headed BASF Taiwan’s global electronics material section in Taoyuan’s Kuanyin Industrial Park, was contacted by executives of Jiangyin Jianghua, including its chairman, surnamed Yin (殷), and vice general manager, surnamed Zhu (朱), who offered him a huge financial reward if he leaked the German firm’s key technology, Yang said.
After agreeing to the deal, Huang founded Yang Yi International Co in June 2017 and recruited four colleagues — surnamed Lin (林), 55; Yu (余), 45; Yeh (葉), 45; and Hsu (許), 44.
The five allegedly targeted the proprietary process for making electronic-grade sulfuric acid and other high-quality chemicals for supply to the semiconductor industry, according to findings by Taoyuan prosecutors and the Criminal Investigation Bureau (CIB), adding that Huang had allegedly stolen BASF’s piping and instrumentation diagrams and other proprietary files.
“It was a case of Chinese industrial espionage focused on new know-how in production and proprietary technologies at Taiwanese and international companies,” Yang said. “Huang and his men were enticed by the money to carry out intellectual property theft for China.”
The investigation found that Huang and his company signed an agreement with Jiangyin Jianghua, which paid him NT$179 million to assist the Chinese firm in setting up an electronic chemical manufacturing plant, as well as helping with marketing and sales.
Although Huang was still working at BASF Taiwan at the time, he collected NT$700,000 as consulting fees from Jiangyin Jianghua.
Huang was reportedly offered an annual salary of NT$14 million, plus bonuses and stock options, to work at the Chinese company’s plant, while his four colleagues were promised annual salaries of between NT$2.8 million and NT$5.5 million.
Surveillance of the men began after a tip-off, and prosecutors and CIB agents arrested the five on Jan. 3 when they returned from a trip to China.
Yang said key technology data and BASF company materials were found in the possession of the five suspects.
Investigators said Huang had sent the proprietary files via e-mails to the Chinese business collaborators from his home computer.
BASF said it is aware that its former employees had been indicted, adding that the company takes the matter seriously and supports the investigation.
It has been protecting related information and had filed a criminal complaint, its office in Taiwan said in a statement.
“At BASF, we do not tolerate such kinds of non-compliant activities,” it said.
The company is committed to investment and protection of intellectual property resulting from research and development, as well as production know-how both by BASF and its customers, it said.
Toward this end, the company has set up systems and policies to minimize risks and conduct internal training for employees, it said, adding that BASF encourages employees to seek guidance on compliance issues if in doubt.
Employees can consult their managers, specialist departments, compliance officers and anonymous external hotlines, it said.
Additional reporting by Crystal Hsu
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