U.S. Nuclear Engineer Indicted on Charges of Sharing Commercial Reactor Secrets with China

A two-count indictment was unsealed by the Justice Department late last week alleging that Szuhsiung Allen Ho, a U.S. citizen, illegally shared technical information on commercial nuclear reactor designs and materials with China General Nuclear Power Co. (CGN). It appears this is a major case that falls generally in the realm of economic espionage.  (Update: January 6, 2017 – Ho Pleads Guilty, US DOJ Statement)

Six other unnamed nuclear engineers are also alleged to have shared the information with CGN either directly via trips to China or through Ho. One of the engineers, alleged to have been hired by Ho through his firm Energy Technology International (ETI), a Delaware corporation, is identified by the Justice Dept. as an executive with the Tennessee Valley Authority (TVA). In a statement TVA declined to name the manager.

The others are all identified as nuclear or mechanical engineers. The indictment says Ho recruited the others through ETI without revealing CGN’s intent to design and manufacture a new nuclear reactor. The engineers recruited by Ho live in South Carolina, Pennsylvania, and Colorado.

The indictment alleges that Ho and his associates shared information on reactor outages and nuclear fuels with CGN without authorization under the Atomic Energy Act. The law requires that the Department of Energy to approve all data exchanges about commercial reactors with the Peoples Republic of China (PRC). According to the indictment, the defendants never sought the agency’s permission for their activities which allegedly began in 1997 and which continued up to the date of the indictment this month.

According to the Justice Department, represented in a press statement by Assistant Attorney General for National Security John P. Carlin, Szuhsiung Allen Ho, who was born in China, and is a naturalized U.S. citizen, hired the other nuclear engineers at CGN’s direction. For this reason, Ho is also charged with conspiracy to act as an agent of a foreign government.  CGN is a state-owned corporation and is part of the Chinese government.

Technical details of the information in the indictment

The indictment includes a long list of technical data and analyses provided to CGN. The evidence cited comes from email traffic between Ho, his contractor engineers, and CGN. The emails from the Chinese firm include specific technical requests for information which could be indicators of areas where they were having difficulty with their work.

The key information passed by Ho to CGN is described as nuclear reactor outage data for use at CGN’s Daya Bay Nuclear Power Plant. Daya Bay has two 944 MWe PWR nuclear reactors based on the Framatone ANP French 900 MWe three cooling loop design, which started commercial operation in 1993 and 1994 respectively. It is located on China’s southeastern coast in Longgang District, Shenzhen.

The technical details of the information Ho is alleged to have shared with CGN also include data to assist CGN’s work on development of its ACPR-100 small modular reactor, nuclear fuel assembly design and fabrication, and computer codes for modeling the operation of commercial nuclear reactors.

Additionally, Ho is alleged to have obtained information on U.S. nuclear reactor fuel performance data, and potential damage to reactor pipes caused by abnormal water pressure events. Ho had one of his team obtain reports, at CGN’s specific request, from the Electric Power Research Institute (EPRI) through TVA’s contract with the non-profit research center.

Additional work not related to the EPRI reports covered instrumentation and control systems. The indictment says CGN wanted to design and manufacture their own I&C system based on U.S. data and apparently told Ho money was no object.

In an email to one of the six engineers in 2009 Ho wrote, “China has the budget to spend … They asked me if I could form a comprehensive team to provide technology transfer in design and manufacturing related training, and technical supports?.?.?.?They said budget is no issue.”

The six engineers, with skills in various nuclear energy related disciplines, are described as having provided information on nuclear fuel materials including plutonium used in MOX fuel, U-233 used in the thorium fuel cycle, and conventional U-235 enriched nuclear fuel. The focus on multiple nuclear fuel cycles is further evidence that a broad development program of new reactor types is  underway in China. According to the Justice Department two of the engineers were paid a total of about $38,000 for their work.

Description of TVA’s manager’s work

The unnamed “TVA manager” is identified as an expert in probabilistic risk assessment and is described in the indictment as having worked with Ho from 2010 to 2014. The TVA executive is described in the indictment as having been born in Taiwan and is a naturalized U.S. citizen. According to the indictment, the manager met Ho through the Chinese American Nuclear Technology Association.

He is also identified as having previously worked for Florida Power & Light in a similar capacity. The utility referred media inquiries to the Justice Dept.

The TVA executive described as having traveled to China in 2013 to provide consulting services on nuclear reactors to CGN. The work scope is reported by the Bloomberg wire service to include information on fuel reliability for design of a new nuclear reactor which may have been the now completed design of CGN’s 1000 MW Hualong One PWR reactor.

Was Ho’s work for the Hualong One?

The charges against Ho don’t cite specific work on the Hualong One (IAEA Profile) a newly designed 1000 MW PWR targets at global export markets. However, it is the major commercial reactor design that has emerged from China during the period (1997-2016) Ho worked with CGN. The coincidence of timing may be just that, or more details may come out if and when the case goes to trial.

The strategic importance of the reactor to CGN is that it is the core technology of China’s efforts to compete in global markets for new reactor deals going head-to-head with Westinghouse, Areva, and Rosatom. CGN and the China National Nuclear Corp (CNNC) have recently set up a joint venture to export the Hualong One with plans to build at 30 of them in Asia and Europe.

Both firms are in negotiations with the UK for permission to build two of the reactors at the Bradwell site in the UK in return for their separate equity investments in the Hinkley Point reactor project. The agreement was signed by British Prime Minister David Cameron and Chinese President Xi Jinping during his visit to the UK last October.

The Hualong One reactor would have to pass a review by the Generic Design Assessment and be approved for construction and operation in that country. In addition to the UK, Argentina has signed an agreement with China to begin work on a Hualong One to be built in that country.

It is not clear whether the six unnamed engineers knew that Ho did not have permission from the Department of Energy to engage in the consulting work with CGN. One of them asked in an email in 2009 if the legal issues governing their contacts with CGN had been taken care of.  No defense attorney for Ho is listed in any of the news media reports about the case.  Ho has been arrested and is reportedly in federal custody.

For its part, CGN declined to comment in response to media inquiries.

The Justice Dept. press release notes the case is being investigated by the FBI, the Tennessee Valley Authority-Office of the Inspector General, the Department of Energy-National Nuclear Security Administration and the U.S. Immigration and Customs Enforcement Homeland Security Investigations, with assistance from other agencies.

The case is being prosecuted by Assistant U.S. Attorney Charles E. Atchley Jr. of the Eastern District of Tennessee and Trial Attorney Casey T. Arrowood of the National Security Division’s Counterintelligence and Export Control Section.

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