Nuclear secrets: The ex-Westinghouse employee accused of helping a foreign power Power Source By Anya Litvak / Pittsburgh Post-Gazette September 15, 2016 Following the arrest of Allen Ho this spring, FBI agents appeared on the doorsteps of nuclear scientists across the United States.
In Murrysville, they met with Charles Beard, a retired Westinghouse Electric Co. software engineer who first connected with Mr. Ho in the 1980s when both men worked for that company. In 2011, Mr. Ho had approached Mr. Beard to consult for his Delaware-based firm Energy Technology International, according to documents in the case.
Mr. Beard had just retired and wasn’t sure it was worth it. He quoted an hourly rate so high it was intended to repel the advances, Mr. Beard told the FBI. But Mr. Ho agreed to the money, and so did Mr. Beard.
And thus he became part of a group of consultants — retired nuclear specialists, many from Cranberry-based Westinghouse — that Mr. Ho assembled on behalf of the China General Nuclear Power Corp. (CGN), one of several state-owned nuclear firms in one of the world’s largest commercial nuclear markets.
The consulting team was to “provide technology transfer in design, manufacturing, related training and technical support,” Mr. Ho wrote in an e-mail later obtained by the FBI. “They said budget is no issue.”
Since mid-April, Mr. Ho, 66, has been in jail in Tennessee awaiting a trial in which he faces a potential life sentence for violating a 60-year statute that has never before been tested in court. He spends 23 hours in a cell, in solitary confinement, according to his attorney.
In its case, the government has said that Mr. Ho’s consulting services amount to nuclear espionage and that he was acting as a foreign agent when he recruited nuclear scientists to educate China’s nuclear engineers on aspects of commercial reactors.
Mr. Ho, and one of his former consultants Ching Ning Guey whose plea deal last year helped the government build a case, are the first people to be charged under a statute of the Atomic Energy Act of 1954 that says people who help make special nuclear material outside of the U.S. have to ask the Secretary of Energy for permission.
They are the only two people that have been charged in this case.
The “special nuclear material” in question is plutonium — a byproduct of the nuclear reaction that takes place inside commercial power plants. By helping a Chinese company with its operations, Mr. Ho was involved in making plutonium, the government said.
Last month, despite a slew of character letters from friends, some of which pledged their homes as collateral, Mr. Ho was denied bail.
Even if he were stripped of his U.S. and Chinese passports, and outfitted with a tracking anklet that confined him to his home, Chinese operatives might shepherd him out of the country, prosecutors warned. They cited his expensive house in Delaware, an apartment in China and a child he fathered there nine years ago………
Mr. Ho had, in fact, applied for the special authorization required by the Atomic Energy Act.
In 2013, he sent two letters to the U.S. Department of Energy describing his activities in China. One said he and his consultants were engaged in IT support work, such as converting code from one language to another and updating it with more recent fission and heat transfer models.
In less than two months, the energy agency replied to Mr. Ho that these activities don’t need special permission……..
Special permission
The government’s argument on the dangers of Mr. Ho’s actions follow two paths. On the one hand, the FBI has alleged Mr. Ho was selling commercial secrets, violating intellectual property protections and helping Chinese companies get ahead by bypassing the expense and time of research and development.
On the other hand, the government and the FBI agents that conducted the interviews with Mr. Ho’s consultants have sprinkled in questions about possible security concerns, given that the plutonium produced at commercial nuclear power plants can be used for military purposes.“Our idea of how China works, is that at the end of the day, whatever’s good for commercial is also good for military,” the federal agent told Mr. Ho after his arrest.
That dynamic is the focus of the Atomic Energy Act, a law passed in 1954 that guides how the U.S. balances the promotion of nuclear trade in the electric sector with the goal of keeping nuclear proliferation at bay.
There are 50 countries for which a special authorization is not required. For all others — including China — activities ranging from document transfers and e-mails to the “transfer of knowledge and expertise” in the area of nuclear reactors call for special permission from the Secretary of Energy.
George Rudy, who consulted for Mr. Ho, told an FBI agent on April 15 that Mr. Ho didn’t seem to understand the logic behind the authorization rules. “He felt that the requirements were the NSA and DOE trying to impede his progress,” Mr. Rudy told the FBI.
A 2014 Government Accountability Office report looking at how the Department of Energy handles the special authorization statute found that U.S. nuclear firms and the Nuclear Energy Institute commonly felt the requirements and the long approval times put U.S. firms and the interest of commercial nuclear development at a disadvantage to suppliers in other countries.
It’s OK for Westinghouse………
China’s nuclear ambitions are second to none. It is gobbling up Western nuclear technology and expertise, and developing its own in service of an aggressive plan to build dozens of reactors in the next decade.
“This whole thing doesn’t make any sense, because Westinghouse sold AP1000 reactors to China along with all of their proprietary information,” Mr. Rombough said this month. “If doing nuclear reactors in China is so off limits, why did they allow Westinghouse to do that?”
David Seel, another retired Westinghouse engineer, told FBI agents in April that his concerns “were mitigated by the assumption (Westinghouse’s) presence in China and AP1000-related business dealings illustrated consulting such as his was not prohibited.”………
While he declined to speak about Mr. Ho’s case in detail, Mr. Zeidenburg said it “falls into a long and depressing line of cases where the Department of Justice has arrested a Chinese-American first and asked questions later.”
In court filings, he has argued that the government — unable to find an espionage statute that sticks — has tried to “shoehorn” Mr. Ho’s legitimate commercial work into a statute that has never been tested in court.
Mr. Ho’s trial is scheduled to begin in January.
Anya Litvak: alitvak@post-gazette.com or 412-263-1455.http://powersource.post-gazette.com/powersource/companies/2016/09/15/Nuclear-secrets-The-ex-Westinghouse-employee-accused-of-helping-a-foreign-power/stories/201609140193
