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Former employee accused of stealing trade secrets from Monsanto as part of Chinese government program

Former employee accused of stealing trade secrets from Monsanto as part of Chinese government program

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ST. LOUIS — A federal grand jury this week added new charges against a former Monsanto employee of stealing trade secrets on behalf of a controversial Chinese government talent recruiting program.

The indictment, unsealed Thursday, mirrors that of a criminal complaint filed last week that accused Haitao Xiang, 42, of trying to steal an online platform known as the Nutrient Optimizer, which uses a proprietary algorithm to determine how to maximize crop growth for farmers. Xiang was working for Monsanto and an affiliate, The Climate Corporation, at the time.

But the indictment has added new charges and claims Xiang did so as part of the Hundred Talent Program, a government-run program designed to advance Chinese industries. A U.S. Senate subcommittee warned in a report released this week that China has more than 200 talent recruitment plans that it uses to gain information about American research and development. Participants are offered salaries, research funding, lab space and other incentives to come to China, and some have taken sensitive information and lied about receiving money from the Chinese government, the report says.

The report also says that officials have been slow to recognize the threat.

While working at Monsanto and TCC, Xiang sought to be recruited into the Hundred Talent Program, describing work he could only do by using the Nutrient Optimizer, the indictment says. He won a position in August 2016 with the Chinese Academy of Science’s Nanjing Institute of Soil Science, the indictment says, and resigned from Monsanto on June 9, 2017.

Although Xiang told Monsanto that he kept no company documents, data or storage devices when he left, he downloaded the Nutrient Optimizer to a flash memory card and drove to Chicago’s O’Hare International Airport for a flight to China, the indictment says. But he was detained at the airport and federal agents seized his laptop, finding the card.

He was indicted on one count of conspiracy to commit economic espionage, two counts of economic espionage, one count of attempted economic espionage, one count of conspiracy to steal trade secrets, two counts of theft of trade secrets and one count of attempted theft of trade secrets.

In a detention hearing earlier Thursday, Assistant U.S. Attorney Matt Drake told U.S. Magistrate Judge John Bodenhausen there was a “substantial risk” that Xiang would flee the country. Drake said that others in the Hundred Talent Program have left the country when they learned that they were under investigation, adding that extradition would be “next to impossible from the People’s Republic of China” because of Xiang’s links to that government-sponsored program.

Drake said that in addition to Xiang’s government job, he also had a company that employed 30 people and an apartment there.

Xiang’s lawyer Eric Selig sought Xiang’s release pending trial during the hearing, saying Xiang would turn over his passport and travel documents. He said Xiang’s 11-year-old daughter and wife, who works for Monsanto, are in the St. Louis area, and that Xiang has traveled back and forth from China seven times since authorities seized his laptop and was in the country this time for his daughter’s piano recital. He also said that Xiang and his wife would be willing to put up their St. Louis County home and about $100,000 to ensure his return to court.

He also said that Xiang was cooperative when FBI agents showed up at his home over the weekend.

Bodenhausen has not yet made a decision about whether to hold Xiang in jail until his trial.

Selig told the Post-Dispatch on Monday that Xiang “anticipates the opportunity to investigate and prove his innocence.”

An employee of a Chinese seed company was sentenced to three years in prison in 2016 after admitting a conspiracy to steal proprietary corn seeds from DuPont Pioneer and Monsanto, the FBI has said. His alleged co-conspirators are believed to be in China.

Monsanto was acquired by Bayer last year.

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