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September 24, 2008 

Virginia Physicist Charged With Violating Arms Export Control Act and FCPA

In what appears to be the latest trend, the U.S. Attorney for the Eastern District of Virginia announced the arrest of an individual that was charged with violating export controls laws and the Foreign Corrupt Practices Act (FCPA).

Mr. Shu Quan-Sheng, a PhD physicist the President of AMAC International (AMAC), a Newport News, Virgina company involved in the research and development of superconducting RF power technologies, magnetic levitation and cryogenics in space, was charged with:

  • Unlawfully exporting a defense service to foreign persons without prior approval, in violation of the Arms Export Control Act;
  • Unlawfully exporting a defense article in violation of the Arms Export Control Act; and
  • Bribing, offering a bribe, and attempting to bribe a foreign government official, in violation of the FCPA.

According to the complaint, Shu allegedly provided technical assistance and foreign technology acquisition expertise to several PRC government entities involved in the design, development, engineering and manufacture of a space launch facility in the southern island province of Hainan, China.

According to the complaint, Shu has been involved in the PRC's systematic effort to upgrade their space exploration and satellite technology capabilities by providing technical expertise and foreign technology acquisition in the fields of cryogenic pumps, valves, transfer lines and refrigeration equipment, components critical for the use of liquefied hydrogen in a launch facility. Shu has also been instrumental in arranging for PRC officials to visit various European space launch facilities and hydrogen production/storage facilities.

The complaint also alleges that Shu offered bribes to government officials with the PRC’s 101 Institute to induce the award of the hydrogen liquefier project to the French company Shu represented. According to the complaint, on Dec. 1, 2003, Shu and his company AMAC entered into an agreement with the French company establishing AMAC and Shu as the French company’s representative in China. The agreement provided that AMAC was entitled to a success fee of ten to fifteen percent.

According to the complaint, prior to the ultimate decision to award the hydrogen liquefier project to the French company in January 2007, Shu offered payments to PRC officials within the 101 Institute to induce those officials to award the contract to the French company rather than a competitor and to earn Shu and AMAC a commission. The contract value for the hydrogen liquefier is believed to total approximately $4 million.




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