WASHINGTON, Dec 22: The United States has fined the Chinese subsidiary of a US firm $3.75 million after it pleaded guilty to exporting high-performance coatings for a nuclear power plant in Pakistan.

The penalty, $2 million in criminal and $1.75 million in civil fines, represents one of the largest fines for export violations in the history of the US Commerce Department's security programme.

“The fines are 100 times more than the gross proceeds generated by the unlawful export scheme,” said Ronald C. Machen, US Attorney for the District of Columbia.

PPG Paints Trading (Shanghai) Co., Ltd., a wholly-owned Chinese subsidiary of the US-based PPG Industries, Inc., had only earned $32,319 from these exports, which was also forfeited.

Besides paying the fines, the company also agreed to serve five years of corporate probation. Tuesday's guilty plea stemmed from “the illegal export, re-export and / or transhipment of high-performance coatings from the United States to the Chashma 2 Nuclear Power Plant in Pakistan,” Attorney Machen said.

The coatings were exported via a third-party distributor in the People's Republic of China.

Eric L. Hirschhorn, US Department of Commerce Under-Secretary for Industry and Security, said the company misled US authorities by claiming that the coatings were for a nuclear power plant in China, which would not require a licence.

PPG Paints Trading was sentenced in accordance with the terms of the plea agreement by Judge Rosemary M. Collyer in District Court of Columbia.

To ensure that the companies going forward maintain a commitment to US export controls compliance, the US Bureau of Industry and Security also required an audit of 2011 and 2012 export transactions of PPG and its relevant business units in the United States and China.

The audit will include transactions related to restricted end-users on the agency's Entity List and nuclear end-uses and end-users.

The US Department of Justice pointed out that the detection of these illegal exports “emphasises the critical role that US parent companies play in monitoring the activities of their subsidiaries dealing in US-origin items that are subject to the Export Administration Regulations”.

“This case also demonstrates our resolve to vigorously enforce US export law,” said Attorney Machen. “It should also serve as a warning to corporations that would violate US export laws.”

Court documents identified Chashma 2 as a Pakistan Atomic Energy Commission power plant under construction near Kundian, in Punjab.

The documents noted that the PAEC was the science and technology organisation in Pakistan responsible for nuclear programme, including the development and operation of nuclear power plants.

In November 1998, following Pakistan's first successful detonation of a nuclear device, the Commerce Department's Bureau of Industry and Security added the PAEC, as well as its subordinate nuclear reactors and power plants, to the list of prohibited end-users under the Export Administration Regulations.