It’s a tale worthy of telling, again and again. The insider is a prime threat vector for all industries. While China agreed in 2015 to step back from cyber espionage and the theft of trade secrets and intellectual property, the reality is much different. The latest in the continuing saga of China targeting and, in many cases, successfully stealing the trade secrets and intellectual property of others, involves the U.S. petroleum industry. One can imagine the executives from the targeted firm, Phillips 66 Research Center, are checking to see if those Chinese signatures on that agreement were made with disappearing ink.

Who is Hongjin Tan?

Hongjin Tan is a “materials scientist” who resigned in early December from the Disruptive Technologies team at Phillips 66 Research Center in Bartlesville, OK, where he was working on large-scale energy storage projects (you can find more about him on his active LinkedIn profile).

Hongjin Tan came to the U.S. in 2006 and attended Caltech where he obtained his master’s and PhD in Materials Science. He remained in the U.S. following graduation with stints at the Jet Propulsion Laboratory, Contour Energy Systems, and Liox Power, before landing with Phillips 66 as a staff scientist. In addition, since 2011, he has been working at CalTech as a “visiting scientist” where he described his duties:

  • Work with graduate students of Fultz group on materials synthesis and characterization for energy storage, polaron dynamics, structural phase transition, Mossbauer spectrometry, Sievert’s apparatus, and synchrotron high-pressure experiment
  • Study the composition, crystal structure, and morphology of materials by XRD, SEM, TEM, EDS, NMR, XPS, BET, Raman etc.
  • Research on entropy of electrochemical systems

the stolen Billion dollar technology

According to his employer, as detailed in the criminal complaint filed by the U.S. Department of Justice, the value of the technology which Hongjin Tan was involved, and stole, was greater than $1 billion. The complaint describes how Hongjin Tan stole hundreds of files, including files related to the $1 billion product. These files would have permitted the manufacture of Phillips 66 unidentified product, but believed to be associated with large-scale battery technology.

The day after Tan’s resignation in early-December, Phillips 66 contacted the FBI after a review of their internal computer system where they found that he had copied hundreds of files, as described in the complaint. This was the company’s insider threat program/protocol at work, paying dividends.

Tan’s arrest and possession of trade secrets

Tan had told his employer he was returning to China in a few weeks to care for his parents.

The FBI investigators allege that Hongjin Tan stole the documents to take with him to China, where he had lined up his next “opportunity.” Tan was offered the position of Energy New Material Engineering Center Director in Xiamen, contingent upon his “guarantee that the information you have already provided and will provide is real and effective.”

Tan was arrested December 20, 2018, when a subsequent search of his residence uncovered a thumb drive containing the Phillips 66 files. On December 29, Tan was ordered held without bail given he was a significant flight risk. Tan has not yet been formally charged with a crime. One may expect that he will be indicted on charges associated with theft of trade secrets and perhaps economic espionage.

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Christopher Burgess (@burgessct) is an author and speaker on the topic of security strategy. Christopher, served 30+ years within the Central Intelligence Agency. He lived and worked in South Asia, Southeast Asia, the Middle East, Central Europe, and Latin America. Upon his retirement, the CIA awarded him the Career Distinguished Intelligence Medal, the highest level of career recognition. Christopher co-authored the book, “Secrets Stolen, Fortunes Lost, Preventing Intellectual Property Theft and Economic Espionage in the 21st Century” (Syngress, March 2008).