Update: Xiang Haito pleaded guilty to conspiracy to commit economic espionage today, a little over two years after his indictment by a grand jury. He admitted to stealing trade secrets from Monsanto for the “purpose of benefiting a foreign government, the People’s Republic of China.” Xiang faces a maximum penalty of 15 years in prison and a potential fine of $5 million according to the Department of Justice.
An imaging scientist within Monsanto’s Climate Corporation subsidiary was indicted by a grand jury this week for theft of trade secrets. Haitao Xiang, a Chinese national who was a member of the talent plan program, which China uses to identify and engage those with knowledge it has identified as strategically important, worked for the Monsanto subsidiary from 2008-2017.
While the court documents remain sealed, we learn from the Department of Justice (DoJ) that Xiang pitched himself to the Chinese Talent Program in 2016 and was accepted. Xiang intended to share with the program the advanced Monsanto algorithms to which he had access. The DoJ explains how algorithms were associated with the “digital online farming software platform which farmers use to collect, store and visualize critical agricultural field data and increase and improve agricultural productivity for farmers.” The component holding the critical algorithm is referred to as the “Nutrient Optimizer.”
Monsanto’s employee breaks trust
In Xiang’s instance, he submitted his resignation to Monsanto in June 2017, and the very next day purchased a one-way ticket to China. He was arrested at the airport with Monsanto’s trade secrets in his possession.
The fact that the FBI was able to act on short notice is indicative of Xiang having come to the attention of Monsanto’s insider threat program. This may have occurred sometime prior to his resignation, or as a result of his resignation. Regardless, Monsanto contacted the FBI and provided sufficient information to permit the FBI to open a case, put eyes on Xiang, and stop him.
Xiang, like so many others who have recently been charged with espionage or theft of trade secrets, was a student in the United States and decided to stay after acquiring his PhD from the University of Illinois (2003-2008) in agricultural engineering.
China’s strategic initiatives include Economic Espionage
China considers agricultural advancement as a key national initiative as evidence by its repeated presence in each Communist Party Plenum, where acquiring advanced technologies is identified as a priority. This instance of an attempt by China to steal from the U.S. agricultural sector is not the first (Chinese nationals and naturalized U.S. citizen who came from China have pleaded guilty to stealing trade secrets from numerous U.S. entities involved in agricultural research in both corn and rice), and nor shall it be the last.
The Chinese Talents Program is one avenue which is used to good effect to put gifted scientists with access in front of various Chinese entities and specialists for assessment and ultimately recruitment in order to open a pipeline of illegal intellectual property transfer.
Assistant FBI Director John Brown commented, “The revolutionary technology at the core of this case represents both the best of American ingenuity and why the Chinese government is so desperate to steal it for themselves. The FBI is committed to working with a host of partners to stop individuals, like the defendant in this case, from engaging in economic espionage to acquire information and technology for a foreign government that is either unable or unwilling to compete on a level playing field.”
Additionally, the comments from Assistant Director Brown emphasize the need for a cooperative relationship with companies in order to prosecute economic espionage cases.
Companies in all sectors should have in place basic security practices to protect their intellectual property and trade secrets. These should include a strict need-to-know or privileged access hierarchy. Additionally, as part of every off-boarding process, concrete steps should be taken to ensure all intellectual property belonging to the employer has been returned. While the FBI will investigate and take to the DoJ economic espionage and trade secret cases, we all have a responsibility to protect our own property from insider theft.
