Physicist pleads guilty to selling technology to China

NORFOLK

Two years ago, federal agents walked into the Newport News office of physicist Quan-Sheng Shu and issued a warning: Selling space technology to China is a violation of federal arms control laws.

On Monday, Shu admitted he did it anyway.

The 68-year-old scientist pleaded guilty to exporting a defense service without a license, exporting a defense article without a license, and bribery of a foreign official. He faces up to 25 years in prison when he is sentenced in April.

Shu admitted to a lengthy set of facts, laid out in a 20-page statement detailing his four years of negotiations with the Chinese, with the help of an unidentified French company, for the design and development of a cryogenic liquid hydrogen rocket system.

According to the Justice Department, China intends to use the technology to send space stations and satellites into orbit, as well as provide support for manned space flight and future lunar missions from its new Hainan space facility.

U.S. District Judge Henry Coke Morgan Jr. asked Shu a series of questions to ensure that his guilty plea was voluntary. Shu answered quietly, "yes" and "no," to the judge's questions.

"Did anybody force you to sign this agreement against your will or against your better judgment?" Morgan asked.

"No," Shu answered.

Shu, who remains free on $100,000 bond pending sentencing, declined to comment after leaving the courtroom.

His attorney, James Broccoletti, said his client wishes to make clear that this was not an espionage case.

"He doesn't want to be known as a spy because he's not," Broccoletti said. "In the grand scheme of things, his was a minor role."

As part of the plea deal, Shu agreed to cooperate with federal authorities as they continue their investigation into Shu's sale of rocket technology to China. The deal also spares Shu's wife from prosecution. Court records show that she advised him on certain aspects of the negotiations.

Assistant U.S. Attorney Alan M. Salsbury said Shu would undergo "extensive debriefing" by federal agents. H e declined to indicate which direction the investigation was headed.

Shu, who was born in Shanghai, became a U.S. citizen in 1998 and is president of Amac International in Newport News. He moved here in the mid-1980s, initially working at universities while assisting NASA in the development of technology similar to what he sold to China.

His technology is credited with helping extend space missions by saving fuel and reducing launch mass.

Shu began providing assistance to China in 2003. He then negotiated, with the French company, a $4 million deal for a 600-liter-per-hour liquid hydrogen fuel tank system. Shu was ultimately paid $386,000 in commissions for his work. Shu and the French company had hoped to secure another $16 million in contracts from the Chinese, according to court records.

In an effort to secure the initial contract, and after learning he was competing with German and Russian firms, Shu offered bribes to Chinese officials.

Calling them "percentage points," Shu offered payments totaling $189,300. It remains unclear whether any payments were actually made, but the court records indicate that one Chinese official refused a payment. Shu admitted in court, however, that he offered the payments as bribes to several officials.

Shu has agreed to pay the U.S. government the $386,000 as a penalty. H e also could face $1 million or more in fines.

The case was investigated by the FBI, the Department of Commerce and U.S. Immigration and Customs Enforcement.

It was special agents from Commerce who visited Shu in 2006 to warn him that he would be breaking the law by selling rocket technology to China.

By then, agents already had Shu under surveillance. Court records indicate that the agents had been listening to and recording Shu's conversations with Chinese officials.

Tim McGlone, (757) 446-2343, tim.mcglone@pilotonline.com