Canadian Exec Admits Sharing U.S. Navy Data with China

A test of the Oceanworks rescue sub system for the U.S. Navy, 2012 (Oceanworks) By The Maritime Executive 09-16-2019 07:20:39

The president of a Canadian subsea systems manufacturer has pled guilty to sharing details of a U.S. Navy submarine rescue system with a Chinese firm, the Beijing Company, in a bid to build a comparable system for China's navy.

Oceanworks held a contract from the U.S. Navy to develop a submarine rescue diving recompression system, including a ship-deployed pressurized rescue module (PRM) for evacuating crew from a distressed submarine. In 2007-8, Oceanworks modified its own design for the PRM to meet the Navy's standards, and it continued to work closely with the Navy to operate and refine the system through 2017. The Navy expected elements of these technical refinements to remain confidential.

In 2016, Chinese firm Beijing Company bought Oceanworks and acquired its intellectual property - including its submarine rescue technology - for a total of about $20 million. After Beijing Co. bought the firm, it hired back Oceanworks' former president, Glen Omer Viau, to take up the helm again. Working with Beijing Co. and with other Oceanworks employees, Viau helped to develop a proposal to build a submarine rescue vehicle for the Chinese People's Liberation Army Navy (PLAN).

U.S. Navy officials met with Viau after Oceanworks' sale to Beijing Co. and developed the understanding that Navy technology and information would be firewalled from the new owners. Shortly after, while on a trip to China, Viau proposed to provide Beijing Co. with detailed information with the work that Oceanworks had completed for the U.S. Navy. In a sales presentation sent to Beijing Co., he included information on a proprietary U.S. Navy underwater transfer skirt system that is used to bridge the gap between the rescue sub and the sub in distress. He later sent multiple pages of technical drawings that were restricted under U.S. export license controls, including documents bearing a stamp reading "distribution authorized to U.S. government agencies only."

The U.S. Defense Department terminated its contract with Oceanworks about one month later. After the U.S. Navy ended its contract with Oceanworks, Canada's Foreign Investment Review Agency forced Beijing Co. to divest its interest in Oceanworks and barred it from accessing any Oceanworks intellectual property.

This January, the U.S. Justice Department charged Viau with concealing information from the Department of Commerce's Office of Export Enforcement (OEE). According to prosecutors, Viau told the OEE that the release of controlled information to Beijing Co. was inadvertent and that Beijing Co. had no intended, specific purpose for the information. The indictment also alleges that Oceanworks provided a Beijing Co. representative with a hard drive containing U.S. Navy technical data on the PRM, and asserts that this hard drive was hand-carried back to China. (This allegation is not included in Viau's plea agreement.)

Viau has pled guilty to the charge of misleading OEE, and prosecutors have recommended a fine of $25,000 and a jail sentence of time served. The recommended sentencing range for the offense runs between six and twelve months in prison.