Export Control Violation Involving U.S. Company In China

PPG Industries announced that it and its wholly-owned subsidiary, PPG Paints Trading Shanghai, have reached a settlement with the U.S. Department of Justice and the U.S. Department of Commerce's Bureau of Industry and Security related to violations of U.S. export control laws in connection with certain paint shipments in 2006 for use by the Pakistan Atomic Energy Commission in the construction of a nuclear power plant.

The settlement reportedly resolves previously disclosed investigations by the DOJ and BIS of shipments by SPT of small quantities of protective coatings for potential use in Pakistan that were made without the required export license.

As part of the settlement, SPT has pled guilty in U.S. District Court to four charges under U.S. export control laws, will pay fines of USD3 million for civil and criminal violations, along with USD32,319 in criminal forfeitures, and will serve five years of corporate probation. In addition, SPT's parent company — PPG Industries — entered into a cooperation and non-prosecution agreement with the DOJ under which the U.S. government has agreed not to bring charges related to this matter against PPG or its affiliates. PPG is required to meet the conditions of the NPA for two years, including reporting any future violations and maintaining an ethics and export compliance program. PPG also agreed to resolve the BIS investigation through the payment of a USD750,000 civil penalty and a commitment to satisfy certain compliance and reporting obligations.

As a result of this settlement, PPG will record a charge in the fourth quarter of 2010 equal to the amount of the agreed-upon payments.

PPG stated that it acted promptly once it learned of the wrongdoing. With the assistance of outside counsel, the company immediately began an internal investigation, quickly responded to administrative and federal grand jury subpoenas, and cooperated with the DOJ and BIS on their investigation.

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