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Thursday, 3 May, 2001, 21:36 GMT 22:36 UK
Lucent scientists charged
Lucent logo
More trouble for Lucent as workers are charged
US authorities have charged two Lucent Technologies scientists and a businessman with stealing and passing on company secrets to a Chinese firm.

The two Chinese nationals and one US citizen were arrested by the FBI on Thursday and accused of a "complicated scheme of corporate espionage", the US attorney's office said.

The men allegedly conspired to steal Lucent voice and data software and pass it onto the Chinese government-owned firm Datang Telecom Technology.

The US authorities admitted that they had no evidence the Chinese firm had broken any laws.

China-US tensions

The arrests come at a time when tensions between the US and China have escalated over last month's spy plane incident and promised weapons sales to Taiwan.

In 1999 the FBI arrested a government scientist and charged him with 59 criminal counts that he handed nuclear weapons secrets to China.

The case against Taiwanese national Wen Ho Lee collapsed but only after he had spent nine months in solitary confinement.

The charges

Hai Lin and Kai Xu, the Lucent scientists, and businessman Yong Qing Cheng are accused of "corporate espionage" for conspiring to steal the source code and software of the PathStar system, which allows internet service providers to offer low-cost voice and data services.

The complaint alleged that Mr Lin and Mr Xu established a company called ComTriad Technologies and planned to negotiate a joint venture with state-run Datang of Beijing.

"The goals for the joint venture were for it to become the leading data networking company in China, 'the Cisco of China' and to go public both in China and the U.S. with initial public offerings in stock," the complaint charged.

The scientists had been designated "distinguished members" of Lucent's technical staff at the Murray Hill, New Jersey, headquarters of the telecommunications giant.

If convicted, they could face a maximum of five years imprisonment and a $250,000 fine.

Lucent's troubles

The timing is not good for struggling Lucent, which reported a $3.7bn second-quarter loss last week after a $1bn first-quarter loss in January when it announced plans to cut its work force by 16,000 jobs, or 15%.

Lucent spokesman Bill Price could not say what the alleged theft cost the company or how long the scientists worked at Lucent.

He said the company notified authorities "as soon as we became aware of the activities and have been assisting them in the investigation".

PathStar, which services more 90% of that market, generated $100m for Lucent last year, according to court papers.

Shares of Lucent lost 5.5% on the New York Stock Exchange.

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See also:

04 Apr 01 | Business
Lucent sold on rumour
22 Mar 01 | Business
Lucent cuts Agere float
21 Feb 01 | Business
Lucent's big challenges
24 Jan 01 | Business
Lucent posts $1bn first-quarter loss
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