LDN - Business

U.S. seeks extradition of Chinese researcher in drug secrets theft

[July 08, 2019] By John Miller

ZURICH (Reuters) - The United States wants Switzerland to extradite a Chinese researcher accused of helping his scientist sister steal secrets worth $550 million from drugmaker GlaxoSmithKline <GSK.L>, Swiss documents released on Monday show.

Gongda Xue, who is fighting extradition, has been labeled a potential flight risk, according to a Swiss Federal Criminal Court verdict, keeping him in custody pending the extradition request's resolution.

U.S. allegations against Gongda Xue, 49, underscore global fears that China is using networks of highly trained nationals abroad to smuggle trade secrets to the world's second-largest economy.

Last year, prosecutors in Germany charged a Chinese-born engineer with industrial espionage in connection with secrets pilfered from chemical maker Lanxess <LXSG.DE>.

Gongda Xue, a Basel-area scientist who worked at Switzerland's Friedrich Miescher Institute for Biomedical Research until 2014, is the brother of Yu "Joyce" Xue, a Chinese-American scientist who last August pleaded guilty at the U.S. District Court in Pennsylvania to pilfering secrets from Britain's GlaxoSmithKline (GSK).

According to the U.S. indictment, Gongda Xue received stolen GSK secrets from his sister, performed tests at Miescher's facilities and sent results to accomplices in China. The stolen information, prosecutors allege, involved antibodies that bind to tumour cells and kill them.

"Gongda Xue knowing received, bought, and possessed a trade secret belonging to GSK...knowing it to have been stolen...with the intent to convert that trade secret...to the economic benefit of someone other than GSK," according to one U.S. charge.

GSK said it was cooperating with U.S. authorities.

Xue, an 18-year Swiss resident, was arrested in May in Switzerland and has been held in custody as authorities consider the U.S. request, documents show.

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"He faces up 20 years in prison if convicted," the Swiss court wrote, in rejecting his release. "We affirm a flight risk."

His Swiss lawyer declined to comment.

Yu Xue, his 48-year-old biochemist sister who worked at Glaxo in Pennsylvania until 2016, is awaiting sentencing in her case in which a U.S. government witness estimates secrets stolen were worth more than $550 million.

In total, there are six co-defendants, including Yu Xue's twin sister, Tian Xue, who also pleaded guilty last year to money laundering-related charges.

U.S. government lawyers allege the scheme included establishing a Chinese state-backed company, Renopharma, that relied on theft to bypass costly research that underpins drug development.

"GSK invested more than twenty years of work and hundreds of millions of dollars," U.S. prosecutors wrote. "By stealing these platforms, Renopharma obviated the need to undergo the same time and expense."

Prosecutors have branded the case "economic warfare", adding the group had profit motives and hoped to sell Renopharma for up to $2.2 billion.

Switzerland's Friedrich Miescher Institute, which helped develop cancer compounds such as Novartis's <NOVN.S> Afinitor, confirmed Gonda Xue had been a postdoctoral employee, adding the institute had not accused him of wrongdoing.

"We are cooperating with American authorities," an institute spokeswoman said.

(Reporting by John Miller; Editing by Raissa Kasolowsky)

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