The AXT Way 

Meet Xuan Wen Li. Fremont semiconductor firm AXT, Inc. poisoned him with arsenic, then fired him - just as it did with up to 500 other Chinese immigrants.

Page 6 of 10

According to a report from the Fremont Fire Department, AXT mishandled more than just gallium arsenide. On April 27, Fremont hazardous material technician Drew Johnese spoke to an informant who worked at an office near AXT's corporate headquarters. The informant, Johnese wrote, claimed that AXT officials were illegally storing "multiple 55-gallon drums full of chemicals" on the property, and that staff in her office were "having skin and allergic reactions." That afternoon, Johnese arrived in AXT's lobby to inspect the premises. According to his memo, officials may have cooked up a ruse to get him to put off his inspection for a few days.

"I asked the receptionist to inform [AXT safety director] Jeff Shapiro that we were there to conduct an inspection," Johnese wrote. "She got Jeff on the telephone, and he explained that he was away from the facility on a family emergency and would not be available; he asked if I could schedule the inspection for some other time. I explained that he did not need to be present, that I only needed a representative from the facility to accompany us; he suggested Brian Ward. The receptionist got Brian on the phone and he, too, was out of the facility, at least two hours away, and asked if I could reschedule the inspection. I explained, again, that he did not need to be present. At this point, I asked the receptionist to get 'any representative' of the company."

Johnese strode around the complex, accompanied by a company official, and found a variety of illegally stored chemicals, wastes, and processes. "We noted a large process tank containing approximately 400 gallons of unknown liquid, and 69 drums, inside and outside the building, containing unreported liquids," he wrote. Thirty minutes into his inspection, up walked Shapiro, who was supposed to be away on a family emergency, and Ward, who had earlier said he was at least two hours away by car. Johnese issued six citations for improperly storing and reporting hazardous material.

"It is our feeling that representatives of AXT have been less than completely candid or cooperative in the efforts of this department to help them return to compliance," he wrote. "Therefore, it is our recommendation that this matter be forwarded to the Alameda County District Attorney's Office."

Ward refused to comment for this story and Shapiro could not be reached.

Then, beginning in May, someone started sending government investigators a series of bizarre e-mail messages, urging them to check AXT employees' hair for traces of arsenic. According to state records, the first e-mail, signed by "an worker in AXT" but whose return address was DavisZhang@hotmail.com, read in part, "Our company ... has a serious safety and health problem in our working conditions on the job. ... Workers may feel tired ot [sic] losing hair if working in this kind of condition. If you do not believe, check workers' hair arsenic content, specially the workers in slicing, ingot process, and crystal growth. Please take action, do not ignore it just because this company is running [sic] by Chinese or most workers are Chinese. They are still human."

Two weeks later, someone posted a nastygram on Yahoo's stock chat board, purporting to be a government official gloating over AXT's legal problems. And on June 8, DavisZhang@hotmail.com wrote to Brown's office again, asking, "Did you check the hair Arsenic content of the workers? Did you ask AXT workers to have a complete medical check? Will you help them to sue AXT?" When Brown's supervisors asked him about the e-mails, he advised that they ignore them and suggested that AXT executives, or perhaps their attorney Jeff Tanenbaum, were trying to lure government regulators into a correspondence that could compromise their investigation. "I think that someone is trying to draw us into an electronic exchange of e-mails for who knows what purpose," Brown wrote on May 26. "Sounds like a set-up to me." Two weeks later, he wrote, "I believe we would be making a mistake by responding to any of these message [sic] as there is something fishy about all this and maybe it's part of Mr. Tanenbaum's or AXT's bag of tricks."

Tanenbaum scoffs at Brown's suggestion that he had anything to do with the e-mails. "I think that shows something about his credibility more than anything else," he says. "It was certainly nothing that I did."

AXT finally learned its fate on May 16. Brown faxed the company his final list of citations and met with AXT officials the next day. "The reaction," he later wrote, "was muted and 'smoldering.'" As well it might be; the state had just fined the company a third of a million dollars. And he had one more piece of bad news: Another informant had complained of additional safety violations, and Brown asked to immediately inspect the company's headquarters. "Mr. Shapiro gave the consent (somewhat unhappily) and we spend the next 75 minutes inspecting all areas under AXT control." There, Brown allegedly found yet more violations and prepared to write up the company yet again.

In a statement later released to the media, AXT attorney Tanenbaum called the fines "excessive and inappropriate," and appealed the citations shortly afterward. Under state regulations, once a company has appealed a citation, occupational safety inspectors are forbidden to set foot on its property until the appeal is resolved. That meant no more inspections, and no more visits to make sure AXT was following the rules. Company officials had sworn to fix the arsenic problems, but the government had just lost its only way to make sure AXT honored that commitment.

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