Pittsburgh-area company to plead in Chinese electrodes case

PITTSBURGH, Pa. – A western Pennsylvania company that supplies the steel industry was scheduled to plead guilty to smuggling Chinese graphite electrodes into the country.

The owner of Ameri-Source International Inc., Ajay Goel, told The Associated Press that his attorneys will enter the plea Monday afternoon before a federal judge.

Goel wouldn’t discuss the plea and said he’ll have no comment once it’s entered.

“I think it’s all in the court documents,” Goel said.

According to a two-count criminal information, the Bethel Park company was importing the electrodes — which are used to power electric arc steel furnaces — but lying about their size. That happened in April and June 2011 on shipments from Dalian, China, the documents state.

The smuggling charges each carry up to a $500,000 fine, and probation of one to five years. Under federal law, a company can be placed on probation and subject to additional sanctions if it violates the law again while on probation.

The federal government charges a duty of nearly 160 per cent on electrodes that are less than 16 inches in diameter to stop Chinese companies from dumping cheap electrodes on the market. But Ameri-Source was falsely claiming the electrodes it imported were larger to avoid paying the duty, according to the criminal information.

A criminal information is similar to an indictment, except that criminal charges are filed in an information when the defendants have co-operated with investigators and plan to plead guilty.

The U.S. Commerce Department issued an anti-dumping order after investigating claims filed in 2008 by two American companies, Superior Graphite Company, of Chicago, and SGL Carbon LLC, of Charlotte, North Carolina. The U.S. International Trade Administration investigated and the Commerce department determined Chinese exporters were selling the smaller graphite electrodes at roughly 133 per cent to 159 per cent less than normal value.

As a result, the government eventually imposed a 159.64 per cent duty on the smaller graphite electrodes to discourage companies from buying the Chinese products.

According to the criminal information, however, Ameri-Source avoided paying the duty by reporting the Chinese electrodes it was importing were greater than 16 inches in diameter.

The criminal charges don’t specify the value of the allegedly smuggled electrodes or how much money the company saved by avoiding the anti-dumping duty.

Graphite electrodes are used almost exclusively in electric arc furnaces, which must reach temperatures of 5,000 degrees Fahrenheit to melt scrap steel. The molten steel is then poured into moulds so it can be recycled into other products.