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Poison and Profits

by Chris ThompsonEast Bay Express
April 7th, 2004

Cartoonist: Khalil Bendib

Ling Chan gave up everything to come to America. Ten years ago, at the age of 48, she left behind her friends, family, and the only culture she ever knew. Her husband was too old to start over, so he stayed behind in Beijing with one of their two children. Chan arrived in the United States with no knowledge of English, no support network, and a dependent child. And because she speaks only Mandarin, she had a hard time finding work. So she was happy to land a janitorial job with AXT Inc., a Fremont, California semiconductor manufacturing firm. In early 2000, she was put to work on a four-person cleaning crew, scrubbing the boxes used to ship semiconductor wafers around the factory. Dressed in a white plastic suit, gloves, and a thin paper mask, she used industrial solvent to wipe the boxes clean of the dust that always coated them. But after a few weeks, her colleagues -- mostly Chinese immigrants, like herself -- whispered that this was no ordinary dust: It could give you cancer.

AXT specializes in growing crystals of gallium arsenide, a compound semiconductor whose properties have special applications in fiber optics and solar cells, and are used in everything from communications satellites to cellular telephones. Unfortunately, gallium arsenide is particularly brittle, and as workers slice and lathe it into wafers, they generate clouds of dust that drift in the air and can settle on their clothes and in their lungs. Once gallium arsenide finds its way into your body, it separates into its constituent elements, one of which is the carcinogen arsenic, one of the deadliest toxins known to man.

Still, Chan needed the work, and company officials had assured her she was safe. "Sometimes containers come in from wafer room, and they had broken wafers in there, so I had to handle them," she says through an interpreter. "They told us that our safety level was good, so we didn't have to worry much." But gallium arsenide silently dusted the factory anew over the course of each shift. And according to one of Chan's associates, who asked not to be named, AXT's ventilation system was so inadequate that workers used to cough and gag. "It's even worse when it's foggy outside; the air would get worse," she says. "Sometimes the alarm would go off, and the manager would tell us to go outside and breathe for a little bit."

Every day, Chan poured industrial alcohol into dozens of boxes. She worked without goggles -- her supervisors did not provide any -- and her eyes were assaulted by the alcohol fumes and gallium arsenide dust. By the end of each shift, she and her co-workers would stagger to their cars, their eyes red, bleary, and inflamed, their vision so clouded they could barely see. At night, when Chan went to sleep, she says the pain felt as if someone were rubbing gravel and sand into the underside of her eyelids, or piercing her irises with little needles.

In October 2001, a woman on the cleaning crew asked Chan to look at her neck. "She asked if there are lumps in glands in her throat, and she went to the doctor the next day," Chan recalls. Her friend was eventually diagnosed with nasopharyngeal carcinoma, a cancer of the upper respiratory tract. She never returned to work and eventually was laid off. Today, she can no longer talk above a guttural wheeze.

The following April, another woman on Chan's crew was diagnosed with rectal cancer, which has left her unable to control her bowels. In the space of six months, half the members of her team discovered they were staring death in the face. Chan confronted her manager and asked if something was wrong with the air, but he told her not to worry. "They said, 'We have people working here for ten years, and they're okay,'" Chan says. "I was very worried, but I still had to work, so there was nothing I could do about it."

As it turned out, Chan wouldn't have to worry much longer. In September 2002, AXT outsourced her job to a new factory in China, firing her and more than one hundred other workers. When she came to pick up her two weeks of severance pay, she says, a manager told her that unless she signed a statement promising never to sue AXT, she wouldn't get her money. Chan signed the statement.

AXT Over Time

December 1986: Morris Young founds AXT, then American Xtal Technology.

July 1995: AXT earns four serious citations from state Division of Occupational Safety and Health.

1996: AXT moves headquarters to Fremont.

June 1998: AXT's monitoring shows workers exposed to illegal levels of arsenic.

June 1999: Company VP Davis Zhang allegedly orders safety manager Ed Haggerty to hide exposures from employees.

January 24, 2000: An informant tips Fremont Fire Department to exposures; officials refer complaint to state.

February 22, 2000: State regulator orders AXT's factory shut down pending arsenic cleanup; it reopens four days later.

May 16, 2000: State issues 42 AXT citations for, among other things, willfully exposing workers to arsenic.

April 30, 2001: State discovers arsenic exposure was up to 31 times legal limit. AXT says it will move manufacturing to China.

December 31, 2002: By year's end AXT had laid off roughly 500 workers compared with two years earlier.

June 6, 2003: State cites AXT supervisors after they allegedly exposed construction workers to arsenic during factory renovation. AXT appeal pending.

Eighteen months later, her vision is still foggy and blurred. She has heavy bags under her eyes, a face marked by stress fractures, and the sexless, clipped hair of a woman whose married life ended ten years ago. As the sounds of children playing outside drift in the windows, she sits on a bench in a dark room, her spine ramrod-straight, her legs crossed. Her hands twitch in her lap, and she picks at her cuticles, tearing little strings of skin. Like so many of her co-workers, she hasn't found a job since being fired by AXT. She wonders if she will get cancer, and what will happen to the child she's raising. Next month, her unemployment insurance will expire, and if she doesn't come up with the mortgage payments, the bank will foreclose on her house.

The company didn't fire everyone. The Fremont facility is still open -- though a much smaller workforce now toils there -- and sometimes, when AXT has a particularly heavy order to fill, the managers temporarily hire back some of their old employees.

Every day, Chan hopes the phone will ring, and that she will be one of those employees. That's why she agreed to tell her tale only if identified by a pseudonym; she is willing to sear her eyes again for one more paycheck.

Poisoning with impunity

The facades of AXT's Fremont campus gleam with tinted windows and antiseptic white walls, and saplings drift in the wind above perfectly manicured lawns. The company has built such a stellar reputation that, in 2001, Forbes listed it among the magazine's top 200 small businesses. AXT has done business with the National Aeronautics and Space Administration; and the Department of Defense has invested almost $1.5 million in AXT research projects. The company's customers have included heavy hitters such as Hewlett-Packard, Motorola, Nortel Networks, and TRW Space and Defense. Its chief financial officer, Don Tatzin, currently serves on the City Council of Lafayette, an affluent town east of San Francisco.

But peer behind AXT's white walls and you get a considerably different view. According to government records, internal company documents, and former employees, AXT has knowingly poisoned perhaps hundreds of its own employees with arsenic over a period of at least five years. When government officials investigated the company in 2000, they found evidence that AXT's managers knew that its employees were being exposed to arsenic levels four times the legal limit -- yet had done almost nothing about it. At one point during the investigation, AXT internal monitoring indicated that one employee was exposed to 31 times the maximum permissible concentration of arsenic dust. Another employee says AXT managers refused to repair broken ventilation systems, and government regulators claimed in writing that the company failed to offer its workers respirators and shower facilities with which to decontaminate themselves. Not only were workers breathing arsenic dust, they were possibly bringing it home on their clothes and exposing their children to it.

Investigators from the state Division of Occupational Safety and Health were so horrified with these conditions that in the spring of 2000 they shut down the company's factory for four days and slapped AXT with a $313,655 fine. By the agency's standards, such a fine is nuclear in scale. It says a lot about what AXT had done to its workers, but it also says a lot about how toothless the state legislature has rendered its watchdogs of occupational toxins. Only the 1998 explosion at the Tosco oil refinery generated a substantially larger fine -- $410,000 -- and refinery managers had to kill four people to incur it. The sad fact is that no regulatory body has the power to rein in such businesses. Companies such as AXT can poison, maim, or cripple their workers with near impunity.

Still, rather than accept its citations, fix its problems, and move on, AXT hired a powerhouse San Francisco law firm, appealed the fine, and dragged the case out for months. When government regulators met with company officials in a settlement conference in 2001, they learned that AXT had found a way to resolve this issue once and for all -- by moving the factory to China, safely out of American jurisdiction. Roughly five hundred employees, 90 percent of whom were Chinese immigrants, had not only been exposed to potentially lethal amounts of gallium arsenide; they lost their jobs as well. Last summer, regulators once again cited AXT for willfully exposing employees to arsenic. Resolution of that case is still pending, and company officials refused numerous requests to comment for this story.

What the tech boom left behind

Workplace toxins and outsourcing jobs are hardly new to Silicon Valley. Personal computers and the Internet continue to transform our lives in many ways, but the building blocks of the high-tech revolution have left a toxic legacy in Bay Area soil and drinking water. Santa Clara County, for instance, now has 23 Superfund waste clean-up sites -- the most of any county in America: Nineteen of them are directly related to the high-tech industry and involve poisons such as freon, benzene, and trichloroethylene. The 1980s saw a disturbing rise in the incidence of birth defects and miscarriages in certain Silicon Valley neighborhoods, and the cost of cleaning contaminated sites and settling the subsequent lawsuits has run into hundreds of millions of dollars.

Now, former high-tech workers and environmental activists are beginning to ask whether these same companies poisoned their own workers, and a mountain of new litigation is descending upon state and federal courthouses across the country. Last month, in what many consider a landmark case in the area of high-tech occupational liability, a Santa Clara jury ruled that IBM was not responsible for the cancer of two former employees who handled hazardous material in the 1970s and 1980s. But five days later, Big Blue settled a similar lawsuit in New York, and the company faces some two hundred further lawsuits by former employees. Several former AXT employees are weighing their own legal options and shopping for attorneys.

But it's the subject of globalization that has so unnerved the American public lately. As computer programming jobs are exported to India, the middle class of Silicon Valley is finally discovering the sting of outsourcing. Yet the darker side of globalization lies not in the exportation of six-figure desk jobs, but in the emigration of toxic industries to countries with negligible labor and environmental protections. From computer assembly jobs in the 1980s to waste incineration, copper smelting, and semiconductor assembly and testing, the nation's dirtiest industries are being relocated to countries such as Thailand, Malaysia, and, increasingly, China. The moment company officials decided to move their most toxic manufacturing processes to Beijing, Fremont's AXT became a prime example of this phenomenon.

Related Links

Silicon Valley Toxics Coalition

Basel Action Network

AXT, Inc.

"The reason everyone talks about outsourcing is cheap labor," says Jim Puckett, founder of the Basel Action Network, a nongovernmental organization that tracks the spread of toxic chemicals across the globe. "But there are certain things that go hand in hand with cheap labor that no one wants to talk about. They include the lack of government occupational safety regulation, lack of tort law to redress a grievance, lack of labor unions. All of these things are part and parcel of outsourcing. You're not just taking advantage of cheap labor, you're taking advantage of marginalized and vulnerable populations, and the fact that you can poison people without ever having to face the music."

Globalization and high technology are two of the most creative forces in the modern world, where nothing is good or evil, merely possible. For the last six years, AXT executives have spliced together the best and worst of human nature inside a modest business park near the salt ponds of Fremont.

Crystal farmers

In the mid-1980s, many engineers were worried that they had reached the upper limits of how much information computers could process using silicon semiconductors. But gallium arsenide showed promise. It was rare, brittle, and expensive, but its electronic properties allowed information to be processed exponentially faster than its silicon contemporaries. If only someone could find a way to produce it on the cheap, recalls Robert Meyer, an electrical engineering professor at UC Berkeley. "It was the hottest thing around, according to the trade press," he says. "Back in '86, PCs were only able to turn two million times a second ... at the time, gallium arsenide could turn ten times that."

In 1986, while working as a physicist at Lawrence Livermore National Laboratory, Morris Young hit upon a new method of growing gallium arsenide crystals. Along with his two brothers, Gary and Theodore, and current AXT board member Davis Zhang, Young founded American Xtal Technology in a small complex in Dublin, a suburb in northern California. "He was able to make the materials in a more cost-effective and efficient manner, and, from that, he was able to start the company," says Guy Atwood, AXT's chief financial officer during the 1990s. "Crystal growth is his specialty."

In addition to information processing, gallium arsenide had applications in fiber optics and solar cells that spurred a wave of research and development in the late 1980s and early 1990s. The compound emits light more readily than silicon, which made it useful in cell phones, CD players, and optical computer mice. "If you're calling me from a cell phone, most likely there's a gallium arsenide transistor in it," says UC Berkeley material science professor Eugene Haller. "You can make light-emitting diodes or very compact, efficient lasers which can read your entertainment stuff."

Gallium arsenide's resistance to radiation also makes it useful in solar cells, which the Department of Defense uses to power communications and spy satellites. As a result, the department has pumped tens of millions of dollars into gallium arsenide research projects, including several overseen by AXT. But while one arm of the government was investing in AXT, another was investigating it. On June 19, 1995, an employee accidentally dipped her fingers into a bath of caustic hydrogen fluoride and suffered severe burns. The accident prompted a visit from the state Division of Occupational Safety and Health, which inspected the facility and issued four citations for serious violations of worker safety laws.

One year later, AXT moved its operation from Dublin to a larger campus at 4311 Solar Way in Fremont. The technology boom was sweeping up AXT along with many other companies, and the semiconductor manufacturer went on a hiring spree. Hundreds of recent Chinese immigrants found work there. Since almost none of them spoke English, local jobs were scarce, and they were thankful for the steady paycheck. They had no idea what else lay in store for them at the new factory.

"Everyone thought there was a better life here"

When Morris Young was founding AXT, Fei Ying Zhao was a country girl growing up on the outskirts of Canton, China, where her father supervised a farm that sold fruit and tea. Her family made a little more money once they moved to Canton and bought a house, and Zhao quit school after the ninth grade to take a sales job in a furniture store. But her aunt kept calling from America, urging her relatives to come to the new country. "Lots of people want to immigrate to United States in mainland China; they want to see life in United States," Zhao says through a Mandarin interpreter. "Everyone thought there was a better life here."

Zhao was a good daughter who obeyed her parents, so she got on a plane and, in May 2000, found herself in a crowded San Francisco apartment with the rest of her extended family. With her diminutive frame, slender arms, and timid, unsteady gait, it's hard to imagine Zhao sweating away in a factory. But two months after she arrived in America, that's just what she found herself doing for AXT. Young Shin, the executive director of Asian Immigrant Women Advocates, says employers hire workers such as Zhao precisely because they speak little or no English and know nothing of their legal rights. "It's not an accident that certain industries employ Asian females with no or limited English," Shin says. "It's institutional; it's a design to hire certain targeted populations. You're talking about immigrants who do not have networks to assert their rights, so it's an easy target for them. Second, this being the US, a monolingual society, when you don't speak English it's hard to get information about your rights. So you're targeting a population that's easy to exploit."

In fact, most of the twenty or so former AXT employees contacted for this story refused to speak altogether and immediately hung up the phone. But one woman spoke long enough to tell a story about the way that managers treated workers who complained or got sick on the job. After working at AXT for around eighteen months, she says, her menstrual flow became alarmingly heavy, and something seemed wrong with one of her hands. Her physician said her health problems were clearly work-related, but when she complained to her supervisors, they denied any responsibility. In addition, she says, they forced her to sign a statement affirming that none of her health problems had anything to do with her job. Another employee says that a sense of foreboding spread among the workers as gallium arsenide accumulated in the factory air, and alarms forced managers to evacuate the building. "They had complaints in the other departments," she says through an interpreter. "They'd talk to the manager, that the air is not clear, making them cough. There was never answer from the supervisor. ... I remember soon after I started working there; the government came to inspect. The employee said, 'It's a good thing the government only came by to inspect the water today. If they inspected the air, things would be bad.' So I think, 'Oh, this dangerous.'"

Still, employees such as Fei Ying Zhao shrugged their shoulders and kept at the job. Zhao worked in a small room with two other women, placing gallium arsenide wafers into a machine that made sure each piece met company specifications. For hours at a time, she handled the freshly cut wafers without a respirator. After a few months, she met a young man on the job, got married, and moved in with him and his parents in a cramped tenement in Oakland's Chinatown. In July 2001, Zhao went to see a doctor for a routine physical. Almost immediately after the visit, Zhao got an alarmingly heavy menstrual period. A few days later, she got a phone call. "The doctor say to call her, 'Congratulations, you are pregnant,'" her interpreter explained during an interview. "And she say, 'No, I was bleeding. '" Zhao had miscarried.

Breathing arsenic

On January 24, 2000, the company's casual handling of arsenic finally came to the government's attention. Someone placed a phone call to the Fremont Fire Department; There's something wrong with the air at AXT, the caller said. Fire officials referred the complaint to the Oakland office of the state Division of Occupational Safety and Health, where it landed on the desk of "industrial hygienist" Garrett Brown.

Brown has a Jim Hightower, Texas-populist look to him; he's the sort of bureaucrat who shows up for work in jeans and cowboy boots. For the next thirteen months, he would be AXT's worst nightmare, peering into every chemical drum and ingot-slicing workstation, unearthing the company's secrets. Brown declined to be quoted for this story, but the massive file he compiled on AXT paints a portrait of a methodical, patient man.

On February 4, 2000, he arrived at AXT's factory and requested records of all company monitoring of airborne inorganic arsenic in the facility. The results were dismaying, to say the least. According to AXT's internal reports, which dated back to 1998, an employee named Hua Tang Guo had been exposed to 4.6 times the maximum permissible level of arsenic. Kang Lin had been exposed to arsenic at a level 4.5 times the legal limit; Paul Baldo was exposed at 4.3 times the limit, and Song Yang Liu worked in an area dusted with arsenic at levels 3.9 times the limit. One employee, David Almar, had been exposed to arsenic dust at 21 times the maximum permissible limit.

Four days later, Brown returned to AXT, accompanied by a doctor and a Mandarin-language interpreter. Over the course of two days, they toured the plant, conducted "wipe sample" tests for arsenic dust in the workplace, interviewed employees, and tested the air. "The wipe samples are sent for analysis and the results indicate widespread contamination of desks, benches, and other work areas," Brown later wrote. On February 22, the airborne test results came back, showing that several employees had been exposed to dangerous levels of arsenic, with one worker's station testing at four times the legal limit. Brown concluded that substantial parts of the factory were contaminated. For at least eighteen months, company air quality indicated, AXT's supervisors had known their employees were being poisoned, but did virtually nothing to stop it. Brown shut down the plant that very day.

Company managers then spent four days scrubbing the facility from top to bottom, and Brown agreed to reopen the plant. AXT safety director Jeff Shapiro agreed to take several preventive measures, including monitoring factory air more frequently, cleaning the factory daily, setting up a medical surveillance program, and hiring more safety staff. The government's move sent a chill through the rank and file on the factory floor, and workers told each other to keep quiet if they wanted to keep their jobs. "The colleagues said don't talk about this, or they might get laid off," one employee says. "They are kind of intimidated, so they don't really talk about it."

But AXT also started fighting back. Government records report that executives began "stonewalling" requests for more information, and the company hired San Francisco-based Littler Mendelsohn, the nation's largest employment law firm, whose lawyers enjoy such a fearsome reputation that union organizers refer to the firm as "Hitler Mussolini." The company cut its teeth on fighting organizing drives wherever they cropped up, but as the labor movement began to fall apart in the early 1980s, its partners expanded into areas such as disability, sexual harassment, and discrimination. Suddenly, Brown faced a much more sophisticated and aggressive team across the bargaining table.

Tell them nothing

Arsenic can kill you all at once or a little bit at a time. Even small doses can trigger a compendium of health problems. According to data from the federal Centers for Disease Control, chronic exposure to inorganic arsenic can cause "arsenic warts," or polyps on the palms, soles of the feet, and torso. Arsenic also can cause nausea, vomiting, anemia, cardiovascular disease, blood vessel damage, and mild neurological effects such as a sensation of pins and needles in the hands.

Arsenic also is associated with cancers of the bladder, liver, kidney, and prostate, but the most common arsenic-related cancers attack the skin and lungs. According to University of Washington professor of public health David Eaton, arsenic appears to work synergistically with smoking to greatly increase your chances of getting lung cancer. A 2002 survey from the American Journal of Public Health found that 34 percent of Chinese-American men smoked cigarettes, making them one of the heaviest-smoking demographic groups in the country.

That said, medical science knows very little about the health effects of airborne inorganic arsenic because it's an uncommon occupational hazard. The most prevalent arsenic vector is groundwater contaminated by naturally occurring deposits or discharge from mines and other heavy industries. As a result, researchers have largely focused on the effects of ingesting arsenic in drinking water. The most notorious instance of airborne arsenic contamination occurred near Tacoma, Washington, where a copper smelter operated until the mid-1980s. Over the course of 76 years, smelter operators pumped so much arsenic through their smokestacks that they contaminated more than two hundred square miles of land around Puget Sound. "There have been relatively few studies of airborne exposures to arsenic," Eaton says. "The Tacoma smelter is the best. They took all the workers and looked at how many of them over time developed cancer, and they found that more of them developed lung cancer than they would have expected without the exposure."

Because so little is known about airborne arsenic, it would be foolish to automatically assume that AXT employees who got sick did so as a result of arsenic exposure. For example, it's unlikely that arsenic caused the rectal cancer of Mrs. Chan's janitorial colleague, because that cancer is fairly common and not known to be associated with arsenic exposure. On the other hand, nasopharyngeal carcinoma is a somewhat more likely candidate, since that cancer is rare and associated with chemical pollutants. As for arsenic's effects on reproduction and fetal development, research scientists simply haven't studied it enough to draw definitive conclusions. Several studies of women living close to arsenic-rich copper smelters and contaminated wells have found an increase in spontaneous abortions, low birth weights, and fatal birth defects. However, a 1995 study found no connection between miscarriages and arsenic in the semiconductor industry.

Such limited data is the plaintiff's great barrier to occupational safety litigation. We may intuitively know that arsenic is bad for you, but proving in court that a specific case of toxic exposure caused a specific illness is all but impossible in most cases. After all, research scientists estimate that arsenic-induced lung cancer takes fifteen to twenty years to develop. And even clear proof of toxic exposure may not be enough to hold employers liable. Across the country, but especially in California, the cards are stacked against employees. "You cannot sue unless the employer knows you're sick, and the illness is caused at the workplace, and they fail to report it," says Richard Alexander, one of the attorneys in the failed lawsuit against IBM. "They're entitled to poison you -- that's the problem with California law. ... That's the problem we ran into with the IBM case."

Although the link between arsenic and AXT workers' health problems is far from clear, Garrett Brown knew at least one thing: Company executives knew exactly what they were doing. On April 5, Brown drew up a preliminary list of 44 charges against the company. AXT, he wrote, had allowed its ventilation system to degrade, failed to train employees in handling arsenic, withheld respirators and other protective gear, exposed employees to arsenic, and failed to notify employees that they had been exposed. Moreover, Brown wrote that AXT's safety manager, Ed Haggerty, "was aware that these exposures presented a hazard to the employees." One employee who'd been exposed at four times the legal limit told Brown that company managers had assured him his arsenic test had turned out "okay." In fact, according to Brown's memo, Haggerty had claimed that AXT vice president Davis Zhang ordered him to stop warning workers about the arsenic levels because the "letters [were] getting employees upset and concerned." Haggerty could not be reached for comment, and Zhang has not returned phone calls.

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.

On February 1, 2001, after eight months of negotiating and delays, regulators sat down with AXT representatives and hashed out a deal. The company would pay just under $200,000 and formally agree to fix every problem identified by the government. But on April 30, as part of the agreement, AXT's lawyers sent Brown the results of nine months of arsenic testing. The news was appalling. Although company officials had spent the previous fourteen months assuring Brown that they already were cleaning up their operation, the test results indicated that harmful exposures actually had increased in the months after Brown shut down the facility. Employee Liu Shi was exposed to arsenic levels 14 times the legal limit, Chang Kui Ding worked around levels 28 times the limit, and Ke Yu Wang was exposed to arsenic at 31 times the maximum permissible level.

But AXT officials had figured out a way to solve their regulatory woes once and for all. Some years earlier, the company had bought land in Beijing to expand its manufacturing capacity. Now company executives announced they were moving the most toxic stage of their manufacturing process overseas. AXT was going to China, where Garrett Brown could never meddle in its affairs again. Its Fremont workforce dropped from 826 in 2000 to 317 in 2002, while in China the number of workers rose to nearly one thousand. Hundreds of immigrant employees, having been exposed to dangerous levels of arsenic for years, were wiped off the employment ledgers. Most have vanished back into the immigrant underclass from whence they came, back to Oakland's garment district or the Hobart industrial dishwashers behind most East Bay restaurants.

Disposable humans

Xuan Wen Li hails from Western Canton, a region famous for the quality of its coffins. He is one of the few AXT employees to actively participate in the outsourcing process that cost him his own job. In the summer of 1999, Li brought his wife, daughter, and parents to America, in search of better job prospects for his only child. He quickly found work hauling material for a cotton processing firm, but the work proved too strenuous for his fifty-year-old back, and his boss referred him to AXT. There, he mastered the ingot-slicing machines and became one of the factory's crack workers, operating five laser cutters at a time with a partner. He had a family to feed and was proud of showing off his technical aptitude, which trumped his worries about gallium arsenide. "People from China don't really pay a lot of attention to that," he says, through an interpreter. "Because we're new immigrants; as long as we got work, it's okay."

Everything began to change once the government stepped in. At first, Li welcomed the investigation; instead of the paper masks he usually wore, AXT managers suddenly gave him industrial respirators. But one day in mid-2001, Li's boss had a new assignment for him: He was going to China. Li spent six months in Beijing, training hundreds of workers how to detect the fissures in gallium arsenide crystals, how to line up the laser cutters -- in short, how to do his own job. Once he had finished, the company flew him back to the East Bay and fired him.

Today, Li and his family live in the back of his brother's acupuncture clinic in East Oakland. He has tried to find work for more than two years, but no one wants a 55-year-old man who can't speak English. As the male head of a traditional Chinese household, he keenly feels the shame of not being able to provide for his family, of driving his wife and daughter to jobs he can't get. His kitchen, which also serves as the family living room, is littered with copper wire, mangled circuitboards, and old stereo components; Li has lately started taking apart electronic gadgets, hoping to learn a new trade. He also is pursuing work as a housekeeper. And he blames the government for putting him out of work.

"We are not young enough to find job and fight with the younger kids," Li says. "It's really hard to find job now, especially for men. Most people don't want male housekeeper. That's why I think the factory works for people our age. If the government gives us better plan, better solution like better ventilation, the factory would still be open, and we would still have jobs. So they don't have to move all the way to Beijing."

Despite having put the government investigation behind them, AXT's executives watched as the company began a long slide into the red. The technology bust had taken a big bite out of its sales figures, it underwent a painful restructuring, and the move to China was going badly. According to David Kang, an analyst who tracks the company for the investment firm Roth Capital, customers started complaining that semiconductor products from the Beijing factory were not up to the company's usual standard. AXT's bottom line dropped from a $21.6 million profit in 2000 to a staggering loss of $81 million in 2002.

Company executives began to radically contract their business operations, and an in-house, all-Chinese construction crew was dispatched to renovate the old factory at 4311 Solar Way, to consolidate administrative and manufacturing functions back into the building. But it was still contaminated with high levels of arsenic, as Connie Schultz, AXT's new director of Environmental Health and Safety, allegedly pointed out to senior management. According to two sources who asked not to be named, Schultz advised AXT executives to test the work areas for arsenic contamination and provide construction workers with gear to protect them from the poison lurking in the walls and ceiling tiles. Not only did AXT's senior executives ignore her advice, they began firing her employees. One by one, all six of her safety staff quit or were laid off. On May 2, 2003, Schultz tendered her own resignation.

On June 6, Garrett Brown showed up at AXT's door once again. Someone had called to warn him that the company was potentially compromising the health of its workers, and he walked through the renovation zone, conducting wipe samples that confirmed the presence of inorganic arsenic. According to government records, the construction crew did not use gloves or shoe coverlets, nor did they shower after work as required by California law. AXT did not train its construction workers how to handle arsenic and didn't even bother to test if the toxin had contaminated the facility. In July, Brown issued four citations, including one for willfully ignoring the possibility of arsenic contamination at the work site, and fined the company another $20,000. It has appealed the fine, and a final resolution is still pending.

By the end of last year, AXT had managed to stabilize its operations. The company sold a failing arm of its business and reduced its debt by 45 percent. Although sales revenue dropped from the previous year, AXT steadily whittled its annual net loss down to $26.7 million by abandoning money-losing ventures and restoring the quality of its semiconductor wafers. All it has to do now, believes analyst Kang, is to wait for the expected increase in purchasing by large customers such as Motorola. "About a year ago they had some issues, but that's pretty much behind the company," he says. "They're just waiting for the end market to pick up and then they'll go from there. They've got a lot of cash."

A shameless politician

Don Tatzin has a number of responsibilities at AXT. As its chief financial officer, he is charged with balancing the books and keeping the company on an even financial keel. As the liaison between the company and its investors and the media, he handles all inquiries from Wall Street and reporters. Except, apparently, inquiries that bring up his company's apparent history of exposing workers to poison. Over a period of several weeks, Tatzin didn't respond to any of numerous inquiries seeking comment for this story. After a more pointed message was left for him explaining the story's content in greater detail, a public relations specialist hired by AXT finally left a message in return. "We do appreciate the opportunity to respond to, I guess, some of the questions that you have for AXT," said Leslie Green, a vice president at Stapleton Communications. "We are going to pass on the opportunity to participate in your article at this point, but again, I do appreciate the opportunity." Tatzin and his colleagues seemed to have no interest in explaining AXT's record to the public.

But Tatzin lives another life -- as a member of the Lafayette City Council, where he has enjoyed the respect and admiration of his community for two decades. On the morning of March 6, Tatzin joined several hundred friends and neighbors to cut the ribbon for Buckeye Fields, a $1.8 million Little League and soccer complex in Lafayette. It was a perfect day. The last of winter rains had given way to an clear, azure sky, and the sun kissed the wooded glens and creekbeds of this snug residential enclave. Beneath the venerable live oaks, an unbroken line of sport utility vehicles and minivans meandered up St. Mary's Road and stopped in the parking lot, where they released their payloads of boys in baseball jerseys and girls in Brownie uniforms. Children scampered underneath the arch of red, white, and blue helium balloons and played pickle in the outfield. It was a verdant, Caucasian slice of paradise.

Standing among the mothers and fathers of Lafayette, Tatzin looked a bit younger than his 52 years, fit and trim in his blue corduroys and hiking shoes, his sandy brown hair beginning to thin in front and showing a few wisps of gray. He bandied small talk with state Assemblywoman Loni Hancock, while women in fleece windbreakers laid out folding chairs and waited for the ceremony to begin. Finally, Lafayette Mayor Erling Horn stepped up to the microphone.

The Americana was in full effect, as this intimate community saluted its volunteers and spoke of what can happen when people of goodwill come together. One by one, the mayor invited leaders such as state Senator Tom Torlakson, Hancock, and Tatzin to stand beside him and receive the city's accolades. A four-piece band butchered "The Star-Spangled Banner" as someone ran a flag up a pole, and everyone stood silent, their hands over their hearts. A little boy threw out the first pitch -- at less than three feet tall, he delighted everyone by making it over the plate -- and the crowd broke up to watch the home-run derby. Tatzin wandered among the crowd, striking up brief, leisurely chats and surveying this blessed plot. When approached and asked to discuss AXT's workplace safety record, Tatzin refused to discuss any element of AXT's history. "This is not my work time," he said, "so let me do my city thing." Asked when he might be available, he refused to answer and invited us to run this story without his company's perspective. "Go ahead, it's your choice," he said. "It's freedom of the press." With that and a few more remarks, Tatzin returned to kissing babies, shaking hands, and enjoying the sunshine.

A few days after this encounter, spokeswoman Leslie Green agreed to accept questions in writing. In response to seventeen detailed questions about many aspects of AXT's operations, she e-mailed the following response, which is printed in its entirety: "AXT has a strong commitment to maintaining a safe and healthful work environment for all of its employees," Green wrote. "The company monitors its work environment and its employees, including providing medical testing of those employees who work in manufacturing areas. AXT's health and safety policies were developed in accordance with federal and state regulations."

Generations of grief

Back in Oakland's Chinatown, Fei Ying Zhao's life couldn't be any more different from that of Tatzin's constituents. She lives in a two-bedroom tenement above a porno storefront with her husband, her son, and her in-laws; its dark, narrow hallway is stacked with boxes of Huggies and Top Ramen. The kitchen serves as the only common room in her home, and a couch and a TV stand next to bowls of shredded meat and chopped onions stewing in a broth. Children's toys litter the linoleum floor in bright, primary colors. Cooking pots simmer on the stove. The air is thick with greasy smoke, and the cupboards are lined with aluminum foil. Zhao sits on the couch, dressed in sweats and slippers, her belly swollen in the eighth month of pregnancy. Her deformed son holds onto a table leg and sways back and forth.

Zhao had already lived through the one miscarriage and a cancer scare, so by the time she got pregnant again in mid-2001, she was more than a little nervous about working at AXT. Two months into her pregnancy, she claims, the ventilation system failed, and a pungent chemical stench began to accumulate in the workroom she shared with two other employees. When she complained to her supervisor, he gave her a flimsy paper mask to wear. Zhao's anxiety grew with the smell -- she describes it as worse than gasoline -- and she returned to her boss after a few weeks. In most departments, she claims, managers gave pregnant women employees a year's worth of maternity leave, because the workplace was simply too toxic. Zhao asked for the same consideration and even brought letters from her doctor. Her supervisor said no. "The manager didn't move her to the other department," Zhao's interpreter explained. "Because the manager said it's okay, you are not polluted. You are not touching the polluted things."

When she pressed the issue, her supervisor gave her a Material Safety Data Sheet, which explained, in both Chinese and English, the potential health effects of gallium arsenide. With her ninth-grade education, Zhao had no hope of understanding it; she didn't even recognize the chemical symbol for arsenic. Nor did she realize the legal import of the following phrase printed in the center of the sheet: "American Xtal Technology assumes no liability in connection with any use for the products discussed, and it makes no warranty in that respect. The user must assume full responsibility for all required safety measures in the use of these materials."

Zhao was out of options, so she stayed right where she was and inhaled the stale, acrid air eight hours a day. In February, 2002, her water broke five weeks early, and she was rushed to the hospital. Her son was born blind, and his testicles failed to descend. Less than a month after Zhao brought him home, seizures began racking his body. Doctors diagnosed him as suffering from an extremely rare birth defect known as agenesis of the corpus callosum -- in lay terms, the neural structure connecting the two hemispheres of his brain is missing. When this defect is associated with seizures in the first weeks of life, the prognosis is often severe mental retardation. Zhao's son may never dress or clean himself, understand social cues, or be capable of abstract thought.

Zhao has been trying to sue the company for allegedly causing her son's disorder, but she hasn't exactly had time to focus. Her son recently had surgery to lower his testes into his scrotum, but it didn't work, and he'll have to go under the knife again. The company laid her off five months after her son was born, and she has been scrambling to get a job before her unemployment insurance runs out. Her husband works as a stock boy in a hardware store, her father-in-law in a construction company, and her mother-in-law in a garment factory, but the medical bills are mounting, and Zhao is running out of ideas. "The pressure is very much," her interpreter describes Zhao as saying. "Because now, the family's financial -- is not easy to get the financial problem solved."

Still, Zhao keeps trying to get her day in court. When her first lawyers walked away from the case, she immediately started looking for another to take his place. She may be just a country girl, but she is determined to exact a measure of justice from AXT's chief executive officer Morris Young -- the man who, she claims, reached out from nowhere and changed her life without giving it a second thought. "He doesn't have any sympathy on the workers," her interpreter explains. "He knows that the worker take the risk to work for him, but he never even send any message to her at all. ... She suspect that the company make the son like that. So she has to fight for the son."

As she talks, Zhao's son stops lumbering around the kitchen and starts to wail. His grandmother hefts him onto her lap and softly coos a Cantonese lullaby. She stares into his eyes as if looking for something, but they just roll back into his skull.

Chris Thompson writes for the East Bay Express.