DuPont Refrigerants. It s a Chilling Reality. Counterfeit Refrigerants are on the rise... Chillventa Refrigerants Forum No.

DuPont Refrigerants It s a Chilling Reality Counterfeit Refrigerants are on the rise... Chillventa Refrigerants Forum No.4 October 9, 2012 Beth Sassano Global Marketing Manager DuPont Fluorochemicals 1

The Vision of DuPont MARKET DRIVEN SCIENCE National Geographic image Our vision is to be the world s most dynamic science company, creating sustainable solutions essential to a better, safer, healthier life for people everywhere. 2

The Foundation of DuPont 3

Counterfeiting a violation of core values Counterfeit Refrigerant is sold to an unsuspecting buyer Service Personnel unknowingly handle and service equipment with the counterfeit refrigerant Counterfeit refrigerant reacts with equipment parts causing leaks, poor performance Chemical reaction inside equipment results in explosions and death Ethics Issue Health Issue Environmental Issue Safety Issue 4

Shipping Industry Reefer Incidents - 2011 Mixtures of R-134a/R-40 inadvertently used by servicing companies to re-gas reefer compressors (thought to be pure R-134a) R-40 reacted with aluminum metal parts in the compressor forming tri-methyl aluminum, a highly pyrophoric, explosive substance Three fatalities resulted. Over 1000 reefers grounded, being inspection to confirm contamination and methods are being developed and tried to decontaminate or decommission Later, when servicing reefers, trimethyl aluminum exposure to air caused 4 separate reefer explosions (2 Vietnam, 1 China, 1 Brazil) References: Air Conditioning, Heating and Refrigeration NEWS January 9, 2012 Cambridge Refrigeration Technology Cambridge, UK. www.worldcargonews.com 5

Counterfeit Statistics Did you know? For EU Member States in 2011, more than 91,000 detention cases were registered by Customs: an increase of 15% compared to 2010. In 2011, China continued to be the main source country from where IPR infringing goods were shipped to the EU, accounting for 73% of the total amount of detained articles. Today smugglers of illegal / regulated substances often hide HCFCs behind a layer of other chemicals such as HFC. In southern Europe it is estimated that up to 10 small ships a day are ferrying small consignments of HCFCs between ports bordering the EU where trade controls are not in place, and ports within the EU where import of virgin HCFC is banned. http://www.unep.fr/ozonaction/information/mmcfiles/7507-e-risk_assessment.pdf. http://ec.europa.eu/taxation_customs/customs/customs_controls/counterfeit_piracy/statistics/ 6

Are you at risk? Are you operating in multiple countries or regions? Are your local procurement officers able to make independent purchase decisions for your refrigerant needs or do you have a preferred supplier list? Are your refrigerant sourcing decisions being made purely on price or is quality, reliability and security of supply chain being considered? Do you use refrigerants that are patent protected, under regulation and/or in tight supply? Is your returnable cylinder return rate less than 100% annually? Have you not instituted a refrigerant testing program? 7

OEM Incident April 2012 Methyl chloride confirmed in Heatcraft recall HEATCRAFT Australia has confirmed that the "flammable and poisonous" counterfeit refrigerant responsible for the recall of certain models of Kirby packaged refrigeration units in Australia does have methyl chloride (R40) as one of its constituents. It has also been confirmed that the suspect units were manufactured and charged with the refrigerant at its own factory in China. Kevin Lee, Heatcraft Worlwide Refrigeration's global technical director told ACR News that the units which were supposed to be charged with R134a actually contained a cocktail of R22, R142b and R40. The problem first came to light through the analysis of warranty return compressors. The units affected are the Kirby 'Drop-in" refrigeration units KPC800-6, KPC1000-6, KPC1400-6, KPC1700-6, KSC2000-6, KSC2700-6, KSC3500-6, with serial numbers 1108xxxxxx to 1202xxxxxx. The units were sold between September 1 2011 and April 10 2012 and sales were restricted to Australia with a few in New Zealand. Heatcraft customers in Australia have advised to contact their supplier or Heatcraft directly to have the unit replaced. Under no circumstances, says the company, are the units to have the refrigerant replaced by a service technician whilst in-situ. It was a similar cocktail containing R40 and R22 which was implicated in the deaths of three people last year when refrigerated containers they were working on exploded. 8

Refrigerants: The industry has an issue Counterfeit refrigerants pose a global threat, can be unsafe for use, and can pose quality issues for businesses and customers. Counterfeit refrigerants can include substituting content with flammable gases (methane, ethane, propane or butane). 9

Refrigerants: The industry has an issue Region Our customers indicate there is a problem around the world. Frequency of Counterfeit Which Product Frequency of Illegal Imports Which Product AP >30% 134a DACs <10% R22 DACs LA 15% 134a, ISCEON 340g cans 15% R12 DACs ME >30% 134a DACs <10% R12 DACs NA <10% R22 DACs 10% 20% R22 DACs 10

DuPont Refrigerants Brand Assurance Anti-Counterfeiting Global Initiative DuPont is focusing on this because counterfeiting and illegal imports of DuPont refrigerant products can result in: loss of life, loss of jobs and livelihood significant revenue losses for our customers and DuPont quality and safety issues due to equipment failure if the wrong refrigerant is used potential damage to reputation for DuPont and our customers as suppliers of high quality products 11

DuPont Refrigerants Brand Assurance Anti-Counterfeiting Global Initiative Market Monitoring & Communications Training DuPont Refrigerants Brand Assurance Program Enforcement Product Identification & Tracking 12

Authenticating DuPont refrigerants One overt technology being deployed is the patented DuPont Izon security label on DACs (Dispos a Cans) Count the dots and Count on DuPont 14

Authenticating DuPont refrigerants There are different views on each side of the DuPont Izon hologram. Static shots of the two Izon labels in use are shown below. Left view Right view Top view Bottom view Left view Right view Top view Bottom view 15

Authenticating DuPont refrigerants This feature is being rolled out on all DuPont DACs (Freon, Suva and ISCEON branded products) in 2012. 16

Authenticating DuPont refrigerants The DuPont Izon security feature should simplify the identification process to determine if a DAC and its contents are authentic or counterfeit. The label will always be positioned on the top of the container and is easily visible The label cannot be removed without serious damage to the label. This feature helps to prevent re use of the label. Izon security label on top of DAC 17

Training for Customs / Border Control Officials Customs Recordals Trademarks Customs Training Legal / Investigators DuPont Refrigerants packaging Types & Sizes Colors & Labels How to spot fakes Tips & Tricks Overt and covert tactics DuPont Refrigerants supply chain in the specific country Documentation Distribution partners Contacts 19

How to spot the Fakes 20

Our Results in the last 2 years Investigation and seizure of products worth several million USD in revenue Assistance to law enforcement officials in conducting raids and seizures, resulting in prosecution Internet monitoring resulted in removal of 100+ ebay listings, 200+ Alibaba store front listings. Establishing cutting edge, patented product identification methods and technologies of DuPont branded refrigerants Forging relationships with key stakeholders (including environmental, governmental and private companies) to enhance effectiveness of anti counterfeiting effort Informing industry through videos, press releases, website news and marketing collateral There is a lot more to be done to Contain, Stabilize & Secure 22

DuPont Refrigerants Brand Assurance Anti-Counterfeiting Global Initiative Market Monitoring & Communications Training DuPont Refrigerants Assurance Program Enforcement Product Identification & Tracking 23

Successful Action against Counterfeiting in U.A.E. Outcome: Police conducted a raid, seizing counterfeit refrigerant cylinders, machines, printing templates, and counterfeit packaging for DuPont refrigerants. Second raid yielded seizure of filling and printing machines. Counterfeiter was apprehended and sentenced to two years in prison for the crime of counterfeiting. 24

Successful Seizure of Illegal Refrigerant in Sharjah Outcome: A seizure resulted in confiscation of 3,100 units of fake DuPont SUVA 134a refrigerants and 6,000 units of fake product from another manufacturer. Counterfeiter paid fines to the UAE Government and made additional payments to cover costs related to storage of the seized goods, painting and repackaging the cylinders without the DuPont trademarks. This trader is no longer in business. 25

Successful Pursuit of Refrigerant Counterfeiter in China Outcome: Defendants fined $39,400 by Chinese Government Settlement agreement including compensation and future fines for any repeat offense. Defendants paid DuPont $32,000 in damage as well as court costs Defendants issued formal public apology in China 26

Global Website We invite you to learn more about our activities on our website www.refrigerants.dupont.com/genuine 27

Thank you for your attention! Questions? 2012. DuPont. All rights reserved. DuPont Oval logo, Freon, Suva, ISCEON and The miracles of science are registered trademarks and trademarks of E. I. du Pont de Nemours and Company 28