* Singapore inquiry rules out foul play
* U.S. embassy endorses inquiry; risk of diplomatic discord eases
* Family believes engineer was murdered, to issue statement
* U.S. audit of Singapore firm has started
By Kevin Lim and John O'Callaghan
SINGAPORE, July 8 American engineer Shane Todd committed suicide in Singapore last year, a coroner's inquiry in the city-state concluded on Monday, a verdict at odds with his family's belief that he was murdered because of his work.
The case had threatened to become a diplomatic issue as Senator Max Baucus, who represents Todd's home state of Montana, had pressed for more U.S. involvement in the investigation.
The possibility of damage to U.S.-Singapore ties appears to have diminished, even though Todd's parents have vowed to push for an investigation at home. They allege Singapore's Institute of Microelectronics (IME), where their son had worked, was involved in the transfer of sensitive technology to China.
After the verdict, the U.S. embassy in Singapore said: "The inquiry into Dr. Todd's death was comprehensive, fair and transparent". The statement expressed "heartfelt sympathy" to his family, friends and colleagues.
Todd, 31, died of "asphyxia by hanging" and there was "no foul play involved in the deceased's death," said the summary of the findings by District Judge Chay Yuen Fatt, issued after two weeks of testimony by dozens of witnesses in May. Singapore law requires an inquiry into any death not resulting from illness.
Singapore sees the case as closed but will be open to the Todds "if they want to talk to us, if they want to come over and look at things again", K. Shanmugam, the foreign minister and law minister, told Reuters.
"This is not a case like a civil litigation where one side wins and one side loses. It is a sad situation."
Through their lawyer, the Todds said they would issue a statement after they had gone through the 145-page report.
U.S. AUDIT OF SINGAPORE COMPANY
Todd was found hanging from the bathroom door of his apartment in June 2012, two days after he left his job at IME. He was researching an advanced semiconductor material called gallium nitride (GaN) that has commercial and military uses.
Todd's parents believe he was murdered over what they said was his role in a project between state-linked IME and Chinese telecoms equipment giant Huawei Technologies Co Ltd.
Shanmugam said a "process audit" of IME by U.S. officials had begun to allow them to "satisfy themselves there has been no such illegal transfer (of technology) as has been alleged".
"The process has started. It will be continuing through this month," he said, adding U.S. experts would arrive in mid-July.
Huawei and Singapore officials have denied the accusations, saying they did not proceed beyond initial discussions into a possible project involving GaN, which can be used in equipment ranging from mobile phone base stations to military radars.
The judge concurred.
"The potential GaN power amplifier project did not even materialise. Even if it did, which I did not find, the listed specifications show it would not have violated general export control laws, nor could it have been used for military applications," he said.
"(Todd) was not in possession of confidential and valuable classified information in the course of his employment."
Huawei has been blocked from some projects in Australia and is deemed a security risk by the U.S. Congress on the grounds that its equipment could be used for spying.
Rick and Mary Todd attended the inquiry for several days before pulling out and leaving Singapore, saying they had lost confidence in the system investigating their son's death.
"What has made us say that we can no longer stay here is the testimony from the beginning, saying they are always only looking at suicide, never murder," Rick Todd told Reuters Television on May 22. "The outcome was pre-determined."
During the inquiry, Singapore government lawyers presented forensic reports that showed Todd died by hanging, based on injuries around his neck. Their findings were backed by two U.S. pathologists, who said the manner of death pointed to suicide.
The parents walked out of the hearing after a U.S. medical examiner they had hired retracted a statement that Todd had been garrotted and the judge refused their request to delay testimony by another witness so they could go through it.
The Todds' belief that their son was murdered was based on documents on a hard disk drive they said they found in his apartment. Singapore disputes the Todds' account, saying police had returned the hard drive to the family after examining it.