China to begin trial of 4 Rio Tinto employees

21 March 2010

An Australian executive and three other employees of mining giant Rio Tinto face charges of stealing secrets and offering bribes in a Shanghai trial beginning Monday that is viewed as a barometer of China’s handling of foreign business.

China has warned against politicizing the case, which has been an irritant in relations with Australia. Australia has protested the plan to close court sessions involving the commercial secrets charges.

The trial comes at a time of friction with the U.S. over China’s currency policies and doubts among some in the foreign business community over Beijing’s commitment to an open and fair business environment.

Australian citizen Stern Hu and three Chinese nationals were arrested nine months ago at a time when Rio Tinto was acting as lead negotiator for global iron ore suppliers in price talks with Chinese steel mills. Hu was Rio Tinto’s senior executive in China in charge of iron ore.

Few details of the allegations against the suspects have been made public, and the four Rio Tinto employees have not been allowed any public comment since their arrest. Lawyers contacted over the weekend, ahead of Monday’s trial, refused comment.

The Australian Department of Foreign Affairs and Trade issued a statement saying it was disappointed with the Chinese court’s decision not to allow its consular officials to attend sessions having to do with commercial secrets.

“The Government’s disappointment with the decision has been registered with Chinese officials in Beijing and Canberra. The Australian Government does not propose to make further representations on this matter,” it said in a statement issued over the weekend.

It said Hu’s lawyer, Duan Qihua, would be present throughout the trial. Australian consular officials will attend hearings involving the bribery charges.

Rio Tinto has repeatedly said it hopes the case will be handled quickly and transparently. In the meantime, it is moving ahead with its business in China, the world’s biggest steel maker and thus its biggest consumer of iron ore.

The company recently appointed a new top executive for China and on Friday it announced an agreement with China’s state-run aluminum giant Chinalco to develop an iron ore reserve in the West African country of Guinea.

Rio Tinto CEO Tom Albanese is due to attend a forum on China’s role in the world economy in Beijing on Monday.

Lawmakers in Australia have urged their government to push more forcefully for an open trial.

“The world will be watching how this particular case is conducted,” Australian Prime Minister Kevin Rudd said after the trial date was announced.

Almost all criminal cases that go to trial in China end in conviction. The maximum penalty for commercial espionage is seven years in prison if the case is found to have caused extreme damage. The maximum penalty for taking large bribes is five years.

China treats a wide range of commercial information as state secrets. Chinese reports that the Rio employees were originally suspected of obtaining state secrets suggest they may have been caught up in an effort to control information exchanged during the iron ore talks.

The trial begins as China is again bogged down in iron ore price negotiations with foreign miners.

China has sought to convince Rio Tinto and other suppliers to give its mills lower prices than those paid by Japan and South Korea. Miners reportedly are seeking price hikes of 90 percent or more this year.


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