Rio Tinto executive admits bribe charges as high-profile trial opens

Daniel Ren
23 March 2010

Stern Hu, a Rio Tinto executive and Australian citizen, admitted bribery charges in Shanghai yesterday on the first day of a high-profile trial that has strained China’s trade and investment ties with foreign countries.

Hu and three Chinese employees of Rio Tinto – Wang Yong, Ge Mingqing and Liu Caikui – are accused of taking bribes and illegally obtaining commercial secrets. The four were brought to Shanghai No 1 Intermediate People’s Court yesterday, nearly nine months after they were detained.

Hu and Liu pleaded guilty, lawyers said, but it is not clear whether Wang and Ge did.

Tom Connor, Australia’s consul general in Shanghai, said after the first day of the trial that Hu was facing at least two bribery charges involving 1 million yuan (HK$1.13 million) and U$$790,000.

“He made some admissions regarding those two bribery amounts so he did acknowledge the truth of those amounts,” Conner said.

Tao Wuping, a lawyer representing Liu, said that Hu had pleaded guilty to the bribery charges. He said prosecutors had read out the charges against the accused without debate. The hearing would continue today with debate on the bribery charges being held during the morning session, he said.

The hearing on charges of infringing commercial secrets would follow in a closed-court trial.

Foreign reporters were not allowed in the courtroom yesterday although the hearing on bribery charges was described as an open-court hearing. Tao said Liu was charged with accepting 3 million yuan in bribes, Ge with accepting bribes of more than 6 million yuan and Wang of collecting 70 million yuan.

Hu and his colleagues with the Anglo-Australian mining giant were arrested in Shanghai last July and were initially accused of stealing state secrets. The accusations were later downgraded to industrial espionage and bribery during high-stakes iron-ore contract negotiations.

The detention of the Rio Tinto employees soured China’s relations with Australia. It also triggered fears in the Western business community that the emerging global economic powerhouse had made an about-face on foreign investors, following its three decades of efforts to draw overseas capital to fuel its economic growth. China’s demand for iron ore, coal and liquefied natural gas has made it Australia’s largest trading partner. With trade worth about US$53 billion last year, Australia was able to avoid the worst effects of the global financial crisis.

The case had been used as an example of the hazards of doing business in China. But the guilty pleas may be an embarrassment for Rio Tinto which said that its employees were innocent.

The four defendants could face jail terms of more than 10 years, lawyers said.

Few details of the allegations against the suspects have been made public. The trial is scheduled to last three days but it is unclear how soon the court might issue a verdict, which sometimes comes weeks or even months after a trial is held.

Almost all criminal cases that go to trial in China end in a conviction.

Australian Prime Minister Kevin Rudd said the world would be watching the trial “very closely”.

“China has a different legal system to the rest of the world,” he said in Canberra yesterday. “The world will be watching very closely.”

Yesterday, at least 50 local and foreign reporters were waiting outside the court in Beijing.

The hearing coincided with a Beijing trip by Rio’s chief executive Tom Albanese. “The issue is obviously of great concern to us,” he said. “We respectfully await the outcome of the Chinese legal process.”

Analysts said both China and Australia now want to play down the political implications of the case as they try to normalise trade and investment relations.

“It is not easy to avoid politicising some high-profile commercial cases,” said Xu Mingqi, a professor at the Shanghai Academy of Social Sciences. “As China’s economic might increases, more frictions with the Western businesses are likely to surface. Consistent legal and law enforcement systems are much needed in China as it further integrates into the global economy.”

The mainland’s total trade with Australia rose 55.1 per cent in the first two months of this year to US$11.09 million, which accounted for 2.87 per cent of China’s total of US$386.4 billion during the period, according to China customs’ latest statistics.

In June last year, Rio rejected a US$19.5 billion investment from China’s state-owned Aluminum Corporation of China. But the two companies signed an agreement last week to develop an iron ore project in Guinea.

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