China to try Rio Tinto employees
Mining giant "very concerned" for executives charged with espionage and bribery.
Last Modified: 11 Feb 2010 09:02 GMT

Rio Tinto and Australian officials have called for a "transparent and expeditious" trial [Reuters]

China is to push ahead with moves to prosecute four employees of Anglo-Australian mining group Rio Tinto Ltd, in a case that has strained relations between China and Australia.

Stern Hu, an Australian executive, and three Chinese nationals, Wang Yong, Ge Minqiang, and Liu Caikui, were arrested in July and later charged with stealing commercial secrets and taking bribes.

The four were arrested in Shanghai during contentious iron ore price talks with China's steel industry group.

No trial date was announced, but observers said it could be held as early as this month.

In a brief statement Rio Tinto said it was "very concerned" about the fate of its employees and wanted China to hold a "transparent and expeditious" trial after the four.

"We are very concerned about the nature of these charges, however, as this is part of an ongoing legal process, it is inappropriate to comment any further," Sam Walsh, the head of the company's iron ore division, said.

Australian government officials also called for an open trial.

"We continue to emphasise to the Chinese authorities the need for the case to be handled transparently and expeditiously," a spokesman for Stephen Smith, the Australian foreign minister, said.

'Closed-door trial'

But a spokeswoman for Shanghai's Number One Intermediate People's Court told AFP that the trial was likely to be closed to the public because the case involves "infringing commercial secrets".

"I don't want to speculate on the timing of the trial of Mr Hu and I certainly don't want to speculate on any matters which might occur during the trial"

Julia Gillard, Australian deputy prime minister

"If it is decided to be a closed-door trial, no media will be allowed."

China is the world's biggest steel producer and consumer of iron ore and has been pressing Rio Tinto and other suppliers to give its mills lower prices than those paid by Japanese, South Korean and other competitors.

The case briefly snarled diplomatic ties between China and Australia, which have become major trading partners as China seeks commodities and energy to feed its rapid industrialisation.

Commenting on the case Julia Gillard, Autralia's deputy prime minister, said officials were continuing to provide Hu and his family with "consular assistance".

"I don't want to speculate on the timing of the trial of Mr Hu and I certainly don't want to speculate on any matters which might occur during the trial," she said.

China's Xinhua state news agency said the four Rio Tinto workers had been charged with stealing commercial secrets on multiple occasions from Chinese steel producers and taking bribes from mills – a shift from earlier accusations that the employees paid bribes.

'Industrial espionage'

The four are accused of using their "positions to obtain benefits for others and on many occasions solicited or accepted bribes", the agency said.

Rio Tinto supplies vast amounts of iron ore to China's steel industry [Reuters]
Xinhua said the employees of the mining giant had also "on many occasions obtained the trade secrets of Chinese steel companies, leading to serious consequences for the relevant steel companies".

The maximum penalty for commercial espionage is seven years in prison if the case is found to have caused extreme damage, and five years for taking large bribes.

Shortly after the arrests, Kevin Rudd, the Australian prime minister, had warned China the world was watching its handling of the case and said China should consider how the issue could affect its economic ties with the rest of the world.

Chinese officials rejected the comments as interference in the country's judicial system.

Analysts said industry leaders would keep a close eye on the proceedings to gauge the pitfalls of engaging with China, the world's top exporter whose breakneck growth defied the global slowdown.

"I think the business community will try to talk as if the Stern Hu situation is a unique one, but I think they will realise that it's more than that," John Lee, fellow of the Centre for Independent Studies think-tank, told AFP.

"It's a commentary on the general risk of doing business with China."

Lee, who has personally investigated the case, said Hu had little chance of being acquitted and he expected the Rio Tinto executive to receive a sentence of five to seven years.

"The mere possession of the information that Stern Hu had is illegal," he said. "I think there's no prospect of finding him innocent."

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