Mon, Aug 10, 2009 - Page 1 News List

Rio Tinto spied for years, Chinese report concludes


China’s state secrets watchdog has accused mining multinational Rio Tinto of engaging in commercial spying over six years, saying data on Rio computers showed the espionage came at a huge loss to China.

The report and other comments from the agency said the case of four Rio employees detained and accused of espionage, including one Australian, could foreshadow stricter controls on how foreign companies do business in China.

Rio has said its employees did nothing unethical and did not bribe Chinese steel mills for information.

The report issued by China’s National Administration for the Protection of State Secrets said Rio Tinto’s commercial spying involved “winning over and buying off, prying out intelligence, routing one by one, and gaining things by deceit” over six years.

“The large amount of intelligence and data from our country’s steel sector found on Rio Tinto’s computers and the massive damage to our national economic security and interests are plainly obvious,” said the Chinese-language report, issued on the administration’s Web site on Saturday.

China has detained the Rio workers — Australian Stern Hu (胡士泰) and three Chinese colleagues — on allegations of stealing state secrets about iron ore price negotiations.

The detentions have raised worries about doing business in China, strained ties with Australia and overshadowed critical price talks.

Rio’s share price, however, has been little affected.

The new Chinese report said Rio’s spying meant Chinese steel makers paid more than 700 billion yuan (US$102 billion) more for imported iron ore than they otherwise would have.

It did not explain how it arrived at this estimate.

A Rio spokeswoman in Australia said yesterday she was unaware of the Chinese report and declined to comment further.

The report from the secrets watchdog suggests the Chinese government is unlikely to drop the Rio case and could instead use it as a springboard for tougher information controls on domestic and foreign businesses.

It said the case should force Chinese officials and firms to do more to protect sensitive information, and that foreign businesses in China must come under stricter controls to deter them from spying.

“Our country has entered a peak period of commercial espionage warfare, and the threat to important economic intelligence and security of national economic activity increases by the day,” the report said.

The report and others on the agency’s Web site said the government should spell out more clearly what commercial data count as official secrets.

Contacts between local officials, experts and managers and foreign businesses should also be more strictly controlled, the report on Rio said, adding that “traitors” were enriching themselves at the expense of Chinese businesses.

“The Rio Tinto spying case has again sounded the alarm over secrets protection by our country’s state-owned enterprises and corporations,” Luo Jianghuai, a secrets protection official, wrote in an essay accompanying the report on Rio.

Luo said multinationals used Chinese staff with experience in local businesses and government to illicitly gain information and influence.

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