Thu, Mar 25, 2010 - Page 5 News List

World is watching, Rudd warns China as trial ends

NEED FOR STEEL Australian Prime Minister Kevin Rudd said international observers would pay close attention to how a Chinese court is handling the Rio Tinto trial


The trial of four Rio Tinto executives ended in Shanghai yesterday, with three defendants contesting charges of stealing commercial secrets in a case that has highlighted the Chinese steel industry’s huge appetite for iron ore.

The trial of Australian citizen Stern Hu (胡士泰) and his Chinese colleagues, in which all four admitted to taking bribes, has strained ties between Australia and its largest trading partner. The four face jail terms of at least five years for bribery.

It has also raised worries about China’s secretive legal system, although the admissions by the executives could also cast doubts over the way mining giant Rio Tinto, the world’s No. 2 iron ore producer, conducts business in China.

“It’s not just Australia that’s watching this trial very closely, but the eyes of the world are focused on the way in which this trial is conducted and what happens as a result of it,” Australian Prime Minister Kevin Rudd told reporters in Perth.

Hu, head of the China iron ore business, his subordinates Liu Caikui (劉才魁) and Ge Minqiang (葛民強) and iron ore salesman Wang Yong (王勇), pleaded guilty on Monday to taking kickbacks, but they have contested the amounts alleged by prosecutors.

Rio, seeking to improve relations with China, had maintained since the men were detained last July during sensitive annual iron ore price negotiations that they had done nothing wrong. Iron ore is the main raw material for making steel.

“We would always investigate thoroughly any allegations of serious wrongdoing,” Tony Shaffer, Rio’s principal adviser for media relations, wrote in a statement e-mailed to reporters. “We cannot comment on the case of our ­employees in China at the moment as the legal process is still under way.”

No verdict or sentence had been reached, Zhai Jian (翟建), lawyer for defendant Ge, said on his way out of the court. He did not comment further.

A verdict may be likely before the World Expo 2010 opens on May 1, drawing tourists and international heads of state to Shanghai.

“There may well be some time, a matter of days between the end of the hearing today, and those further processes,” Australian Foreign Minister Stephen Smith told Australian radio.

Lawyers say the four executives have testified that Rio Tinto did not know about the kickbacks, which came mostly from smaller or private steel mills desperate for iron ore at stable and relatively low term prices.

They included Rizhao Steel, formerly one of China’s largest private steel mills, whose billionaire founder Du Shuanghua (杜雙華) gave written testimony about a US$9 million payment to defendant Wang, trial reports showed.

Three of the four Rio employees on trial for stealing state secrets have contested the charge, Zhang Peihong (張培鴻), a lawyer for defendant Wang, said yesterday.

He said the “fourth defendant” did not contest the charge, but did not give a name. In the trial schedule, the fourth defendant is listed as Liu, who faces the lowest of the bribery charges, but it was not clear that Zhang was referring to him.

For its part, Rio Tinto has conducted an independent internal audit to clear itself of any wrongdoing and determine whether there was evidence the company paid bribes to, or received illegal payments from, Chinese steel mills, the Australian newspaper reported yesterday.

A team of forensic accountants and lawyers found nothing that would uphold a claim the company had supported any illegal activity or could have been aware of the alleged misbehavior, the paper said, adding the audit team could not give Rio similar assurances about the activities of the four executives.

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