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Sat, Jul 11, 2009 - Page 10 News List

Rio Tinto detainees accused of bribery

BROAD DEFINITION A senior Australian executive and three Chinese Rio Tinto staff are accused of bribing Chinese steelmakers during iron ore price negotiations


Chinese security officials accused four detained staff of ­Anglo-­Australian miner Rio Tinto Ltd of bribery yesterday as Australia sought to avert a diplomatic row centered on the massive iron ore trade.

The Shanghai office of China’s State Security Bureau accused the three local Rio staff and senior Australian executive Stern Hu (胡士泰) of bribing Chinese steelmakers during tense iron ore price negotiations this year, the China Securities Journal said.

“This seriously damaged China’s economic security and interests,” said the paper, which is published by the state-run Xinhua news agency. “The activities of Stern Hu and the others violated Chinese law as well as international business morality.”

The shock detentions have cast a shadow on relations between Beijing and Canberra, whose economies have been welded together in recent years by China’s huge demand for Australian metals and minerals.

China’s ambassador to Australia was summoned to the foreign ministry late on Thursday to discuss what local newspapers said was a fast-escalating crisis, after Chinese security authorities arrested the four on Sunday, alleging they were involved in stealing state secrets.

“In 2009 during negotiations between Chinese and foreign companies on iron imports, Hu and his people used illegal methods by bribing personnel of Chinese steel production units to steal Chinese national secrets, which caused damage to China’s national ­economic safety and interests,” local newspapers said, citing a statement from the Ministry of State Security, China’s main internal intelligence agency.

The material included summaries of meetings of Chinese negotiators, the newspaper 21st Century Business Herald said, citing unidentified sources. It said that would allow Rio to know “the Chinese iron ore negotiating team’s bottom line.”

China is pressing iron ore suppliers for sharp price cuts following several years of repeated increases. The other major suppliers are Australia’s BHP Billiton Ltd and Brazil’s Vale SA.

China’s communist government regards steel as a strategic industry and treats a wide range of economic data as secret. Information on steel company ore costs, profits and technology spending all are considered secrets, news reports said.

Australian Foreign Minister Stephen Smith told reporters in Perth that China appeared to have a “broader” definition of what amounted to industrial espionage than many other countries.

“It’s very hard for the Australian government to see the connection between what might be daily commercial and economic negotiations and national security issues,” he said. “Having said that, Mr Hu now ... runs the risk of being subject to Chinese criminal, legal and judicial processes.”

Rio is “surprised and concerned” about the allegations, said a company spokesman in Melbourne.

“We are not aware of any evidence that would support these allegations. Rio Tinto is committed to high standards and business integrity and takes its ethical ­responsibilities very seriously,” spokesman Tony Shaffer said.

Chinese authorities have not given Rio any information about the case, Shaffer said.

“We remain ready to assist these authorities in their investigations,” he said. “We will continue to support our employees and their families in China.”

Rio said on Thursday it knew of no evidence to support spying accusations.

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