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Canberra 'respects' China's legal system
Tue, Mar 30, 2010
China Daily/Asia News Network

SHANGHAI - Four employees of British-Australian mining giant Rio Tinto were sentenced on Monday to jail terms ranging from seven to 14 years for taking bribes and stealing commercial secrets - a verdict the Australian government described as "very tough".

The Shanghai No 1 Intermediate People's Court sentenced Stern Hu, an Australian national who headed Rio's iron ore operations in China, to seven years in prison for taking bribes, and five years for stealing commercial secrets. However, he will serve 10 years in jail, the court said. Hu was also fined 1 million yuan ($205000).

"On any measure this is a very tough sentence," said Australia's Foreign Minister Stephen Smith. "It is a tough sentence by Australian standards. As far as Chinese sentencing practice is concerned, it is within the ambit or within the range," he said.

But he added the Australian government respected China's legal and judicial processes and that the sentencing would not affect Australia's ties with China.

The other three defendants, all Chinese nationals - Liu Caikui, Ge Minqiang and Wang Yong - were sentenced to seven, eight and 14 years behind bars respectively. It is believed Wang got the longest jail term for receiving the highest amount of kickbacks from a steel tycoon in Shandong province.

The four were convicted of receiving over 92 million yuan in bribes.

The court said in the verdict that the defendants had also obtained confidential information from Chinese steel mills that had been used .as a bargaining chip to drive up the price that China pays for its iron ore imports from the world's three top suppliers: Rio, BHP Billiton and Vale.

It said the four had "damaged the competitiveness" of, and "caused severe losses" to, the Chinese steel industry and hurt China's national interests.

The court on the same day also ruled on a second case - that of Tan Yixin and Wang Hongjiu, executives at two major Chinese steel mills, Shougang Corp and Laigang - for allegedly leaking commercial secrets to Rio's employees. But details of the verdict were not immediately announced.

The two were detained around the same time as Rio's employees last year.

Lawyers representing Rio's four employees said they were yet to meet with their clients to decide whether to lodge an appeal.

While acknowledging evidence that bribery acts did occur among Rio's employees, Smith said there were "serious unanswered questions" regarding the commercial secrets charges. That part of the trial was held in closed court and no details have been made public.

He said the issue was not only of concern to Stern Hu and the other accused, but also more generally and widely to the Australian and international business community. China had "missed a substantial opportunity" to bring clarity to the notion of commercial secrets, he said.

Shortly after the announcement of the verdicts, Rio Tinto posted a statement on its website, quoting Sam Walsh, chief executive of Rio Tinto Iron Ore, as saying that receiving bribes is "a clear violation of Chinese law and Rio Tinto's code of conduct" and that the company will "terminate employment" of the four men.

Tom Albanese, Rio's chief executive, said: "I am determined that the unacceptable conduct of these four employees will not prevent Rio Tinto from continuing to build its important relationship with China. This is a high priority for me personally."

The Rio case, together with search engine Google's recent announcement to pull out of the Chinese mainland, has been widely seen by foreign media as a sign that foreign business sentiment is souring against China, where legal boundaries are blamed as vague.

Chen Fengying, a researcher at the China Institutes of Contemporary International Relations, said China had dealt with the case in accordance with Chinese law. She refuted the foreign media's association of the case with the business environment in the country. Instead, the case reflects the fact that "China is getting increasingly international".

"It is unavoidable that bribery cases involving multinational firms in China will increase as the country integrates more closely with international business community, which is true across the world. More bribery cases will be exposed as China learns how to cope with them," she said.

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