State secrets allegation in Rio case dropped

PUBLISHED : Thursday, 13 August, 2009, 12:00am
UPDATED : Thursday, 13 August, 2009, 12:00am

China has formally arrested four employees of Anglo-Australian mining giant Rio Tinto on charges of bribery and stealing commercial secrets from the nation's steel industry, further fuelling diplomatic friction between Canberra and Beijing

Australian citizen Stern Hu, head of Rio's iron ore business in China, and three Chinese colleagues, had obtained commercial secrets about the steel industry through 'improper means' violating criminal law, Xinhua reported, citing a statement from the Supreme People's Procuratorate.

No formal charges have been laid yet, but the arrest warrants mean the authorities can continue detaining the four men while they make further investigations.

Mainland lawyers said the latest accusations were less serious than earlier allegations of stealing state secrets but the men still faced up to seven years in jail if convicted.

Mr Hu and his colleagues - Liu Caikui, Ge Minqiang and Wang Yong - were detained on July 5 by the Shanghai State Security Bureau for suspected spying and stealing state secrets.

Their detention came amid protracted iron ore contract negotiations between Chinese steel mills and mining companies including Rio, raising suspicion in some quarters that the men were being used as bargaining chips to force prices down.

Relations between Australia and the mainland have since hit a new low, undermining a renewed investment push by Chinese companies into Australia's resources sector. Attempts by Beijing to block a speech in Canberra by exiled Uygur leader Rebiya Kadeer raised tensions further.

Rio yesterday questioned again the strength of the case against its employees, while the Australian government urged Beijing to let the four consult lawyers.

Sam Walsh, Rio's chief executive for iron ore, said: 'Rio Tinto will strongly support its employees in defending these allegations. From all the information available to us, we continue to believe that our employees have acted properly and ethically in their business dealings in China.'

Australia's foreign affairs department said the Chinese Ministry of Public Security informed it about the arrests and charges late on Tuesday.

The four are suspected of 'using improper means to obtain commercial secrets about China's steel enterprises' and commercial bribery. Changing the charge from stealing state secrets to stealing commercial secrets could reduce some of the international pressure on China.

'Stealing state secrets comes with a punishment much too harsh for China to take a step back should it want to compromise with Australia,' said Li Mingjiang, assistant professor at the S. Rajaratnam School of International Studies in Singapore.

Zhao Yunheng, senior partner at Beijing-based Dacheng Law Offices, said the men could face between three years and seven years in prison on the latest charges.

Additional reporting by Woods Lee