FOUR EXECUTIVES from the international mining company Rio Tinto will go on trial in Shanghai today on bribery charges in a case that has brought scrutiny to bear on China as a place to do business.
The world will also be watching to see what kind of hearing the four from Rio’s iron ore team, including Australian citizen Stern Hu, will get, as there has been controversy over the lack of transparency in how the case has been handled. The executives were detained on July 5th last year and taken to a secret location after a fraught round of talks to set the 2009 iron ore prices.
They were initially charged with breaching state secrecy rules. However, they were subsequently charged in August last year with bribery and “obtaining commercial secrets about China’s steel and iron industries”, under Article 219 of China’s criminal code. This carries a maximum seven-year jail sentence, although those convicted may also only face a fine.
Rio has rejected any charges of wrongdoing by its four employees.
In Australia, the case is causing a major furore because China will not allow its diplomats to attend a “closed” section of the three-day trial. The Chinese have warned the Australians not to politicise the trial.
China’s purchase of huge quantities of iron ore from Australia to fuel its ongoing expansion has been a big support for the Aussie economy. China is Australia’s biggest trading partner.
The trial takes place as the foreign investment community is becoming increasingly frustrated with China’s investment environment. As the world’s largest steel consumer, China carries a lot of muscle in the commodities market.
It has taken over the lead from Japan in the 40-year-old annual iron ore price talks, a potent symbol of China’s growing economic and political influence.
Many analysts say privately that the tensions with Rio began when China sought to buy a more meaningful presence in the international business by acquiring a large stake in Rio Tinto through the state-owned company Chinalco for US$19.5 billion (€14 billion). Chinalco already holds a stake in Rio. The deal was abandoned by Rio in favour of a link-up with BHP Billiton, four months after it had agreed to what would have been China’s biggest overseas investment.
