Rio Tinto ore chief in China handed 10-year jail term for accepting bribes

RIO TINTO’S iron ore chief Stern Hu has been jailed for 10 years for accepting bribes and stealing commercial secrets after a case that has brought attention to bear on China as a place to do business.

There was strong evidence of bribery and wrongdoing, the court said, a fact acknowledged by the Australian government and Australian mining giant Rio, although there were lingering concerns over the conviction as the part of the case relating to state secrecy took place in closed session.

The Shanghai Intermediate People’s Court sentenced China-born Australian national Hu, who headed Rio’s iron ore operations in China, to 10 years in jail, with parts of a seven-year bribery term and a five-year secrets sentence running concurrently. Three other executives, all Chinese nationals, were jailed for between seven and 14 years on bribery and secrets charges.

Rio Tinto has distanced itself from the men, saying they broke rules and must bear the consequences. The mining company said it would fire the four for their deplorable behaviour, and said Chinese prosecutors had unearthed “clear” proof of backhanders.

The Beijing government has identified corruption as a major challenge to single-party rule and has taken some high-profile scalps in a number of public crackdowns on graft in the past few years.

The decision to hand hefty jail sentences to Mr Hu and his colleagues has caused a major stir in the western business community in Beijing. Foreigners’ accounts of doing business in China are filled with tales of graft and corruption, of funding enormous banquets to secure access to corrupt officials and of kickbacks to keep the wheels turning.

The Chinese stance on the case, as outlined in the court, was that stealing commercial secrets caused a great loss to the Chinese industry, putting it in a disadvantageous position in iron ore prices talks.

The reaction in China, where corruption causes deep resentment, has generally been positive.

China is Australia’s biggest trading partner, and the case has caused diplomatic tensions, with Canberra anxious to make its point without threatening essential economic ties.