iOS app Android app More

China Slaps Four Rio Tinto Employees With Up To 14 Years In Jail Over Bribery Charges

Rio Tinto Bribery China

ROHAN SULLIVAN   03/30/10 12:32 AM ET   AP

SYDNEY — Australia's leader said Tuesday that secrecy surrounding China's trial of four Rio Tinto workers for commercial espionage leaves room for doubt about the convictions.

Canberra says the jail sentence handed to Australian citizen Stern Hu on bribery charges was harsh, and has criticized the decision to keep media and diplomats out of the court while it considered the other charges of stealing commercial secrets.

Hu, Rio Tinto's executive in charge of iron ore negotiations in China before his arrest last July, was sentenced in a Shanghai court on Monday to a total 10 years in prison. Three Chinese colleagues were imprisoned for between seven and 14 years.

The case was closely watched by foreign companies operating in China. The rulings suggest Chinese authorities are taking a sterner stance toward foreign companies caught violating the country's often selectively enforced corruption code.

Australia Prime Minister Kevin Rudd, a Chinese-speaking former diplomat to Beijing, said closing the court during the commercial secrets part of the trial left "serious unanswered questions about this conviction."

"In holding this part of the trial in secret, China I believe has missed an opportunity to demonstrate to the world at large transparency that would be consistent with its emerging global role," he told reporters.

It was unclear whether Hu or his co-workers would appeal.

London-based Rio Tinto is a key industry negotiator in price talks with China's state-owned steel mills, and the arrests of its employees last August were initially thought linked to Beijing's anger over high prices it paid for iron ore – a key commodity for China's booming economy. That belief was shaken last week after the four pleaded guilty to taking bribes from steel mills trying to get preferential access to ore supplies.

Australia said Hu's sentence wouldn't affect ties with China, but some experts said the trial underlined worries companies already have about doing business in a country where legal proceedings are often opaque.

The verdict also comes as other faultlines appear between Beijing and the global corporations eager to tap a fast-growing market of more than 1 billion. A recent survey showed a growing number of foreign businesses in China feel shut out under government policies promoting homegrown technology. Internet search giant Google's high profile decision to move its Chinese site to Hong Kong after a spat over censorship and hacking added to the unease.

China has chronic problems with corruption so the Rio case "is not as simple as China sending a warning message to a particular country or company" said Jin Linbo, a senior research fellow with the China Institute of International Studies. "It's time China should deal with this problem or more serious cases will emerge," Jin said.

Beijing is constantly staging anticorruption crackdowns, but big foreign companies are rarely targeted.

Australian Foreign Minister Stephen Smith and Rio Tinto said separately they were satisfied that there was substantial evidence that bribery had occurred.

Rio Tinto said if would fire Hu and his colleagues.

"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," CEO Tom Albanese said in a statement. The company is increasingly dependent on its business with China.

Smith said corporations would be disappointed at the secrecy of the commercial secrets elements of the trial.

"Clearly the international business community has been watching and transparency and clarity on this point would have been of assistance," he told reporters.

__

AP Business Writer Elaine Kurtenbach in Shanghai contributed to this report.

FOLLOW HUFFPOST BUSINESS
Subscribe to the HuffPost Money newsletter!
Filed by Ryan McCarthy  |