China: Rio arrests "isolated," part of corruption clampdown (Roundup)

Aug 12, 2009, 11:04 GMT

   Beijing/Sydney - The formal arrest on Wednesday of four employees of Anglo-Australian mining giant Rio Tinto Group on charges of trade secrets infringement and bribery should not hurt trade and economic ties between China and Australia, a top official said.

   'This is an isolated judicial case,' Commerce Vice Minister Fu Ziying said at a press briefing about proceedings that have worried foreign investors in China and strained bilateral relations.

   The four employees - Australian citizen Stern Hu and Chinese nationals Liu Caikui, Ge Minqiang and Wang Yong - 'obtained commercial secrets of China's steel and iron industry through improper means, which had violated the country's criminal law,' an official statement said, according to the official Xinhua news agency.

   Prosecutors claimed to have evidence that the four were involved in bribery, the report said, adding that there were suspects within China's steel and iron enterprises who had provided them with commercial secrets.

   Earlier reports suggested the employees could face a more serious charge of stealing state secrets, and observers said the prosecutors' decision is part of a larger anti-corruption campaign.

   'It should be viewed as an attempt by the government to clamp down on corporate bribery, standardize market order, and ensure a good basis for investment and the economy,' Zhang Xu, an expert in criminal law at the China University of Political Science and Law, told the German Press Agency dpa.

   While the case has worried foreign investors in China, Dan Harris, an international lawyer and founder of the China Law Blog, says the government's target audience is local.

   'My sense all along has been that China made these arrests strictly for domestic consumption. China - Beijing and the [Communist] Party - are trying to show they are in control and trying to gain greater control over ore pricing. China is trying to show its populace that when it comes to corruption, nobody is above the law, not even foreigners,' Harris said in an email.

   According to the Chinese financial magazine Caijing, the case was being investigated under an article of China's Criminal Law code that says a person found violating trade secrets causing major losses to another person could receive a prison term of no more than three years and a fine.

   If the offence resulted in especially serious consequences, a prison term of three to seven years could be imposed, it said.

   The arrests came days after an editorial by Jiang Ruqin, an employee with Jiangsu province's Administration for the Protection of State Secrets, accused Rio of cheating China out of 102 billion dollars over six years through stealing state secrets and bribing officials to get a higher price for its iron ore.

   Jiang later said, however, in interviews with the US-based financial news agencies Bloomberg News and Dow Jones Newswires that he had no details about the case against the four Rio Tinto employees and he was just expressing his opinion.

   Speaking publicly for the first time this afternoon, Rio iron ore chief executive Sam Walsh said he did not believe his employees had done anything wrong.

   'The charges have been downgraded and I think that reflects what we've been saying all along that we don't, in fact, believe there's any evidence of wrongdoing,' Walsh said.

   Australian consular officials visited Chinese-born Hu earlier this week and reported him well.

   'We are pleased to hear that Stern appeared well and that he raised no welfare or medical concerns,' Walsh said. Chinese law forbade the consular officials from discussing Hu's case with him.

   Meanwhile, Rio has removed several staff from its Shanghai office, and there were concerns about how the arrests might affect its multi-billion-dollar sales to China.