(Reuters / Aly Song)
Australian Consulate General, Tom Connor speaks outside the People's Intermediate Court in Shanghai after the trial of a Chinese-Australian executive of Rio Tinto
Rio Tinto, the Anglo-Australian mining giant, has sacked four iron ore executives after a Chinese court sentenced them to jail terms ranging from seven to 14 years for commercial espionage and taking bribes.
Within hours of Australian citizen Stern Hu and his three Chinese colleagues being convicted, Rio Tinto to limit damage to its business interests in China.
The company announced it had sacked the four executives and said it hoped the case would not affect its trade with the world’s largest steel producer.
Mr Hu, Wang Yong, Ge Minqiang and Liu Caikui all pleaded guilty to accepting bribes during negotiations over iron prices, but disputed the amounts and aspects of the accusations. One of the four had admitted to commercial espionage.
He said: “We have been informed of the clear evidence presented in court that showed beyond doubt that the four convicted employees had accepted bribes.”
Mr Walsh declined to comment on the charges of stealing commercial secrets which were heard in a closed court last week, because the company “has not had the opportunity to consider the evidence”.
Mr Hu was sentenced to seven years for taking bribes and to five years for stealing business secrets, the Shanghai Number One Intermediate People’s Court ruled.
The court said Mr Hu would serve parts of the sentences concurrently, reducing his jail term to 10 years. Mr Wang, accused of taking 75 million yuan (£7.5 million) in bribes, received the longest sentence, of 14 years.
The two other Rio staff, Mr Ge and Mr Liu, were sentenced to eight years and seven years respectively.
All four stood passive while the sentences were read out. Mr Hu’s usually dyed black hair was now white. Tao Wuping, a lawyer for Mr Liu, said: “I think all of them were already mentally prepared to appeal both the bribery and secrets convictions.”
Jin Chunqing, a lawyer in the Mr Hu’s team, said the defence team were gathering to decide their next step. He said: “We haven’t decided yet if we would appeal.” Appeals in China have about a one per cent chance of success.
Australian Foreign Minister Stephen Smith described the sentences as “very tough”.
He said: "It is a tough sentence by Australian standards. As far as Chinese sentencing practice is concerned, it is within the ambit or within the range. According to Australian officials there was evidence indeed, if not substantial evidence, that bribery acts had occurred."
Announcing its verdict, the court said it had shown leniency because the defendants had made admissions of guilt.
However, it said the sentences were in line with the seriousness of a crime that had caused major losses to the Chinese steel industry.
It is unclear how the actions of the four Rio executives differed from usual practices by businesses seeking to learn details of the position of an opposite number in any business negotiation.
The four Rio employees were arrested last July during contentious iron-ore contract talks between top mining companies and the steel industry in China, the world's largest consumer of the raw material. The talks collapsed. This year’s negotiations are still under way.
Tom Albanese, the chief executive of Rio Tinto, said: “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.”
Mr Smith said the outcome of the trial would not impact relations between China and Australia. He said: “I don’t believe that the decision that has been made will have any substantial or indeed any adverse implications for Australia’s bilateral relationship with China.
“We did go through some tensions or some difficulties last year, but whilst this has been a sensitive, very important and very difficult consular case, I don’t believe that what has occurred today will have an adverse impact on our own relationship.
“We continue to have a very strong economic and broader relationship with China,” he said.
At the three-day trial, the court heard evidence that millions of yuan in bribes had been stuffed into bags and boxes for the accused.
Mr Hu took money from small private steel companies which, before the global financial crisis, were locked out of buying iron ore from Rio Tinto because the mining giant gave priority to large state-run steel companies.
Mr Walsh said today: "Shortly after the four employees were detained we appointed independent forensic accountants and lawyers to assist us in carrying out an internal investigation into the claims. This was done to the fullest extent possible. It did not uncover any evidence to substantiate the allegations of wrongdoing.
"Rio Tinto has concluded that the illegal activities were conducted wholly outside our systems.
He added: "We have already implemented a number of improvements to our procedures, and we have now ordered a further far-reaching independent review of our processes and controls. We will introduce any necessary additional measures and safeguards the review recommends and will spare no effort in doing everything we can to prevent any similar activity."
Dong Zhengwei of the Beijing Zhongyin law firm, said: “Based on the crime, Mr Hu’s sentence is not harsh for China. He faced up to 15 years. This sends a real signal to foreign companies that they must act in accordance with business ethnics. They face a risk if they engage in illegal activities.”
The men will likely serve their sentences at Shanghai’s Qingpu prison, where American Jude Shao served 10 years of a 16-year sentence for tax evasion and fraud. Mr Shao was released in 2008.
Within hours of Australian citizen Stern Hu and his three Chinese colleagues being convicted, Rio Tinto to limit damage to its business interests in China.
The company announced it had sacked the four executives and said it hoped the case would not affect its trade with the world’s largest steel producer.
Mr Hu, Wang Yong, Ge Minqiang and Liu Caikui all pleaded guilty to accepting bribes during negotiations over iron prices, but disputed the amounts and aspects of the accusations. One of the four had admitted to commercial espionage.
Sam Walsh, the company’s iron ore chief executive, described the behaviour of the four workers as “deplorable”.
He said: “We have been informed of the clear evidence presented in court that showed beyond doubt that the four convicted employees had accepted bribes.”
Mr Walsh declined to comment on the charges of stealing commercial secrets which were heard in a closed court last week, because the company “has not had the opportunity to consider the evidence”.
Mr Hu was sentenced to seven years for taking bribes and to five years for stealing business secrets, the Shanghai Number One Intermediate People’s Court ruled.
The court said Mr Hu would serve parts of the sentences concurrently, reducing his jail term to 10 years. Mr Wang, accused of taking 75 million yuan (£7.5 million) in bribes, received the longest sentence, of 14 years.
The two other Rio staff, Mr Ge and Mr Liu, were sentenced to eight years and seven years respectively.
All four stood passive while the sentences were read out. Mr Hu’s usually dyed black hair was now white. Tao Wuping, a lawyer for Mr Liu, said: “I think all of them were already mentally prepared to appeal both the bribery and secrets convictions.”
Jin Chunqing, a lawyer in the Mr Hu’s team, said the defence team were gathering to decide their next step. He said: “We haven’t decided yet if we would appeal.” Appeals in China have about a one per cent chance of success.
Australian Foreign Minister Stephen Smith described the sentences as “very tough”.
He said: "It is a tough sentence by Australian standards. As far as Chinese sentencing practice is concerned, it is within the ambit or within the range. According to Australian officials there was evidence indeed, if not substantial evidence, that bribery acts had occurred."
Announcing its verdict, the court said it had shown leniency because the defendants had made admissions of guilt.
However, it said the sentences were in line with the seriousness of a crime that had caused major losses to the Chinese steel industry.
The court found that the four had helped to obtain information from confidential strategy meetings of the China Iron and Steel Association, which was representing the Chinese steel industry in last year’s negotiations with the world's three top iron ore suppliers, Rio, BHP Billiton and Vale.
It is unclear how the actions of the four Rio executives differed from usual practices by businesses seeking to learn details of the position of an opposite number in any business negotiation.
The four Rio employees were arrested last July during contentious iron-ore contract talks between top mining companies and the steel industry in China, the world's largest consumer of the raw material. The talks collapsed. This year’s negotiations are still under way.
Tom Albanese, the chief executive of Rio Tinto, said: “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.”
Mr Smith said the outcome of the trial would not impact relations between China and Australia. He said: “I don’t believe that the decision that has been made will have any substantial or indeed any adverse implications for Australia’s bilateral relationship with China.
“We did go through some tensions or some difficulties last year, but whilst this has been a sensitive, very important and very difficult consular case, I don’t believe that what has occurred today will have an adverse impact on our own relationship.
“We continue to have a very strong economic and broader relationship with China,” he said.
At the three-day trial, the court heard evidence that millions of yuan in bribes had been stuffed into bags and boxes for the accused.
Mr Hu took money from small private steel companies which, before the global financial crisis, were locked out of buying iron ore from Rio Tinto because the mining giant gave priority to large state-run steel companies.
Mr Walsh said today: "Shortly after the four employees were detained we appointed independent forensic accountants and lawyers to assist us in carrying out an internal investigation into the claims. This was done to the fullest extent possible. It did not uncover any evidence to substantiate the allegations of wrongdoing.
"Rio Tinto has concluded that the illegal activities were conducted wholly outside our systems.
He added: "We have already implemented a number of improvements to our procedures, and we have now ordered a further far-reaching independent review of our processes and controls. We will introduce any necessary additional measures and safeguards the review recommends and will spare no effort in doing everything we can to prevent any similar activity."
Dong Zhengwei of the Beijing Zhongyin law firm, said: “Based on the crime, Mr Hu’s sentence is not harsh for China. He faced up to 15 years. This sends a real signal to foreign companies that they must act in accordance with business ethnics. They face a risk if they engage in illegal activities.”
The men will likely serve their sentences at Shanghai’s Qingpu prison, where American Jude Shao served 10 years of a 16-year sentence for tax evasion and fraud. Mr Shao was released in 2008.
