Rio Tinto executives jailed by Chinese court

Tuesday 30th March 2010

Rio Tinto, a leading international mining and exploration group headquartered in the UK, suffered a blow yesterday as four employees were jailed after being found guilty of taking bribes and infringing commercial secrets.

Stern Hu, an Australian executive that led Rio Tinto's iron ore unit in China, was sentenced to ten years in prison by a Shanghai court after a three-day trial last week.

Three other employees, Liu Caikui, Wang Yong and Ge Minqiang were sentenced to between seven and 11 years.

The Rio executives obtained secrets regarding steelmakers' production and meetings of the China Iron & Steel Association from companies, including the Shougang Corp. and Laiwu Group, said Chief Judge Liu Xinin sitting in the Shanghai No. 1 intermediate people's court. This, the judge said, led to the failure of iron ore price talks last year.

The court said the actions of the men had cost Chinese industry "severe losses".

Liu Caikui was sentenced to seven years, Wang Yong 14 years and Ge Minqiang to eight years.

The four employees pleaded guilty to receiving 92.18 million yuan ($13.5 million) between them in bribes

Sam Walsh, chief executive Rio Tinto Iron Ore, said: "Receiving bribes is a clear violation of Chinese law and Rio Tinto's code of conduct. By accepting bribes the four employees engaged in deplorable behaviour.

"In accordance with our policies we will terminate their employment."

But there are concerns about the conduct of the trial and the nature of the charges held against the four men, in particular those against Hu.

The Australian foreign minister, Stephen Smith, said that the ten year sentence given to the former executive was very tough and that there were some serious unanswered questions.

According to the Chinese media initial charges against the men, who were first detained eight months ago, were held in connection with state secrets charges and paying - rather than receiving – bribes.

But after protests from Australia, and concern from foreign executives, the men were charged with lesser offences.

Foreign media were not allowed into the trial last week, but were allowed access to hear the sentencing yesterday.

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