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Rio Tinto exec gets 10 years in China bribery case

The Anglo-Australian mining giant's lead negotiator and three colleagues admitted to accepting about $13.6 million in bribes from private steel mills. All will do prison time.

March 29, 2010|By David Pierson | Los Angeles Times Staff Writer

Reporting from Beijing -- An Australian mining executive was sentenced to 10 years in prison Monday by a Shanghai court on charges of bribery and stealing commercial secrets.

Stern Hu, the lead negotiator for Anglo-Australian mining giant Rio Tinto, was found guilty along with three Chinese colleagues, all facing the same charges.

Rio Tinto announced shortly after the verdict that the four employees had been fired.

"Receiving bribes is a clear violation of Chinese law and Rio Tinto's code of conduct," said Sam Walsh, chief executive Rio Tinto Iron Ore in a written statement. "We have been informed of the clear evidence presented in court that showed beyond doubt that the four convicted employees had accepted bribes."

The case has sparked heated exchanges between Australian and Chinese officials since the four men were detained last July.

Australian foreign minister Stephen Smith said Monday that the prison term handed down was a "very tough sentence" and that there were "serious unanswered questions" because the commercial secrets portion of the trial was conducted in secret, the Associated Press reported.

Hu and his colleagues admitted to accepting about $13.6 million in bribes from private steel mills that wanted to avoid purchasing iron ore from more costly state-run mills, according to the Xinhua news agency. The arrangement undercut the state's China Iron and Steel Assn.'s desire for a united front in negotiating with Australian suppliers.

Australia supplies about 40% of China's iron ore imports, a resource badly needed to keep up with the pace of urban development. Officials say Hu and his co-worker's manipulation of prices added about $150 million in costs to more than 20 Chinese steel companies last year.

Hu's colleagues include Wang Yong, who is facing 14 years of jail time; Ge Minqiang, eight years; and Liu Caikui, seven years. The four men were facing terms of up to 20 years. The court also asked them to pay a total of $1.1 million in fines.

The arrests last year raised suspicions because they came shortly after the Australian government rejected a $19.5-billion bid by Chinese state-owned metals company Chinalco to increase its stake in Rio Tinto.

The commercial tensions between China and Rio Tinto appear to have already dissipated.

Chinalco and Rio Tinto are discussing a deal to develop iron ore reserves in Guinea in West Africa.

Rio Tinto Chief Executive Tom Albanese also attended a meeting with Chinese Premier Wen Jiabao last week and stressed the need to mend commercial ties with China.

"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," Albanese said in Monday's press release. "This is a high priority for me personally."

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