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Rio rejects Chinese bribe reports

in.reuters.com

Rio rejects Chinese bribe reports

CANBERRA/BEIJING – july 17  – Global miner Rio Tinto on Friday strongly defended its four employees being held in China on accusations of industrial espionage, saying claims they bribed Chinese steel mills were unfounded.

The Anglo-Australian miner said it was “very concerned” for its workers, held in Shanghai since July 5.

The detention of Australian Stern Hu and three Chinese colleagues have strained Australia-China ties, with Beijing warning Canberra not to interfere in its judicial independence.

The detentions have also unsettled the global iron ore trade, but Rio, which sells billions of dollars worth of iron ore to Chinese steel mills each year, said it was maintaining high tonnages of iron ore shipments to China.

“Rio Tinto believes that the allegations in recent media reports that employees were involved in bribery of officials at Chinese steel mills are wholly without foundation,” Sam Walsh, chief executive of Rio Tinto’s Iron Ore division said.

“We remain fully supportive of our detained employees, and believe that they acted at all times with integrity and in accordance with Rio Tinto’s strict and publicly stated code of ethical behaviour,” Walsh said in a statement.

China detained the four workers on allegations of stealing state secrets related to sensitive iron ore price negotiations.

The detentions have complicated annual negotiations on iron ore contract prices between Chinese steel mills and Australia’s top mining firms Rio and BHP Billiton. Iron ore is used to make steel.

This year’s negotiations have been fraught, since they coincided with the collapse of a deal by Chinese state-owned aluminium firm, Chinalco, to increase its stake in Rio.

BILATERAL WARNINGS

Australia and China traded warnings on Thursday over the spy case, while the United States urged Beijing to ensure transparency and fair treatment for staff of foreign companies.

Australian Foreign Minister Stephen Smith said he believed China had not yet reached a conclusion that the four detained Rio employees were guilty and investigations were ongoing.

Smith, who discussed the detentions with China’s Vice Minister for Foreign Affairs He Yafei at a meeting in Egypt on Thursday, said statements by an official in Beijing that the four had harmed China’s economic interests were not conclusive.

Australia understood the matter was “subject to an investigation, subject to Chinese law and Chinese potentially criminal, legal and judicial processes”, and had made that point to He during their meeting, said Smith.

“An investigation is under way. He (Stern Hu) has not yet been on the receiving end of charges. If and when he is, we will deal with it at that point in time,” he said by telephone from Dubai.

But some analysts believe China would not have detained the Rio workers without strong evidence.

“The Chinese government knows that if it really does not have evidence at this critical time, its image will be damaged,” said Scotia Capital China strategist Na Liu.

“In recent years, China has been very conscious in terms of its image and has been improving its PR skills. It would not likely risk the prospect of future foreign resource acquisitions with baseless allegations against Rio.”

Australia’s Mandarin-speaking Prime Minister Kevin Rudd, a former Beijing diplomat, has been criticised at home for not intervening in the case and phoning China’s President Hu Jintao.

Rudd, facing an election late next year, is struggling “to strike the right note with the Chinese”, senior Age newspaper political editor Michelle Grattan wrote.

China is Australia’s top trading partner, with total two-way trade worth $53 billion in 2008, of which the iron ore trade made up $14 billion.

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China’s president Hu Jinatao ‘endorsed Rio Tinto investigation’

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China’s President Hu Jintao personally endorsed an investigation into global miner Rio Tinto that led to the detention of four of its China-based staff, an Australian newspaper has claimed, citing Chinese government sources.

The investigation appears to be part of a realignment of how China manages its economy in the wake of the global financial crisis, with spy and security agencies promoted to top strategy-making bodies, the Sydney Morning Herald newspaper said.

The detention a week ago of Anglo-Australian miner Rio Tinto’s top iron ore salesman in China, Australian Stern Hu, and three of his Chinese subordinates has cast a shadow over Australia-China relations and unnerved the iron ore trade.

Rio Tinto is the world’s second largest iron ore miner and was locked in intense price negotiations with China when Mr Hu and the three others were detained in Shanghai, accused of stealing state secrets and bribing Chinese steelmakers for information.

Stephen Smith, the Australian foreign minister, said on Sunday he was urging Chinese authorities to handle the case expeditiously, and to consider the wider risks for international business confidence. But he also warned the process of freeing the men could be long and difficult.

The nine-member standing committee of China’s Communist Party, led by President Hu, had taken more control over economic decisions at the expense of the State Council, led by Premier Wen Jiabao, the Herald said, quoting anonymous Chinese economic advisers.

The inquiry began before Rio Tinto broke off its $19.5 billion investment deal with Chinese metals firm Chinalco and instead formed an iron ore joint venture with rival BHP Billiton on June 5, the sources told the paper.

“This is certainly not revenge for the Chinalco deal not going through,” the Herald quoted one Chinese government source as saying.

The collapse of the Chinalco deal was immediately followed by the establishment of a high-level, all-of-government group that would assess the political and economic risks of large overseas investment deals, the paper said.

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Australia urges China to make haste on Rio spy case

in.reuters.com

Australia urges China to make haste on Rio spy case

CANBERRA -july 14-  Australia urged China on Tuesday to move quickly in dealing with the detention of a senior Australian mining executive on suspicion of spying, as Canberra came under pressure at home to take a harder line with Beijing.

Australian Treasurer Wayne Swan said the government was ready for a lengthy process in dealing with the detention of Anglo-Australian miner Rio Tinto’s top iron ore salesman in China, Stern Hu, and three other China-based Rio staff.

But, speaking a day after Canberra again summoned Chinese diplomats for more information on the detentions, Swan said the case should be handled as quickly as possible.

“Australian officials will continue to press Chinese authorities for further detail on the reasons for Mr Hu’s detention and reiterate Australia’s view that his case should be handled expeditiously,” he said in a speech.

“I know the (Australian) foreign minister will be having more to say on this case, so it wouldn’t be appropriate for me to comment further on it at this time.”

Hu and his three Chinese subordinates have been detained in Shanghai without charge since July 5, on suspicion of espionage and stealing state secrets. They are accused of bribing state-owned steel mills to gain information that, media reports say, could have given Rio Tinto an edge in iron ore price talks.

Rio Tinto is the world’s second-largest iron ore producer. It and another Anglo-Australian firm BHP Billiton, the third-largest producer, have been locked in pressure-cooker negotiations to agree a price for iron ore supplies governing the current fiscal year.

Chinese mills have been holding out for a cut in price of more than 33 percent, arguing that it is a matter of survival for many of them, but so far there has been no announced deal despite a substantial part of the contract year having already elapsed.

The case has cast a shadow over Australia-China trade, worth $53 billion in two-way terms in 2008. It has at times hurt the Australian dollar and also weighed down on the share prices of both Rio Tinto and BHP Billiton.

Australian Prime Minister Kevin Rudd is on informal leave for the rest of this week, despite calls for the former Beijing diplomat and fluent Mandarin speaker to intervene in the Rio detentions and call Chinese President Hu Jintao.

Australia has urged Chinese authorities to consider the risks for international business confidence in China. But Australia, which has relied on Chinese demand for resources to shield its economy from the global financial crisis, is treading carefully.

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