Tag Archives: negotiations

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 accuses Rio staff of bribing steel-makers

in.reuters.com

China accuses Rio staff of bribing steel-makers

CANBERRA july 10- Chinese security officials accused four detained staff of Anglo-Australian miner Rio Tinto Ltd of bribery on Friday as Australia sought to avert a diplomatic row centring on the massive iron ore trade.

The Shanghai office of China’s State Security Bureau accused the three local Rio staff and senior Australian executive Stern Hu of bribing Chinese steelmakers during tense iron ore price negotiations this year, said the China Securities Journal.

“This seriously damaged China’s economic security and interests,” said the paper, published by the state-run Xinhua news agency. “The activities of Stern Hu and the others violated Chinese law as well as international business morality.”

Chinese security authorities arrested the four on Sunday, alleging they were involved in stealing state secrets.

Australia’s Prime Minister Kevin Rudd, a Mandarin-speaking China expert, and Foreign Minister Stephen Smith both said Canberra was treading warily after the shock detentions, which have cast a shadow on ties between the two countries.

“Such a serious matter is a matter which goes very much to the relationship between Australia and China, so we are treating this as a very, very sensitive and difficult issue,” Smith told reporters in Perth, adding Hu had been well treated.

The arrests come as iron ore talks between the two sides miss a June 30 deadline, and after Rio Tinto ditched a $19.5 billion tie-up with Chinese state metals firm Chinalco last month.

Chinalco, Rio’s major shareholder, said the arrests were unrelated to dealings between the two firms and expressed “mutual concern for the current situation with their staff”.

Rudd, facing criticism at home for not intervening with China’s President Hu Jintao on behalf of Hu and his employer, promised any representations needed to secure their release. Trade Minister Simon Crean left for China on Friday.

China’s ambassador to Australia Liang Hong was summoned to the foreign ministry late on Thursday to discuss what local newspapers said was a fast-escalating crisis in relations.

Smith said China appeared to have a “broader” definition of what amounted to industrial espionage than many other countries.

“It’s very hard for the Australian government to see the connection between what might be daily commercial and economic negotiations and national security issues,” he said.

But Smith said the latest row would not derail negotiations with China on a free trade pact, underway since 2005.

The Australian dollar , knocked sharply lower on Thursday amid China export ructions, steadied on Friday, although the market was closely following developments. Rio shares traded up to 1.9 percent higher after a Standard & Poors rating upgrade.

RUDD CRUNCH

China is Australia’s second-largest export customer behind Japan, buying A$36 billion ($28 billion) of mostly commodities in the 11 months ended May 2009. In 2008, more than half of China’s imports from Australia were of iron ore.

Australia, along with Chile, is the largest recipient of Chinese investment this year, worth $3.9 billion, with Chinese companies anxious to lock-in access to resource exports.

Australian papers were critical of Rudd, pointing to a serious deterioration in Canberra’s relationship with its second largest export market.

“What does the much touted Australia-China relationship add up to if Beijing treats Canberra with such conspicuous discourtesy and indifference?” wrote the Australian newspaper’s foreign editor, Greg Sheridan.

Senator Steve Fielding, whose support Rudd’s centre-left government needs in the upper house to pass crucial climate and budget laws, said Rudd had no idea how to look after Australians when China was involved.

“Here we have a Prime Minister who speaks Mandarin, tells everyone he has a relationship with China, yet he hasn’t a clue what to do when it comes to the crunch,” Fielding said.

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Reliance ADAG, DreamWorks close to $825 mln film financing deal

in.reuters.com

Reliance ADAG, DreamWorks close to $825 mln film financing deal

LOS ANGELES – july 16 – Director Steven Spielberg’s DreamWorks Studios could receive $825 million in film financing to begin producing movies starting this year, Reliance ADA Group which is involved in deal talks said on Wednesday.

The Indian conglomerate is in talks with DreamWorks Studios partners Stacey Snider and Spielberg in New York, and the $825 million figure has emerged from those talks as a possible funding slate for DreamWorks Studios.

The deal between the two companies, which announced a plan to work together last year, has not been finalized.

But the ongoing negotiations over financing come after DreamWorks Studios said in February that the Walt Disney Co would distribute its films.

Under the terms of the deal, which could allow DreamWorks to make five to six films a year, Reliance would match whatever financing DreamWorks can get from a syndication of banks.

The $825 million funding slate announced by Reliance would break down as $325 million from the Indian conglomerate, $325 million from the banks and $175 million from Disney.

But the total amount could change if DreamWorks raises more from banks. That would increase the matching equity investment from Reliance, which has agreed to provide up to $550 million.

The deal between Reliance and DreamWorks was initially valued at $1.2 billion, but Amit Khanna, chairman of Reliance Big Entertainment, a division of Reliance ADA Group, said that much money is not needed now.

“If so required, we will raise the money at a later stage through a balance of debt and equity,” Khanna told Reuters.

With the downturn in the global economy, DreamWorks had trouble securing financing from banks in recent months.

“This venture with Reliance opens a new door to our future,” Spielberg said in a statement.

“Their visionary step has given us a new set of dreams to work toward,” he said.

The newly created DreamWorks Studios is a production unit separate from listed DreamWorks Animation SKG Inc.

Under the deal, Disney would market and distribute the studio’s films around the world, except in India where Reliance would retain distribution rights, Reliance said.

No date was given for when Reliance and DreamWorks Studios expect to close their deal.

DreamWorks has looked for funding since last year, after cutting ties with Viacom Inc’s Paramount Pictures.

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