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| Jul 10, 2009 23:06 |   |
 | RIO Tinto has rejected allegations by China that its senior executive, Stern Hu, bribed staff of Chinese steel companies. As Australian officials finally got access to the incarcerated Mr Hu, who is accused of espionage, the Chinese Government claimed on an official website that Mr Hu bribed steel companies on such a scale that he caused huge losses to China's national economic interests. The new bribery allegations are consistent with unsourced Chinese media reports and claims to The Age from Chinese industry sources that the Ministry of State Security has dragged at least three Chinese steel mills into its Rio Tinto investigation. They support an emerging picture of Beijing using its top spy agencies and the China Iron and Steel Association to force steel companies into line and present a united negotiating front against Rio and other major mining companies. Rio Tinto said it was surprised and concerned by the allegation and was not aware of any evidence to support the claim against Mr Hu, who is in charge of the company's iron ore sales in China. The company was "committed to the highest standards in business integrity". The Chinese web statement said: "As understood from the Shanghai State Security Bureau, during China's iron ore negotiation with foreign miners in 2009, Stern Hu gathered and stole state secrets from China via illegal means, including bribing internal staff of Chinese steel companies. This has caused huge loss to China's national economic security and interests." Foreign Minister Stephen Smith said it seemed clear the road the Chinese authorities were going down related directly to commercial matters. China's view of state secrets was much broader than that Australia might take, he said. Making clear the Government's criticism, he said: "It's very hard for the Australian Government to, frankly, see the connection between what might be daily commercial negotiations … and national security issues. "But … it's quite clear that they are proceeding on the basis of possible criminal charges … arising as a result of commercial or economic negotiations." He expressed annoyance that the Australian Government had had to get information from the web and public Chinese statements rather than directly from the Chinese authorities. The Government was continuing to press for more information. Meanwhile, the Chinese entity Chinalco, the largest single shareholder in Rio Tinto, strongly rejected suggestions the action against Mr Hu and three Chinese Rio Tinto employees was payback for the collapse of its effort to increase its stake in Rio Tinto. |
| Jul 10, 2009 23:07 | #1 |
| Mr Smith indicated the question of legal representation would be one of the main issues during the consular visit. The Age contacted Stern Hu by phone two weeks before he was detained, and he said: "I'm sorry, I can't really talk now, we are worried our phones are being bugged." The Age previously had learnt from other sources that detailed contract information from Rio Tinto iron ore auctions was being immediately intercepted by the China Iron and Steel Association. In June, veteran CISA director Zou Jian warned steel companies would be "punished" if they did not toe the line, without detailing specifics. The wording of the Chinese statement suggests Beijing has already concluded that Mr Hu and his three staff are guilty, even before they have been officially charged. "Stern Hu and three other staff, including Liu Caikui, gathered and stole state secrets from China via illegal means, including bribing internal staff of Chinese steel companies," the statement said. It said they had "caused huge loss to China's national economic security and interests", and "have already broken Chinese law and have violated international business ethics". On May 14 the CISA announced it was investigating steel mills and traders that were ignoring its directives and buying record iron ore shipments from Rio Tinto and BHP Billiton. The volumes were so large as to help the Australian economy withstand the global financial crisis, which had wreaked havoc on the trade accounts of every other significant economy. But CISA now appears to be a side-player in this co-ordinated push to marshall China's buying power against the Australian miners. The Age believes CISA boss Shan Shanghua told Chinese journalists on Monday that the association had finally agreed to accept the 33 per cent cut in the benchmark iron ore contract price previously agreed by Japanese and other steel industries. He said he would announce the deal within two days, apparently without knowledge that the four Rio Tinto staff had already been detained. Chinese sources say iron ore contract negotiations remain "unresolved". Prime Minister Kevin Rudd continued to stress the need for a careful approach to this "difficult case", saying the Government would "make other representations" to the Chinese Government as appropriate. |
| Jul 10, 2009 23:14 | #2 |
| Article from: The Australian AUSTRALIA is directly challenging China's claims of espionage against detained iron ore executive Stern Hu, setting the Rudd government on course for its most serious foreign policy crisis since taking office in November 2007. As Australian consular officials gained access to Mr Hu for the first time since his arrest last Sunday by Chinese secret police, Foreign Minister Stephen Smith suggested Mr Hu had been conducting normal commercial negotiations. "Frankly, it is difficult for a nation like Australia to see a relationship between espionage and national security and what appeared to be suggestions about commercial or economic negotiations," Mr Smith said. Mr Hu, a Chinese-born Australian and the head of Rio Tinto's iron ore operations in China, has spent almost a week in detention without being charged. He was arrested with three senior Chinese employees of Rio. It also emerged yesterday that Mr Hu's detention coincided with a Chinese government crackdown against iron ore officials across the country. Reports in Beijing said an official from China's Capital Steel company had been arrested. This was in addition to Tan Yixin from Shougang International Trade and Engineers Corporation. The Chinese government was also said to be targeting executives from two other steel companies. An official Chinese government website said yesterday Mr Hu had bribed staff of Chinese steel companies during fraught negotiations over this year's iron ore prices. |
| Jul 10, 2009 23:15 | #3 |
| As is understood from a Shanghai State Security Bureau, during China's iron ore negotiations with foreign miners in 2009, Stern Hu gathered and stole state secrets from China via illegal means including bribing internal staff of Chinese steel companies," the website said. Speaking in Perth yesterday, Mr Smith raised the stakes with the Chinese government, suggesting that what passed for normal commercial negotiations in Australia could be construed as espionage in China. Mr Smith said there appeared to be a difference in the application of China's laws on state secrets and their Australian equivalent. "China has its own laws about state secrets. They are clearly broader than the view that Australia might take," Mr Smith said. Chinese embassy officials in Canberra had assured the Department of Foreign Affairs and Trade that Mr Hu had been treated well and in accordance with Chinese law, he said. Malcolm Turnbull continued to attack the government's response in the Hu case. "Mr Stern Hu is one of us; he is a fellow Australian. He has been denied basic human rights in China, and the Australian Prime Minister Mr Rudd should take this matter up directly and personally with the Chinese government," the Opposition Leader said. Earlier, Kevin Rudd reaffirmed the main focus of diplomatic efforts in Shanghai was to secure Mr Hu's release. "Our objective is, of course, to secure Mr Hu's release and that is going to take all of our combined efforts and we'll move through it methodically," the Prime Minister told Melbourne radio. "I know from my conversations with the Foreign Minister Stephen Smith that it's a case of step by step establishing the facts, his health, his condition, and then moving on from there in terms of whatever other actions we need to take," he added. Executives from Rio and Chinalco yesterday were keen to point out that relations between the two companies continued to be good despite the issues of earlier this year. Rio Tinto said it was "surprised and concerned" by the accusations of espionage, which it strongly denied. "As the company has said in earlier statements, we are not aware of any evidence that would support these allegations," the company said. Chinalco said the detention of the four Rio Tinto staff was not linked to the company's failed bid to acquire a $25billion stake in Rio Tinto. It is now clear that the issues surrounding the arrests of the four Rio employees are focused on the iron ore negotiations and nothing to do with Rio's about-face on its deal with Chinalco. |
| Jul 10, 2009 23:16 | #4 |
| But the arrests come against a backdrop of increasing resentment in China of the fact that it does not have a stronger hand in world ore negotiations, despite becoming the world's leading importer of iron ore, at a time when it is under increasing pressure from the world economic slowdown. Chinese steelmakers this year refused to accept a 33 per cent reduction in the iron ore price agreed with suppliers by Japanese steel mills in negotiations that are the traditional benchmark. Chinese steelmakers wanted a 40 per cent cut. A former Australian ambassador to South Korea, Richard Broinowski, said the Rio Tinto arrests could pose the most serious diplomatic challenge Mr Rudd has faced since taking office. "It looks pretty serious so I think it's got that potential. He's (Rudd) playing it cool at present and that's all he can do because he doesn't have any options. "If they're going to throw the book at him (Hu), if it seemed that this was punitive and related to the fact the Chinese didn't get their deal with Rio Tinto, there could be grounds for some sort of extraordinary action on the part of the Australian government." Mr Turnbull said the government needed to acknowledge the reality that Chinese companies seeking to acquire interests in Australian resources were in truth and in every respect wholly owned agencies of the Chinese government. |
| Jul 11, 2009 19:38 | #5 |
| It's scary that 30% net assets of a state giant corp. are owned by foreigners. However, the magnitude of nearly 0.2 billion is nothing compared to the unknown wealth that TINTO's other big shareholders earned in stock market in late 2007 when huge revenues from chinese purchasing ( i beleive china's purchasing volum and the highest credit scores justify that 40% discount is reasonable) and the good news that china's intention to increase stake SAVED Tinto in macro level thru it's extraordinary performance reflected in its book in such a difficult times globally. There is a lot we do not know, but the case of detention itself has already cast a huge shadow or uncertainty on TINTO's future financial and operational performance... M. |
Last edited by MARRIE: Jul 11, 2009 19:41 |
| Jul 11, 2009 23:20 | #6 |
| Marrie..where do you dream up this rubbish? "and the good news that china's intention to increase stake SAVED Tinto " China never saved Rio from anything! Rio was NEVER in danger of collapse. Rio bought Alcoa and needed to raise about $US 20 billion. The banks baulked at extending the loan due to the global financial crisis. Chinalco offered to buy an addittional 9% stake in Rio at the absurdly low price of $US19.2 Billion. They were a predator! Not a saviour! BHP had aready offered TWICE what Chinalco was offering in a merger deal but was still refused. Eventually the existing shareholders of Rio injected $US15.2 Billion and BHP paid $US5 billion for some iron deposits which cleared Rio Tintos debt. Chinalco got US$195 Million for doing nothing more than making an offer to double it's existing stake for peanuts! " i beleive china's purchasing volum and the highest credit scores justify that 40% discount is reasonable" The facts are that Japan buys almost as much iron ore as China. India and South Korea also buy substantial amounts. They have all signed contracts at the 33% discounted price with Vale, BHP and RIO. Only China still refuses. It wants a 40% discount which nobody will accept. So now they have to buy iron ore on the spot market at even higher prices because they don't want to lose face and sign contracts. That's why they have arrested the RIO executive on trumped up charges of espionage. They are trying to bully and intimidate RIo, BHP and Vale into giving them a special discount. Give us what we want..or we will arrest your executives and steal your computer files! But never let the facts get in the way of your fairytale story that China saved Rio Marrie. Believe what you want. Obviously I am wasting my time here. |
| Jul 12, 2009 10:31 | #7 |
| Commercial conflicts are not equated to state security, which is just aslogan. You can take advantage of this as double standards, so can we. As the professor of Economics at Peking University, Citigroup's former chief Asia economist said:"That unfortunate ending to the Chinalco-Rio deal was a kind of wake-up call for policy makers that the external environment can be much more complicated than just managing trade relations," ... ----------------------------------------- source Hamersley(TINTO) Iron’s total shipments of iron ore to major markets in 2008 Million tonnes China 73.0% Japan 28.5 Other Asia 17.9 Europe 1.3 Other 0.4 Total 121.2 NOTE: This table includes 100 per cent of all shipments through joint ventures. Robe River Iron Associates --------------------------------------------------------------------------- We chinese has just taken the first step to learn global playing rules, so the unfortunate ending of this deal is like expensive tuition fees. However,Tinto is not the only supplier of iron ore or business partner to China. According to the market segment of iron ore revenue geographically, Tinto must pay much more than what it have already paid.. |
Last edited by MARRIE: Jul 12, 2009 10:44 |
| Jul 12, 2009 16:14 | #8 |
| Add up your percentages Marrie. How can you have 121.2% ? Your figures are as nonsensical as your comments. "We chinese has just taken the first step to learn global playing rules". Global rules do not include imprisoning foreign company executives without consular, family or legal contact. They do not include failure to provide evidence of alleged crimes committed. They do not include the exclusion of a fair trial. They also do not include the death penalty for industrial espionage. You have a lot to learn. |
| Jul 12, 2009 16:31 | #9 |
| ''You have a lot to learn. '' Exactly. I am learning and watching how President Hu, Jing Tao and Australian leaders are dealing with it. Thank you, Robert. M. |
| Jul 12, 2009 17:00 | #10 |
| Rob, i just drop a line in ur box asking for learning material. Thx. |
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