Australian envoy says Rio Tinto executive admits to some bribery charges in Shanghai court

Envoy says Rio Tinto exec admits to some charges

SHANGHAI — An Australian executive and three Chinese officials with mining giant Rio Tinto pleaded guility to accepting bribes in a Shanghai court, lawyers said Monday in a case that has strained relations between the countries.

The lawyers said Stern Hu and the three Chinese nationals — Liu Caikui, Ge Minqiang and Wang Yong — pleaded guilty but disputed the amounts they are alleged to have accepted. They still face charges on stealing commercial secrets.

“Like the other three executives, Hu also pleaded guilty to the bribery part. He was very calm when the case was under the trail,” said Tao Wuping, the lawyer for Liu. Calls to Hu’s lawyer, Duan Qihua, were not answered.

The case has been used as an example of the hazards of doing business in China, but the guilty pleas may be an embarassment for Rio Tinto, which has been saying its employees were innocent and which is again involved in tough iron ore price negotiations with China.

Australia’s consul-general in Shanghai, Tom Connor, told reporters that “during the course of the trial, Mr. Hu made some admissions concerning those two bribery amounts. So he did acknowledge the truth of some of those bribery amounts.”

Rio Tinto has urged authorities to handle the case quickly and openly. In the meantime, it is moving ahead with its business in China, the world’s biggest steel maker and thus its biggest consumer of iron ore.

China accounted for 24 percent of Rio Tinto’s revenues last year and the company recently appointed a new top executive for China. On Friday, it announced an agreement with China’s state-run aluminum giant Chinalco to develop an iron ore reserve in the West African country of Guinea.

The Rio Tinto case comes as many foreign executives doing business in China complain of a chilling of what was once a warm welcome.

The American Chamber of Commerce released a report Monday showing a growing number of foreign businesses in China — 38 percent of those surveyed — feel shut out under new government policies promoting homegrown technology.

The chamber’s data, gathered earlier this year from 203 companies, portrays a steadily worsening environment for foreign companies in China over the past three years. Only 23 percent said they felt unwelcome in the chamber’s 2008 survey.

Connor said the Australian government will issue a formal statement later but he did not say when.

Zhai Jian, the lawyer for Ge, said his client pleaded guilty, but the bribery part of the trial will not end until noon Tuesday. “The final result is yet to come,” Zhai said.

Wang’s lawyer Zhang Peihong said his client admitted accepting a “small amount” of money, but denied charges that he took $9 million.

Hu and the other three also face charges of stealing secrets in the trial which is expected to end Wednesday.

“I can only say we respectfully await the outcome of the Chinese legal process,” Rio Tinto’s chief executive, Tom Albanese, told a business forum earlier Monday in Beijing.

China has warned against politicizing the case, which comes as the government is in talks with Google over its plans to pull out of China if it has to continue censoring the results on its Chinese search engine.

The four were arrested nine months ago when Rio Tinto was acting as lead negotiator for global iron ore suppliers in price talks with Chinese steel mills. Hu was Rio Tinto’s senior executive in China in charge of iron ore.

The trial at the Shanghai No. 1 People’s Intermediate Court was closed to foreign media. The Australian government has protested the court’s decision to exclude its consular officials from parts of the trial related to commercial secrets, urging a fair and transparent handling of the case.

But China’s legal system, like other parts of the government, is dominated by the Communist Party, an institution prone to secrecy.

Few details of the allegations against the suspects have been made public. The trial is scheduled to last three days. But it is unclear how soon the court might issue a verdict, which sometimes come weeks or even months after a trial is held.

Almost all criminal cases that go to trial in China end in conviction. The maximum penalty for commercial espionage is seven years in prison if the case is found to have caused extreme damage. The maximum penalty for taking large bribes is five years.

China treats a wide range of commercial information as state secrets. Chinese reports that the Rio employees were originally suspected of obtaining state secrets suggest they may have been caught up in an effort to control information exchanged during the iron ore talks.

The trial began as China is again bogged down in iron ore price negotiations with foreign miners. China has sought to convince Rio Tinto and other suppliers to give its mills lower prices than those paid by Japan and South Korea. Miners reportedly are seeking price hikes of 90 percent or more this year.