Verdict due Monday after China court trial of 4 Rio Tinto workers in bribery, secrets case

Verdict due after China trial of Rio Tinto workers

SHANGHAI — A Shanghai court is due to rule Monday on bribery and commercial secrets charges against four employees of mining giant Rio Tinto — a case seen as a barometer of China’s treatment of foreign business in a time of rising trade friction.

The verdict comes as multinational companies like Rio Tinto are facing increasingly strict oversight into their business dealings worldwide, as both developed and developing countries gradually tighten enforcement of anti-corruption rules.

Stern Hu, an Australian executive of Rio Tinto, and his three Chinese co-workers pleaded guilty to charges of taking bribes in a three-day trial held last week. Their pleas on commercial espionage charges were unknown as those hearings were closed and lawyers said they were barred from commenting.

“Please kindly understand that my colleagues and I are obliged to keep any and all of the secrecy matters in most strict confidence even after tomorrow, pursuant to professional regulations in China,” said Jin Chunqing, a defense lawyer for Hu.

The court was due to issue a verdict and sentences Monday afternoon, Rio Tinto and the Australian government said. An Australian consular official was to attend the hearing.

Jin said he was wary of speculating on the likely sentence for the secrecy charges, which he described as “technically complicated and sophisticated.”

“It is an unprecedented case for China, in its international business history and law enforcement,” Jin said.

China warned against politicizing the case, while the Australian side lobbied for greater transparency and protested the court’s decision to close sessions handling the commercial secrets charges.

But investigations aren’t limited to just China or Rio Tinto.

German automaker Daimler AG, accused of paying tens of millions of dollars in bribes through subsidiaries to officials of at least 22 governments, including China, is among many companies snagged by the U.S. Foreign Corrupt Practices Act, which makes it unlawful to bribe foreign government officials or company executives to secure or retain business.

China Petroleum & Chemical Corp., Asia’s biggest refiner, acknowledged Friday that Daimler AG had allegedly paid bribes to one of its employees. It urged the government to tighten oversight of lawbreaking foreign companies.

With most major economies still struggling to recover from the fallout from the global financial crisis, many Asian governments also have sharpened their scrutiny of multinational companies, says Robert Broadfoot, managing director of the Political and Economic Risk Consultancy in Hong Kong.

“There is nothing like a severe global recession to get people to focus on corruption,” Broadfoot said. He noted, however, that graft cases also are used to advance the political agendas of those doing the accusing.

China ranks 10th among 16 countries the consultancy tracks in its political corruption survey of more than 2,000 executives working in Asia, the U.S. and Australia. Indonesia, Cambodia and Vietnam were the three worst.

In China, anti-corruption campaigns are a perennial political strategy of the Communist Party, which recognizes the damage to its image from widespread graft but enforces its crackdowns selectively.

Whistleblowers often run greater risks than the officials caught abusing their positions, especially if party leaders fear the accusations could threaten their hold on power.

In the Rio Tinto case, the government has said nothing official about the local businesspeople accused of giving the bribes.

“It’s clearly a selective application of the law,” Broadfoot said.

The arrests of the Rio Tinto employees last August were initially thought linked to Beijing’s anger over high prices it paid for iron ore — a key commodity for China’s booming economy. Rio Tinto, based in London and Melbourne, is one of the top suppliers of ore to China and a key industry negotiator in price talks with China’s state-owned steel mills.

Few details of the allegations against Hu and the others have been released, and none has been allowed to make any public comment since they were detained.

Reports in the past week on the Web site of the Chinese financial magazine Caijing said one of the Rio Tinto employees, Wang Yong, was accused of receiving $9 million from Du Shuanghua, a steel tycoon whose company, Rizhao, has chafed at the state-dominated pricing arrangements, setting his own agreements with overseas suppliers.

The contrast between the Daimler case, which will be presented to a U.S. federal court next week, and Rio Tinto’s highlights China’s secretive way of handling such issues.

U.S. court documents available online outline in great detail the allegations against Daimler, reflecting the results of five years of investigations. No such materials on the Rio Tinto case are available in Shanghai; court officials refuse comment and defense lawyers said they were barred from commenting on the secrecy charges.

Australia’s consul-general, the only outside official allowed to attend the bribery section of the trial, planned to attend Monday’s hearing, and his government said it would comment after the verdict is announced.