In Chinese court, Rio Tinto mining executive admits taking bribes
In a case that has become a flash point for the foreign business climate in China, an Australian mining executive admitted Monday to taking bribes while working as a chief iron-ore negotiator in China.
Australian Stern Hu and three Chinese employees of the British-Australian mining giant Rio Tinto Group have been held since July, accused of stealing commercial secrets and accepting millions of dollars in bribes.
The charges have been embarrassing for Rio Tinto, a major provider of iron ore to China, as it has sought to develop better relations with the country’s leaders. Rio Tinto Chief Executive Tom Albanese told reporters Monday in Beijing that his company was working hard to resolve differences.
As for Hu and his Chinese colleagues, who each face up to 20 years in prison, Albanese was quoted by the Sydney Morning Herald as saying: “This issue is obviously of great concern to us.”
The case has set off fears about the treatment of foreign companies in China at a time when the business environment for non-Chinese firms is perceived to be increasingly difficult.
In perhaps the highest-profile example, Google Inc. said Monday that it redirected users in China to an uncensored Chinese-language Hong Kong site for searches. But China still was able to block access to sites it deemed contrary to its interests.
Regulators scrutinized Google more heavily than domestic rival and market leader Baidu Inc., analysts said. Much of the rising discontent among multinationals is centered on government polices that are seen as favoring homegrown competitors.
Those policies include a bid to reserve government procurement contracts for companies that have Chinese intellectual property or trademarks. That directive, which has not been implemented, is part of a plan to promote “indigenous innovation” among domestic companies.
A survey released Monday by the American Chamber of Commerce in China says 38% of U.S. businesses believe that foreign companies are increasingly unwelcome in the Chinese market, up from 23% two years ago.
Of those companies that felt unwelcome, most cited an uneven judicial system, the “indigenous innovation” policies and “domestic standards” that, for example, force international computer makers to adhere to Chinese wireless Internet technology and require cellphone manufacturers to build devices compatible with the Chinese third-generation, or 3G, signal.
“We strongly support Chinese innovation,” said Michael Barbalas, the chamber’s president. “However, limiting market participants and reducing competition does not encourage innovation.”
But others don’t think business in China is souring.
The U.S.-China Business Council says disputes between the Chinese government and foreign companies do not add up to a change in climate. They worry that the perception could lead to an unwarranted response from Washington, where anger is already brewing over China’s policy to control the value of its currency against the dollar.
“Our membership is telling us clearly that the China market is important to their sales growth, overall company health” and American jobs, wrote the council’s president, John Frisbie.
“Indeed, there are problems, but executives tell us these issues need to be addressed specifically and with solutions, not with sanctions that would disrupt the bilateral relationship,” he said.
Chinese Premier Wen Jiabao made good on a promise this month to improve dialogue with foreign business officials. Wen held a question-and-answer session Monday in the Great Hall of the People that was attended by leading business figures, such as Albanese; Stephen Roach, chairman of investment banker Morgan Stanley Asia; and Maurice Greenberg, former head of insurer American International Group Inc.
Still, the Rio Tinto case remains serious for international business relations.
China has drawn strong rebukes from the Australian government, which says it is concerned that Hu will not receive a fair hearing. Australian officials have been denied access to the commercial-secrets portion of the hearings.
The four Rio Tinto employees were detained soon after the Australian government rejected a $19.5-billion bid by Chinese state-owned metals company Chinalco to increase its stake in Rio Tinto.
Chinese news reports in February said they “sought and accepted huge amounts of bribes from many Chinese steel companies” and “obtained commercial secrets from Chinese steel companies through methods including inducement.”
Tommy Yang in The Times’ Beijing bureau contributed to this report.
