- The Washington Times - Saturday, July 11, 2009

BEIJING | Four detained Rio Tinto Ltd. employees are accused of paying bribes for secret information about China’s stance in iron ore price talks, state media said Friday in a case that highlights the volatile mix of Chinese business and politics.

The four employees, including an Australian, were detained Sunday as Rio, the world’s third-largest mining company, negotiated on behalf of global iron ore suppliers with Chinese steel mills. The government says it has proof they stole state secrets.

The Rio employees are accused of bribing Chinese steel company personnel to obtain summaries of meetings by Chinese negotiators and gain an edge in the price talks, newspapers said, citing the Ministry of State Security, China’s domestic intelligence agency. They said that damaged China’s “economic safety.”

The accusations reflect the communist government’s sensitivity about fields such as steel and energy that it deems strategic and its intense secrecy about a wide array of economic and industrial information.

“If you’re foreign, information is power in China, and they tend to think most of their information is national security information,” said Robert Broadfoot, managing director of Political and Economic Risk Consultancy in Hong Kong, who has advised companies on China since the 1970s.

The Australian, Stern Hu, is the Shanghai-based manager of Rio’s Chinese iron ore business. Australian diplomats were allowed to meet with him Friday for the first time since he was detained, but no details were immediately released.

China is the world’s biggest steel producer and has criticized iron ore suppliers for sharply raising prices in recent years. Chinese mills are pressing for substantial reductions. The other major suppliers are Australia’s BHP Billiton Ltd. and Brazil’s Vale SA.

China’s foreign ministry denied speculation in Australia that the Rio case was linked to the company’s decision last month to cancel a multibillion-dollar investment deal with state-owned Aluminum Corp. of China, or Chinalco.

In a possible attempt to avert a backlash in Australia, Chinalco issued a statement there Friday insisting it had nothing to do with the Rio case.

Information on Chinese steel company ore costs, profit margins and technology spending all are considered official secrets, according to news reports.

The maximum penalty for an espionage conviction is life in prison.

Rio responded to the accusation by saying Friday it is “committed to high standards and business integrity.” Spokesman Tony Shaffer in Melbourne said Chinese authorities have not given Rio any information about the case.

Many of those caught up in criminal cases over economic and industrial information have been ethnic Chinese from abroad or Chinese-born foreign nationals.

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