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Spying allegations could still resurface in Rio case
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20:53, August 13, 2009

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Allegations of stealing state secrets could still resurface from the Rio Tinto investigation, according to law and economic security experts, following yesterday's reports that four employees of the mining giant have been formally arrested on charges of trade-secrets infringement and bribery.

The employees of the Anglo- Australian mining giant were detained July 5. They have been formally arrested on charges related to improperly obtaining commercial secrets about the industry and taking bribes as non-governmental employees, according to a statement released late Tuesday night by China's Supreme People's Procuratorate.

The statement said the employees, including Stern Hu, the general manager of Rio Tinto's Shanghai office and head of the London-based firm's iron-ore business in China, were found to have obtained trade secrets.

An official with the Shanghai division of China's State Security Bureau told AFP yesterday that the case was "no longer under the jurisdiction of the" bureau, as it had been passed to the procuratorate.

Rio hailed the development, calling it a "downgrade" compared with the earlier charges pertaining to spying and stealing state secrets. Hu is an Australian passport holder. He was detained along with Chinese employees Liu Caikui, Ge Minqiang and Wang Yong.

"The charges have been downgraded, and I think that reflects what we've been saying all along – that we don't, in fact, believe there's any evidence of wrongdoing," Rio's chief executive of iron ore, Sam Walsh, said yesterday. "From what we understand, this is a normal commercial-market situation. I don't believe that our employees have, in fact, done what has been inferred by (the) charges."

Earlier yesterday, Australia's Foreign Affairs Ministry also commented that "the involvement of the Ministry of Public Security" indicated that the case has moved from the "state secrets" realm.

But Chen Tao, a member of the Criminal Law Committee of the Beijing Bar Association, argued that the announcement by the procuratorate only represents the result of the initial investigation, and there is a possibility that the accusations of espionage could be revisited after further investigation.

"The formal arrest of four Rio employees marks the case having officially entered into the legal and judicial processes," Chen said.

That thinking was echoed by Jiang Yong, director of the Center for Economic Security Studies at the China Institutes of Contemporary International Relations.

"Hu's case is very complicated," Jiang said. "It won't be subdued easily, and more sensitive issues may emerge with the ongoing investigation, I suspect."

Jiang, however, noted that the current allegations against Hu are light compared with the losses China has suffered from the alleged illegal activities.

"China took the feelings of the Australian side into consideration," Jiang said, adding that with a lack of corresponding articles in Chinese law dealing with industrial espionage, authorities also found it difficult to finalize the charges.

Shi Yinhhong, a professor of international relations at Renmin University of China, diverged with Jiang on the handling of the case.

"The case was not deemed a diplomatic one," Shi said. "The investigation is aimed at Rio Tinto, not the Australian federal government. China does not have to compromise diplomatic pressure imposed by Canberra. China was firm and upright in its handling of the case, displaying a sense of propriety."

The Rio Tinto case was alarming to many foreign corporations operating in China, Shi said, adding that the nation is in a process of standardizing the market.

"Some of the immediate impacts of the case could be negative. But foreign companies won't lose their interest in China," Shi said. "They will probably become more cautious about their actions in the future. Upright foreign corporations in China may find some encouragement from the outcome of the case."

According to article 219 of Chinese Criminal Law, infringing upon trade secrets carries a maximum penalty of seven years in prison, Chen said. Espionage carries a much stricter penalty: death, or life imprisonment.

Trials involving commercial or national secrets should be separate from public trials according to Chinese law, Chen noted, adding that police will continue to investigate and present any evidence to the procuratorate. "The whole process lasts 14 months, at most, when charges" are assessed, he said.

About 81 percent of Web users who participated in a survey on the Global Times' huanqiu.com claimed that the result of the case would be conducive to the security of national resources, citing the anti-corruption nature of the case.

In the meantime, 51.9 percent of Web users polled said that the Rio case could strain relations between the two nations, while 25.2 percent disagreed, and the remaining 22.9 percent said the case was irrelevant to the ties.

In an apparent attempt to head off concern among foreign investors, Chinese Vice Commerce Minister Fu Ziying said the Rio Tinto case would not impact China's status as a destination for foreign direct investment.

In addition to the formal arrests, Chinese investigators have asked for permission to arrest a number of local steel executives in connection with the Rio Tinto case, the procuratorate said.

Officials with the China Iron and Steel Association said they didn't have any information on the identities of the Chinese executives of steelmakers allegedly being investigated for their involvement in the case.

Source: Global Times

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