China warns Australia over criticism of Rio trial

By Rob Taylor and Chris Buckley

CANBERRA/BEIJING (BestGrowthStock) – China warned Australia not to make “irresponsible” comments about the trial of four employees of mining firm Rio Tinto after Canberra said the trial had left questions about China’s legal system.

The verbal sparring over the conviction of Australian citizen Stern Hu and three colleagues underlined foreign investors’ concerns about legal transparency in China and the potential for conflict between the top trading partners.

“In holding part of the trial in secret, China, I believe, has missed an opportunity to demonstrate to the world at large transparency that would be consistent with its emerging global role,” Australian Prime Minister Kevin Rudd told reporters in Melbourne.

But Rudd, keen to draw a line under the squabble with its top export partner, said disagreement over the trial would not hit the booming resource trade between the two countries.

A Shanghai court convicted the four Rio Tinto men of taking bribes and stealing commercial secrets, handing out sentences on Monday ranging between 7 and 14 years in prison.

“We express serious concern about the Australian statements on the Rio Tinto case. The Rio case is a criminal case, and the Chinese side has already given its verdict,” Chinese Foreign Ministry spokesman Qin Gang said.

“Australia should respect this outcome and stop making irresponsible comments.”

China has not yet announced the verdict in the case of two Chinese steel executives, who were tried in secret last week for leaking information about iron ore negotiations to Rio Tinto.

Rio immediately sacked its four employees, who had pleaded guilty to taking kickbacks. All but one contested separate charges heard in closed court of stealing commercial secrets, and one of the Chinese defendants has already decided to appeal.

“We understand how deeply distressing these events are for the families of those convicted and we are sympathetic. However, we have had no choice but to terminate the employment of those convicted and associated support for the families,” a Rio Tinto spokesperson said.

China is Australia’s biggest export market with two-way trade worth $53 billion in 2008. Major exports to China include iron ore, wool, copper ore and manganese. Resource-hungry Chinese firms have been behind several tie-ups with Australian firms.


The influential Australian Chamber of Commerce and Industry, which covers 85 percent of the country’s mining and energy companies, said it was seeking urgent talks with Chinese authorities to get clarity in the wake of the Rio trials.

“These broader issues are important to the Australia-China economic relationship, and the necessary confidence Australian business executives require when doing business abroad,” said Nathan Backhouse, manager of trade and international affairs.

Chamber members include Rio Tinto, Fortescue Metals, Newcrest Mining and Woodside Petroleum, who helped reshape the trade relationship with China.

Australian firms with large China businesses, including BHP Billiton have been anxious to distance themselves as far as possible from Rio’s troubles.

Asked whether China is satisfied that Rio Tinto had nothing to do with its employees’ misdeeds, Qin said that “all foreign companies” that do business in China must respect its laws and regulations.

“In the Rio case, whoever is implicated, irrespective of their nationality, will be handled according to the law.”

Australia’s Assistant Treasurer Nick Sherry said he believed Rio was a good corporate citizen and told CNBC the case raised no “broader issues” for the miner.

But the Greens party, which wields swing votes in the upper house of parliament, sought an investigation into the firm by the Australian Securities and Investments Commission, similar to one already launched by Britain’s corporate watchdog.

An ASIC spokesman said the regulator was “following developments to see if anything was of interest” but said no investigation had yet been launched.

Stock Market Money

(Additional reporting by Victoria Thieberger and Sonali Paul in MELBOURNE, and Chris Buckley and Lucy Hornby in BEIJING; Editing by Ken Wills and Sanjeev Miglani)

China warns Australia over criticism of Rio trial