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Rio Tinto spy case awaits trial decision

Jan. 13, 2010 at 11:20 AM   |   Comments

BEIJING, Jan. 13 (UPI) -- A Chinese official has said the industrial espionage case against four employees of Rio Tinto will be handled fairly and according to strict legal practices.

Police have concluded their five-month investigation into the activities of the men, including an Australian national, and handed the case to the Shanghai public prosecutors to decide if the men have a case to answer. If so, they will stand trial, but it could be up to six weeks for the prosecutors to decide.

The alternative is they walk free, Chinese media have said.

"We have notified Australia of the situation in this case," said Jiang Yu, China's Foreign Ministry spokeswoman. The case has been dealt with keeping in mind diplomatic agreements and processes with Australia, she said in an article in the China Daily newspaper.

The case created a rift between the two countries starting in July when Chinese police detained and later arrested the men, including Australian citizen Stern Hu who is head of Rio Tinto's Shanghai office. He faces up to seven years in jail if convicted.

Also arrested were Liu Caikui, Ge Minqiang and Wang Yong of the Shanghai office. All four are accused of obtaining commercial secrets of China's steel and iron industry through "improper means and bribery," the China Daily article said.

The Chinese have never gone public with what the men are accused of stealing, and both countries have gone out of their way to not let the incident damage bilateral relations, although relations have had a rocky six months.

At the same time as the Rio Tinto arrest, Australia greatly upset China by granting a visa to Rebiya Kadeer, an ethnic Uighur leader now living in the United States. China accuses Kadeer of fomenting separatist unrest among the ethnic Muslim Uighur, a Turkic group in China's westernmost province of Xinjiang. She went on a speaking tour of Australia.

At the heart of the Chinese case is the belief that Rio Tinto used what it called deceit for six years to illegally obtain information that meant Chinese steelmakers were being overcharged more than $100 billion for iron ore, according to a report in the Wall Street Journal in August just after the men were arrested. China imported around 445 million metric tons of iron ore in 2008, Chinese customs data shows.

The London-based Anglo-Australian mining group denies its employees are guilty.

The latest series of articles in the China Daily have been firm regarding the Chinese right to proceed with a trial of the Rio Tinto four if required by law. But Daily has also printed conciliatory comments from various analysts and legal experts.

Han Feng, observer of Asia-Pacific Studies with the Chinese Academy of Social Sciences, said although the two countries had some misunderstandings regarding Hu's case in the beginning, they have reached a consensus and the Chinese law was respected during the course of the investigation.

"The Chinese side must have had enough evidence, otherwise they wouldn't have detained the executive," Han said. The Sino-Australian tie has been properly maintained and will likely improve this year since the economies in both countries are improving, he added.

Australia is too aware that any political fallout over such incidents could affect its economy in the long run. Two-way trade between Australia and China was worth $53 billion in 2008.

PetroChina, Asia's largest oil company, signed a $41 billion deal in late summer to buy 2.25 million tons of liquefied natural gas from the as yet undeveloped Gorgon gas field off Australia's northwest coast. The gas would come from a part of the field leased by ExxonMobil. The 20-year deal could create up to 6,000 jobs.

Foreign Minister Stephen Smith extended a verbal olive branch to the Chinese last autumn in an effort to calm the war of words and ensure that PetroChina doesn't become collateral damage.

Despite the rifts, both countries have been meeting regularly to discuss free trade. Australia wants better access to Chinese consumers for Australian goods and services as well the opening up of the Chinese market for Australian agricultural products.

The Chinese have said they want more freedom to invest in Australian resources.

In early 2009 major Rio Tinto shareholders rebuffed Chinese offers to invest up to $14 billion. Then in the summer -- a month before the arrest of the Rio Tinto employees -- the company rebuffed another investment, a $19.5 billion injection from state-owned Aluminium Corp. of China, according to the mining sector publication Chinamining.org.

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