Rio Tinto four facing long jail sentences after guilty verdicts - Business - Evening Standard
       

Rio Tinto four facing long jail sentences after guilty verdicts

A Chinese court today sentenced Rio Tinto's Australian executive Stern Hu to 12 years in prison after convicting him of bribery and commercial espionage in a judgement that sent shockwaves through firms involved in foreign investment in the country and the huge domestic steel industry.

A court in Shanghai sentenced Hu to seven years in prison for accepting bribes and five years for stealing commercial secrets.

The court said he would serve 10 years. It also confiscated assets worth 500,000 yuan (£49,000) and fined him the same amount.

Hu's Chinese colleague Wang Yong was sentenced to 14 years, while his compatriots Liu Caikui and Ge Minqiang face jail terms of seven and eight years respectively.

London-listed Rio Tinto immediately sacked all four employees and condemned their "deplorable" behaviour by accepting the bribes, which are thought to be around £9 million.

Sam Walsh, head of iron ore at the miner, said: "The clear evidence showed beyond doubt that the four had accepted bribes. They engaged in deplorable behaviour. We will terminate their employment."

But Rio Tinto stressed it could not comment on the commercial secrets charge because the evidence was discussed in closed court.

The Australian government, which had expressed "disappointment" with Beijing over its refusal to allow Australia's consul-general Tom Connor access to the whole trial, today said Hu's prison term was tough "by any measure".

Foreign minister Stephen Smith said there were "serious, unanswered questions" about the commercial secrets charge, and added: "China has missed a substantial opportunity to bring some clarity to the question of commercial secrets. Regrettably, it chose to go down a different road."

Smith claimed the case would not affect Australia's trade with China, the country's biggest export market.

As Hu and his colleagues went on trial last week, their boss, Rio's chief executive Tom Albanese, was in Beijing meeting China's prime minister about the firm's "long-standing partnership with China".

However, after Google this month diverted its search engine to Hong Kong over censorship complaints, there were fears today's judgement would fray business relationships with China.

Linda Yueh, economics fellow at Oxford University, said foreign investors may become "more wary" about operating in China.

"China had a good track record in terms of its policies toward foreign companies, but this case highlights how far the legal system lags behind economic reforms," she said.

"Unless this changes, China's position as an attractive place to do business could be dented.

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