China to put Rio Tinto employees on trial

(AP) — China will put an Australian national and three other detained employees of mining giant Rio Tinto Ltd. on trial on charges of stealing commercial secrets and taking bribes.

The Australian government confirmed Thursday it was notified of the indictment and reiterated its calls for China to handle the case "transparently and expeditiously."

The four Rio employees were detained July 5 in Shanghai while Rio acted as lead negotiator for global ore suppliers in price talks with China's steel industry group. The case has strained relations between Beijing and Australia, a key supplier of iron ore to China's steel mills.

"As with all legal processes, it is not appropriate to speculate on the outcome or penalties at this time," the Australian Department of Foreign Affairs and Trade said in a statement.

The Xinhua News Agency reported Wednesday that the case against Australian Stern Hu and three Chinese nationals was accepted for trial by the Shanghai No. 1 Intermediate Court but gave no date. Lawyers for the defendants said they expected the trial to begin later this month.

"I do not expect a public hearing since this is related to commercial secrets," said Zhang Peihong, the lawyer for Wang Yong, one of the three Chinese named in the case.

The other Chinese employees are Ge Minqiang and Liu Caikui. Hu was the manager of Rio's Chinese iron ore business.

Nearly all criminal cases that go to trial in China end in conviction. The maximum penalty for commercial espionage is seven years in prison if the case is found to have caused extreme damage. The maximum penalty for taking large bribes is five years.

The trial comes as Beijing tries to tighten control over China's dozens of steel producers and consolidate the industry through mergers. Industry analysts suggest the Rio employees might have been snared in an effort to clamp down on information being given by executives to foreign miners.

China is the world's biggest steel producer and consumer of iron ore and is pressing Rio and other suppliers to give its mills lower prices than those paid by Japanese, South Korean and other competitors. Rio balked last year and talks ended without agreement, forcing Chinese mills to pay the same price as other customers. Analysts are forecasting iron ore price hikes of 40 percent or more this year due to strong demand.

Xinhua said the Rio employees are charged with stealing commercial secrets on multiple occasions from Chinese steel producers and taking bribes from mills — a shift from earlier accusations that the Rio employees paid bribes.

The government has given few details and it provided no information on who was accused of giving the bribes.

One defendant is alleged to have taken bribes worth 70 million yuan ($10.3 million), said Zhai Jian, the lawyer representing Ge Minqiang.

"The loss for some Chinese steel millers is apparently huge," Zhai said, describing the case as "interesting, very interesting."

The communist government treats a wide range of commercial information as state secrets. Chinese news reports last year said the employees were accused of paying bribes to obtain information on China's negotiating stance.

Investigators found confidential information on sales and production from dozens of Chinese mills on a computer seized from Rio's Shanghai office, the Chinese newspaper National Business Daily reported.

Rio has denied its employees paid bribes. The company recently named Ian Bauert, a fluent Chinese speaker, to head its operations in China, apparently hoping to repair relations with its biggest customer.

Australian officials have warned Beijing that delaying the case could erode Australian public support for close commercial ties with China. Prime Minister Kevin Rudd warned Beijing shortly after the arrests that the world was watching its handling of the case and said China should consider its economic ties.

Chinese officials have rejected Australian comments as interference in this country's judicial system.

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On the Net:

Rio Tinto Ltd.: www.riotinto.com

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Associated Press researcher Ji Chen in Shanghai contributed to this report.