Rio Tinto Case Tied to Price Negotiations

SYDNEY -- Australia's foreign minister, Stephen Smith, said that Chinese government officials told him the detention of a Rio Tinto executive stems from a criminal investigation of conduct surrounding iron-ore price negotiations, rather than from what his government would consider espionage.

Mr. Smith's recounting Sunday of comments made by Chinese officials appeared to be at odds with previous statements by China's government on the case of Stern Hu, an Australian citizen, and three Chinese colleagues at Rio Tinto. China's government detained them on July 5, and has publicly alleged they used bribery to obtain "state secrets" and damaged China's "economic security." Those statements suggested the case was being treated as something beyond a typical criminal investigation. It wasn't clear from Mr. Smith's remarks whether China is changing its position.

Reuters

Rio Tinto executive Stern Hu, an Australian citizen, seen in this undated picture, has been detained by China since July 5.

Following a meeting Friday with China's vice foreign minister, He Yafei, Mr. Smith told the Australian Broadcasting Corp. that Chinese officials were "quite clear they are focusing on a criminal or judicial investigation relating to the 2009 iron-ore negotiations." He added: "they are not interested in what we would regard as espionage or national-security matters."

But Mr. Smith went on to say that "commercial and economic matters" can fall within the Chinese definition of state secrets. He said the legal situation facing the Rio Tinto employees would become clearer should the Chinese investigation result in charges against Mr. Hu and others.

Rio on Friday issued its strongest denial so far in the case, with Sam Walsh, the company's chief executive of iron ore, saying in a statement that allegations that its employees were involved in bribery are "wholly without foundation." The company believes the employees "acted at all times with integrity and in accordance with Rio Tinto's strict and publicly stated code of ethical behavior," the statement said.

In the days after Mr. Hu's detention was announced by Rio Tinto, a spokesman for China's Ministry of Foreign Affairs, Qin Gang, said that the Rio employees "stole Chinese state secrets for a foreign country" and that they had "hurt China's economic interests and economic security." That echoed a statement issued to Chinese media July 9 by the Shanghai State Security Bureau. Neither Mr. Qin nor the earlier statement specified what state secrets had allegedly been stolen.

China's definition of what can constitute a state secret is broad and covers not just military and intelligence information, but also "national economic and social development." China's largest steel makers are state-owned enterprises, so information about them could, theoretically, be considered a state secret.

Mr. Smith, the Australian foreign minister, said his government is seeking further details and will continue to press China to move rapidly on the case, but said the issue can't be "magically" resolved.

Mr. Smith said that because the detention of the Rio Tinto employees relate to allegations of bribery and criminal conduct, the processing of the case is solely a matter for China. "It needs to be done within Chinese law and Chinese practice, but it needs to be done quickly," Mr. Smith said. link......