Joe Mcdonald & Rohan Sullivan

Rio Tinto 4 Arrested as Furor Goes Diplomatic

Beijing. Four employees of Anglo-Australian miner Rio Tinto have now been formally arrested on charges of stealing state secrets, China’s foreign ministry said on Thursday.

The Australian government revealed on Wednesday that the four had been detained on Sunday. The events come amid contentious iron ore price talks.

Chinese foreign ministry spokesman Qin Gang said on Thursday those arrested worked in Rio’s Shanghai office and included an Australian national.

Qin declined on Thursday to give other details or say when the Australian, Stern Hu, might be allowed to talk to diplomats.

“Hu is suspected of stealing China’s state secrets for foreign countries,” Qin said. “Competent authorities have sufficient evidence to prove they have stolen state secrets and have caused huge losses to China’s economic interests and security.”

Qin warned Australia not to politicize the case. “It’s improper to exaggerate this individual case or even politicize it, which will be no good to Australia.”

He rejected speculation in Australia that the case was retaliation for Rio’s decision last month to cancel an investment deal with a Chinese state-owned company.

The detentions on Sunday came as Rio acted as lead negotiator for global iron ore suppliers in price talks with Chinese steel mills. There has been no indication whether the case is linked to the negotiations, however.

China’s vague spying and national security laws give authorities wide latitude in deciding what to prosecute. The government treats a sweeping array of economic and other data as state secrets. The maximum penalty for a conviction on espionage charges under Chinese law is life in prison. A formal arrest in China means an almost automatic conviction.

The Chinese-born Hu is general manager of Rio’s Chinese iron ore business. The Australian government says the three other detainees were Chinese nationals.

Meanwhile, a Chinese steel executive who had “close contact” with Hu has been detained by Beijing police, reports said on Thursday.

Tan Yixin, general manager of Shougang International Trade and Engineering, oversaw iron ore purchases, the reports said.

The foreign ministry refused to say whether Tan was linked to the Rio case.

Australian diplomats are pressing for access to Hu and details of his case, according to Australian Foreign Minister Stephen Smith. Under a consular agreement, China has a week to respond and Smith said diplomats expected to see him on Friday or Saturday.

“We are perplexed by the reason for his detention,” Smith said. “We’re asking for additional information as to the basis of his detention.”

In a statement issued before China’s announcement of a formal arrest, Rio said it knew of no evidence of spying.

“We have been advised by the Australian government of this surprising allegation,” the company said in a statement.

“We are not aware of any evidence that would support such an investigation.”

It declined to comment further on the matter.

Rio Tinto, the world’s third-largest mining company, is headquartered in London and has offices in Melbourne.

Iron ore price talks failed to produce an agreement by the June 30 expiration of previous buying contracts, after China’s steel industry association rejected prices negotiated by Rio with Japanese and Korean mills.

The other major suppliers are Australia’s BHP Billiton and Brazil’s Vale.

China criticized Rio and the Australian government last month after the scrapping of a deal to have state-controlled Aluminum Corp. of China, or Chinalco, invest $19.5 billion in Rio Tinto.

Rio Tinto launched a rights issue to raise money instead.

Chinalco took up a portion of the $15.2 billion share issue to maintain its 9 percent stake in the company.

The Chinese steel industry criticized Rio’s plan to form a joint venture with BHP Billiton, combining their mining assets in the state of Western Australia.

The group said the tie-up might reduce competition, raise prices and hurt customers.

China’s Commerce Ministry said the breakup of the Rio-Chinalco deal would not harm Beijing’s ties with Australia.

But a ministry spokesman warned that the deal with BHP Billiton might face an antimonopoly investigation in China.

In a previous case in 2002, a Chinese-born American, Fong Fuming, was convicted of paying bribes to help investors obtain secret information to bid on power projects.

Fong was sentenced to five years in prison, but was expelled from China in 2003 after three years in jail.



Associated Press