Rio Tinto: Will China's detention of employees scare off foreign firms?
The lack of transparency over the case of executive Stern Hu raises questions about rule of law – even as many agree China is within its rights to investigate.
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Analysts didn't quibble with China's right to investigate Stern Hu as part of a crackdown on bribery involving negotiations for iron ore – the raw material used in China's steel industry, the world's largest.
Instead, they criticized a heavyhandedness and a lack of transparency in China that they say could scare away foreign businesses used to the rule of law.
On July 5, Shanghai state security detained Mr. Hu, a China-born Australian, and three Chinese colleagues, sparking weeks of diplomatic pleas for openness in handling their case. Australian Prime Minister Kevin Rudd warned China that the world was watching.
Yet the pleas were rebuffed by Beijing, where spokesmen for the one-party government said simply that the case is a matter of "internal affairs."
Some observers say they see the detentions as retaliation for Rio Tinto's refusal to be bought by China's state mining giant, Chinalco, in June. But Chinese and Western analysts both say China is acting within the law, and agree that Hu's case is just the latest in an anticorruption sweep led by the ruling Communist Party.
The Rio Tinto employees face possible formal arrest and charges of spying on and bribing iron-ore buyers at China's steel mills, where graft, analysts say, is widespread already.
Charges are virtually unknowable
One Western lawyer based in China, who asked to keep his name out of print, said the Rio Tinto traders are "guilty, at least of crimes of hubris."
But he bemoaned China's courts and the country's state-secrets laws which, in combination, make the charges and the evidence in the case virtually unknowable at this stage.
Right-wing Chinese pundits explain the timing of the case as proof of Beijing's commitment to ridding the country of corruption. That Hu is a China-born Australian national working for a company with which China's been doing battle is a coincidence, they say, and none of the West's business.
Wang Xiaodong, coauthor of the 2009 nationalist bestseller "Unhappy China," is baffled by calls for transparency in the case from Australian Foreign Minister Steven Smith and US Commerce Secretary Gary Locke.
"The Rio Tinto case actually focuses on China's internal affairs. It is a big move on the Chinese domestic problems, including corruption and bribery in the state-owned enterprises," Mr. Wang says. "Why do foreigners always interpret the case from the angle of foreign affairs? Foreign affairs are small things compared with serious domestic issues."