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Rio Tinto employees sentenced to jail in China, then fired

Rio Tinto quickly distanced itself from Stern Hu and three colleagues on Monday after a court in China sentenced them to 7-14 years in jail for bribery and stealing commercial secrets. The Anglo-Australian mining giant vowed to continue building its ‘important relationship’ with China.

By Kathy MarksCorrespondent / March 29, 2010

A general view shows Qingpu Prison, where Rio Tinto executive and Australian citizen Stern Hu is expected to serve his prison term, in Shanghai Monday.

Aly Song/Reuters

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Sydney, Australia

Rio Tinto moved swiftly to distance itself from its Australian executive Stern Hu and three of his Chinese colleagues on Monday, firing them for “deplorable” conduct after a Chinese court sentenced them to seven to 14 years in jail.

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The response of the Anglo-Australian miner was different from that of Australian politicians and businessmen, who expressed dismay at the severity of the sentences. Australian Foreign Minister Stephen Smith called Mr. Hu’s sentence “very harsh,” and said the barring of consular officials from parts of the trial left “serious, unanswered questions which [the] international business community will want to … pursue with China.”

The Shanghai court convicted all four men of bribery and stealing commercial secrets, at the conclusion of a high-profile case that has strained relations between Australia and China. Mr Hu was jailed for 10 years, while Wang Yong was given 14 years; Ge Minqiang, eight years; and Liu Caikui, seven years.

Foreign Minister Smith said, however, that he did not expect “any substantial or indeed any adverse implications for Australia’s bilateral relationship with China.” China is Australia’s largest trading partner.

‘Deplorable behavior’

Rio Tinto’s chief executive officer, Tom Albanese, expressed similar confidence in a continued relationship with China. "I am determined that the unacceptable conduct of these four employees will not prevent Rio Tinto from continuing to build its important relationship with China. This is a high priority for me personally," he said.

The company said in a statement that it was convinced "beyond doubt" that the men were guilty. The four admitted accepting $13.5 million in bribes from small private steel mills in exchange for giving them access to regular supplies of iron ore at a better price than they could get from state-run mills. One of them – it is not clear which – pleaded guilty to stealing commercial secrets.

The court said the four men had stolen the minutes of a meeting of the China Iron and Steel Association, as well as information on the output of one of the country’s steel giants, Shougang.

Hu, head of Rio Tinto's Shanghai office, was arrested along with his colleagues last July, soon after the collapse of acrimonious talks aimed at setting a price for Chinese steel mills to buy iron ore from Australian companies. The court said the defendants had “seriously damaged the interests of Chinese steel enterprises."

Ruling too harsh?

Australian businessmen expressed surprise at the sentences Monday. Paul Bartholomew, China editor of the website Steel Business Briefing, told Reuters: “A slap on the wrist might have been expected … but this [Hu’s sentence] is far longer than we thought.”

At the weekend, Australian media quoted Mr Hu’s lawyer, Jin Chunqing, as saying he accepted a bribe of $790,000 in order to help two childhood friends employed by one of the private steel companies excluded from the “club” of buyers.

Foreign media, excluded from the three-day trial, were allowed to witness Monday’s hearing by closed-circuit television from another room. Agence France Presse (AFP) reported that the men all wore civilian clothing, with Mr Hu in a light blue jacket. His black hair has apparently gone grey.

Ann Kent, a visiting fellow at the Australian National University’s College of Law, told AFP in Australia: “There had been an expectation that the Chinese legal system was becoming more transparent and accountable. On the evidence to date, this trial has not met these expectations.

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