Ex Rio Tinto employee Stern Hu cops 10 years in jail from a Shanghai Court. I am disappointed – not yet because of the verdict – but at present because of the way the way the trial was implemented. The bribery charges have not been fully articulated and the ‘stealing secrets’ charges have not been articulated at all – all that was said is that stealing the secrets led to a collapse of a contracting arrangement. There is the option to appeal and dealings in this case will continue I am sure. Australian’s should not start barking like ‘mad dogs’ at the verdict and should be respectful of the Chinese court decision. Until the ‘stealing secrets’ charges are articulated the process of normal commercial intelligence seeking in China will be disrupted to the disadvantage of China and the rest-of-the-world.
Further remarks: The hefty jail sentence for taking bribes from Chinese steel companies were plausible given the bribery charges at least in terms of Chinese penalties. Furthermore, the conviction for taking bribes gets both Rio Tinto and the Australian Government off the hook – Hu can be simply viewed as a rogue trader by Rio and relations between Australia and China will be less threatened by the claim that the arrests were prompted by China’s vengence for the collapse of the Rio deal with Chinalco.
One unresolved issue is the identification of the corrupt Chinese nationals who paid the bribes.
Another issue is the structure of the Chinese iron ore market. The basis of the corruption seems to be that the Chinese Government has sought to reduce Australian monopoly power with monopsonistic restrictions on purchases. These purchases have been concentrated in a few hands leaving smaller steel mills starved for iron ore. The possibility of quick resales of purchased ore at much higher spot prices has occurred because of explosively growing demands. This hearing provides a case for moving away from contract pricing towards spot pricing for iron ore to reduce rorts to relieve short-term imbalances in the market.
The claim that Hu and his colleagues stole commercial secrets still poses problems for Rio Tinto. An unfavourable outcome would see Hu and colleagues admitting corporate espionage but claiming that they acted with Rio’s support. Rio employs Hu and his colleagues, and is therefore still exposed.
Finally, firms routinely gather information about markets to facilitate their commercial operations. The line where such behaviour becomes corrupt is difficult to draw. The second secret part of this trial will certainly put a dampener on engagement with China and intelligence-gathering.
(hc) …cut out the trash comments James.
I think hc has unlike the SMH et al got closer to grasping the essentials of the Stern Hu case, but his noble defence of Hu is I think still short of the mark. Some of the media and hc have indeed asked why Hu is charged with accepting bribes, pleads guilty, but those who paid the bribes have apparently not been charged with paying bribes. Why would that be?
Why was Hu bribed? – according to the liberty loving Communist Party of China (CPC), the bribers wished to achieve disadvantageous deals with Rio for their very own CPC and/or its steel companies etc. If so, there should be a money trail from Hu to inflated prices paid by China Iron Importers Inc. and syphoned off to the bribers. Is that what actually happened? No evidence offered at the public trial.
Am I too cynical? My early classical education leads me to ask in this Hu case, cui bono? i.e. who benefited from the “bribes” he “admits” to having received? or, to what end? Not the CPC and its affiliates, as they plausibly claim they would have suffered, potentially at least, significant losses from a disadvantageous iron ore pricing deal with Rio.
This why I am glad to see Rudd and co. criticising that holiest of cows (more likely pigs!), the CPC.
I disagree, Harry, there is no need for us to be respectful of a trial that is so abjectly political in intent and affect. Others have even said an ancilliary purpose the trial served was to allow China to claim claiming victim status in the intellectual property/ cyber wars. Cui Bono indeed! The actual guilt or innocence of Hu is, because of this, a side issue. The timing of the trial, the lenght of the trial (a mere few days) for the complexity of the charges and the number of the defendants (Hu and the other 3), the closed court, the refusal to release details of the evidence trail etc etc. This was a travesty of justice and Hu, was caught between the operations of a company that has, in my opinion, always been prepared to get its hands dirty to get what it want, this is not necessarily a problem except when it leads to injustice like this ,and the open brutality of a communist regime. What we can learn from this needs pondering.