China accuses Rio’s Hu of bribing mill officials, Smith says

Finance

China accused Rio Tinto iron-ore executive Stern Hu of bribing steel mills officials, Australian foreign minister Stephen Smith said today, citing a statement posted on an official Chinese Web site.

"As understood from the Shanghai security bureau, during China’s iron ore negotiations with foreign miners in 2009, Stern Hu gathered and stole state secrets from China via illegal means, including bribing internal staff of Chinese steel companies," Mr Smith told reporters in Perth, citing the statement.

Australian officials will today meet with Hu, who’s been detained since July 5 and is yet to be charged, Smith said. Prime Minister Kevin Rudd's government is moving to mend a diplomatic rift with China, which is deadlocked in iron-ore pricing talks with Rio.

"We continue to press Chinese authorities and officials for more detail on the basis of Mr. Hu’s detention," Mr Smith said. "It is clear to our mind that these matters relate to commercial or economic matters."

Rio Tinto, which has about a third of its assets in Australia, last month scrapped a US$19.5 billion investment by state-controlled Aluminum Corp of China.

"The company is surprised and concerned about the allegations," Rio Tinto spokesman Tony Shaffer said today by phone from Melbourne. "We are not aware of any evidence that would support these allegations."

Mr Rudd today called for a calm and methodical approach to resolving the case. Hu, an Australian passport holder is suspected of stealing state secrets, Qin Gang, China's foreign ministry spokesman, said in Beijing yesterday. Three Chinese employees of Rio Tinto have also been detained.

"Chinese officials in Canberra yesterday assured Australian officials that Mr Hu had been treated well and in accordance with appropriate procedures and in accordance with Chinese law," Mr Smith said.

Aluminum Corp of China denied any connection with the detention of Hu or the others, vice-president Lu Youqing said today by phone from Beijing.

Rio Tinto's staff stole state secrets by corrupting employees at Chinese steelmakers, the China Business News reported on its website yesterday, citing the Shanghai state security authority.
Rio Tinto employees obtained summaries of internal meetings of the Chinese iron-ore negotiation team, 21st Century Business Herald reported today, without citing anyone.

The Australian government may update the media later today with information concerning its representatives' meeting with Hu, Smith said. The results of the meeting will first be reported to his family, he said.

"The Chinese authorities have responded strictly in accordance with the consular agreement that Australia signed with China in the year 2000," he said.

Australian Trade Minister Simon Crean, in China to discuss auto exports, will meet with officials about Hu, the Department of Foreign Affairs and Trade said in a statement today.

Bloomberg, July 10