Sep 13

The Brutal Truth About Rio Tinto’s Bribery Case – What People Should Know

Written by guest on Monday, September 13th, 2010 at 10:43 am
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This article has been published through the Independent web media both in USA and Australia few months ago, but has yet to publish in China. As it related to China and the way, Australia media and politicians treated China in a racist and unbelievable non-reasoning manner. I thought the Chinese readers should be make aware of the case.

The article begin here:

After nine months of media allegation, finger pointing based purely on hear-say, speculation surrounding the reasons behind the arrest of the four Rio Tinto’s executives in Shanghai on the 5th July 2009, the truth about the actual background of the arrest has finally out weighted the disinformation relentlessly generated by the mainstream media in Australia.

We now know that:

1) The four Rio Tinto executives admitted taking bribes (The Australian, 23 March 2010)

2) One should note that, it was only after the four Rio Tinto executives admitted taking bribes on the 23 March 2010, we then learn on the following day that, ’Secret Rio Tinto probe cleared company but left Stern Hu in doubt’ (The Australian, 24 March 2010).

3) Stern Hu was sentenced to jail for 10 years (The Australian, 29 March 2010) and Rio Tinto Iron Ore chief executive Sam Walsh sacked all the four convicted executives. Mr Walsh described the bribery findings — admitted by all four men — as “deplorable”, and said that the company had “implemented a number of improvements to our procedures, and we have now ordered a further, far-reaching independent review of our processes and controls”. (The Australian, 31 March 2010).

Is Rio Tinto as a company an innocent party?

On the outset, Rio Tinto as a company seems to be an innocent party . However, according to the Melbourne’s Age (31 March 2010), under the heading ‘Rio Tinto calls in Kissinger to mend fences’, it was disclosed that: “Mr Kissinger’s role came to light as claims emerged that Rio was told months before the arrests of Hu and his three colleagues of potential ”dodgy dealings” within its China operations but resisted internal calls for an investigation.”

The Age further evaluated that: “The Age has been told that a number of Rio employees in Singapore raised concerns with management about the activities of employees in China more than a year ago but the concerns were never formally investigated.”. “A well-placed source, speaking on condition of anonymity, said a rapid rise in the iron ore spot price led some to question whether bribes were being offered. ”Some of the guys in Singapore said ‘let’s have an investigation’ but that investigation was quashed by senior company figures,”

The truth is, Rio Tinto is a direct beneficiary to the bribery activities. As a result, “China paid $165m too much for iron ore last year,” (Daily Telegraph, 30 March 2010).

One should note that, all these information only came after the four Rio Tinto executives admitted taking bribes! The interesting questions here are: How did our media and politicians behave between the period after the arrest on 5 July 2009 and the Rio Tinto executives admission of taking bribes on 23 March 2010?

What can we learn from this case about our media culture, our law in practices and our politicians?

In retrospect, when we examine the way our politicians and mainstream media reaction to the arrest of Rio Tinto executives in Shanghai since July 2009 and the subsequent abusive language used, and the on-going and systemic repeating of certain points about the case to the Australian public, we can tell a lot about our media culture and the kind of political leaderships and competency we rely upon to manage our national affair. Can we trust them?

a) Our legal frame work on anti-foreign bribery:

On the 10th August 2009, I wrote an articles with a title: “Australia media and government should respect its own law on Foreign Bribery – Stern Hu’s Case: Problem of corruption is a world issue, not just Chinese”. In this article, I highlighted the content of the Australian government website on the issue of anti-foreign bribery (www.ag.gov.au/foreignbribery), with part of the information as follows:

“Australia recognises that corruption is not just one country’s problem and, in recognition of this, is an active participant in international initiatives, including:

– ratifying the United Nations Convention against Corruption (UNCAC) on 7 Dec 2005

– ratifying the United Nations Convention against Transnational Organised Crime on 27 May 2004.

– ratifying the OECD Convention and Combating Bribery of Foreign Public Officials in International Business Transactions on 18 Oct 1999 and participating in the Asian Development Bank OECD Anti-Corruption Initiative for the Asia – Pacific.

– participating in the Asia – Pacific Economic Cooperation Anti-Corruption and Transparency Experts Task Force (APEC ACT)….(etc)

Australia is committed to sharing technical expertise and improving our legal cooperation relationships with other countries to strengthen the fight against corruption, both in Australia and throughout the Asia – Pacific region.”

Note: The Australian government has changed the content of this website and removed many of the statements I reported in my article mentioned above dated 10th Aug 2009. However, I have save a copy of the original content. By the way, you can still find the name of the International Convention ratified by Australia.

I submitted this article to a number of newspapers and magazines in Australia but receive no response from the editors except the New Internationalist Magazine with this message: “Thanks for your message. Our June issue is all about China, so I’m afraid we won’t be looking for any more China-related stories for the time being.”.

As a result, I decided to create my own website and register the domain www.outcastjournalist.com on 19 Oct 2009 to publish my own research against media disinformation.

b) Our Law is only as good as the people who administer it

Despite the series of International Convention we ratified, and our government pledged in their own website to cooperate with countries “throughout the Asia Pacific region” to “fight against corruption”, did our government honour these International convention they ratified? Did we do what we preaches? Let’s look at how our politicians response to the arrest of Rio’s executives on the 5th July 2009:

i) Our Prime Minister, Kevin Rudd not only failed to allow Shanghai’s police the time to sort out the evidence, conduct further investigation and offer assistance to China to facilitate their investigation, he politicised the whole issue with a public statement: “Our Chinese friends”, “China had significant economic interests at stake in it relationship with Australia and other commercial partners around the world.” (Brisbane Time 16 July 2009)

ii) As usual, The Australian Newspaper always knew which politician to pick for negative comment about China. This time, they mentioned Senator Barnaby Joyce twice to assert one point: “the failure of Chinalco to increase its stake in Rio was behind the arrests.” Apparently, the Australian Newspaper has removed the content of this news on their website with the subject heading: ‘Beijing accuses Rio of spying as Australia is shocked at arrest of mining executives’ dated 9 July 2009. Luckily, I have kept a copy of this news from the Australian website as well. You may read my detail analysis in my earlier article on Rio Tinto case to find out how the Australian Newspaper skilfully crafted wording using the techniques of creating, repeating, asserting and confirming an unproven speculation that the arrest was related to the recent failed negotiation over Australian iron ore exports to China . By the way, the Crowdsourced coverage website can proof my claim that the Australian did carry that news heading on their website in July 2009.

c) The rule of law in theory and in practices (China vs. Australia)

China as a developing country is not perfect in many aspects. It was at one stage a totally lawless society 60 years ago with wide spread poverty, low literacy, bad health (average life expectancy was 36 year), without an effective government after century of foreign invasion and colonial exploitation such as the First Opium War; the numerous unequal treaties forced upon China by varies foreign governments such as UK, USA, Japan, Russia, France, Germany, Portugal, Italy, Austria-Hungary, Belgium, Spain and Netherlands – Wikipedia recorded 18 of these unequal treaties; and Nanking Massacre, etc.

However, over the last 60 years of political, legal and economic reform, China enjoy unprecedented prosperity with political stability and high level of citizen satisfaction with the direction of the government. (PEW survey 2008).

China is still far from a perfect country, and the country knew that – in the recent session of the National’s People Congress, the heads of the Supreme People’s Court and Supreme People’s Procurator made a promise for “greater supervision and competence in its judicial system”. (CCTV, 11 Mar 2010).

Like any Western country’s history of building its legal system, it is an on-going process of improvement as a result of discovering new loopholes and inefficiency. However, where there are existing written law to follow, no one have the right to dispute its legitimacy. Rio Tinto’s bribery case was trial in accordance with the existing Chinese law and legal proceeding – the bribery case was trial at an open Court, and the stealing of commercial secret case was trail in a close Court but with 40 witnesses including some of the family members of the defendants. (The Australian, 26 Mar 2010) and we should respect the outcome as the crime was committed in China under their Judiciary system.

If we want other countries to respect our law, we should learn also to respect others.

The irony with the Australian media and government is that,

i) We keep making unfound speculation that Chinese leaderships are personally involved in the case. For example,

After Prime Minister Rudd issue a public warning to China: “The world is watching”, Foreign Minister Stephen Smith and Treasurer Wayne Swan also joined him in saying “the rest of the world was watching China”. Despite Qin Gang, China Ministry of Foreign Affairs spokesman urging Australia not to “interference in China’s judicial sovereignty”, and claimed that: “The actions of the Rio Tinto staff have caused losses to China and China’s interests,” he said. “I believe Stern Hu and Rio Tinto are fully aware of this.”, like most media throughout the country, the Age also pushing the following point in its report dated 17 July 2009 under the heading: ‘China tells Australia to butt out’:

The Age: “It has been widely speculated that Mr Hu’s detention is linked to Rio’s decision to snub a bid by China’s state-owned Chinalco last month to take a large stake in the company.”

Reader should note that, the effort to link the arrest of Rio Tinto executives in Shanghai to the failed bid by Chinalco to increase it investment in Rio Tinto is wide spread throughout the Australian media industry over the next 8 months since their arrest in July 2009 until the bribery findings — admitted by all four men.

The Sydney Morning Herald (29 July 2009) run an article: “China does not respond positively to humiliation”, implying that, by maintaining a good relationship with Chinese leaderships, Stern Hu stand a better chance for an early released.

Sydney Morning Herald (13 July 2009) under the heading ’Chinese President backed Rio spy probe’ quoting an (unnamed) Chinese Government sources suggesting that “The Chinese President, Hu Jintao, personally endorsed the Ministry of State Security investigation into Rio Tinto that led to the detention of the Australian iron ore executive”. If you Google this news title, you will notice that like most negative news against China, it is an Australia wide coverage.

Again, Sydney Morning Herald (7 Nov 2009) under the heading ‘Exposed: the man controlling Stern Hu’s fate’, speculating without quoting any source that “Wu Zhiming, who is due to decide his (Stern Hu) fate within 10 days”. Follow by an unnamed source: “But some Chinese lawyers say the justice system is more tightly controlled in Shanghai because it has been the stable, long-time power base of Jiang Zemin.”, then another unnamed statement: “Some say Wu has a tighter grip on Shanghai than even the mayor or Communist Party secretary”. Then “The President, Hu Jintao, and a host of lesser players might also vie for influence” (not quoting any source again), then “political analysts (unnamed) say there is a risk that Rio Tinto’s iron ore team will – or might already have – become stuck in the middle of a bitter struggle between President Hu and Jiang.”

How wonderful to be a mainstream media journalist. You can say whatever you like without quoting any sources.

On 11 Feb 2010, The Age made a further speculation under the heading ’China steps up Stern Hu bribe case’, again, using the technique of quoting an (unnamed) observer: “Observers say the decision is likely to have been made at the highest level of Chinese politics,” follow by this statement: “Some had expected President Hu Jintao’s visit last month to Shanghai – the territory of his political rivals and his first visit in two years – would lead to the case being resolved in Mr Hu’s favour.”

The reality is, with the eventual admission of all four Rio Tinto’s executives in the bribery charged on March 2010, all the above rumours and speculations pushed relentlessly by the mainstream media over the last 8 to 9 months have reflected badly in the truthfulness and professionalism of our media industry and , unfortunately the competency of our political leaderships as well.

ii) Political interference in Australia Judiciary system.

Our media and politicians love to make up stories and accuse other culture of political interference in their judiciary system as and when our criminals committed crimes in a non Western country like the Rio Tinto case demonstrated above. However, in practice, did we do what we preaches?

Technically, if Rio Tinto as a company knowing its executives criminal act in China “more then a year ago and resisted internal calls for an investigation” (The Age, 31 March 2010), Rio Tinto has effectively violated a number of Australian laws including the series of our Anti-Foreign Bribery related law and legislations. (Not to mention that Rio has directly benefited from these illegal activities). For a detail listing of our legal framework on Anti-foreign bribery, please read my earlier article dated 10 Aug 2009.

The ASIC (Australian Securities and Investments Commission) is right to indicate that it is “looking at Rio over Stern Hu case” as “Prof Ramsay said that under Australian criminal law, Rio could be potentially liable if a court found the company’s corporate culture either directed, encouraged or tolerated bribery of a foreign public official.” Despite the fact that “Green leader’s Bob Brown called for the Rudd Government to order the regulator to investigate Rio Tinto”, “Foreign Affairs Minister Stephen Smith …. said it was possible that the Hu case involved a breach of Australian law, but he told the ABC …. that he had no reason to refer the matter to ASIC.” (News Limited, 31 Mar 2010). Whether or not the ASIC is serious about “looking at Rio over Stern Hu case”, we can only wait and see for now.

Again, the Rudd government is not interest in upholding the Australian law against foreign bribery. Instead, our “Foreign Minister slams Chinese as Stern Hu gets 10-year jail sentence” (Sydney Morning Herald, 30 March 2010), so as Prime Minister Rudd (The Australian, 9 April 2010). And the media is talking about a prisoner exchange treaties with China (Courier Mail, 8 Apr 2010). So much for the usefulness of the written law in Australia.

However, in another recent incident, when it was reported that a “Chinese coal ship that ran onto the Great Barrier Reef was one of dozens of freighters to have taken a legal short cut between dangerous shoals this year” (Brisbane Time, 7 April 2010). Let’s have a look at how our poll driven Politicians reacted to this incident in an election year:

Usually, incident like this should be handled by the experts to access the damages, and the federal police to investigate the cause of the incident and then refer the case with according to our established legal framework and procedure, and finally a court proceeding and expert (The Australian Maritime Safety Authority) recommendation such as to introduce new rule and regulation (for example, extending the VTS to the entire length of the reef ) to ensure this kind of incident will not happen again. It should be up to the Judicial System to decide on the case.

However, our Prime Minister have to personally involved himself on the case and pledged that: “vessels that threatened the health of the reef would be prosecuted with all the force of the law,” follow by our Federal Transport Minister Anthony Albanese: “The Australian government will ensure that the full force of the law is brought to bear on those responsible … and we will also ensure … compensation is paid with regard to the cost of cleaning up,.” (Brisbane Time, 12 April 2010).

So, is our Judicial System independent from political interference? You be the Judges!

Economic or Commercial espionage cases outside China

For the benefit of readers, I would like to provide the following links to other commercial espionage cases outside China:

The Economic Espionage Act of 1996 was approved by Congress because theft of U.S. trade secrets is costing U.S. companies many billions of dollars a year in lost sales and costing U.S. workers their jobs. Here are brief summaries of some of the first arrests under this new US law: http://www.wright.edu/rsp/Security/Spystory/Industry.htm.

Other commercial espionage cases across the world:

– A case study in French Espionage: Renaissance Software.

– Case study: USA – UK industrial espionage

– F1 engineers plan appeal in Ferrari espionage case (30 April 2007)

– Telecom Italia espionage scandal deepens (25 January 2007)

– Fender bender crooks swipe $190K in chips (21 December 2006)

– Vodafone fined €76m over Greek wiretap scandal (15 December 2006)

– Foiled computer blaggers jailed for 38 years (3 July 2006)

– Spyware-for-hire couple plead guilty (15 March 2006)

– Eight CCTV cameras bust ‘Mr Stupid’ (28 August 2005)

– Armed raiders steal £840,000 in computer kit (20 January 2003)

Conclusion: Why the West cannot use normal heart to handle other cultures?

I feel sad for Australia—a country I called HOME. The world has changed so much in the 21st century and yet some in our society still unable to put aside the colonial mentality of the past. These people seem to has to see other culture through colour lenses and unable to put in context our own behaviour when facing the similar situation.

Our media reporting news based heavily on hear-say and unfound speculations. Despite numerous newspapers and magazines on our news stand, they all seems to speak in one voice most of the time with the same messages and mistakes. Very often, those people they quoted with a name are in fact – no expert to the case. Those so-called experts are people without a name. The editors seems not too interested in the truth of an event. Apparently, like the latest ANU research, most of our editors only interested in reporting news based on their party line. (I would put it as political line.) They are unable to distinguish the different in responsibility between writing a news piece and opinion piece.

Since the financial crisis, our reserve bank governor has in many occasions accredited China as the main factors that lifted Australia out of this crisis. China is in actual fact our number one trading partner. However, as a result of our bureaucrats and politicians reliance exclusively on our newspapers for information about China. (refer to Brisbane Time on the 15 Oct 2009 under the heading – Rudd policy on China ‘set by BHP’, with the following statement from Mr Joske (an economic adviser to former treasurer Peter Costello in the 1990s): ”There’s no one in Treasury who can tell up from down on China, beyond what they read in the newspapers.”

Should our government consider to reform our media industry to safeguard our national interest as a result of the misleading information we received from our media on a daily basis?

To read this article with links to the sources, visit my personal website:

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