I believe this shows that when it comes to critical issues related to supporting China’s infrastructural growth, they are not quite ready to play the harmonious rhethoric – to them this is a matter of survival. In terms of international relations, whether what Hu did was/is criminal or not is not in focus here. China is dealing with this unilaterally, it is not quite the harmonious cooperative tone they have been charming the world with for a while now.
The PR backlash however, has already started in Australia.”They don’t realise this. The image is now they are the tough guys who do not have to be nice to anyone…’‘ Professor of Chinese studies at the University of Technology, David Kelly.
See also the massive amount of reportage within just one day from The Age in Australia – Australia blasts China over sentence (The Age, 30 March 2010) and Farce flags Canberra’s limited influence in Beijing and also, my favourite (written in true Aussie-style)- Hu just roadkill on the economic superhighway.
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Australia blasts China over sentence
KIRSTY NEEDHAM, CANBERRA, AND JOHN GARNAUT, BEIJING
Source – The Age, published March 30, 2010
FOREIGN Minister Stephen Smith has hit out at China over a 10-year jail term handed to Australian businessman Stern Hu, describing it as ”on any measure a very tough sentence” and saying it put at risk the confidence needed by the global business community to operate in China.
Hu and three Chinese colleagues employed in China by mining giant Rio Tinto received sentences of between seven and 14 years after being convicted in a Shanghai court of accepting millions of dollars in bribes and stealing commercial secrets.
Judge Liu Xin broadly accepted the prosecutor’s allegations, including that the men had inflicted huge losses on China by obtaining industry secrets.
The secrets had included information taken from the China Iron & Steel Association, and a steel mill’s production plans. ”The four have seriously damaged the interests of Chinese steel enterprises,” the judge said.
One of the convicted, Wang Yong, would appeal against the verdict ”as not in accordance with the facts” while the other three were undecided, their lawyers said last night.
While the bribery convictions appeared well substantiated, the convictions and the court’s tough rhetoric could add to diplomatic tensions and exacerbate concerns that China’s business and political environment is becoming more difficult and unpredictable.
Mr Smith said yesterday’s verdict left ”serious unanswered questions” because Australian officials had ”very regrettably” been locked out of that part of the trial dealing with theft of commercial secrets, for which Hu was sentenced to five years.
The minister said openness and transparency would have helped Australia and the international business community to understand and deal with the matter.
”Regrettably, China and the Shanghai court chose to go down a different road,” Mr Smith said. ”That leaves serious, unanswered questions and a significant lost opportunity so far as China is concerned.”
However, he conceded that there was ”substantial” evidence that Hu was guilty of bribery, based on what Australian officials had learnt through access to that part of the trial.
Rio Tinto iron ore chief Sam Walsh also accepted that the court had ”showed beyond doubt that the four convicted employees had accepted bribes” and last night formally sacked all four for ”deplorable behaviour”.
The four Rio Tinto iron ore salesmen were originally investigated and arrested for stealing state secrets of such importance that they threatened China’s national economic security, before the case was downgraded to receiving bribes and stealing commercial secrets.
Judge Liu said the actions of the men had caused 1.018 billion yuan ($A165 million) in losses to Chinese steel companies.
He said the stolen secrets included information taken from two conferences several years ago hosted by the China Iron & Steel Association, as well as the production plans of steel mill Shougang.
The industry association provided evidence that those conferences were closed, although industry observers say they may have been open to journalists and foreign traders.
The court said information was generally gathered by Hu or channeled to him by Hu’s three colleagues, and then passed on to Rio Tinto headquarters.
Judge Liu said Tan Yixin, head of iron ore buying at the state-owned Shougang, met with the China Iron & Steel Association on June 8, 2009 – one month before the arrests – and then passed information to Hu that evening at the China World centre, where Rio Tinto has its Beijing headquarters.
He said Hu emailed the information to his superiors at Rio Tinto, who emailed back requesting confirmation.
The judge said Hu received a 6.5 million yuan ($A1.05 million) bribe from Hebei Jinye and $US790,000 from Tangshan Guofeng – both small privately owned mills in north China.
Hu was sentenced to seven years’ jail for bribery and five years for stealing secrets commercial secrets. The total sentence was reduced from 12 to 10 years because Hu showed contrition and repaid the bribes received.
Wang Yong was sentenced to 14 years, reduced from 16, including for accepting a US$9 million bribe from billionaire steel magnate Du Shuanghua, which Wang had argued in court had been a loan which he had repaid.
Ge Minqiang received an 8-year sentence, reduced from 9.5, while Liu Caikui was sentenced to 7 years, cut from 9.
All four are expected to serve their sentences in Shanghai’s Qingpu prison.
Hu is one of the most senior foreign executives to have been convicted in China and questions remain as to the motives behind the investigation. Some sources in China say the conduct of the case has been complicated by bureaucratic and political infighting.
Apart from Wang’s case, the bribe payers were all said to be small and medium-sized private steel mills that were seeking access to high-quality Australian ore on long term contracts rather than paying higher prices for variable product on the domestic spot market.
The convictions will force Rio Tinto to confront criticism that governance of its China operations was not up to standard. The Age understands that after the July 5 arrests the company moved key marketing executives from Shanghai to Singapore.
Mr Smith denied that the government had not pushed hard enough on Hu’s behalf. He said multiple representations were made in Beijing, Shanghai and Canberra for China to honour its 1999 consular agreement with Australia and allow officials to attend the full trial.
”I feel very much for Stern Hu and his family. While we do not condone bribery in any way I think the sentence … was harsh,” he said.
Professor of Chinese studies at the University of Technology, David Kelly, said the trial had left the Chinese legal system’s image in tatters.”They don’t realise this. The image is now they are the tough guys who do not have to be nice to anyone,” he said.
Ann Kent of the Australian National University College of Law said the sentence ”will send a chill down the back of most foreign businesses in China”.
With SANGHEE LIU
Filed under: Australia, Influence, International Relations, Nationalism, Resources, Stern Hu - Rio Tinto, The Age