Executives in the British-Australian mining company Rio Tinto have
been sentenced by Chinese
to prison sentences as long as 14 years, bringing to close a
bribery and espionage scandal that began in July 2009. The businessmen
are charged with accepting millions of dollars in bribes from Chinese
officials and for illegally obtaining secret information from state-run
steel companies. With China embroiled in conflict
Google over censorship, the Rio Tinto case further highlights the
complicated intersection in China between business and transparency.
Here's what the case says about China and doing business there.
for Fairness of Chinese Law The Asia Times' Wu Zhong writes of the court's decision to decrease
the espionage charges from stealing state secrets to stealing commercial
secrets, "Contrary to overseas opinion, many analysts in China believe
the change in the charge represents progress in China towards an
improved rule of law." Wu explains that the court is now considering
state-run businesses as businesses, rather than as extensions of the
state. This lessens their political protection and levels the market
- This Is How Business in China Is Done The
Financial Times' David Pilling points out
that relations between China and Rio Tinto remain good. The arrested
official, everyone understands, "had little option but to cosy up to
Beijing. On the very day the four Rio executives were standing trial in
Shanghai, Tom Albanese, Rio's chief executive, was paying homage to
China's leaders in Beijing's Great Hall of the People. The symbolism
could hardly have been clearer."
- New Emphasis on Regulation
The New York Times quotes Liu Junhai, a law
professor in Beijing: "The Rio Tinto case is sending a signal to the
world that China’s model of managing its financial activities has
changed ... In the past, we overemphasized the country’s development,
but didn’t pay enough attention to regulation."
Courts Still Too Political The Wall Street Journal's Stanley Lubman says the case
"demonstrates the usual limits on the ability of defense lawyers to
fully represent their clients, a disturbing lack of transparency, and
the impact of political influences on the proceedings and the outcome."
The courts are still "a state apparatus that is more concerned with
fighting crime than judging from a neutral vantage point." Lubman says
the "level of legality" is improving but very slowly, which is raising
concerns within both China and the international business community.
Firms Playing Hardball The U.K. Independent
speculates, "there is a belief in some quarters that this is all
revenge for Rio Tinto's decision to spurn an offer of Chinese investment
last year when the mining giant was in financial difficulties." Just
before the 2009 arrests, Rio Tino turned down a $19 billion offer to
sell part of the company to Chinese firms. Additionally, "there is a
widespread belief that Beijing wants to squeeze foreign technology
companies out of lucrative markets to sell computers and office
equipment to government departments."
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