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Opinion piece critical of Australian handling of case
Australian whipping boy
March 30, 2010
The conviction of Stern Hu is nothing short of a sham - a sacrificial offering for a supposedly noble cause.
THAT rushing sound of water? That's the sound of thousands of people washing their hands of a problem that was proving just too difficult to solve.
Now that Stern Hu, Rio Tinto's Shanghai-based chief negotiator on iron ore sales and one of its most senior executives, has been sentenced to 10 years in a Chinese gulag, everyone can resume the business of making money.
Hu is an Australian citizen. He was tried under circumstances and convicted of charges that would never have held water in an Australian court.
But there is little chance his employer or the federal government will intervene. That time has passed. In any case, there is too much at stake - billions upon billions of dollars, in fact. And in six months, the episode will be a long-forgotten speed hump on the economic superhighway from Canberra to Beijing.
Hu and his three colleagues, who are Chinese citizens, have become roadkill - expendable casualties for a supposedly noble cause. How did it all come about?
There are those who believe it had nothing to do with last year's tense negotiations - conducted by Hu - between Rio Tinto and Chinese steel makers. Others believe it had little to do with Rio Tinto's rebuff of Chinalco's $US19.5 billion rescue package.
Perhaps they are right. Perhaps the timing was exquisitely coincidental. And there goes another flock of pigs.
Make no mistake: that rejection of Chinalco sent white-hot rage through the corridors of power in Beijing, a fact senior Rio executives in Melbourne were acutely aware of as they braced for a backlash.
Within four weeks of that rejection - China's biggest-ever single foreign investment - Hu and the other three executives were under arrest. Hints were dropped they had been conducting their nefarious operations for six years and had cost China hundreds of billions of dollars in lost revenue.
And while Chinalco, a loss-making company wholly owned by the Chinese government, maintained it played no part in the arrests, its chairman, Lu Youqing, within days let his feelings be known on the matter: ''Rio Tinto has no business credibility as a company, it is not unlikely that a few staff are suspected of breaching the law.''
At that stage, Hu and his colleagues were accused of bribing Chinese steel mills and gathering information that breached state security.
But as the diplomatic rift caused by the arrests turned into a potentially explosive trade situation, and as Rio Tinto pulled out all the stops to smooth the tenuous relationship, everyone appeared to take a deep breath and review the matter.
After the publicity surrounding the arrests, however, a total backdown by Chinese authorities was out of the question. Instead, in mid-August, the charges were downgraded substantially and significantly altered. Rather than paying bribes, Hu and his three colleagues were accused of accepting bribes.
This had the effect of removing Rio Tinto from any culpability should the four be found guilty, and given almost everyone charged in China is found guilty, that probability was overwhelming.
Had they been paying bribes, the obvious source of the bribes would have been their employer, thereby implicating Rio Tinto and possibly executives all the way to the top. Altering the charge to accepting money, however, isolated them from the company and had the effect of turning them into rogue negotiators.
All four last week pleaded guilty to accepting money. But all four rejected accusations they had been on the take to the tune of $US13 million. Who knows what pressure was brought to bear on the defendants to accept a guilty plea?
Then there is the still sticky matter of the espionage charges. That part of the hearing was held in secret, with Australian consular officials denied access.
But with Hu and his colleagues found guilty of industrial espionage, it is possible this could come back to bite Rio Tinto.
Accepting money is one thing. But what use would you have for industrial secrets, other than to hand them on to your employer?
Let's be plain here, though. What industrial secrets can you possibly have in iron ore negotiations? Price is determined by supply and demand.
Everyone knew Chinese mills were increasing their steel production and you don't have to be brilliant to figure out capacity growth over the course of a year.
The crucial element got down to supply. And it is very difficult to hide thousands of tonnes of iron ore.
And with satellite imagery, tracking down supplies and determining whether they are en route or stockpiled these days is a simple matter. Ever looked at Google Earth?
Speaking of Google, it opted to exit China a fortnight ago after continued huge breaches of security systems by hackers and demands from the Chinese government that it refused to meet.
It is a given that Chinese authorities would be using their own sophisticated satellite technology to monitor mine development and production in the Pilbara, Africa and South America, in an effort to gain market intelligence in price negotiations.
Talk to any businessman operating in China, and all will tell you they never engage in anything other than pleasantries on either mobile or fixed phones.
Bear in mind, too, that for decades China has sanctioned or at the very least turned a blind eye to counterfeiting trademarked manufactured goods on an unimaginable scale.
There is little use in attempting to deconstruct events surrounding the circus that passes for Chinese justice other than to recognise it for the sham that it is.
But where Australia once stood for the rights of the individual, it now seems happy to offer a sacrifice for the good of the collective.