Tag Archives: Rio 4

Xue Feng, Stern Hu, State Secrets And China’s Rule Of Law

When is publicly available information a state secret? When it is business information held by China’s state-owned firms. The sentencing of Xue Feng, a 44-year old Chinese-born American geologist, to eight years in jail in China for stealing state secrets, which in his case involved an attempting to buy data about the oil industry for the U.S. energy consultancy he worked for, follows the 10-year sentence given in March to Stern Hu, formerly of the Australian mining firm Rio Tinto, for accepting bribes and dealing in state secrets.

It doesn’t take much to draw comparisons between Xue and Hu’s cases. Both involved men who had gone abroad, gained a second nationality and then returned to work in the country of their birth as executives for a foreign company. Both have received exemplary sentences in comparison with those handed down to the Chinese nationals tried alongside them (three in both cases). Both were working in what are regarded as strategic natural resources industries (oil and steel respectively).  Both cases strained relations between Beijing and a foreign government (the U.S. and Australia) that had raised the cases at the highest levels; handing down the sentencing of Xue on the same day that the U.S. was celebrating its own Independence Day holiday was a particularly pointed rebuff, especially as Washington had not publicized Xue’s case previously in the way that Canberra had done with Hu’s.

The lessons to be drawn from all this, for foreign businesses at least, is that those competing in any of the 20 industries that China has designated as strategic and in which it is grooming national champions need to remember that the line dividing market intelligence from industrial espionage is a fine one and that the one dividing market intelligence from a state secret finer still. And while it might appear to foreign companies that the distinction is vague, it is not to Chinese law makers: draft regulations released earlier this year defined business information held by state firms as state secrets.

Second, that Chinese-born foreign nationals who return to work in China for foreign companies are seen as a special kind of threat; those operating in sensitive industries doubly so (Reuters has a list of a dozen or so examples of ethnic Chinese punished for stealing secrets and spying here). Third, that the due process of law in China — which has been applied in both these cases (more or less) — is still the application of a rule of law in which law is regarded as an agency of the state.

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Rio 4 Trial Ends

The trial of the Rio 4 is over. No verdict or sentence has been handed down yet by the Shanghai court. That could take weeks. Three of the four Rio employees pleaded guilty to taking bribes; it is not known how the four pleaded to the industrial espionage charges. Those were heard in secret, though Australian diplomats were allowed to attend the part of the trial dealing with the bribery charges. Justice is blind, or at least blinded.

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Rio 4 Trial: Look It Up Once It’s Done

Stern Hu, head of Rio Tinto’s Shanghai office, who stands accused of taking bribes and engaging in industrial espionage, has admitted taking bribes, though he contests the size of them. We know that via one of the attorney’s representing one of Hu’s three colleagues who are also on trial. Proceedings, which are expected to last three days, are closed, even to Australian consular officials for most of the time. The part dealing with infringing trade secrets charges is expected to start sometime on Tuesday. As Lu Zhian, an associate professor at Fudan University’s  Law School, told Xinhua, if we want to find out what went on, we “can refer to the court’s hearing records after the trial and appeal”.

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The Rio 4 Case And China’s Legal Catch 22

Here is the Catch 22 for China over the Rio 4. If it wants to be regarded as a country that follows the rule of law, not one that adjudicates for reasons of political expediency or connections, then it has to prosecute the case through the courts. If it prosecutes the case through the courts, the legal system will be exposed as the arm of state administration intended to deliver a swift conviction and sentence it is rather than an exercise in justice. The constitution and legal system provide for fundamental human rights, including due legal process. In practice, both are often ignored. But then the constitution isn’t the supreme law. The people led by the Party are supreme, a Catch-22 of its own.

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Rio 4 To Stand Trial

The industrial espionage case involving four employers of the Anglo-Australian mining company Rio Tinto  has entered its next phase. The four, who include an Australian citizen Stern Hu, have been indicted on on charges of bribery and stealing business secrets, Xinhua reports. They will stand trial in Shanghai in what promises to be another test of relations with Australia, and of the nerves of foreign investors which have been rattled by what seem to be a number of strikes at foreign companies in recent months. If found guilty, the Rio 4 could face up to seven years in jail on the commercial secrets charge, and up to 20 years on the bribery charge. Last week, Rio appointed Ian Bauert to run its operations in China. An old China hand, Bauert set up the company’s first China office more than 25 years ago.

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No Progress In Rio 4 Case

Kevin Rudd, Australia’s prime minister, seems to have to no change out of his Chinese counterpart Wen Jiabao when the two discussed the case of Stern Hu and three of his Rio Tinto colleagues who were detained by Chinese authorities in July on suspicion of stealing state secrets. Speaking on the sidelines of the ASEAN meeting in Thailand, Rudd said only that the case, which has strained relations between Canberra and Beijing, continued to be the subject of “intense and continuing discussion” between the two countries’ foreign ministries. Deciphering the diplomatic body language, those discussions aren’t making much progress. The four were  formally arrested in August on charges of stealing commercial secrets, but not on the more serious one of stealing state secrets.

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