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March 25, 2010

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3 Rio workers deny theft of business secrets

THE trial of four Rio Tinto employees ended in Shanghai yesterday, with three of them contesting charges of stealing commercial secrets in a case that has highlighted China's understandable sensitivities over its rich resources sector.

Australian citizen Stern Hu, a senior Rio Tinto executive, and his Chinese colleagues have already admitted to taking bribes. They face jail terms of at least five years on those counts.

Hu, head of the China iron ore business, his subordinates Liu Caikui and Ge Minqiang, and iron ore salesman Wang Yong, pleaded guilty on Monday to taking kickbacks but have contested the amounts alleged by prosecutors.

Three of the four employees charged over stealing business secrets have contested those counts, Zhang Peihong, the lawyer representing Wang, said yesterday.

He said the fourth defendant pleaded guilty but did not give a name.

"We would always investigate thoroughly any allegations of serious wrongdoing," Tony Shaffer, Rio's principal adviser for media relations, wrote in a statement e-mailed to Reuters.

Legal process

"We cannot comment on the case of our employees in China at the moment as the legal process is still underway."

No verdict or sentence had been reached, Zhai Jian, the lawyer representing Ge, said on his way out of the Shanghai court.

"There may well be some time, a matter of days, between the end of the hearing today, and those further processes," Australia's Foreign MinisterStephen Smith told Australian radio yesterday.

Lawyers said the four accused men had testified that Rio Tinto did not know about the kickbacks, which came mostly from smaller or privately owned steel mills desperate for iron ore at stable and relatively low prices.

They included Rizhao Steel, formerly one of China's largest private steel mills, whose billionaire founder Du Shuanghua gave written testimony about a US$9-million payment to Wang, according to trial reports.

Internal audit

For its part, Rio Tinto has conducted an independent internal audit in a bid to clear itself of any wrongdoing and determine whether there was evidence the company paid any bribes to, or received illegal payments from, Chinese steel mills, The Australian newspaper reported yesterday.

A team of forensic accountants and lawyers found nothing that would uphold a claim the company had supported any illegal activity or could have been aware of the alleged misbehavior, the newspaper said.

It added that the audit team could not give Rio similar assurances about the activities of the four executives standing trial in Shanghai.

Rio Tinto's Website states that "bribery in all its forms is prohibited." Other Australian firms urged caution.

"With our employees, the reality in China is that areas that are black and white here in Australia are much greyer over there," said Andrew Forrest, CEO of Fortescue Metals Group, the third-largest iron ore miner in Australia.


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