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March 30, 2010

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Rio Tinto quartet imprisoned, sacked

A SHANGHAI court yesterday sentenced four employees of mining giant Rio Tinto to jail terms ranging from seven to 14 years on charges of accepting bribes and stealing commercial secrets.

Shanghai No. 1 Intermediate People's Court said Stern Hu, an Australian national who headed Rio Tinto's iron ore operations in China, was jailed for seven years for accepting 6.46 million yuan (US$946,338) in bribes and five years for stealing business secrets.

He will serve a combined sentence of 10 years.

The court also fined Hu, who has returned all of his ill-gotten gains, 1 million yuan.

Three Rio Tinto Chinese employees - Liu Caikui, Wang Yong and Ge Minqiang - were also imprisoned.

Wang received the most severe sentence of 14 years for accepting 75 million yuan in bribes and stealing commercial secrets. Ge was jailed for eight years and fined 800,000 yuan, while Liu received seven years and a fine of 700,000 yuan.

Wang would appeal, his lawyer, Yang Bailin, said yesterday. The others had yet to decide on appeals, their lawyers said.

Rio said it had no comment on the verdict but would sack all four employees.

"We have been informed of the clear evidence presented in court that showed beyond doubt that the four convicted employees had accepted bribes," Sam Walsh, the chief executive of Rio Tinto Iron Ore, said in a statement.

"By doing this they engaged in deplorable behavior that is totally at odds with our strong ethical culture.

"Rio Tinto has concluded that the illegal activities were conducted wholly outside our systems."

The four all pleaded guilty to taking bribes but rejected the amounts alleged. Three of them denied the commercial secrets charge.

Liu's lawyer, Tao Wuping, said his client had pleaded guilty to the secrets charge.

The court supported all the prosecution charges based on the defendants' confessions to police, testimony from witnesses and official assessments of business secrets.

Hu, Wang, Ge and Liu accepted bribes from medium and small Chinese steel companies in exchange for lining up preferential contracts.

The four also used Rio's advantageous position in the iron ore trade to inquire about information of secret meetings of the China Iron and Steel Association and iron ore prices Chinese steel companies desired in negotiations.

"The theft put Chinese steel companies in a disadvantageous position in iron ore price negotiations," the verdict said.

"It won massive profits for Rio but caused huge losses to Chinese steel companies."

More than 20 Chinese steel firms prepaid 1.02 billion yuan more than they should have in 2009 for their iron ore imports because of the crimes committed by the four.

The court named Tan Yixin, once tipped as future head of Shougang Steel in Beijing, and Wang Hongjiu, shipping manager for Laiwu Steel in Shandong, as the source of some of the leaks.

The court sentenced those two executives yesterday, although their penalties were not immediately announced.

The four defendants, except Wang, confessed the bribery spontaneously to police.

Hu has returned all the bribes he had taken and the rest have returned part of the bribes, the court said.


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