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Prison for four Rio Tinto executives in China

From John Vause, CNN
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China jails Rio Tinto staffers
  • Shanghai court sentences Australian mining executive and three others on bribery
  • Australian sentenced to 10 years after admitting accepting almost $1M
  • The case is being closely watched over fears of a China crackdown on foreign firms

Shanghai, China (CNN) -- A Shanghai court has sentenced an Australian mining executive to 10 years for bribery and stealing commercial secrets in the Rio Tinto case.

Executive Stern Hu also has to pay a fine of 500,000 yuan ($73,239).

The case against Hu and three other employees of the British-Australian company was closely watched over fears of a government crackdown on foreign companies doing business in China.

The other defendants also were sentenced:

-- Wang Yong received 14 years for bribery and stealing commercial secrets. He was accused of receiving the largest bribe, almost $9 million, prosecutors said.

-- Ge Minqiang received eight years and a fine of 300,000 yuan ($43,943).

-- Liu Caikui received seven years and a fine of 400,000 yuan ($58,591).

Wake-up call for foreign firms in China

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  • China
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  • Australia

The four originally received longer sentences, but they were all reduced under China's legal guidelines of overlapping sentences. Three of the four -- Hu, Ge and Liu -- also are to have varying amounts of their personal assets confiscated.

None of the employees showed emotion as the verdicts were read.

The four employees have been fired, said Sam Walsh, another chief executive with the company.

"We have been informed of the clear evidence presented in court that showed beyond doubt that the four convicted employees had accepted bribes," Walsh said.

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

The three-day trial last week was closed to foreign media. Australian consular officials were allowed in the Shanghai courtroom for the bribery phase of the case, but were barred from witnessing the theft portion.

Because of the closed-door trial, it was not clear what evidence prosecutors presented on the charge of stealing commercial secrets.

"Please kindly understand me that my colleagues and I are obliged to keep any and all information related to (that charge) in the most strict confidence," said Hu's lawyer, Jin Chunqing.

On the bribery charges, Hu admitted taking money -- almost $1 million -- on two occasions from two steel mills in northern China, his lawyer said.

"He indicated to police, prosecutor, judge and his lawyers that he was proud of his being clean in this chaotic industry and he truly stuck to his principle for nearly 15 years," Jin said. "But just within a short while of two to three months, he invaded his boundary and ruined his reputation."

Hu was worried that Rio Tinto would be acquired by another company, with his position eliminated, Jin said.

Hu was 50, with a wife and children. He also tended to his ailing parents and parents-in-law and wanted to help two childhood friends, Jin said.

He is accused of receiving two bribes: one for 1 million yuan ($146,490) and another for 5.3 million yuan ($790,000).

The Chinese government initially accused the four of stealing state secrets when they were first detained, but the charges were reduced to theft of commercial secrets several months ago.

Hu and the others were detained in July -- a month after Rio Tinto broke off an investment deal with China state-owned Chinalco, a resources company, that was worth more than $19 billion.

The deal with Chinalco was signed in February 2009 and was awaiting a review by Australia's foreign investment board.

The deal soured as opposition party members in Australia ratcheted up their disapproval, saying it would put Australian resources at strategic risk.

Others saw the deal as an alliance that would further link resource-rich Australia with the commodities-hungry Chinese market.

"I am determined that the unacceptable conduct of these four employees will not prevent Rio Tinto from continuing to build its important relationship with China. This is a high priority for me personally," said Tom Albanese, chief executive of Rio Tinto.