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China confirms Rio Tinto executive was arrested for spying, alleging theft of state secrets

By Amarendra Bhushan for CEOWORLD Magazine Updated:July 9, 2009

Four employees of the Anglo-Australian miner Rio Tinto Ltd. have been arrested over alleged stealing of China’s state secrets, including Stern Hu, general manager of the company’s Shanghai office.

The maximum penalty for a conviction on espionage charges under Chinese law is life in prison.

China said that it would handle the spy case related to Rio Tinto employees “according to the law”.

“Hu is suspected of stealing China’s state secret. The four people including Hu had been detained by China’s security authorities Sunday evening,” said Chinese Foreign Ministry spokesman Qin Gang at a press conference Thursday.

The arrests apparently came last weekend, amid contentious iron ore price talks between Rio Tinto and Chinese steel mills. Xinhua did not indicate whether the case is linked to the negotiations.

Australia says one of the arrested Rio Tinto employees is Australian, and it is demanding consular access to him. The detained Australian, Stern Hu, is the Shanghai-based general manager of Rio’s Chinese iron ore business, according to the Australian government, which says the three other detainees are Chinese nationals.

The state-controlled Aluminum Corporation of China (Chinalco) last week bought 1.5 billion U.S. dollars of Rio Tinto shares to cement its 9-percent stake in the miner. The deal came a month after the failure of Chinalco’s 19.5-billion-U.S.-dollar bid for a19-percent stake and joint management of some Rio Tinto assets.

Australia’s foreign minister Stephen Smith has said he sees “no basis” to suggestions that the arrest of a mining executive in China is payback for a cancelled deal.

Australia’s Foreign minister, Stephen Smith, said access had not so far been granted to Mr Hu and there has been no indication of where the four men are being held. He said the accusations of spying were “very surprising”.

“One of the reasons why we want access to him, is to satisfy ourselves as to his welfare, to satisfy ourselves as to his well-being and to get some indication from him as to how we can be of assistance,” said Mr Smith.

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