Australian Businessman Accused of Spying by Chinese Govt

[Aliantha]

This is shaping up to be a diplomatic nightmare for Australia and could potentially end up involving other countries who trade with China. Basically an Australian mining exec was 'detained' by Chinese officials under suspicion of stealing Chinese trade secrets. There are rumours that it's all connected to a mine purchase by a Chinese company in Australia although these rumours are unfounded atm. The man has been detained now for 7 days without charge, and China has yet to utter a word to Australia - at any level - with regard to anything other than the accusation.

There are calls for the government to get involved, and over the last couple of days there are calls for the business community to begin imposing it's own 'sanctions' on trade with China. China is our main trade partner with regard to coal and iron ore. I personally don't see the mining companies getting on board with this. They'd stand to lose too much when they're already struggling.

From the Sydney Morning Herald:

KEVIN Rudd has flown back into Australia and the storm over China's treatment of a Rio Tinto employee.

His arrival comes as pressure mounts to intervene in the Stern Hu case, while the goovernment has warned China it could face a business backlash over the case.

But Foreign Affairs Minister Stephen Smith and Prime Minister Kevin Rudd are yet to speak to their Chinese counterparts about the plight of Rio Tinto employee Stern Hu.

Mr Smith said yesterday that Mr Hu could be "in for a long haul" after his arrest just over a week ago.

The man in charge of Rio Tinto's Chinese iron ore business, accused of bribery and undermining China's economic security, will have to wait another month to get further access to Australian consular officials.

[xoxoxoBruce]

The link doesn't work.

[Aliantha]

Try again

Here's another one with different info

[xoxoxoBruce]

No sense getting all in a lather over 4 people when there's billions of dollars at stake.

[casimendocina]

I would disagree.

[TheMercenary]

This whole issue merely points out the duplicity of the Chinese government in any dealings with the freemarket. It is all ok until they think someone else is making a profit or doing it better than they are.

[Aliantha]

When dealing with a corrupt regimen, things like this are bound to happen sooner or later.

[ZenGum]

I wonder if there isn't something more going on.

Historically, the Chinese have a record of playing hardball in business that makes Bernie Madoff look like a boy scout car wash team. I wonder if this isn't a stage in a plan to push down resource prices.

In general, their cultural assumptions about what constitutes fair dealing and reasonable behaviour are often quite different from ours, and there is no particular reason why western assumptions should prevail, especially in a situation like this.

Further, the present Chinese regime is still quite secretive, xenophobic, and totalitarian - so it is not unnatural for them to regard things like contracts and resource prices as state secrets.

Resource prices were at a peak a year ago and have since fallen dramatically. Chinese buyers have been putting downwards pressure on Australian resource prices. Well, naturally.

But interestingly, although China's production of steel has fallen, their imports of iron ore have not. (Similar ratios are true for other base metals.) They would appear to be stockpiling iron ore. Why? A few possible reasons:
(1) They prefer to hold a big pile or iron ore than a big pile of US dollars, since in five years time the iron ore will still be iron ore, but the greenbacks might well be just paper.
(2) They are building a strategic stockpile in case of war.
(3) They are building an economic strategic stockpile to improve their negotiating position and force the price of iron ore down.

My guess is that (3) is most likely, or a combination of (1) and (3). And so I wonder if this incident - which may have been personally approved by Hu Jin Tao, according to media reports - is part of a large scale game plan to get leverage over resource prices.


.


Do you have any idea how hard it is to make a tinfoil hat with corks bobbing around the brim?

[casimendocina]

I thought this article made a good point.

http://blogs.theaustralian.news.com....p_in_mandarin/

Just had a quick look at their website and Internet Censorship is the main cause at the moment. While definitely worthy of their attention, there's a bit more at stake here, I would say.

[xoxoxoBruce]

One of the comments from casimendocina's link.

The only problem is that the man is being charged under Chinese law for offences he (allegedly) committed in China. Judicial sovereignty is supreme in this case--and especially in this case, in a jurisdiction with which nobody dares to argue.
If the federal government goes in to bat for him, they have to do the same for any Australian citizen held anywhere in the world on a (seemingly) dodgy charge.
Has anyone asked the question: what if the Chinese have it right, and he has a case to answer?
Honestly, as filthy and repressive a regime as it is, China is accepted (for reasons of money and fear) by the world community; therefore, its sovereignty will be respected.
The other solution is to arrange a “coalition of the willing” to invade the oppressive, ideologically-driven, violent, murderous regime, and to establish democracy in that land.
Oh, that’s right: we only did that, post-WW2, in Iraq (a small, reasonably easy target), the “success” of which hangs on a daily knife-edge. No western nation or coaliton ever had the guts to try it with Russia.
Word of advice: if you don’t want to get locked up without charge, or for the most specious of reasons, avoid China, the middle east, Russia, many African “nations”, and anywhere there is a dictatorial regime. Do your business elsewhere: in commercial, democratic countries, for example. I mean, how hard can it be?
Every time I hear of an Australian tourist or businessperson wallowing in an Asian gaol, I think: why on earth were you there in the first place? Even if you had a good reason (money, adventure, culture, whatever), you must have known that it might go pear-shaped at some time. Justice and rule of law operate almost randomly in those countries.
Just stay away from them.

Amen.

[casimendocina]

These points open another whole can of worms.

[Aliantha]

OK, so he paid or offered bribes to get his project moving. Let's assume this is a fact.

Do you know that it's a fact that pretty much any major project to do with mining in almost every country other than western democratic countries includes in the budget, money for bribes to officials just to get things done.

Here's an example.

Last time Dazza was in PNG, he had to pay the port authority in port moresby a certain amount of money or they wouldn't allow their boat to leave the port. This was by customs officials. People you would think would be inclined to follow the law, but no, that's not the case.

Corruption and bribery are simply a normal part of the business proceedure in China. I'm sure it's probably true what the Chinese govt are accusing this man of, but he's obviously pissed them off somehow - and most likely in a way they don't want known publicly - so they're charging him for a crime that he's committed and has probably committed many times during the normal course of business as punishment for whatever else he's done. maybe he paid off the wrong person, or didn't pay enough, or threatened to go public with something. There is such a huge amount of money at stake with trade relations between Australia and China, and Rio Tinto is one of the leading players.

[TheMercenary]

Originally Posted by Aliantha

Corruption and bribery are simply a normal part of the business proceedure in China.

As it is in just about every other country in Africa, Asia, and the Middle East.

[Clodfobble]

South America too.

[TheMercenary]

Yea, I forgot that one, and Central America.