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Rio employees face trade secrets, bribery charges

SHANGHAI, China — China has formally arrested four employees of the Anglo-Australian mining giant Rio Tinto Ltd. on charges of infringing trade secrets and bribery, in a case that has strained relations with Australia.

The official Xinhua News Agency said Wednesday that investigations showed the four employees, including Australian citizen Stern Hu, had obtained commercial secrets about China's steel and iron industries through "improper means" and were involved in bribery.

The report made no mention of the more serious charge of stealing state secrets, which Chinese media have been saying the four would be accused of.

News of the formal arrests came five weeks after Hu — Rio Tinto's head of iron ore operations in China — and his Chinese colleagues were detained on July 5 in Shanghai amid contentious ore price talks with Chinese mills.

Australia's Foreign Affairs Department said Wednesday that Australia had been officially informed late Tuesday by China's Ministry of Public Security that Hu and the three other Rio Tinto workers had been arrested on charges of taking bribes and obtaining commercial secrets.

Australia urged China to let Hu consult a lawyer.

The department said in a statement that "we encourage China to allow Mr. Hu all the protections available under Chinese law, including access to legal representation, now that he has been formally arrested."

News of the arrests also was reported Wednesday on the Web site of the China Procuratorial Daily, which is run by the Supreme People's Procuratorate — China's top prosecutorial organ.

Xinhua said Chinese prosecutors had found evidence of bribery and that some individuals in Chinese steel and iron companies were suspected of providing the Rio employees with commercial secrets. No specific details were given.

Amanda Buckley, Rio Tinto's spokeswoman in Melbourne, Australia, declined to comment, saying the company had not received official confirmation of the arrest and charges.

The arrests of Hu and his co-workers came as fractious talks with Chinese steel mills over iron ore prices dragged on.

The few details of the case that are known have come from state-owned Chinese media, including accusations that Hu paid bribes to Chinese officials for information on China's negotiating stance in iron ore price talks.

Australia is a major supplier of iron ore and other minerals to resource-hungry China, and the case has raised tensions between Beijing and Canberra, where the government is concerned that the case is moving too slowly and that Hu may not receive a fair trial.

China's deputy commerce minister said the case was an isolated one.

"We believe Chinese judicial organs will make a fair ruling on the case based on the facts and in accordance with law. There is no question about that," Fu Ziying told a news conference Wednesday.

Fu said the case showed the government's determination to create a competitive, open and fair market environment in China.

"This will not hurt China's efforts in terms of attracting foreign direct investment. On the contrary, we believe this will benefit China's attraction of foreign direct investment," Fu said. He added it should not affect relations with Australia.

Rio Tinto decided in June to drop a $19.5 billion deal with the state-controlled Aluminum Corp. of China, better known as Chinalco. Chinalco then subscribed to a $15.2 billion share issue to maintain a 9 percent stake in Rio Tinto.

Chinese media reports have said Hu's actions amounted to stealing state secrets, and executives of at least five major Chinese mills are being questioned. A Chinese diplomat said in July that China had told Australia it had "ample evidence" that Hu and his three co-workers stole state secrets.