July 15, 2009

More accusations against mining firm

Rio Tinto employees allegedly bribed 16 Chinese steel mill executives, a source said in the widening investigation of the Anglo-Australian mining company.

The accused executives were bribed during iron ore price talks, China Daily reported Wednesday quoting the source identified as an industry insider.

China is the world's largest steelmaker and Rio Tinto is one of its major iron ore suppliers. China is holding four Rio Tinto employees, including Stern Hu, an Australian and Rio Tinto's general manager in Shanghai. They have been accused of stealing China's state secrets.

The expanded investigation results from government claims there has been widespread bribery in business dealings to obtain government trade and manufacturing data, The New York Times has reported.

The China Daily report said the latest accusations come amid reports the government is considering invalidating 20 iron ore import licenses to regulate China's import business.

Rio Tinto got to know the key executives of the 16 steel mills, who have sensitive industry information, when the China Iron and Steel Association brought them to the bargaining table, a senior manager of a large steel company told China Daily.

And then Rio Tinto bribed them (to get access to industry data), which has become an unwritten industry practice.

Rio Tinto has said the company is not aware of any evidence to support the Chinese charges against its employees.

A month ago, Rio Tinto backed away from a $19.5 billion deal with Chinalco, a Chinese state-owned company, but Australian officials have said the spy allegations did not appear related to company business.