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Reply With QuoteBigfellaOriginally Posted by Bigfella
No disagreement here.... but sofar I am not seeing the level of transparency that would be considered impressive.
Yes, I agree that it is difficult to trust the current Chinese legal system, especially when Chinese government is deeply involved in the case. But to my knowledge, almost all multinational companies have been playing dirty in China. I don’t mean to blame those companies. It’s quite understandable that those companies have no choice but to comply with the so called “the under table rules” in China. (Google maybe is the exception, but who knows how much compromise Google had to made to survive in China)
It’s also understandable that why Chinese government “dared to” arrest some expatriates of a MNC. It’s so easy for Chinese government to find some real evidence to show Rio Tinto is guilty and then make the international society shut up. Does anybody really believe Rio Tinto may do business in China without bribing Chinese officials? Quote a popular saying in China, nobody is clean.
Personally, I am glad to see the Rio Tinto case may reveal the little secret of those MNCs in China to Western public. It is also a very serious warning to all Chinese officials who are ready to trade national interest with MNCs.
Bigfella
No disagreement here.... but sofar I am not seeing the level of transparency that would be considered impressive.
ying
The question here not "why" they are doing it, but rather "how."
Yes. I suspect that the people behind this are seeing an opportunity to 'teach a lesson' about not doing what China wants rather than 'setting an example' of what China can become. Bad news for the Rio Tinto guys & ultimately bad news for China.
Win nervously lose tragically - Reds C C
You get the point. So, don’t put too much expectation on the legal procedure.
Also, don’t worry that foreign companies may withdraw from China. They will stay and play with Chinese government so long as Chinese economy is growing.
This case has something to do with the legitimacy of CCP and the political life of some top Chinese officials, which are definitely much more important than the money of foreign companies.
Being a Chinese, i think it is good news for Chinese, not bad one.
Not sure how to interpret this; but the agency (Shanghai state security authorities which in charge of financial related issues) that investigated the market pricing scheme does not seem to have any communication State Council that oversees the Tio investment and there were pressures from the iron ore producing provinces to push Shanghai state security authorities to act so forcefully as they were shut out of the pricing talks.
Rio Spy Claim Case Shows SEC Probe Risk, Lawyers Say (Update1)
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By Andrea Tan
July 22 (Bloomberg) -- China’s detention of Rio Tinto Group executives amid allegations of espionage and bribery should serve as a reminder to foreign companies that they may also risk prosecution by U.S. enforcement agencies, lawyers said.
“It’s not just domestic law that may be involved,” said Richard Cassin, of Singapore-based law firm Cassin Law LLC. London-based Rio is subject to the act prohibiting bribery of public officials as its shares trade in New York, he said. “The U.S. Foreign Corrupt Practices Act reaches everywhere.”
By treating information from state-owned companies as secrets, China affirmed the broad definition of public officials under the U.S. legislation, said Shanghai-based lawyer Lesli Ligorner. The July 5 arrest of Rio’s iron ore chief in China Stern Hu and three others in the middle of price talks also underscored the resource’s importance to country, the world’s biggest user of the steelmaking ingredient.
“Negotiating discounts for your company didn’t use to seem this dangerous,” the partner at Paul, Hastings, Janofsky & Walker LLP said. Any company dealing in a highly regulated area such as power, water, food supply or raw materials must “be very, very careful” with sensitive information, she said.
China accused the Rio officials of harming its economic interests and security. Rio, the world’s third-largest miner, has denied allegations that its China-based executives bribed steelmakers for information in the iron ore talks.
Rio Declines Comment
Rio spokeswoman Amanda Buckley declined to comment on whether the company had communicated with the U.S. Securities and Exchange Commission and Department of Justice, which enforce the FCPA, regarding the case.
“In a situation like this, it would be common and expected of the SEC to contact Rio Tinto about the payments and allegations,” said Cassin, author of “Bribery Everywhere, Chronicles From the Foreign Corrupt Practices Act.”
SEC spokesman John Heine and Justice Department spokesman Ian McCaleb declined to comment.
The U.S. with its prohibition on companies and employees offering payments to officials, governments and political parties in other countries, is one of the most active developed countries in fighting graft, according to Transparency International. China ranked 72nd out of 180 nations in the Berlin-based group’s 2008 Corruption Perceptions Index, better than other nations including India, Vietnam and the Philippines.
Avon, Schnitzer Steel
New York-based Avon Products Inc., the world’s largest direct seller of cosmetics, last year said it voluntarily notified the SEC and DOJ about an internal investigation into FCPA compliance in China. Portland, Oregan-based scrap recycler Schnitzer Steel Industries Inc. agreed to pay more than $15.2 million in 2006 to settle criminal and regulatory probes related to bribes to Chinese and South Korean steel mills.
“Doing business in China in what’s perceived as the normal way is no longer an option,” said Gareth Hughes, the Hong Kong- based head of the China disputes group at London-based Simmons & Simmons LLP, referring to the perception that bribery and corruption is the only way to get things done there.
China wants not just to clamp down on corruption, but to be seen to be clamping down on it, he said. The Chinese Supreme People’s Court and Supreme People’s Procuratorate in November clarified the definition of a bribe to include interests such as home renovations and travel expenses and last month started an anti-corruption hotline for the public to report graft.
In addition to clarifying the law regarding commercial bribery, Chinese authorities have also taken high-profile action on corruption recently, Hughes said.
Death Sentences
A Beijing Court this month gave former China Petroleum & Chemical Corp. Chairman Chen Tonghai a suspended death sentence for bribery and the government has been strengthening its anti- corruption laws amid rising public opposition to official graft. Former Beijing Vice Mayor Liu Zhihua also got a suspended death sentence in October for accepting bribes.
“The challenge or problem is for foreign companies like Rio Tinto not to succumb to easy promises of privileged access, privileged information, or some kind of special step up promising completion of a huge and profitable deal,” said Nicholas Howson, who teaches Chinese law at the University of Michigan Law School in Ann Arbor, Michigan.
While Chinese prosecutors may have a good case, “there are no guarantees that the PRC authorities will exercise the requisite discipline, transparency and due process in the forthcoming prosecution so as avoid walking into a public relations disaster,” Howson added.
Transparency, Due Process
Australian Prime Minister Kevin Rudd said July 15 that the world is watching how the case is handled and U.S. Commerce Secretary Gary Locke urged “greater transparency” and due process. China said on July 16 that Australia’s comments were an “interference” with the nation’s legal sovereignty.
“This case is a shock to the foreign investment community in China because they’ve shown little interest in human rights cases and issues of due process there in the past,” said Jerome Cohen, a professor at the New York University School of Law and a member of the New York-based Council on Foreign Relations.
“Business people like to look the other way,” he said. “This shows that they should pay more attention and put more pressure on the Chinese government to meet international standards.”
To contact the reporter on this story: Andrea Tan in Singapore at atan17@bloomberg.net
Last Updated: July 21, 2009 22:23 EDT
Rio Spy Claim Case Shows SEC Probe Risk, Lawyers Say (Update1) - Bloomberg.com
Last edited by xinhui; 22 Jul 09, at 06:37.
I posted the above 5 days ago, and here is a follow up.................
China to deploy foreign reserves
FT.com / Asia-Pacific - China to deploy foreign reserves
By Jamil Anderlini in Beijing
Published: July 21 2009 19:09 | Last updated: July 21 2009 19:09
Beijing will use its foreign exchange reserves, the largest in the world, to support and accelerate overseas expansion and acquisitions by Chinese companies, Wen Jiabao, the country’s premier, said in comments published on Tuesday.
“We should hasten the implementation of our ‘going out’ strategy and combine the utilisation of foreign exchange reserves with the ‘going out’ of our enterprises,” he told Chinese diplomats late on Monday.
Mr Wen said Beijing also wanted Chinese companies to increase its share of global exports.
The “going out” strategy is a slogan for encouraging investment and acquisitions abroad, particularly by big state-owned industrial groups such as PetroChina, Chinalco, China Telecom and Bank of China.
Qu Hongbin, chief China economist at HSBC, said: “This is the first time we have heard an official articulation of this policy ... to directly support corporations to buy offshore assets.”
China’s outbound non-financial direct investment rose to $40.7bn last year from just $143m in 2002.
Mr Wen did not elaborate on how much of the $2,132bn of reserves would be channelled to Chinese enterprises but Mr Qu said this was part of a strategy to reduce its reliance on the US dollar as a reserve currency.
“This is reserve diversification in a broader sense. Instead of accumulating foreign exchange reserves and short-term financial assets, the government wants the nation to accumulate more long-term corporate real assets.”
State-owned groups, particularly in the oil and natural resources sectors, have stepped up their hunt for overseas companies and assets on sale because of the global crisis.
China Investment Corp, the $200bn sovereign wealth fund, has been buying stakes in overseas resources companies and has taken a 1.1 per cent stake in Diageo, the British distiller.
In an interview published in state-controlled media, the chairman of China Development Bank said Chinese outbound investment would accelerate but should focus on resource-rich developing economies.
“Everyone is saying we should go to the western markets to scoop up [underpriced assets],” said Chen Yuan. “I think we should not go to America’s Wall Street, but should look more to places with natural and energy resources.”
Copyright The Financial Times Limited 2009
Last edited by xinhui; 22 Jul 09, at 07:12.
Is it a human rights issue? I’d like to see they receive capital punishments.
According Amnesty International, yes it is. According to many folks from Texas, it is not.
Just saw this, not sure it is related to Rio.
BHP Billiton Says Uranium Sales to China to Start Within a Year
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By Jason Scott
July 23 (Bloomberg) -- BHP Billiton Ltd., the world’s biggest mining company, said it will begin uranium sales to China within a year, while government approval for its Olympic Dam project expansion may be received by mid-2010.
“We see China as a great, growing market for us and we would expect to have sales there within the near future,” Dean Dalla Valle, head of BHP’s Australian uranium operations, told reporters at a conference in Perth. He declined to give an exact time for uranium sales to China to begin or potential volumes of the nuclear fuel.
China plans to raise a 2020 target for nuclear power capacity to 86,000 megawatts, or a 10-fold increase from current levels, the state-run China Daily reported July 2. Uranium demand may rise as the number of nuclear power reactors potentially increases 30 percent by 2020, driven by India and China, the World Nuclear Association estimates.
Olympic Dam is the world’s largest uranium deposit and the world’s fourth-largest copper lode and BHP produces uranium, copper and gold from its existing underground operation. A proposed $15 billion expansion would convert the operation into an open pit. A government Environmental Impact Statement on Olympic Dam may be issued in a year, Dalla Valle said.
BHP aims to begin production at its Yeelirrie uranium project in Western Australia, the country’s second-largest undeveloped deposit of the nuclear fuel, by 2014, Dalla Valle said. Construction could begin as early as late next year, he said.
To contact the reporter on this story: Jason Scott in Perth at jscott14@bloomberg.net
Last Updated: July 23, 2009 01:50 EDT
BHP Billiton Says Uranium Sales to China to Start Within a Year - Bloomberg.com
My bet is that this is just a coincidence. Recent policy changes have made it possible to increase uranium exports dramatically, so deals like this are being stitched up on a regular basis.
Win nervously lose tragically - Reds C C
The DoD Investigates, read: keeps tabs on everyone with access to classified data. It has been doing so most likely since its inception. There was nothing wrong with how it acted.
Fitzgibbon was stupid as an ape. It's too bad the media isn't proficient or educated in basic matters of defence to even provide decent informative material. When you see a picture of an F-16 on a half page article captioned as an F-18, you know that they havn't an clue about how defence spends hundreds of billions of dollars to get even the most basic thing right.. and thats after 3 editors have passed over it.
The defence force does not think much of Rudd rightnow, because of his appalingly bad judgement in providing fitzgibbon with that portfolio, and no doubt is incredibly glad he is gone.
I did not mean to detract from your post however
Back to Business.
China eyes stake in Australian iron ore project
China eyes stake in Australian iron ore project | Industries | Industrials, Materials & Utilities | Reuters
SYDNEY, July 24 (Reuters) - China could take a stake in a $3.3 billion port and rail infrastructure project in Western Australia's Mid-West iron ore belt, one of the firms involved in the project said on Friday.
Murchison Metals Ltd (MMX.AX), which plans to develop the infrastructure with its partner, Japan's Mitsubishi Corp (8058.T), said on Friday that Chinese groups expressed interest in becoming involved at meetings this week in China.
Despite strained ties between the two countries over drawn out negotiations on benchmark iron ore prices and the detention of four Rio Tinto (RIO.L) (RIO.AX) employees in China on charges of stealing state secrets, China was still keen to do deals with Australian iron ore companies, Murchison said.
"The discussions with the Chinese groups have been very positive, with high levels of interest in co-operation in the development of the mid-west region," Murchison said.
The remarks drove Murchison shares up 17 percent, while those of neighbour Gindalbie Metals Ltd (GBG.AX) rose 9 percent.
China's steel industry is keen to back the development of alternative iron ore sources to curb what it regards as too much pricing power in the hands of the world's big three producers of iron ore, Vale (VALE.N)(VALE5.SA), Rio Tinto (RIO.AX)(RIO.L) and BHP Billiton (BHP.AX) (BLT.L).
The Mid-West region of Western Australia has long been touted as a potential new iron ore province, although ore grades are not as rich as in the state's Pilbara region where BHP and Rio Tinto have their Australian iron ore mines.
Murchison said the project, the Oakajee Port & Rail project, intended to pursue a proposal for China Communication Construction Company to provide design assistance.
Oakajee would also hold talks with China Railway Construction Corporation (CRCC) about potential strategic co-operation for the project's rail component.
Chinese interests might take equity in the project, said Murchison's neighbour in the Mid-West, Gindalbie, which plans to mine iron ore there.
"Their involvement could be a combination of things but I'm sure in the long term they would like to have some equity in it," Gindalbie Chairman George Jones said in a telephone interview from Hong Kong.
Jones was one of a delegation of Australian iron ore miners led by the Western Australian state premier Colin Barnett that visited China this week to meet with Chinese steel officials.
The visit came as the China Iron and Steel Association, the country's leading iron ore price negotiator, continued to demand steeper cuts than the 33 percent reduction agreed by Rio Tinto, BHP Billiton (BHP.AX) (BLT.L) and Brazil's Vale (VALE.N) (VALE5.SA) in talks with Japanese, South Korean and Taiwanese steel mills.
Jones said he did not have any special insight into the progress of the talks but believed the Chinese steel makers might eventually agree to the same terms.
"I personally think that these settlements that have been achieved are close to where they should be and I think that ultimately China will accept around the levels that have been settled," he said. (Reporting by Bruce Hextall; Editing by Clarence Fernandez)
BF,
Here is an article for you.
Beijing’s peculiar definition of state secrets
By Phelim Kine
Published: July 23 2009 21:36 | Last updated: July 23 2009 21:36
If foreign investors thought they need not concern themselves with the Chinese government’s spotty record on basic rights, the Rio Tinto case might well be their wake-up call. Since July 5 2009, four of the Shanghai-based staff of the Anglo-Australian mining giant have been in jail, no doubt wondering how they will defend themselves against China’s curiously slippery state secrets law.
The Rio Tinto employees, who include an Australian citizen, Stern Hu, have been accused of obtaining confidential documents during negotiations for the supply of iron ore to Chinese state-owned firms.
While the Chinese government has carried out a great deal of legal reform in the past decade, particularly as it prepared to join the World Trade Organisation in December 2001, less progress has been made towards a stable and predictable legal system. The Communist party is still uncomfortable with the idea that its judgment about the best interests of the state must bend to a real rule of law. The crime of disclosing state secrets is a near-perfect illustration of this attitude.
The Rio Tinto case gives China’s foreign investment community a crash course on the Kafkaesque nature of the Law on Guarding State Secrets. This law can classify as state secrets any information under ex*tremely broad criteria, including information that is related to “economic and social development”, as well as a non-specific “other matters” category.
National and local officials are allowed to decide after material has been published whether it is a state secret, and those determinations cannot be legally challenged. As recently as 2005, information related to domestic natural disasters was also on the state secrets list.
Even information already publicly circulated can be problematic, as the case of Shi Tao, a journalist, illustrates. He was sentenced to 10 years’ imprisonment in 2005 for posting on overseas websites the official restrictions the government had circulated to Chinese media outlets on coverage of the 15th anniversary of the June 1989 massacre.
The Criminal Procedure Law and Criminal Law aid and abet the Law on Guarding State Secrets. During the investigatory stage of state secrets proceedings – which routinely lasts months – the Criminal Procedure Law bars suspects access to lawyers pending investigators’ approval. The Criminal Procedure Law also classifies all evidence in state secrets trials as confidential and requires judges to hold trials behind closed doors. Under China’s Criminal Law, state secret convictions can range from a minimum prison term of five years to the death penalty.
Last month, the National People’s Con*gress, China’s parliament, re*leased a draft revision of the Law on Guarding State Secrets for public feedback. However, the revisions focus mainly on securing confidential information stored on computers or transmitted via the internet and leaves intact the law’s broad criteria for classifying state secrets.
China’s international investors have resisted pushing for progress on the rule of law and transparency beyond the immediate boundaries of their commercial interests. The Rio Tinto case, however, shows that those boundaries provide no immunity when the Chinese government perceives its interests to be threatened.
Foreign investors, representative governments and international business federations such as the Chambers of Commerce of both the US and the European Union should urge China to narrow its definition of state secrets and demand an end to the routine violation of international due process standards for all suspects in state secrets cases. A unified challenge by private industry, foreign governments and international business federations would dovetail with the efforts of Chinese lawyers, academics and human rights defenders to end the abuses built into China’s state secrets laws.
Just last month, concerted and diverse foreign opposition to the government’s move to require computer manufacturers to pre-install the controversial Green Dam/Youth Escort internet filter prompted Beijing to delay the measure. There is room for guarded optimism that a similar campaign to demand change in China’s state secrets laws might just bear fruit.
The writer is an Asia researcher for Human Rights Watch
Copyright The Financial Times Limited 2009
FT.com / Comment / Opinion - Beijing?s peculiar definition of state secrets
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