BEIJING, Aug. 13 (Xinhua) -- The
arrest of four employees of the Anglo-Australian mining giant Rio Tinto Ltd. on
charges of allegedly illegally obtaining commercial secrets and bribery has
exposed some multinationals' lack of legal responsibility.
Photo taken on July 9, 2009 shows the
Rio Tinto Ltd. Office in Shanghai, east China. 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 offic. The four people, including Hu, had been
detained by China's security authorities Sunday evening.(Xinhua
Photo) Photo
Gallery>>>
Liu Renwen, research fellow of the Law Institute of
the Chinese Academy of Social Sciences, said the case showed that everyone,
regardless of nationalities, should abide by the law in China -- even though in
the past, some local governments preferentially treated foreign companies in
order to attract investment.
Shanghai prosecutors approved the arrest of the four
Rio Tinto employees, a statement of China's Supreme People's Procuratorate (SPP)
said late Tuesday.
Preliminary investigations showed that the four employees,
Stern Hu, an Australian citizen of Chinese origin and general manager of
the company's Shanghai office in charge of the iron ore business in China, Liu
Caikui, Ge Minqiang and Wang Yong, had obtained commercial secrets from China's
steel and iron industry through undisclosed improper means, which had violated
Article 219 of the country's Criminal Law pertaining to the crime of
violating commercial secrets.
Prosecution authorities also found evidence to prove
that they were involved in commercial bribery in breach of Article 163 of the
Criminal Law about receipt of bribes by personnel other than governmental
employees, including staff of companies. Prosecutors did not provide details.
The four were detained in Shanghai in early July on
charges of stealing China's state secrets, the Shanghai state security
authorities said.
Liu said investigation of the case did not end as
prosecution authorities did not bring it to court. Currently, these four people
face two charges.
Investigators are still looking for evidence for
possible charges of offering bribes and theft of state secrets which is much
more serious in terms of penalties, legal experts say.
The law says suspects charged with obtaining
commercial secrets would face criminal punishment of 15 days to seven years.
Those charged with "receipt of bribes by non-State personnel" would face
sentence terms of up to 15 years. They also might only face detention if the
crime is petty. These two charges could be combined for multiple offences.
But for the crime of state secret theft, the severest
punishment could be execution.
PROCEDURES IN LINE WITH LAW
Liu said the detention and arrest of the four Rio
Tinto employees was strictly in accordance with the law.
According to China's Criminal Procedural Law,
detention should not exceed 37 days. Hu and the other three employees was
arrested on Aug. 11, 37 days after they were detained on July 5.
The law says if prosecutors do not approve arrest,
suspects would be released on bail or live at home under surveillance.
Lawyer Qian Lieyang of Beijing's Dacheng Law Office
told China Youth Daily that if a case was complicated and suspects faced several
accusations, they were unlikely to be released on bail and prosecutors would
approve arrests on certain charges for which they obtained enough evidence.
Investigation would end within two months after the
four were arrested, according to the law, and the investigative period can
extend to five months.
Preliminary investigations have also revealed that
there were suspects in China's steel and iron enterprises who were providing
commercial secrets to them. The arrest of those suspects has also been approved
by prosecutors, the SPP said.
These suspects in Chinese enterprises would face the
same charges of illegally obtaining commercial secrets with the four employees.
But for state-owned enterprise staff, they would face a bribery charge, a
category that only targeted officials and state enterprises. The highest penalty
for them could be execution.
MULTINATIONALS' ETHICAL
RESPONSIBILITIES
Despite the charges, Sam Walsh, chief executive iron
ore of Rio Tinto said the company "continue to believe that our employees have
acted properly and ethically in their business dealings in China," according to
Rio Tinto's Web site on Aug. 12.
Walsh said a day earlier that "Rio Tinto is committed
to high standards in business integrity and takes its ethical responsibilities
very seriously."
On July 17, a week after the four employees were
detained, Walsh said the employees "acted at all times with integrity and in
accordance with Rio Tinto's strict and publicly stated code of ethical
behavior."
However, Australia-based National Business Daily
reported on Aug. 8 that a U.S. class action against Rio Tinto seeking damages
for human rights abuses stemming from operations at the Panguna copper mine,
Bougainville of the Papua New Guinea, had cleared a crucial hurdle -- and could
reach trial within two years.
It said a U.S. court had ruled that three of the
claims -- for alleged crimes against humanity, war crimes and racial
discrimination committed by Rio Tinto in the 1980s and 1990s -- should proceed
under an American law that permits foreigners to bring action on major
international crimes.
The U.S. court was justified to do that as Rio Tinto
was listed on the New York Stock Exchange (NYSE:RTP) as a foreign company.
But a spokesman for Rio Tinto, Tony Shaffer, said,
"Rio Tinto completely rejects the allegations of wrongdoing made in the
Bougainville complaint and will continue to vigorously defend the matter."
In response to Rio Tinto's bribery case in China, the
U.S. Securities and Exchange Commission (SEC) was preparing to probe NYSE-listed
Rio Tinto.
The Australian newspaper said on July 24 that the
investigation would be based on the Foreign Corrupt Practice Act (FCPA) enacted
in 1977.
An earlier FCPA case saw the 162-year-old German
conglomerate Siemens, which employs about 475,000 people worldwide, forced to
pay 1.6 billion U.S. dollars to settle bribery charges.
The SEC released last year a legal filing on the
bribery cases of Siemens, not only in the U.S., but also in foreign countries
including China.
According to the SEC's litigation release, the
Munich-headquartered company was involved in bribing government officials
worldwide in return for business contracts. It was also accused of paying bribes
on its transactions in China of metro trains, signaling devices, high voltage
transmission lines, and medical devices.
Label maker Avery Dennison Corp, based in Los
Angeles, was the latest foreign company involving in bribery in China. Avery
agreed to pay a 200,000 U.S. dollars fine over charges that employees bribed
Chinese government officials with kickbacks, sightseeing trips and gifts, the
SEC said on its Web site.
The SEC also filed a settled complaint against Lucent
Technologies Inc. in a U.S. court in December 2007, alleging violations of the
FCPA. Lucent is a wholly-owned subsidiary of Alcatel-Lucent, a French company
with business operations in China.
The SEC's complaint alleges that, from at least 2000
to 2003, Lucent spent over 10 million U.S. dollars for about 1,000 Chinese
foreign officials, who were employees of Chinese state-owned or state-controlled
telecommunication enterprises, to travel to tourist destinations of the U.S.,
such as Hawaii, Las Vegas, the Grand Canyon, Niagara Falls, Disney World,
Universal Studios and New York City.
But it alleges that the majority of the trips were
ostensibly designed to allow the Chinese foreign officials to inspect Lucent
factories but officials spent little or no time visiting Lucent facilities.
Professor Shen Kui of the Beijing University Law
School attributed bribery by multinationals in China to the incompatible
development of business culture though the market economy developed quickly.
Shen said some large companies boasting high levels
of ethnic standards would likely choose to downgrade their codes of conduct,
following "hidden rules" and involved in commercial bribery in China.
"The cost of breaking law is rather low so that
foreign companies prefer taking risks to bribe in order to gain profit," he
said, adding law enforcement should be strengthened to curb bribery and maintain
a sound market order.
Shen said the law had "no discrimination in treating
people" and it was common to see Chinese businessmen being charged with economic
crimes.
The latest remarkable case was China's electrical
appliance tycoon Huang Guangyu who was detained on Nov. 24 and was investigated
by the police, on charges of manipulating trading in shares of two listed
companies, Sanlian Commercial Co. and Beijing Centergate Technologies Co..
