Four Rio Tinto iron ore staff jailed in China

RIO Tinto was scrambling to rebuild its relationship with China yesterday after four employees were convicted of stealing commercial secrets and taking bribes by a Shanghai court.

Stern Hu, the mining giant’s former head of iron ore sales in China, and three colleagues were sentenced to between seven and 14 years in jail.

All four pleaded guilty to accepting millions of yuan in bribes from small steel mills in return for knock-down rates from Rio. Only one admitted to taking commercial secrets from the Iron Ore and Steel Association during talks over pricing.

Rio Tinto immediately sacked the four men for their “deplorable behaviour”. Chief executive Tom Albanese said: “I am determined that the unacceptable conduct of these four employees will not prevent Rio Tinto from continuing to build its important relationship with China. This is a high priority for me personally.”

Rio Tinto sold $10.7bn (£7.2bn) of raw materials to China last year, around three quarters of which was iron ore. Sources described China as the single most important market for Rio Tinto and said it was exporting as much as it could produce to the region from its Australian base.

In a signal of how seriously the case has been viewed within China, Australian foreign minister Stephen Smith said: “I don’t believe the decision that has been made will have any substantial or indeed any adverse implications for Australia’s bilateral relationship with China.”

Rio Tinto launched an internal investigation led by O’Melveny & Myers and PricewaterhouseCoopers when the defendants were detained last July which found any illegal activity must have occurred outside the firm’s systems. Evidence seen during the trial is thought to have included bank statements and wads of cash.

The firm will now hold an independent review of its iron ore processes around the world.