China Releases Former Rio Tinto Iron Executive From Jail

- July 4th, 2018

Former Rio Tinto executive Stern Hu has been released from jail in China after serving nine years on corruption charges.

Australian businessman and former Rio Tinto (ASX:RIO, LSE:RIO, NYSE:RIO) executive Stern Hu has been released from a Chinese prison after he served nine years of a ten-year sentence for corruption.

As reported by the Associated Press, Hu had his sentence reduced due to good behavior and he was released from a Shanghai prison on Wednesday (July 3).

Hu was arrested in 2009 and charged in 2010 in what became a low point in relations between China and Australia, raising concerns for multinational companies seeking to do business in Asia’s largest economy.

Hu, along with three Chinese colleagues, was charged with accepting bribes and stealing trade secrets during negotiations between major mining companies and China’s steel industry during the height of Australia’s mining boom.

While Hu’s trial was held behind closed doors, at the time it was reported by Australian diplomats, who witnessed part of the trial, that he admitted to taking over AU$1 million in bribes.

During the trial, he was also accused of receiving sensitive documents about the Chinese steel industry, which he then allegedly forwarded to senior managers in Rio Tinto.

Hu was at the time in charge of the mining giant’s Chinese iron ore operations.

His arrest came shortly after Rio Tinto withdrew from negotiations with Chinalco (SHA:601600), raising questions about whether actions against him were retaliatory.

The Australian government at the time raised concerns about the commercial secrets charge, as Australian diplomats were not allowed into the closed court to hear them.

The then foreign minister of Australia called the ten-year sentence harsh, as did shadow foreign minister Julie Bishop, who has now served as foreign minister since 2013.

At the time of Hu’s jailing, Bishop criticised China’s transparency on trade laws.

“The fact that there is very little detail available as to what constitutes a commercial secret and whether one could be in breach of Chinese laws will continue to create uncertainty for those doing business in China,” she said.

China did not appreciate the criticism from its trade partner, calling comments about the case against Hu and his colleagues “irresponsible”.

Bishop and the current government of Australia have gone on to have tense relations with China over foreign interference laws seemingly aimed at Beijing.

Following Hu’s jailing, and that of his colleagues, all four were fired by Rio Tinto, which said that there was “clear evidence” of bribery on their behalf. An internal audit at the time found the company itself had not committed any wrongdoing.

The company did not get off scot-free however, and was accused by shareholders of abandoning its employees.

Rio Tinto has not made any comment about Hu’s release.

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Securities Disclosure: I, Scott Tibballs, hold no direct investment interest in any company mentioned in this article.

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