In Shanghai today, An Australian mining executive who had been charged with corporate espionage in China pleaded his honesty. His lawyer claimed that essential Stern Hu’s actions had been subject to misinterpretation and that he was essentially an honest man who had made some serious mistakes. The matter is sensitive because he was an Australian Citizen employed by one of the biggest mining companies operating in Australia with substantial Australian Ownership interests. According to a criminal defense lawyer, he has been accused of very serious crimes relating to the corruption and bribery.
Although in China corruption and bribery are not considered anything abnormal, getting caught is another issue. The case may also be interpreted as a turning point for the levels of hostility experienced by Western and in particular Australian companies when doing business in China. One of the prosecutors recommended a lenient sentence for Hu, but he is accused of taking over $900,000.00 in bribes. There was no pleading in relation to the stealing of trade secrets.
The Australian Prime Minister Kevin Rudd commented that the outcome would reflect the status of the rule of law in China. The business community internationally is no doubt watching the case to identify if it will indicate a greater set of challenges related to doing business in the world’s third-largest economy. Hu’s experience in the field of iron ore trading gained as the head of Rio Tinton’s China Office is reflected in some of his comments about the market:
“Chinese steel companies can be divided into three categories that make up the chaotic iron ore market,” he said. At the top are huge state firms such as Baosteel and Shougang, who buy massive volumes from Rio, and in the middle are smaller state steelmakers. Then come the miserable private ones, which have few opportunities. They wanted to build up relations with Rio,” the lawyer said.
When the crisis hit in September 2008, demand for iron ore plummeted, and “the smaller and medium-sized companies thought they finally had an opportunity to squeeze into the club and join the buyers,” Jin said.
