Binoy Kampmark: Dumping Hu and Saving Rio Tinto

Rio Tinto’s attempt to rinse its red blood of any association with the practices of its former employees Stern Hu (an Australian national) and Chinese nationals Liu Caikui, Wang Yong and Ge Minqiang, is troubling. Business in the international mining sector is a ruthless and vicious activity, and the stakes are high when it comes to dealing in the Chinese commodities market. The consumer is king, and Rio Tinto is keen to polish the crown. But amongst all of this, one should not forget that this iron ore giant is far from genteel. Observers of this company’s history will be able to bring forth a series of sins perpetrated by the company, corruption being simply one of them.

Rio Tinto has been adamant that their employees, charged by the Chinese authorities last year of economic espionage and bribery, undertook measures that were inappropriate. The Australian government has not been sure, fearing the implications that such a case might have on the commodities market. The Chinese Foreign Ministry spokesman Qin Gang expressed ‘serious concern about the Australian statements on the Rio Tinto case.’ Canberra, he warned, ‘should respect this outcome and stop making irresponsible comments’ (ABC Radio Australia, Mar 31).

The company has made it clear that the four employees are to carry the can of legal responsibility. What is unsurprising is Rio Tinto’s insistence that their own practices, in the main, were above board. It just so happened that a few rotten apples in the barrel needed turfing out. And the treatment meted out to these particular rotters was nothing short of savage. Sentences for corruption and corporate espionage ranged from seven to fourteen years. Hu’s own sentence was a biting ten years.

The company had initially fronted for its employees, showing a surprising degree of solidarity. In July last year, the company’s iron ore chief Sam Walsh was convinced that ‘the allegations made in recent media reports that employees were involved in bribery of officials at Chinese steel mills are wholly without foundation’ (Sydney Morning Herald, Jul 18, 2009). Now, the company has reassessed its options, fearing that its ties with the Chinese market might be fraying. Walsh, after having initiated what he claims to have been a thorough (or ‘forensic’) internal assessment of the company’s activities, concluded that the activities of the gang of four did not conform to company regulations. Their behaviour had been ‘deplorable’.

But who is to know? The internal review remains just that, shrouded in the jargon and nomenclature befitting a lost, archaic age. If it is corruption they were worried about, surely their own employees might have reminded them of the infamous Grasberg mine in West Papua. Their conduct towards the environment was deemed so reprehensible it persuaded the Norwegian government to abandon its $1 billion worth of shares in the company. An investigation into the company published in 2005 by the New York Times subsequently revealed the insidious ties between company officials and the local government and military junta.

That Rio Tinto was oblivious the activity of Hu and his co-workers in the first place, set in the highly charged iron ore market, is surely inconceivable. Even more to the point, Rio Tinto is smarting over suggestions, pointedly made by the judge, that it damaged its own efforts in the 2009 iron ore price negotiations. The collapse left Chinese steel companies in the lurch, making them pay more than their competitors. The authorities wanted blood, and it was to be of a particular, red variety.

Chief executive Tom Albanese, as a consequence, was singing a somewhat different, discordant tune from the merry note of support struck last year. ‘I am determined that the unacceptable conduct of these four employees will not prevent Rio Tinto from continuing to build important relationships with China’ (The Age, Mar 29). That is the music of authority, demonstrating, as Clive Hamilton points out, the company’s ‘long history of forming cosy relationships with dictatorial regimes’ (Crikey, Jul 24, 2009). Hamilton reminds us of Rio Tinto’s association with Spain’s General Franco in 1937, warmed by the latter’s effectiveness in eliminating the Republican Forces from Rio Tinto’s area of operations, where the company took its name. Miners who engaged in ‘troublemaking’ and were found guilty, as the company’s chief Sir Auckland Geddes explained with satisfaction, would be court-martialled and shot.

The current attitudes of this Red River proprietor have hardly changed, whether it be human rights violations at the PT Kelian gold mine in Kalimantan, Indonesia, or its past dealings with the Pinochet regime in Chile and South Africa’s apartheid administration. Hu and his colleagues were ultimately deemed necessary sacrifices. The company will be casting an eye to more pressing matters.

Binoy Kampmark was a Commonwealth Scholar at Selwyn College, Cambridge. He lectures at RMIT University, Melbourne. Email: bkampmark@gmail.com

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