Stern Hu and his three other Rio Tinto colleagues have been formally arrested on charges of infringing trade secrets and bribery. This is a major breakthrough in a scandal that has severely damaged goodwill between Australia and China. The timing of the formal arrest and the details released indicate that the Chinese authorities have retracted accusations involving state secrets. The Rio Tinto employees are now charged in accordance with normal criminal procedures.
According to a Xinhua press release, the Procuratorate issued a statement late yesterday to confirm the formal arrest. Yesterday was the deadline under PRC criminal procedure law for the Procuratorate to approve and explain the arrests. This deadline would not have applied if the accused were investigated for stealing state secrets.
The charges are in relation to Article 219 of the PRC’s criminal law code concerning commercial secrets. There are also allegations of commercial bribery, even though no specific legislation has been cited. The Chinese version of the Xinhua release further suggests that the Procuratorate is in the process of charging other suspects from China’s steel and iron industry. [I am quoting from the Chinese version of the report because some essential information is missing in the English version.]
What does it mean for Stern Hu
Stern Hu will now be entitled to legal representation. His lawyer can once again lodge a bail application.
The prosecutor will be given two months’ time to prepare the case and to provide details of the charges to Hu’s lawyer. The prosecutor, based on the complexity of the case, can apply for an extension of up to seven months. If the prosecutor is unable to build a case by then, Hu can conceivably be released without charges. However, between now and four months prior to the trial, the prosecutor can, at his discretion, make changes to the charges.
If found guilty, Hu will face a maximum jail sentence of 7 years. He will also be asked to pay a fine.
What should Rio and the Australian Government do
Rio Tinto should see to it that its employees are receiving legal advice as soon as possible. It is also important for the Australian Government to continue to put pressure on its Chinese counterpart to ensure the case continues to be handle expediently and transparently. This can prevent Chinese authorities from trumping up additional charges against the accused and against Rio Tinto.
Just a word of warning for Rio Tinto: the PRC’s criminal code on commercial secrets contains two parts: Article 219 and Article 220. The former deals with charges against individuals implicated in a crime. The latter allows Chinese law enforcement agencies to lay charges against a company and to arrest its senior executives. So it would be advisable for Rio Tinto to make sure that it does not place any more of its senior executives under Chinese jurisdiction.