15/04/2010 - 00:00

Rio, government fail Stern Hu

15/04/2010 - 00:00


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The Stern Hu trial shows who holds the whip hand.

Rio, government fail Stern Hu

THE jailing of former Rio Tinto employee, Stern Hu, has shown the hopes for closer relations with China, based on equality, that surfaced during the 2007 federal election campaign, flowing from Kevin Rudd’s Mandarin speaking skills, were based on fantasy.

Since State Scene often speaks with two China experts, I contacted both after Mr Hu’s arrest last July.

The first said Mr Hu would be pronounced guilty, whether guilty or not, because he was in the unenviable position of being “the canary in a cage in a deep mine”.

Politically powerful apparatchiks had decided it was opportune to make an example of someone, and the Rio-4 – Mr Hu, Wang Yong, Liu Caikui and Ge Mingqiang – fitted the bill.

It also meant others trading with China were simultaneously warned – don’t push your company’s interests too hard, or else.

And Chinese steel producers, as one observer said, “within an intensely hierarchical system riddled with corruption” were simultaneously warned.

My other contact stressed the importance of understanding the meaning of the word, solipsistic.

Having a surname with two Z’s is one thing, but a word with three S’s plus three I’s quite another. So I googled solipsistic and learned its meaning can be broadly defined as having ‘consideration only for one’s own interest’.

“The Chinese worldview and frame of mind are solipsistic rather than universalist; that is, China is only interested in itself, all its actions put Chinese interests foremost, and it is not much concerned with matters of other peoples,” the contact said.

Mr Hu was an ideal target for several reasons. Firstly, he was born in China and took Australian citizenship, something Beijing looks askance at.

Secondly, his parents had been dispatched to a labour camp during the 1960s Maoist Cultural Revolution – the young Mr Hu was raised by his grandparents.

Thirdly, Mao’s totalitarian heirs were bitter and twisted over the Rio Tinto board’s rejection of Chinalco’s $19.5 billion bid for Rio.

We must be dubious about Mr Hu confessing to accepting bribes, since this was almost certainly done under duress to (hopefully) minimise an inevitable guilty verdict.

According to retired New Zealand academic, Dong Li: “The Chinese Communist Party’s officialdom is notoriously corrupt in an institutionalised way.

“The latest ‘World Corruption Report 2009’, published recently by Transparency International based in London, of the 130 or so countries surveyed, China has fallen further from the 77th in 2008, to the 79th position in 2009, in its official transparency and cleanliness.

“It’s interesting to note that Singapore is the 3rd most transparent and cleanest country only after New Zealand and Denmark, while Hong Kong is 12th.”

“Singapore and Hong Kong prove that the Chinese are not inherently corrupt and that it is largely the existence of an independent media and judicial legal system or lack of them that is responsible for cleanliness of governments.”

That ranking speaks louder than anything – China 79th versus two prosperous open Chinese island economies 3rd and 12th.

Moreover, a report from The Age’s Beijing correspondent, John Garnaut, suggests Chinese billionaire steel magnate, Du Shuanghua, who allegedly bribed one of the Rio-4, won’t be prosecuted.

Earlier, The National Business News, which is partly owned by Shanghai’s municipal government, “revealed how Mr Du, founder of Rizhao Steel, provided written testimony about his $US9 million ($A9.8 million) payment to Rio Tinto’s Wang Yong, which Wang had contested on the grounds that it was a loan that had been repaid.” Mr Garnaut said.

“Mr Du’s testimony helped Judge Liu Xin sentence Wang to 14 years’ jail, by far the heaviest of the sentences handed out.

“Mr Du was ranked second on the Hurun Report’s rich list in 2008, with 35 billion yuan ($5.6 billion), before a Shandong government steel company moved to acquire his company last year at a fraction of the market price.

“Mr Du has not been answering his mobile phone, amid speculation he may have been arrested.

“He’s well-connected with relatives of the Chinese President, Hu Jintao.”

A subsequent report claimed two more Rio executives and 20 Chinese, including Mr Du, would be investigated.

Let’s await Mr Du’s fate as Beijing moves to restructure China’s 1,100 steel makers into half a dozen giant corporations, as apparently intended.

With so many wheels within deals it’s difficult to assess all aspects of this so-called trial, most of which was conducted in-camera.

“Operationally, Chinese state-owned enterprises behave like normal companies 99 per cent of the time,” Sydney’s Centre for Independent Studies spokesman, John Lee, said.

“But it’s the 1 per cent exception that we should worry about.

“State companies and agencies have become a primary method by which officials cut their teeth and prove themselves while climbing up the political ladder.

“If they do not get their way, political interests and personal aspirations are damaged.

“Much of China’s state-dominated [corporate] system resembles a messy decentralised mafia-style structure within which unaccountable Communist Party officials compete to control much of the country’s resources, access to markets, land, and labour, in addition to influence over the police and courts.

“The rivalry between Chinese political officials and insiders is fierce.

“Gaining the favour of local officials is essential to doing business in the country.

“But befriending one usually means alienating another.

“Therefore, choose your political friends – and your enemies – carefully.”

Clearly, Mr Hu hadn’t, so faces a lonely decade away from his wife and Australian home.

Rio compounded matters by promptly dismissing him after his politically directed sentencing.

The Rudd government’s contribution, according to Australian National University college of law visiting fellow, Ann Kent, was also unhelpful.

“Long-time China scholars would also be sensitive to the less-than-subliminal messages that both the Australian government and Rio Tinto have been sending out on this case since the detention of the ‘Rio-4’ in July 2009,” Dr Kent said.

“These messages have been conveyed by the continuation of Australian commercial dealings with China, which saw Resources and Energy Minister Martin Ferguson in Beijing as late as March 24 stating that ‘it’s very clear that right through the difficulties over Stern Hu we have maintained a healthy business relationship with China that has been mutually beneficial to both countries’.

“Then there was Treasurer Wayne Swan’s remark that ‘I don’t believe it [the Australia-China relationship] was ever off track’ despite this trial.

“These statements have quite unsubtly suggested to the Chinese government that, whatever the verdict, it would be business as usual in both the political and commercial Australia-China relationship.

“They could well have added years to Stern Hu’s sentence.

“Certainly, there was no evidence in this verdict of the ‘leniency’ that a confession would otherwise have promised.

“Furthermore, as the distinguished Chinese law professor Jerome Cohen of New York University pointed out, the Australian government failed to insist on its right according to the Australia-China Consular Agreement to attend the closed part of the trial on the alleged stealing of commercial secrets.

“This suggests either a lack of political will or a lack of political influence.”

With friends like that who needs enemies?

That these ‘friends’ were a one-time employer and two ministers of the country he’d chosen to become a citizen of makes the Hu affair that much more unpalatable.



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