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China secrets official recycled Rio report's 'facts'

Australia says China's Rio spying allegations 'not new'
Australia on Monday said Chinese allegations that mining giant Rio Tinto waged a six-year industrial espionage campaign that cost Beijing more than 100 billion US dollars were not new. Foreign Minister Stephen Smith played down the claims, published online at the weekend by the State Secrets Bureau, as an analyst said the row over China's arrest of a Rio worker for spying was growing "more serious by the day". The latest claims also caused Rio shares to plunge more than three percent in Sydney trading on Monday. "The allegations referred to on the (website) ... are not new," a spokeswoman for Smith said, adding: "The government has always said the Stern Hu case was complex and involved serious allegations." Chinese authorities detained Australian citizen Stern Hu and three other Shanghai-based Rio employees in early July, accusing them of bribery and stealing state secrets during iron ore contract negotiations. A report published over the weekend on the baomi.org website run by the secrets watchdog said Rio was involved in a "six-year espionage case (that) involved corruption, information gathering and spying." Ord Minnett analyst Peter Arden said Rio fell 2.02 Australian dollars (1.70 US) or 3.33 percent to 58.55 on the Australian market amid fears China was taking its dispute with the Anglo-Australian firm to "a whole new level." "I think it is starting to worry a few investors and it is a ratcheting up of the whole process just when people were hoping it was starting to subside," Arden said. The claims from the bureau, which is responsible for protecting the state secrets of China's government and Communist Party organisations, estimated Rio's spying had cost its steel sector 700 billion yuan (102 billion dollars). Chinese media reports in July had said Rio bribed officials at 16 major Chinese steelmakers during iron ore talks. Rio is yet to comment on the latest allegations but said last that China's accusations are "wholly without foundation." Southern Cross Equities Director Charlie Aitken said case threatened to sour Rio's long-term relationship with China. "This situation with Stern Hu appears far more serious by the day," he said. Hu has not yet been charged after more than a month in detention and the Australian government has repeatedly called on Beijing to deal with the case expeditiously. (Dow Jones Newswires contributed to this report)
by Staff Writers
 Shanghai (AFP) Aug 10, 2009
 An official who accused Rio Tinto of corporate espionage costing China 700 billion yuan (102 billion dollars) said Monday he was not close to the case and his "facts" came from state media.

Jiang Ruqin, a former local state secrets bureau director in Jiangsu province, next to Shanghai, in a report published at the weekend repeated claims that Rio stole secrets to gain the upper hand in iron ore price talks.

It also said his actions forced China to pay what it called excessive prices.

He said Rio's alleged actions amounted to "blackmail" costing more than 500 yuan for each of China's 1.3 billion people.

"It also meant that China gave away more than 100 billion dollars, or around 10 percent of Australia's gross domestic product, for free to employers of the commercial spies," he wrote.

The report was written for "China Secrecy On-Line", which is affiliated with the National Administration for Protection of State Secrets.

However, when contacted by AFP on Monday, Jiang said he had no special knowledge of the investigation into the activities of Australian citizen Stern Hu and three other Shanghai-based Rio employees arrested on July 5.

"It represented my personal views," he said of the report, speaking from Nanjing, capital of Jiangsu. "I'm not representing any organisation or institution."

The 100 billion dollar figure he used was taken from state media, he said.

The China Youth Daily used the figure in a commentary piece on July 27, estimating that Australian iron ore producers Rio, BHP Biliton and Brazilian mining group Vale had made that amount in excess profits in China since 2004.

The newspaper cited unnamed Chinese steel industry insiders as its source.

Rio shares fell 2.02 Australian dollars (1.70 dollars), or 3.33 percent, to 58.55 on the Australian market on Monday amid fears China was taking its dispute to "a whole new level", Ord Minnett analyst Peter Arden said.

Australian Foreign Minister Stephen Smith played down the report's claims.

"The allegations referred to on the (website) ... are not new," a spokeswoman for Smith said, adding: "The government has always said the Stern Hu case was complex and involved serious allegations."

Rio said last month the espionage accusations were "wholly without foundation."

Jiang's report, which was posted on Saturday, appeared to no longer be accessible on Monday. But "China Secrecy On-Line" editors denied it had been removed when contacted by AFP.

The bureau is responsible for protecting the state secrets of China's government and Communist Party organisations and his report sounded authoritative.

"The large amount of data and intelligence on China's steel sector found on Rio Tinto's computers and the huge damage to the economic interests and security of the country are evident," he wrote.

According to Chinese media reports, Rio bribed officials at 16 major Chinese steelmakers during iron ore talks.

Rio and other multinational mining companies allegedly bribed state company executives to get access to information about stock levels, production schedules and volumes, financial information and purchase plans, according to state media reports.

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