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Sunday, August 9, 2009

$100 Billion Spy Case

Wow on the accusation and in my opinion, this is becoming a lose lose for China. They are being forced to buy on the spot market and Rio Tinto is not going to refund them $100 Billion.

A SWAG...

China's central government is setting a situation where all Chinese companies will be forced to negotiate as one body. And may be, the individual steel companies in China are controlled by different players (state governments, that have a lot of political power. And this is a way for the central government to stop the smaller companies from negotiating directly with foreign iron ore producers that undercut China's negotiating position in the past.

Article from the NY Times, minus my SWAG - China Says $100 Billion Was Bilked by Rio Tinto

The official reason is Rio Tinto did espionage by finding out to much about China's iron ore requirements. Of course, the problem in a non-democratic country is what is a secret, and what is not. And since this is often a gray area, authorities can decide what is a secret after the fact. And since this is a states secret trial, the government does not need to supply what their charges are. It's times like this I deeply appreciate the US constitution with it's rights to a trial by your peers, habeus corpus (produce the corpse), and due process.

Another theory is payback by China to Rio Tinto for refusing to be bought by China and getting a better deal.

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