Basically the Rio Tinto executives are accused of taking bribes to channel high quality steel ore that was in short demand to suppliers. Prison sentences varied from 7 to 14 years.
What does this mean for Western owned companies:
- Don't upset the Chinese government, or they will make you pay. The timing of this case is extremely suspicious.
- Chinese born employees, even if they are citizens of a Western country, are still treated as Chinese citizens.
- Chinese law is murky. Parts of the trial were closed to outside observer. A politer way of putting it is a weak rule of law. The original charge was theft of state secrets, but that later changed to the bribery charge. The state secret was a nasty charge, since the sentence could be life in prison. The bribery charge is politically smart for China, since now Rio Tinto fired the employees.
- Bribes are a fact of life in China, unfortunately, but enforcement is often politically motivated.
- Openness with materials in high demand and short supply prevents bribery by your employee, or even allegations of bribery.
- Your country, such as the US, Britain, or Australia, is probably not going to have any meaningful support for your company in legal disputes with China if it's a business dispute. Australia has an agreement with China to people from the embassy to attend the entire trial, unfortunately it was ignored by China. The US has a similar agreement.
- Courts are often used in China as a way to put pressure on a business. A business with a lot of connections/political power can put a business person from overseas, especially if they are ethnic Chinese, in jail.
- Rio Tinto executive gets 10-year prison term in Chinese bribery, theft case - LA Times.
- The Rio Tinto Lesson - The Wall Street Journal
- Chinese Business Horror Stories
- Chinese Kidnapping
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