Tuesday, July 14, 2009

China's Rio Tinto Arrests. Everyone Just Move Along....

By Steve Dickinson - chinalawblog.com - July 14, 2009

The recent detentions of four Rio Tinto executives has caused much concern. However, the situation has been misunderstood by most in the West because of a failure to understand the legal background.

The Rio Tinto employees are accused of conducting industrial espionage. Specifically, they are accused of bribery and theft of trade secrets. These acts are crimes under Chinese law. Therefore, if the accusations are factual, the four Rio Tinto employees are subject to criminal sanction in China, with typical prison sentences of up to four years.

The only thing unusual about this case is the decision of the Chinese government to treat the matter not as a commercial trade secrecy violation, but rather, as a theft of state secrets. I assume the reason for this is that the allegedly stolen information is in fact highly secret and damaging to the position of the Chinese companies in the iron ore price negotiations with Rio Tinto. The Chinese are probably avoiding a criminal trial so as to better maintain the secrecy of the information. The underlying issue, however, is that if the accusations are true, the Rio Tinto employees and their collaborators committed a serious violation of Chinese law. The choice of the government to follow the state secrets route should not obscure this fundamental fact.

What does all this mean for other companies doing business in China? This proceeding is actually not a sudden shift in Chinese policy. Foreign companies need to understand the fundamental fact that if you violate Chinese law you will be arrested and punished. There is no free pass because you are foreign or because you work for a foreign company.

Read the rest of the story:
China's Rio Tinto Arrests. Everyone Just Move Along....

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