Impact of China arresting Rio workers
A sign for the Australian mining giant Rio Tinto in Shanghai.
TEXT OF INTERVIEW
Steve Chiotakis: Global mining giant Rio Tinto saw four of its employees arrested and taken into custody today in China. The charges: stealing commercial secrets and bribery. We're gonna check in with Marketplace's Scott Tong, joining us live from our Shanghai bureau this morning. Good morning Scott.
Scott Tong: Hi Scott.
Chiotakis:What's this all about?
Tong:Well the Chinese media reports suggest what this is all about is the price of iron ore. Now, mining companies like Rio Tinto dig the stuff out of the ground and they sell it to steel mills. A lot of those mills happen to be in China. And the price is negotiated every year between the sellers and the buyers. And the Chinese government, according to these media reports, suspects that Rio Tinto negotiators got inside information from the Chinese bargaining side by bribing people in China.
Chiotakis:So who has been arrested?
Tong: Well, four Rio employees who are based in their Shanghai office, including one who is an Australian national. Now, they've been detained actually for five weeks, since July 5th, and finally we know what charges are that they face. What's interesting is the one charge that they are not facing, that is stealing state secrets. That is a very serious crime in China, could carry a life in prison. A lot of people thought that was coming, and it didn't come today. So under the current charges, it's a maximum of 7 years in prison if they are found guilty.
Chiotakis:And Scott, how big of a deal is this?
Tong: Well, I talked to people in the steel industry, and they've been freaking out over this case. I mean, the way business is done in China is what you and I might consider a little shady. A lot of papers and data are shared between suppliers and buyers, there's a lot of extracurricular activities -- drinking and dinners and expensive gifts. And now the question is OK, what constitutes a bribe? It's always been a little fuzzy here. For multinational companies more generally, there's some talk that China may be becoming a less friendly place for foreigners to do business. So the question is have the risks gone up a little? I should tell you, Steve, that Rio Tinto has denied these charges today.
Chiotakis:All right. Marketplace's Scott Tong joining us live from Shanghai this morning. Scott, thank you.
Tong:OK. Thank you Steve.