David Prosser: Another case for Rio Tinto to answer
Outlook: The company, having failed to spot what its staff had been up to, was quite happy to see the Chinese accused of trumping up charges against them
Tuesday 30 March 2010
It looks as if Rio Tinto knew six months ago that there was evidence its staff in Beijing were guilty of at least some of the offences for which they were eventually jailed for yesterday. That's when it stopped publicly protesting the innocence of the four, though it continued to offer them its support.
The question the world's second-biggest miner must answer now, however, is how it took so long to find out what these men were up to. Rio's own audit of its Beijing office – done by Ernst & Young after the Rio four were first arrested last summer – produced a clean bill of health. Now it turns out millions of pounds in bribes were sloshing around.
No wonder Rio is grovelling to China, where the steel industry is the the world's most important customer for the miner's iron ore. It's not just that Rio staff have been found guilty of paying bribes and stealing commercial secrets, but also that the miner allowed the rest of the world to reach its own conclusions on the basis of popular prejudice.
China arrested these men shortly after a crucial deal with Rio broke down. It was therefore easy to paint a picture in which Rio's executives were the innocent victims of a vengeful country with little respect for international standards of justice. That picture survived right up to the moment that the executives began pleading guilty earlier this month.
There are some issues arising from the case that businesses operating in China will want to consider. In particular, confusion reigns over exactly what constitutes a commercial secret – some close to the case claim the "secrets" in question were freely available on the internet.
Still, this outcome is a major embarrassment to Rio. Its internal controls were so poor that senior staff in one of its most important outposts were able to accept these whacking great bribes and use illegally obtained information in key negotiations without anyone back at head office noticing.
The mining sector has a questionable reputation on ethical standards. Some of that stems from the nature of what it does – the extractive industries leave environmental scars on the planet and the huge sums at stake leave them open to accusations of exploitation. Such accusations are not always fair.
However, in the case of Rio its executives got caught with their fingers in the till and the company, having failed to spot what its staff had been up to, was quite happy to see the Chinese accused of trumping up charges against them.
This has been a sorry saga from beginning to end. Far from being a case that shines a light on the challenges of doing business in China, as some analysts have suggested, it is an affair that reveals some pitiful failings on the part of a Western mining giant that should have done better.
- 1 Hair loss explained: How and why men go bald
- 2 Game of Thrones season 6: Jon Snow theorists believe the Stark may have a twin sister
- 3 Artist takes LSD, draws herself over different stages of the 9-hour trip to show its effects
- 4 A pint of water every day is the key to losing weight, scientists say
- 5 Russia 'accidentally reveals' number of its soldiers killed in eastern Ukraine
Most expensive city to live in for expatriates: Luanda, Angola takes number one spot with Hong Kong and Zurich in top three
Video of Irish 'professional boxer' fighting Istanbul neighbourhood goes viral in Turkey
Irish tourist filmed fighting with shopkeepers in Turkey says they 'messed with the wrong man'
House of Lords: Outcry as donors, fixers and MPs caught up in expenses scandal get peerages
Moody neurotics are more likely to be creative geniuses, study says
Dresden riots: Protesters in Germany attack refugee buses shouting 'foreigners out'
France train shooting: US soldiers speak of the moment they stopped gunman and 'beat him until he was unconscious'
Labour leadership: Jeremy Corbyn accused of 'deluding' young supporters with 'claptrap'
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Iain Duncan Smith calls for urgent ESA overhaul as part of drive to cut down welfare costs
iJobs Money & Business
£13000 - £25000 per annum: Recruitment Genius: Would you like to be part of a ...
£20000 - £25000 per annum + competitive: SThree: Are you passionate about sale...
£25000 per annum + benefits: Ashdown Group: A large financial services company...
£20400 per annum: Ashdown Group: An established and highly reputable organisat...