August 12th, 2009
10:42 AM GMT
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It seems one of the biggest challenges in covering the Stern Hu/Rio Tinto case is trying to explain how the Chinese legal system works, or doesn’t work. For a start everything is in Chinese, which may seem pretty obvious, but it makes it pretty tricky; there are translation issues, which starts to get really tough when you include legal terms, as well.

China says the Rio Tinto case will not affect the development of ties with Australia.
China says the Rio Tinto case will not affect the development of ties with Australia.

On Wednesday came word that the “Rio Four” - as they’ve being called by some in Australia - had been “arrested.” This was the cause for a great deal of confusion in our newsroom – hadn’t they already been arrested? Didn’t that already happen when police swooped in last month? How can someone be arrested by police without being arrested?

And this is perhaps why the Stern Hu case is causing such nervousness among so many of my highly-paid, still-employed, executive friends in Beijing. A number of lawyers who have nothing to do with the Rio case explained to me how it works. Unlike other countries such as the U.S., Britain and Australia, in China police have the power to detain those suspected of being up to no good. They can do that for 37 days. No arrest, no charges, nothing.

So you sit in a jail for 37 days, 888 hours, wondering what it is you’ve done (or if you know, wondering how they found out and what evidence they have). By day 38, police must decide to either formally arrest you or let you go. In the Rio case, they went ahead with the arrests. The police have another two months to gather evidence, can apply for an extension of a month, and then if they need to, another two months and another two months. That’s a total of seven months. All the time you are in a jail, wondering what is going on.

If there is good news here for Mr. Hu and the three others it is that they’ve been arrested on charges of illegally obtaining commercial secrets, not state secrets. Lawyers told me those are likely to be the charges they’ll face in court if it goes that far.

There’s always a slim chance that illegally obtaining state secrets could get back into the mix (legally it’s possible and politically anything is possible, as well.) But there does seem to be a sniff of maybe a deal in the works. China is backing away from the most serious allegations, the heat is coming out of the relationship a little. China’s Deputy Commerce Minister, Fu Ziying, said Wednesday he believed “this case should not, and will not, affect the stable development of the economic and trade bilateral ties between China and Australia."

And a source of mine in Canberra tells me a Chinese embassy car has been parked in front of the Department of Foreign Affairs and Trade for most of the early afternoon.

Coincidence? Maybe, but four Rio employees sitting in a Shanghai prison will no doubt be hoping it’s not.

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Filed under: AsiaBusinessChina

soundoff (5 Responses)
  1. Billy Court

    here's a thought for the day people forget this country was
    founded by big business for big business

    August 12, 2009 at 12:40 pm |
  2. Elke, Germany

    In some way something not surprising. It´s not the first time that China puts pressure on someone to get what it wants. I think the companies should think twice, before doing business in China. Not a nice legal system, when the state can change it as they think it´s good for them. Do the arrested employees have a chance? Or must they sit in prison and hope that Australia and China reach a good deal?

    August 13, 2009 at 8:43 pm |

    why is china not respecting the fundamental human rights of people and onbody seems to alert or step in to hault them. how possible can you send somebody to court and proceedings is your local language. its outrageuos and digusting.obtaining a coomerical secret is not a national security secret. PLS FREE RIO TINTO NOW. WE NEED PEACE IN THE WORLD.

    August 17, 2009 at 7:34 am |
  4. martin clarke

    There is no succession rights in China. Each Corporation has Managers whose decisions are not binding on the Company unlike western companies.

    There is a dispute process via Singapore in some agreements but it takes circa 8 years to reach the tribunal, 2 years to get a decision and the China Corp do not feel bound by that. decision. Britsh or American Embassies can't help as there are too many Companies in the same position. Their teeth have worn away over the years.

    Investing in China is similar to pouring water out of the botttle and then trying to get the water back in. Having said that Investing in the UK is an area where offshore companies have often preference to those home spun and rgistered in Bloomsbury with Companies House.

    August 17, 2009 at 2:14 pm |
  5. Sunil

    Many Economic Experts feel that the GDP Growth claimed by China or for that it is fastest growing Economy IS NOT ON ACTUAL STATISTICS. B'cause Chinese Official Versions & Chinese Media can both make a MOUNTAIN OUT OF MOLE.

    September 24, 2009 at 8:52 am |

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