Rio case reveals flaws in secrets protection, report says

By Zhang Qi,Cui Xiaohuo (China Daily)
Updated: 2009-08-10 07:12

Rio Tinto could have been stealing China's steel industry secrets for as many as six years, according to a report on a website run by a State secrets watchdog.

It also accuses the multinational mining firm of costing the country 700 billion yuan ($102 billion) in excessive charges for iron ore.

The report was published on Baomi.org, a website affiliated with the National Administration for the Protection of State Secrets, on Saturday and written by Jiang Ruqin, ex-director of the Huai'an State secrets bureau in Jiangsu province.

In it, he claims the severity of the case highlights the need for enhanced surveillance of commercial secrets by the government.

However, he did not elaborate on any evidence to support his claims.

China detained four Rio Tinto employees based in Shanghai, including Chinese-born Australian executive Stern Hu, on charges of industrial espionage in July.

Rio insisted the suspects had done nothing unethical and denied claims that its employees bribed Chinese steel mill staff for information related to iron ore pricing.

Jiang's report states that, even though the State secrets laws listed economic intelligence as being under the purview of the National Secrets Protection Law, commercial secrets received insufficient attention from the watchdogs.

The watchdogs division is short-staffed, so staff members focus on government organizations and military research and development, rather than State-owned enterprises, the report says.

A senior director of a large Chinese steel company, who declined to be named, claimed Rio Tinto staff had been bribing Chinese steel mill executives participating in iron ore price talks "for many years" and said the practice had become an unwritten industry activity.

"The whole industry connived and winked at each other; that's why bribery existed for many years but was only revealed now," the director said.

Jiang said the Rio case should prompt State officials and companies to do more to protect sensitive commercial information, and tighter measures should be taken to deter foreign businesses from spying.

He also said the country has entered a peak period of commercial espionage warfare, while the threat to economic intelligence and security of national economic activity increases by the day.

He urged the government to make it clear what commercial data is regarded as an official secret.

Agencies contributed to the story