China Arrests 4 Rio Employees for Stealing Secrets

China arrested four employees of Rio Tinto Group for allegedly stealing China’s state secrets, the official Xinhua news agency reported today, citing the Shanghai state security authority.

The one-paragraph statement comes after the Australian government yesterday confirmed one of the Rio employees being held for spying is Stern Hu, an Australian national and head of Rio’s iron ore operations in China. Three other Rio workers, all Chinese nationals, are also being detained.

London-based Rio last month scrapped a $19.5 billion investment by Aluminum Corp. of China, and is deadlocked in iron ore talks with steelmakers. The detention of the Rio employees is part of a broader investigation into alleged kickbacks among traders and mills, the Australian Financial Review said.

“This is a warning for iron ore buyers and sellers to be more vigilant in their market practices,” said Helen Wang, a Shanghai-based analyst at DBS Vickers Hong Kong Ltd. “The detention of Rio executives indicates business negotiations should also be wary of policy and information risks.”

Rio Tinto spokeswoman Amanda Buckley in Melbourne declined to comment. Shan Shanghua, general secretary of the China Iron and Steel Association, wasn’t immediately available for comment. More

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