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Stern Hu faces 10 year jail sentence -

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Stern Hu faces 10 year jail sentence

Broadcast: 29/03/2010

Reporter: Kerry O'Brien

Australian mining executive Stern Hu is facing 10 years in a Chinese jail after being found guilty
of bribery and commercial espionage. Three other Rio Tinto employees have been sentenced on similar
charges to prison terms ranging from seven to fourteen years. Foreign Minister Stephen Smith speaks
with Kerry O'Brien from Canberra live.


KERRY O'BRIEN, PRESENTER: More than nine months after his arrest for alleged bribery and commercial
espionage, Australian mining executive Stern Hu is facing 10 years in a Chinese jail after being
found guilty of both charges.

Three other Rio Tinto employees have been sentenced on similar charges to prison terms ranging from
seven to 14 years.

Australia's Foreign Minister Stephen Smith tonight described Stern Hu's sentence as harsh. While
Australian consular officials were given access with very few other observers to the bribery
aspects of the court hearing in Shanghai, even they excluded from the charges related to the
stealing of commercial secrets.

Stern Hu pleaded guilty to the bribery charge but not, as we understand, the charge related to
commercial secrets. Only after he was sentenced was Stern Hu allowed to see his wife for the first
time since his arrest. Stephen Smith joins me now from Canberra.

Stephen Smith, you said last September that Australia had asked that the Stern Hu case be dealt
with expeditiously, consistent with Chinese law and procedure. Has that happened as far as you're
concerned, given that you think the sentence is harsh?

STEPHEN SMITH, FOREIGN MINISTER: A number of aspects there, Kerry. Firstly, I've made it clear on
the bribery conviction that Australian officials were in the room at the time. My advice is that
there was considerable evidence leading on its face to the conclusion that bribery acts had
occurred but I do believe the sentence there is harsh.

Certainly harsh by Australian standards.

The difficulty comes - and you asked the question about transparency - the difficulty comes with
the second charge, the commercial secrets to which our officials were not given access. That's very
regrettable and that leaves, I think, a series of unanswered questions, not just for Australia, but
for the international business community.

We, as a nation, of course, accept the legal sovereignty of China. And the advice I have is that
this court process was conducted in accordance with Chinese law and Chinese procedures. But the
transparency issue is a difficulty for our analysis of the trial, as it is, I think, for the
international business community into the future.

KERRY O'BRIEN: Do you... You talk about the evidence and that there was some strength to the
evidence according to the observations of the consular officials. But do you accept that Stern Hu's
guilty plea to accepting bribes was made without coercion, given how much of this process has gone
on behind closed doors? I'm not just talking about the court hearing.

STEPHEN SMITH: Well firstly - Sure. No, no, our officials had access to him effectively on a
three-week, three and a half week basis from his detention until trial.

We were satisfied as to his safety and well being. He had a couple of minor ailments which were
treated. He was obviously under the sort of pressure and stress that you would expect, being in
detention and running the risk of facing such charges. But there was no indication on my advice of
anything other than the surety of his safety and well being.

Indeed, the first indication from him that there might be a difficulty so far as these matters were
concerned, the bribery matters, came at the last consular visit, which was a few days before the
actual trial.

But in addition to his own admissions, I'm told there was documentary and other evidence which led
one to the conclusion that there was on its face substance to the evidence so far as acts of
bribery was concerned and of course, the Australian Government does not condone acts of bribery,
wherever they occur, whether they're in Australia or China or elsewhere.

KERRY O'BRIEN: Even so, I take it you were uncomfortable with a process where the media, the
international media, were excluded from the whole trial and a handful of official observers were
only allowed to attend for part of the trial as you have acknowledged. Yet the media were allowed
in to record the verdict and presumably to help spread the word about China's approach to crime and

STEPHEN SMITH: Well, we made representations; our officials in Shanghai made representations, on
behalf of Australian media to seek to get them access for the trial. And when the trial processes,
in terms of the hearing completed last week, we made subsequent representations for them to have
access for the verdict and the sentencing as has occurred.

We were, or our officials were, against our representations - and I think it was a mistake by
Chinese officials - we were ourselves excluded from the commercial- stealing commercial secrets
part of the trial.

That leaves, as I've put it, serious unanswered questions, but it's also a missed opportunity. This
was a chance for China to more completely engage with and in the international business community
on transparency matters. We don't know, for example, whether what we're dealing with here was
simply information which would come into the hands of company officials in the normal course of
commercial discussions, or whether it's something deeper or broader than that. And that is part of
our difficulty in terms of an analysis, and I suspect that will be part of the international
business community's difficulty and we've made these points to Chinese officials in the past and
will no doubt make them again.

KERRY O'BRIEN: But when you talk about Australia making representations, I guess there are
representations and representations. How tough were the representations Australia made?

STEPHEN SMITH: Well, on this matter generally, we made representations at multiple levels from the
moment of his detention, both in Beijing, in Canberra and in Shanghai, including two on the record
representations by the Prime Minister to the Chinese leadership, the Premier and the President.
I've made a number of representations to my own counterpart and officials have made multiple
representations throughout the processes.

Indeed, once Australian officials were advised by Chinese officials that we would not have access
to the commercial secrets part of the trial, I made my own representations to China's ambassador to
Australia and very strongly made the point that we didn't believe that that was in China's
interests and we didn't believe that it would assist transparency or assist the understanding of
the matter, not so far as Australia was concerned, discharging its consular obligations to Stern
Hu, but also the international business community. So that is, as I put it, I think, a lost
opportunity as China emerges and engages more comprehensively with the international business

KERRY O'BRIEN: You don't think the Chinese overcooked the case along the way with claims that there
were hundreds of witnesses, not that the many, many, many less than hundreds of witnesses who
appeared in the hearings, and that their theft of state secrets caused a huge loss of China's
economic security? And we still don't know, as you say, how strong the commercial espionage case

STEPHEN SMITH: It's not a matter simply of me acknowledging that, Kerry. I'm advertising it. That

KERRY O'BRIEN: That China overcooked the case?

STEPHEN SMITH: No, not that China overcooked the case. I don't know whether that's the case or not,
because we didn't have access to that part of the trial. So I'm not making that assertion. But I'm
advertising the fact that I don't think it was in China's interests to not have this part of the
trial transparent.

The response from Chinese officials, including the ambassador, when I asked China to reconsider -
very strongly asked to reconsider - was that under Chinese law and processes at the request of one
party, if they're a commercial in confidence matter the court can be closed. I gave undertakings on
behalf of Australian officials that if we were present for the part of that- for that part of the
trial, we would of course keep that confidence. And made the point that I didn't believe it was in
China's interests let alone Stern Hu's interests or Australia's interests for that part to be

It now puts us in the position where there are serious unanswered questions which go to the
international business community's view of what is commercial in confidence, what is commercial
secret, what is the normal commercial discussion and exchange of information.

KERRY O'BRIEN: You said in a speech earlier this month that Australia's relations with China were
"now seen to be back on track" after a number of points of tension last year. How far off the track
did relations get? And how much did the Stern Hu case contribute to those tensions?

STEPHEN SMITH: Well, it's certainly clearly the case that last year there were tensions and
difficulties. We're very confident that we've put those behind us.

The visit to Australia of Vice President Li, the better engagement that we've seen, including my
own engagement with my counterpart. I think it's very much back on track. That's been the case, I
think, since towards the end of last year.

And I also don't believe, whilst the Stern Hu matter we've seen today - in my view a harsh penalty,
a harsh punishment on the bribery matter and lack of transparency on commercial secrets - I don't
believe that there will be any significant or indeed any adverse impact so far as the bilateral
relationship is concerned.

Yes, we went through a difficult period but in some respects that helped the maturing of the
relationship. China has a different system, including a different legal system from Australia's. We
have different values and where we do have these differences, we need to learn to manage them. And
last year we saw those differences not just arise in terms of the detention of Stern Hu, but Rebiya
Kadeer and other matters so it has, I think, helped us to learn to manage these issues where we
disagree but to look to the long term for what is clearly a very important economic and more
general relationship that Australia has with China.

KERRY O'BRIEN: Will you at least now seek to persuade the Chinese to allow Stern Hu to serve his
sentence, or the bulk of his sentence in an Australian prison?

STEPHEN SMITH: Well, it's important not to get ahead of ourselves. He is able to appeal if that's
the decision that he makes with his lawyers. It's not often exercised in Chinese practice but that
is open to him. First point.

Secondly, we do have an agreement with China so far as international exchange of prisoners is
concerned but we have not yet ratified that. We're currently going through the ratification
process. But the basis...

KERRY O'BRIEN: Will you hasten that process?

STEPHEN SMITH: We are progressing that. There is a ratification process. We're going through that.
I'm not putting a timetable on it, and on the basis that at some point in the future, the
ratification occurs, then Stern Hu may or may not become eligible for consideration under that
heading. Indeed, a relevant material consideration will be his own wishes. He may or may not, for
example, wish to be separated from family this China, so we do need to take it step by step.

KERRY O'BRIEN: And have you had feedback today on Stern Hu's well being?

STEPHEN SMITH: Well, the advice I've had from officials is that we continue to be satisfied so far
as his safety and well being is concerned. He will now go to a prison in Shanghai which
traditionally deals with convicted and sentenced foreigners. After a short period of assessment he
will again become eligible for our consular visits, which we expect will occur in the normal course
of events on a monthly basis as they have whilst he has been detained pending the trial.

KERRY O'BRIEN: Stephen Smith, thanks for talking with us.

STEPHEN SMITH: Thanks, Kerry. Thanks very much.