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Aust officials to make contact with Stern Hu -

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Aust officials to make contact with Stern Hu

Broadcast: 09/07/2009

Reporter: Rafael Epstein

Australian consular officials will finally get access to Stern Hu tomorrow. But the Chinese
Government is already saying it has proof of espionage implicating Rio Tinto's second most senior
executive in China.

Transcript

LEIGH SALES, PRESENTER: Australian consular officials will finally get access to Stern Hu tomorrow.
The Chinese Government is already saying it has proof of espionage implicating Rio Tinto's second
most senior executive in China.

Some Australian business people in Shanghai contacted by Lateline say they're unperturbed by the
arrests, but others say they do worry their phones and email are being monitored.

Few say they'll change the way they do business there.

With neither the charges nor the supposed evidence clear, the Opposition is urging the Prime
Minister to pick up the phone and call China's leaders.

Rafael Epstein reports.

RAFAEL EPSTEIN, REPORTER: Born in China, Stern Hu went to Beijing University. He worked for Rio
Tinto in Western Australia and ran their Shanghai office. He's been in custody since Sunday and
still hasn't seen a lawyer or consular officials.

Australian expats doing business in Shanghai are nervous and analysts are cautious.

TIM SCHROEDERS, ANALYST, PENGANA CAPITAL: We could very much draw that conclusion that these people
are being made an example of to save face at a much higher level in the Chinese system.

RAFAEL EPSTEIN: Chinese media have reported more arrests of other business executives, this time of
men linked to Stern Hu but working for a different company. One Australian business in Shanghai
told Lateline they didn't think something like this could happen to a company as big as Rio Tinto.
They said it makes people anxious it could happen to them.

At the same time, it doesn't seem that people are changing the way they work in China. One business
in Shanghai told Lateline: "We're living in a very different place here. Free speech is not
appreciated. You've got to be very careful ... be very circumspect about what you say."

But a third business told Lateline: "I don't think we're nervous, if it happened to someone we knew
it might be different."

TIM SHROEDERS: I think everyone's going to be a lot more cautious, expats or locals alike in terms
of the way they do business, the degree of documentation and probably the requirement from
safeguards from their employees in the future.

RAFAEL EPSTEIN: Rio Tinto isn't talking but the Opposition is.

MALCOLM TURNBULL, OPPOSITION LEADER: This is an absolutely outrageous treatment of an Australian
citizen and Mr Rudd - this should be the number one priority on Mr Rudd's agenda today. He should
be on the phone to the Chinese leaders demanding that justice be done to this fellow Australian in
China.

RAFAEL EPSTEIN: Even if Mr Rudd were in Australia, that's a step he's unlikely to take for now.

KEVIN RUDD, PRIME MINISTER: I'll just make the point; let's not get engaged in this business of
political grandstanding on the home front. Let's get on with the practical business of supporting
an Australian in difficult circumstances and that is what the Foreign Minister and Australian
officials are doing. It's the right course of action. A step by step, measured approach.

RAFAEL EPSTEIN: The Government is furious with the Nationals' Barnaby Joyce. He's suggested this is
payback for Rio's failed negotiations with the Chinese metal giant, Chinalco. The allegation is, in
effect, that Chinese business interests are aided by the security apparatus. China rejects that.

QING GANG, CHINESE GOVERNMENT SPOKESMAN: It is inappropriate to make this individual judicial case
bigger or even politicise it because this will be no good for Australia.

Andrew Godwin who worked as a lawyer in Shanghai for 10 years says there is a blurred line between
China's Government and its business interests.

ANDREW GODWIN, LEGAL ANALYST, MELBOURNE UNIVERSITY: Given the role of the state-owned sector in the
Chinese economy, the extent to which state-owned enterprises are indirectly accountable to
government - there are obvious concerns about the role of government, the extent to which
commercial decisions are being directed by government and that is really behind the concerns that
people have in this context, I think.

RAFAEL EPSTEIN: China's spokesman says it's a simple case of espionage.

QING GANG: The relevant Chinese authorities have sufficient evidence to prove that they have stolen
state secrets which have greatly damaged China's economic security.

RAFAEL EPSTEIN: That suggests it will be hard for the chief of Rio's Shanghai operations to beat
the allegations in a Chinese court.

Rafael Epstein, Lateline.