Four Rio Tinto employees have been arrested and accused by Chinese authorities of allegedly stealing the country’s state secrets.

The arrested people were from the Australian-British mining company’s Shanghai sales office. They include Stern Hu, general manager in China of Rio’s iron-ore division, who is Australian. The other three employees, Wang Yong, Ke Ge, and Jeff Liu, were local Chinese employees, according to reports.

The official Xinhua news agency, which broke the news, said that the case was being investigated “according to the law”, and did not elaborate further.

This latest news coincides with the scrapping of a planned US$19.5 billion investment by Chinalco, a Chinese state-owned aluminum company, into Rio Tinto. It also happens amidst delicate negotiations taking place between Rio Tinto and China over the price of iron ore that the latter purchases.

Iron ore is used in the production of steel, which is one of China’s main imports. Chinese steel producers have been lobbying for Rio Tinto to cut the price of ore – which has risen as Chinese mills ramp up production.

Rio Tinto, the second largest iron ore producer in the world, is one of many countries around the world have been seeking to tap into the China market, which has remained resilient despite the global downturn – especially its appetite for raw materials that feed its factories.

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America’s enforcement of its primary anti-bribery laws overseas could lead to a polarisation of the business world into halves – one that condones corrupt practices in business practices, and another that does not, according to a scholar.

Andrew Spalding, a Fullbright senior research scholar at India’s University of Mumbai, also said that current Foreign Corrupt Practices Act (FCPA) enforcement could hurt the development prospects of emerging markets which have only a narrow window of opportunity to exploit economic growth, and reduce poverty.

To arrive at his conclusions, he studied 125 violations that have been pursued anywhere in the world for the last 30 years. He found that very little of FCPA enforcement goes on in developed countries –comprising of only 7 per cent of the total . On the other hand, 68 per cent happened in emerging markets. The rest were in other parts of the world which were even less developed.

He said that this frequent enforcement of FCPA violations in certain emerging markets amounts to de-facto economic sanctions which serves to deter companies in the developed world from investing in these markets. These companies are fearful of the multi-million-dollar – and sometimes billion-dollar – penalties that they may incur as part of routine business.

These same markets can also happen to be at a exceptional but also delicate stage in their economic development, one which may pass by if not taken advantage of promptly, Mr Spalding added.

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