How Can You Air Your Dirty Linen? — Critiquing the Rio Tinto Case*

By Liang Jing
Apr 1, 2010 – 11:57:03 AM

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How Can You Air Your Dirty Linen? — Critiquing the Rio Tinto Case*
by Liang Jing

Recently, veteran Phoenix TV commentator Anthony Yuen, generally given to nauseating praise of the CCP and extreme “patriotic” stances, used exceptionally blunt language in regard to the Rio Tinto case. He said it was dirty linen not only for Rio Tinto, but for the Chinese people as well. [1]

His reason was that the four executives drawn into the case were all Chinese. I think however that in his mind there was a more important reason that he didn’t care to enunciate namely that the scandal in the case attached not only to the four Chinese executives, but to China’s patriarch as well. But for Hu Jintao, China’s image would not be as dire [langbeibukan] as it has now become.

It was long ago stated in the Australian media that Hu was the most critical decision-maker in bringing the case against Rio Tinto. The CCP would never publicly admit it, but it is manifest that the case could never have occurred without his consent. [2]

From the day Party authorities transferred the Rio Tinto case from the Ministry of State Security to that of Public Security, the investigators were clear that their overriding political task was to try to save face for China, and in particular, for Hu Jintao.

Hu made a decision on the case in the summer of 2009. His mood no doubt agitated, his mind engrossed by the forthcoming sixty years celebration and parade, he was led that summer to reverse his customary manner of forbearance and constraint and make a series of startling decisions: a phalanx of troops arranged around his portraits in the parade, ferocious face-to-face threats made to the Phoenix TV leadership—and the use of state security to investigate the Rio Tinto espionage case. He thus came to resemble Jiang Zemin, exposing certain inadequacies in the very act of satisfying the itch to play emperor.

In China today the game of imperial power is still being played, but the world no longer belongs to a single family; the grand patriarch must accept being constrained by the interests of red bureaucratic capital. The Ministry of Foreign Affairs, together with foreign media and diplomatic pressure, finally forced Hu to realise that not only would it prove difficult to gain a conviction on espionage and theft of state secrets, but the international political and economic consequences of such politically sensitive charges would be serious as well.

The transfer of the case from State to Public Security signalled that China was now engaged in looking for a way out of the woods for the unwise decision the patriarch had made in an unguarded moment. And with the start of formal hearings, the authorities’ political strategy for dealing with the Rio Tinto case began to emerge.

An obvious strategy was to shift the charge from theft of state secrets to theft of commercial secrets, giving all parties plenty of room for manoeuver. But according to some sources, this charge was firmly denied by Stern Hu et al. Even more interesting was the story from an Australian source, WA Today, that the authorities hadn’t accused Stern Hu of committing bribery, but laid the charge of accepting bribery squarely on Rio Tinto. The commentator said that this may have reflected an attempt by Chinese officialdom to avoid entering the fray, because as soon as there were accusations of bribery, it would involve questions of where the illicit money had come from. According to common sense, bribes paid in the interests of a company would not be out of their own pockets. It was therefore best not to mention bribery, to avoid implicating Rio Tinto. [3], [4].

This analysis makes sense I think, but also conforms to official interests in China: if someone has taken a bribe, someone must have given it, which would implicate Chinese state-owned iron and steel enterprises in the case, thus revealing a greater in-house scandal. Australian media commentary pointed out that coinciding with the Rio Tinto trial, China announced that Chinalco and Rio Tinto had decided to cooperate in the development of Simandou, one of the world’s largest iron mines, in the West African nation of Guinea. This makes it hard to believe that the Chinese side’s strategy for dealing with the Rio Tinto case had nothing to do with safeguarding the special interests of Chinese bureaucratic and international capital. [5]

How then to save face for Hu Jintao? A charge still had to be fitted to Stern Hu et al. As a result, some more dirty linen was aired. According to an Economic Observer story, just the Rio Tinto trial was starting in Shanghai, it emerged that Du Shuanghua, chairman of the Rizhao Iron and Steel Group, was suspected of paying bribes of some US $9 million. Wang Yong, then sales director in Rio Tinto’s Shanghai office, was the receiver. [6]

The authorities’ wishful thinking clearly was to drive the Rio Tinto flames on to private enterprise, safeguarding the extremely shady state enterprises, and avoiding further airing of family linen. Little did they know this strategy would reveal a still greater domestic scandal. The testimony of Du Shuanghua read out in court revealed how China’s bureaucratic capital oppresses private enterprise. Government-run steel mills not only enjoy beneficial “long association prices”, but can also use this exploitation and suppression to make it difficult for private steel enterprises to survive and develop. Exploitation by foreign capital enterprises is less severe than by SOEs. The private firms had no option but to bribe Rio Tinto.

The Chinese saying says, dirty linen should not be aired outside the family, which is precisely what the Rio Tinto case did on a large scale. How could it end up in such a mess? The main reason is that not only does our patriarch lack competence, he’s even unaware how bad the chaos is at home.

Hu originally sought to assert himself and teach the foreign thieves a little lesson, only to discover that the latter were in collusion with domestic thieves—who were so much fiercer than the foreign ones that he was helpless to deal with them.
* Liang Jing, “Jiachou heyi hui waiyang? – ping Lituo an” [How can you air dirty linen? —critiquing the Rio Tinto case], Xin shiji, 30 March 2010 [梁京： “家丑何以会外扬？——评力拓案”， 新世纪，2010年3月 30日 (<http://newcenturynews.com/Article/gd/201003/20100331021854.html>here).].

[1] “Ruan Cishan: Lituo an shi ‘jiachou,’ anjian reng wei liaojie” [Anthony Yuen: The Rio Tinto case is ‘dirty linen’ that is not yet over], Fenghuang wang, 26 March 2010 [“阮次山：力拓案是‘家丑’ 案件仍未了结”， 凤凰网，2010年3月 26日(<http://phtv.ifeng.com/program/xwjrt/201003/0326_6918_1587560.shtml>here).].

[2] “Ao mei cheng Hu Jintao qinzi pizhunguo Li Tuo de diaocha” [Australian media claim Hu Jintao personally authorised Rio Tinto investigation], Fenghuang wang, 13 July 2009 [“澳媒称胡锦涛亲自批准对力拓的调查”，凤凰网，2009年7月 13日 (<http://finance.ifeng.com/topic/news/lituo/news/industry/hy/20090713/927920.shtml>here).].

[3] Sanghee Liu and John Garnaut, “Stern Hu pleads not guilty to commercial secrets charges: lawyer,” WA Today, 24 March 2010 (<http://www.watoday.com.au/business/stern-hu-pleads-not-guilty-to-commercial-secrets-charges-lawyer-20100323-qu3a.html>here).

[4] John Garnaut and Sanghee Liu, “Stern Hu refuses to accept secrets charges,” WA Today, 25 March 2010 (<http://www.watoday.com.au/business/stern-hu-refuses-to-accept-secrets-charges-20100324-qwrc.html>here).

[5] “Xianggang Wenhui bao: Zhonglü Lituo hezuo xianshi Zhongguo zai Feizhou yingxiang” [Hong Kong’s Wen Wei Po: Chinalco’s cooperation with Rio Tinto shows China’s influence in Africa], Zhongguo xinwen wang, 26 March 2010 [： “香港文汇报：中铝力拓合作显示中国在非洲影响”， 中国新闻网，2010年3月 26日 (<http://www.chinanews.com.cn/hb/news/2010/03-26/2192515.shtml>here).].