Rio Tinto's top iron ore salesman in China admits bribe allegations at trial

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Stern Hu, Rio Tinto's head iron ore salesman in China, yesterday admitted taking bribes as his closely watched trial began in Shanghai, raising questions about the Anglo-Australian miner's business practices on the mainland.

Mr Hu, an Australian citizen, has been in detention for nine months, along with three of Rio's Chinese employees who are similarly accused of taking bribes and stealing commercial secrets. If found guilty the men could face a maximum sentence of 20 years, according to Tao Wuping, lawyer for one of the accused.

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Yesterday's proceedings were closed to the media but an Australian consular official and the men's lawyers were allowed to attend.

Tom Connor, the Australian consul general in Shanghai, told reporters after the hearing ended for the day that Mr Hu had been accused of accepting two bribes, one for Rmb1m ($146,000) and one for $790,000. “Mr Hu made some admissions concerning some of those bribery amounts, so he did acknowledge the truth of some of those bribery amounts,” Mr Connor said. He said Mr Hu appeared healthy and well.

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Mr Connor refused to say whether Mr Hu had entered an official guilty plea, saying only that the trial will continue – and probably conclude – later today, after which the court will hear the commercial secrets charges.

The accused are expected to argue in today's session that some of the amounts they received were legitimate commissions on iron ore sales and not bribes, in an attempt to reduce their sentence.

Yesterday's admissions will embarrass Rio Tinto, which counts China as its biggest customer. The miner said last year that it believed the allegations of bribery were “without foundation”.

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In Beijing yesterday, Tom Albanese, Rio Tinto's chief executive, who is visiting China for the first time since the detentions, said: “This issue is obviously of great concern.”

Legal and business sources say Rio's practices in China were in line with industry practices. But they say the trial highlights one of the biggest problems for foreigners operating in China: laws are often vague and ill-enforced, so companies cannot predict when they may be accused – largely for political reasons – of violating them.