Rio Tinto Chinese Bribery Scandal Expands

BEIJING (AP) -- A government-owned newspaper alleged Wednesday that executives from all 16 Chinese steel mills participating in iron ore price talks this year were bribed by Rio Tinto employees.

The English-language China Daily quoted an unnamed "industry insider" saying that the Anglo-Australian mining giant bribed China's largest steel companies, all members of the China Iron & Steel Association, to get access to industry data. The 16 companies were not named.

The accusation is the most wide-reaching to date in a case that is straining Australia-Chinese ties.

On July 5, four employees, including Australian executive Stern Hu, were detained on espionage charges. State media said they were accused of bribing Chinese steel company employees to obtain confidential information on China's negotiating position in the talks.

The Chinese government has confirmed that Hu and his co-workers are accused of "stealing state secrets" but has given no details.

The accusations reflect the communist government's sensitivity about fields such as steel and energy that it deems strategic and its intense secrecy about a wide array of economic and industrial information.

On Wednesday, Australian Prime Minister Kevin Rudd warned China that the world is watching how it deals with the investigation into the case.

Rudd urged China to consider its economic ties with other countries as it dealt with the men, who have been held since July 5 on espionage charges. Three are Chinese nationals and one is an Australian citizen.

"A range of foreign governments and corporations will be watching this case with interest," Rudd said. "They'll be drawing their own conclusions as to how it is conducted."

News reports earlier this weeks said employees at five Chinese steelmakers were being questioned, including Baosteel Group, China's biggest steel producer. Other companies reportedly under investigation include Anshan Iron & Steel Group, Laigang Group and Jigang Group. An executive for major steelmaker Shougang Group was detained last week, according to news reports.