Jul 24, 2009

Stern Hu and the unpleasant truth about Rio Tinto

Rio Tinto is a company renowned for playing hard-ball in its commercial operations around the world.

The arrest and imprisonment of Stern Hu has been construed in Australia as a conflict between a big company honestly going about its business in a tricky environment and a bullying government with no respect for the rule of law. Whatever the facts surrounding Hu’s role in negotiating iron ore contracts, Rio Tinto is a company renowned for playing hard-ball in its commercial operations around the world. The mining behemoth is no model of business propriety. One of the ironies of Rio’s battle with the Chinese Government is that the company has a long history of forming cosy relationships with dictatorial regimes, beginning with General Franco in 1937, whose forces were welcomed by the company when they drove republicans out of the Rio Tinto (Red River) mining area in Andalusia (from which the company took its name). "Since the mining region was occupied by General Franco’s forces, there have been no further labour problems", the company’s chief Sir Auckland Geddes told shareholders. "Miners found guilty of troublemaking are court-martialled and shot." In the modern era Rio Tinto -- now the fourth largest mining company in the world -- has worked closely with the apartheid regime in South Africa, General Pinochet in Chile and General Suharto in Indonesia. Last year the Government of Norway decided to divest itself of around $1 billion of shares in Rio, citing concern over severe environmental damages from its Grasberg mine in West Papua, the world’s biggest gold mine, part-owned by Rio and Freeport McMoRan. Accusing the company of "grossly unethical conduct", the Norwegian Finance Minister declared that "Rio Tinto is directly involved, through its participation in the Grasberg mine in Indonesia, in the severe environmental damage caused by that mining operation." In 2005 the New York Times published a damning investigation of the Grasberg mine. It exposed a network of corrupt relationships with local military and government officials in violation of US law, noting that for many years Freeport, presumably with Rio’s knowledge and blessing, assiduously courted Suharto and his cronies, including paying for their children’s education and cutting them in on lucrative deals. And in a practice that may have a bearing on the Hu case, Freeport, "working hand in hand with Indonesian military intelligence officers", established a covert program to spy on its environmental critics by intercepting their e-mails. Company lawyers had advised that intercepting other people’s emails was not illegal "outside the United States". Rio Tinto has also been found by Indonesia’s official National Human Rights Commission to have committed "egregious violations" of human rights at its PT Kelian gold mine operation in Kalimantan. A report in 2000 found that Indonesian military and company security personnel "forcibly evicted traditional miners, burned down villages, and arrested and detained protestors since the mine opened in 1992". Abuses included s-xual assaults, theft of land and destruction of property of local inhabitants, all by people employed by Rio’s PT Kelian. In Australia, these sorts of tactics are not acceptable, but that has not stopped Rio playing hard-ball whenever its commercial interests are at stake. Rio Tinto is one of the handful of big companies behind the self-described greenhouse mafia of industry lobbyists that has been so effective first at blocking and then at watering down all attempts to limit Australia’s carbon emissions. They have used every dirty trick this side of the law. And of course Rio Tinto was at the forefront of the campaign to prevent Indigenous Australians securing land rights in 1997-98. In 2005 the company was chastised by traditional owners in the Pilbara for refusing to negotiate over native title. Stern Hu is collateral damage in a battle between a ruthless mega-corporation and a despotic government. He may be a diligent executive doing an honest job, but he is also a pawn in a power struggle, a company man squeezed as the tectonic plates of history come together. Having opened China to capitalism, the Communist Party government is discovering just how powerful are the corporations that control the world’s resources, and it does not like what it has found. Perhaps the members of the Central Committee should take a refresher course in Marxism. They might recall the following lines from Marx and Engels on the power of capital:
The cheap prices of commodities are the heavy artillery with which it batters down all Chinese walls, with which it forces the barbarians’ intensely obstinate hatred of foreigners to capitulate. It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst.
Come to think of it, if there is a copy of The Communist Manifesto in the drawer beside his prison bed, Stern Hu might want to reflect on the meaning of this passage too.

Free Trial

You've hit members-only content.

Sign up for a FREE 21-day trial to keep reading and get the best of Crikey straight to your inbox

By starting a free trial, you agree to accept Crikey’s terms and conditions


Leave a comment

13 thoughts on “Stern Hu and the unpleasant truth about Rio Tinto

  1. Tom McLoughlin

    Mmm, tectonic plates of ruthless powermongering indeed. I wonder how many folks have their superfunds invested in Rio Tinto, or State owned Chinese companies for that matter, whether they know about it or not.

    One thing not discussed here is China’s long history of dictatorship, and human rights abuses and distortion of foreign exchange rate to under cut manufacturing of say steel production here in Australia. That is, to maintain it’s ‘factory of the world’ status at almost any cost to their environment, increasingly the global commons re GHGs, or fair trade concerns.

    For anyone who has watched the Brad Pitt, Robert Redford vehicle “Spy Game” which was shown as inflight fodder when I saw it, those scenes in the Chinese prison system are not pretty.

  2. Mike

    A vitally important article, thanks Clive.

    Are the papers and TV news telling this story? Hardly. THe majority of big news media in Oz can’t resist the Xenophbic posturing and the “Big Bad Chinese” angle that presses all the usual simplistic, emotional buttons with the audience.

  3. Mr Squid

    many years ago a very senior rio executive described to me in detail freeport’s complicity in the murder of west papuans by dropping them, in shipping containers, into the sea from helicopters.

    Notwithstanding rio’s knowledge of these murders and other gross violations of west papuan human rights, as well as environmental destruction on a horrendous scale, the company went ahead and bought into the mine.

    It remains a shareholder in the mine, and remains a party to continuing human rights abuses, including the murder of an Australian citizen, by its other partner in crime, the Government of Indonesia. It also remains a party to horrendous environmental destruction.

    of course you won’t read these facts in newscrap publications.

  4. j-boy57

    multinational companies that incorporate in the west and then use their economic imperative as a reason
    for the policy of “when in Rome” fall into the same category as sexual predators on kiddie tours in places where
    the dollar counts more than the law.
    Australia has rightly enacted laws to prohibit this and charge these people under our laws for an offence committed
    Its high time we started to look at companies that as a mater of course act corruptly overseas,. sometimes in the name
    of this country as in the AWB disgrace .
    Business as usual for Rio whose defence in this case seems to be “thats how business in china is conducted” like throwing
    a dog to the wolves so the sled can keep moving.
    Rio they didn’t like the first Stern report and the second one looks even worse for them.

  5. tee

    Hey Clive,

    Last time you blogged about banning porn and advocating internet restrictions it didn’t appear to be a very nice experience for you, seeing that nearly every comment attacked you. In fact judging but those commenters I would have voted you the most unpopular person in the country and possibly won a bet if a poll was taken. So I can now see that you’re back to your old tricks of corporate baiting, knowing of course you can always get a chorus for that appalling little song you sing and it may get you back from the bottom of the popularity stakes although the stench of the swamp won’t go away.

    However it may get you some deranged commenters linking commercial mining activities with sexual predators, as that loon has done above (I bet you wish you had thought of first). It appears to me that whatever you’re going to try to peddle it isn’t going to work so much any more, as reasonable people know how you operate and what you believe in. In other words you’re only ever going to attract the deadenders from now.

    Keep up the great work Clive and don’t try to hard.

    Can I suggest that your next blog piece ought to be about the Victoria’s Secret catalogue and how Victoria in the 30’s was trying to women’s lingerie to Stalin’s Russia and later she was found to be selling various lines of lingerie to the Pinochet regime. That ought to get the gang really upset.

  6. Friedrich E

    My superannuation fund trustees are much reassured by your evidence that RIO may have some of the toughness needed to deal with the Chinese government after the appalling misjudgments last year when BHP made its big offer. I trust that the Chinese government’s extreme means of stealing confidential information – for giving itself a plausible reason to examine Hu’s computers seems to be a major reason for the coup – is at least going to ensure that those working for us super fund beneficiaries will do what it takes in the way of computer security and paying enough danger money to keep the best and brightest of Chinese brains working for us.

  7. Ray Adams

    @Tee: Have you sought counselling? Seriously. Following your logic is like chasing a flea on a blanket.

  8. jacks

    I see Crikey! So its ok not to care about a man being held captive in a dictatorial state because the company he worked for has done some bad things in the past? Personally im wondering where those hypocrites at GETUP! are. The only australian citizens they seem to care about are those who trained with terrorists.

  9. Elise1

    Clive Hamilton seems to think that a company is unpleasant if it works in a country ruled by an unpleasant leader, or if the Norwegian government says it doesn’t approve.
    Sooo, where do you stand on the fact that the Norwegian state-owned and half-owned oil companies (Statoil and Norsk Hydro) have been actively seeking projects in countries like: Venezuela, Iran, Iraq (including under Saddam Hussein after Gulf War 1), and assorted African countries with unpleasant leaders?
    Do we have an unpleasant truth about Norwegian companies too? And the Norwegian government for that matter, as a substantial stakeholder in these companies? Does their view on Rio then hold any water for your argument about Rio, since they work in similarly dodgy countries themselves?
    While you are at it, you may as well condemn the majority of international oil companies as being unpleasant, and probably most international mining companies as unpleasant also, since most of them would be working in places ruled by unpleasant leaders.

  10. tee


    No never thought I needed counseling, however I reckon Clive does. This is the person who thinks what happened several decades ago is somehow pertinent in the functioning of that same company today.

    In other words he doesn’t seems to understand or is mendaciously dishonest in implying a company has the same standards that it it did 70 or 80- years ago when a firm like RIO resembles nothing like that same company of that time.

    I really don’t know how on earth Crikey publishes this complete nimrod, as he seems unable to understand the modern world, residing in some parallel universe.

    Rio ought to go after him and force the twit to apologize in the same way other firms threatened legal action against the Australia Institute when the twit was writing egregious things about them too.

    He just can’t help himself.

Share this article with a friend

Just fill out the fields below and we'll send your friend a link to this article along with a message from you.

Your details

Your friend's details