Politicial Bribes

Chinese billionaire implicated in iron ore corruption: dealings with Australia exposed

He was embroiled in an iron ore bribery scandal ten years ago, but leaked documents reveal Australian companies that have continued to work with him.

A Chinese billionaire who confessed to paying bribes for Australian iron ore continued to trade with major Australian companies for years, even after the scandal became public in 2010.

The mining companies were still negotiating with steel billionaire Du Shuanghua after he admitted to paying bribes to a Rio Tinto executive.

Leaked documents show Rio Tinto traded more than $ 200 million ($ 275 million) with Mr. Du’s company, including the sale of iron ore, while BHP sold coking coal.

This was revealed in the Pandora Papers, one of the biggest financial document leaks,

which includes 12 million documents from 14 offshore suppliers.

The documents show that Rio Tinto negotiated with Mr. Du’s companies through a Singaporean intermediary.

They also show that a complicated tax structure allowed Mr. Du to stash his fortune, including in offshore tax havens.

The billionaire is the beneficiary of a company called Bright Ruby Resources (BRR), according to the newspapers. It cuts through six layers of trusts and holding structures.

In 2010, Mr Du admitted to paying $ 9.4million (AU $ 12.9million) to gain access to the iron ore, including handing over money stashed in boxes to the Rio executive. Wang Yong, who was sentenced to 14 years in prison.

However, Mr. Du was never prosecuted, as the court concluded that he had been the victim of the ploys of others.

Millions of iron ore

The Pandora Papers show the extent of the dealings between Mr. Du’s company and Australian miners.

One example includes just one month in May 2016, when Rio sold nearly 170,000 tonnes of iron ore to Bright Ruby for US $ 9.9 million (A $ 13.6 million).

A contract signed in 2014 with the Singapore branch of BHP indicates that more than US $ 37 million (AU $ 51 million) of iron ore was sold from BHP to Bright Ruby in the following years, the report revealed. Australian Financial Review.

Another Australian company, Fortescue Metals, also sold 187,000 tonnes of iron ore in July 2018 for $ 8 million (A $ 11 million), according to the newspaper.

Rio and BHP declined to comment on the Pandora Papers revelations to the media.

Fortescue told the AFR he is “committed to a zero tolerance approach to bribery and corruption, adheres to the fight against bribery and corruption and knows your clients’ procedures in all his dealings with suppliers and customers ”.

Risk of engaging with China

Michael Shoebridge, director of defense, strategy and national security at the Australian Strategic Policy Institute, said the revelations about Mr Du illustrated the risk involved in economic engagement with China, even for the most large companies.

“Pandora Papers’ documents showing its use of various intermediaries, legal arrangements and holding of its assets outside of mainland China are not so unusual for high net worth people in China,” he told news.com. to.

“This is because wealthy Chinese businessmen understand the reach of the Chinese Communist Party (CCP) in all national entities, so it makes sense for them to seek to protect some of their party wealth. What is unusual is the disclosure of these arrangements.

Chinese President Xi Jinping has launched a public campaign to bring powerful business leaders into line by demonstrating the party’s power over them, Shoebridge added.

“Things like the information in Pandora’s journals can provide him with an opportunity here. But whether or not the Chinese authorities take action against Mr. Du or others will not so much depend on the validity of the concerns raised by the Pandora documents, but on his stance with Xi and whether Xi should take recourse to the courts. against him, ”he said. noted.

“It is difficult for an Australian public to understand that the courts in China are just tools the party can use and rule, without the independence of our judicial system. The recent release of the two Canadians held on false charges in direct response to the release of Huawei Meng’s CFO in Canada is one example.

Meng Wanzhou’s arrest in Canada at the behest of the United States, on charges of HSBC bank fraud and wire fraud, has sparked a major dispute between Washington and Beijing.

China’s subsequent arrest of Canadian nationals dubbed the “Two Michaels” was widely viewed as retaliation for Ms. Meng’s arrest. They were arrested and jailed for espionage within days of Ms. Meng’s arrest. Their arrest in China has been called “hostage diplomacy” by Western critics.

The situation was resolved recently, with the trio returning to China and Canada in September.

“Pressure” from iron ore companies

The Chinese government has not shied away from putting pressure on Australian iron ore companies, Shoebridge added.

“Through allegations of corruption involving either their employees, their intermediaries, or their interlocutors, as the Stern Hu case shows more than ten years ago. It can also play into what happens next here, ”he said.

Mr Hu is Australian citizen and former Rio Tinto executive Stern Hu who was jailed for nine years in China after being convicted of accepting bribes of around A $ 14 million and for stealing trade secrets.

He and three Chinese colleagues, including Wang Yu, were involved in talks over an iron ore contract between companies and the steel industry in China, and the four were fired by Rio.

Who is Du Shuanghua?

One of the richest men in China, he founded the country’s largest private steel maker, Rizhao Steel Holding.

Forbes estimates that Mr. Du is worth $ 1.3 billion (AU $ 1.8 billion) and he allegedly used the money to buy political connections and power within the CCP.

The 56-year-old man held political positions, including that of deputy to the People’s Congress in Hengshui City as well as in Hebei Province from 2003 to 2008. During this time, he claimed that he had divorced. his wife in a local court without his knowledge, gave him a basic income and took the children.

His political ties extend to the family of former Chinese President Hu Jintao, with business ties conducted through an investment holding company in Hong Kong.

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