China billionaire involved in iron ore bribery: Dealings with Australia revealed

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He was caught up in an iron ore bribery scandal a decade ago, but leaked documents reveal the Aussie companies that continued to work with him.

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

Mining companies still traded with the steel billionaire Du Shuanghua after he admitted to paying bribes to a Rio Tinto executive.

Leaked documents show Rio Tinto has traded more than $US200 million ($275 million) with Mr Du’s company, including selling iron ore, while BHP has sold coking coal.

It was revealed in the Pandora Papers, one of the biggest-ever leaks of financial records,

which includes 12 million documents from 14 offshore providers.

The documents show Rio Tinto traded with Mr Du’s companies via a Singaporean intermediary.

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

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

Back in 2010, Mr Du admitted to paying $US9.4 million ($A12.9 million) to get access to iron ore, including delivering money stashed in boxes to Rio executive Wang Yong, who was sentenced to 14 years in jail.

However, Mr Du was never prosecuted, with the court finding he had been a victim of others’ schemes.

Millions in iron ore

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

One example includes just one month in May 2016, where Rio sold almost 170,000 tonnes of iron ore to Bright Ruby for $US9.9 million ($A13.6 million).

A contract signed in 2014 with BHP’s Singaporean branch shows more than $US37 million ($A51 million) worth of iron ore was sold from BHP to Bright Ruby during the following years, revealed the Australian Financial Review.

Another Aussie company Fortescue Metals also sold 187,000 tonnes of iron ore in July 2018 for $US8 million ($A11 million), the paper said.

Rio and BHP have declined to comment to the media about the revelations from the Pandora Papers.

Fortescue told the AFR it was “committed to a zero tolerance approach to bribery and corruption, and adheres to anti-bribery and corruption and know your customer procedures in all its dealings with suppliers and customers”.

Risk of engaging with China

Michael Shoebridge, director of defence, strategy and national security at the Australian Strategic Policy Institute, said the revelations surrounding Mr Du illustrates the risk involved in economic engagement with China for even the largest companies.

“The Pandora Papers material indicating his use of various intermediaries, legal arrangements and holding of his assets outside mainland China are not that unusual for high worth individuals in China,” he told news.com.au.

“That’s because wealthy Chinese business people understand the reach of the Chinese Communist Party (CCP) into all domestic entities, so it is rational for them to seek to shield some of their wealth from the party. What is unusual is the disclosure of these arrangements.”

The Chinese President Xi Jinping has launched a public campaign to bring powerful corporate leaders to heel by demonstrating the party’s power over them, Mr Shoebridge added.

“Material like the information in the Pandora papers may provide an opportunity for him here. But whether or not Chinese authorities take any action against Mr Du or others will depend not so much on the validity of the concerns raised by the Pandora papers but by his standing with Xi and the utility to Xi of using the courts against him,” he said.

“It’s hard for an Australian audience to understand the fact that the courts in China are simply tools for the party to use and direct, without the independence of our justice system. The recent release of the two Canadians held on fake charges as a direct response to Huawei CFO Meng’s release in Canada is an example.”

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

China’s subsequent arrest of Canadian nationals dubbed the “two Michaels” was widely seen as retaliation for the arrest of Ms Meng. They were arrested and imprisoned on espionage charges in the days after Ms Meng was detained. Their arrest in China was branded “hostage diplomacy” by Western critics.

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

‘Pressuring’ iron ore companies

The Chinese government has not been shy about pressuring Australian iron ore companies, Mr Shoebridge added.

“Through allegations of corruption involving either their employees, intermediaries or those they have dealings with, as the Stern Hu case from over a decade ago demonstrates. That may also play into what happens next here,” he said.

Mr Hu, is an 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 $A14 million and stealing trade secrets.

He, along with three Chinese colleagues that included Wang Yu, were involved in iron ore contract talks between companies and the stell industry in China and all four men were sacked by Rio.

Who is Du Shuanghua?

One of China’s wealthiest men, he founded the country’s largest private steel manufacturer, Rizhao Steel Holding.

Forbes estimates that Mr Du is worth $US1.3 billion ($A1.8 billion) and he’s said to have used the money to buy political connections and power within the CCP.

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

His political connections extend to former Chinese president Hu Jintao’s family, with business dealings conducted via an investment holding company in Hong Kong.

Read related topics:China



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