Thursday, July 16, 2009

China's secrecy laws are a secret

(SMH) -The options for Australian miner Rio Tinto, or indeed anyone, to help four employees detained in a Chinese state secrets investigation are limited, lawyers say, as laws leave great latitude to investigators and prosecutors.

Under China's sweeping laws, the health and even the birthdays of the current leadership are considered state secrets.

Almost anything else can be classed as secret, especially economic data, as China moves from a system where everything once belonged to the state to the current free-for-all where everyone scrambles for any advantage they can get.

Stern Hu, an Australian citizen, and three Chinese colleagues were detained this month for stealing state secrets to aid Rio in price negotiations for iron ore, which is used in steelmaking. At least one Chinese steel executive is also detained and the probe has reached many of the largest mills.

The murkiness of state secret laws puts foreign investors potentially at risk when dealing with state-owned entities and potentially sensitive economic information.

Australia's Prime Minister Kevin Rudd said yesterday the world was watching the case and warned significant economic interests are at stake.

The case has also raised concerns about rights under China's legal system that are more commonly heard from human rights activists than from businessmen.

"This case makes as clear as any does that business people also have human rights," said Jerome Cohen, a professor at New York University School of Law. "They ignore at their peril what are perceived as purely human rights cases, since, as this case illustrates, they can be next."

Consular visits

Chinese diplomatic protocol prevents Australian consular official from asking Hu about anything other than his physical welfare. After their first visit last Friday, Beijing is not required to allow another visit for one month.

During investigations, neither the defendant nor the lawyer have access to documents on which a case in based, and lawyers cannot challenge the "secret" designation, Cohen said.

Lawyers are often not allowed to see their clients until the state security apparatus has concluded the investigation and formally handed the suspect over for prosecution. That can take months, or even more than a year.

Defence lawyers in such cases themselves have a legal "obligation to guard secrets", said lawyer Guan Anping, who took on state secrets cases in the past.

Trials involving state secrets are held behind closed doors, and family members of defendants are barred.

The diplomatic fuss could benefit Hu in areas where Chinese authorities exercise discretion, for instance in allowing earlier access for his lawyer or increased privacy in consultations.

His three Chinese subordinates, and any Chinese executives caught up in the investigation, have far less protection. Rio could hire a lawyer for its Chinese employees, but not much else.

Article 111 of the Chinese code, which refers to illegally providing state secrets or intelligence to organisations or people outside the country, leaves a lot of room for interpretation. Sentences can vary from six months to death, and some foreigners have been expelled after conviction in the past.

"Intelligence" could include information that may be public in China, but considered embarrassing if aired abroad.

Exiled Uighur businesswoman Rebiya Kadeer, who China says was the mastermind behind ethnic riots in Xinjiang, was jailed for mailing newspaper clippings to her husband.

Chinese employees

Chinese-born foreign nationals are particularly vulnerable. Their language and cultural skills mean they navigate the Chinese system well but their loyalty is supposed to be to China first.

That poses a problem for the many multinationals who rely on Chinese employees to advise and carry out operations in China, recognising their ability to bridge foreign and Chinese cultures.

The Chinese business culture is additionally confusing because of the hybrid form of many state-owned companies, which are listed entities but also integral to a state-directed economic model that China adopted from the Soviet Union.

One legacy of the system is that a "state secret" can be in the hands of a commercial enterprise, and the cost of a raw material - such as iron ore - can become of national interest.


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