Australians explain why China's stance against Rio Tinto corruption was a good t

trotskyistplatf

Below is an article from an Australian group explaining why Australian working class people should welcome China's prosecution of Stern Hu and other Rio Tinto executives involved in corruption and greedy activities:

****************************************************************************************
Australian Capitalists Throw a Tantrum After Rio Tinto Bosses Get Caught Out

China is Cracking Down on Corporate Greed & Corruption
When Will That Start to Happen Here?

April 15 - On January 31, a Rio Tinto subsidiary, US Borax and Chemical Corp. locked the gates on 560 US miners in order to try and make the workers accept a really substandard employment contract. Rio’s outrageous action against the workers in Boron, California, came on the eve of the company announcing a $US4.872 billion dollar profit. As we go to press, the miners remain locked out of their workplace. However, the miners, members of the International Longshore and Warehouse Union (ILWU), are getting enthusiastic support from workers across the globe who know all too well the merciless greed and savagery of the Rio Tinto bosses. A joint statement by the Maritime Union of Australia (MUA) and the CFMEU (Mining) declared:

Our solidarity goes to ILWU Boron miners and their families in particular who have suffered these attacks on the morning of January 31 for defending workers’ rights and refusing to capitulate to the bullying tactics of Rio whose agenda is to break the union in order to slash wages and conditions. Rio Tinto hired vanloads of security guards to storm the mine while helicopters flew overhead only last October.

- MUA website, 16 February posting

The statement went on to note that Rio Tinto was notorious for “abuses of human rights, indigenous land rights, workers’ rights and damage to the environment and local communities in Australia, Africa, Bougainville, Indonesia and Iceland.” And that is putting it mildly! Let us here briefly examine some of the history of Rio Tinto. Let us look at the ruthlessness of the Australian and British capitalists who run this company.

In the late 1950s, a subsidiary of Rio Tinto’s Australian arm (then called CRA) wanted to mine the bauxite deposits in Queensland’s Cape York. However, the company owners and executives did not want to spend even a small portion of their profits on giving any compensation to the Aboriginal people that lived in the area. And the greedy bosses as sure as hell weren’t going to share the expected mining wealth with the Aboriginal people whose land they were trampling on. So the Australian state intitutions, which serve the likes of the Rio bosses, moved to simply drive off the people living in the Mapoon Aboriginal Reserve and the Weipa Aboriginal Reserve. When the Aboriginal community stood firm, the Department of Native Affairs intercepted welfare payments and then warned residents that their children would be removed due to “neglect” if they did not leave the area. Finally on November 15, 1963, armed police arrested the entire Mapoon community! The police then burnt down the Aboriginal residents’ homes, school, stores and shops.

Even more extreme violence was used to enforce the interests of CRA in Bougainville, an island under the control of Papua New Guinea (PNG). When copper was discovered in Panguna, Bougainville in the 1960s, PNG was still a direct Australian colony. And it was with the open racist contempt typical of the colonial era that the company and its Australian government enforcers “related” to the Bougainville people. After local people started to oppose the way they were were being treated by the Australian company, the Australian Federal Minister for External Territories popped in to the island in January 1966 to tell disgruntled villagers that the mine was not for their benefit and that they would get no special benefits from it at all! Three years later, Bougainville people would find that the Australian legal system was just as biased in favour of the rich corporate owners. In August 1969, the Australian High Court dismissed a case by Bougainville villagers
against CRA’s (Rio Tinto’s) mining lease. For the next two decades, CRA continued on their merry way. Having driven out hundreds of people to establish the mine, they then made little effort to protect the island and its people from the effects of mining. They simply dumped over a billion tonnes of poisonous tailings waste into Bougainville’s Jaba river, literally turning the river bright blue, destroying vital fishing stocks and ruining the surrounding area. Despite the Panguna mine, one of the world’s biggest open cut mines, raking in spectacular billion dollar profits for CRA’s (Rio Tinto’s) owners, the company gave an insulting pittance in compensation. However, by 1988 Bougainville’s people had had enough. They cranked up the militancy of their anti-CRA struggle. In 1988, villagers managed to briefly shut down the mine through sit-ins and roadblocks and later through daring sabotage actions. Under direction from the Hawke Labor government in Canberra, PNG responded by sending in first riot police and then the military. To direct PNG’s war, Australian military
“advisers” were directly stationed in Bougainville and Australian pilots flew the Iroquois helicopter gunships that terrorised the local people.

Yet despite the firepower arrayed against them, the Bougainville resistance which had coalesced into the Bougainville Revolutionary Army (BRA) managed to force the mine to shut down indefinitely in May 1989. Australia/PNG responded by escalating the war. They used terrifyingly brutal methods. Herding the people of Bougainville into “care centres” (a Vietnam War-euphemism for concentration camps), many suspected of having sympathies for the rebels were killed or beaten. Still unable to defeat the BRA and reopen the mine for CRA (Rio Tinto), Canberra told the PNG puppet government to impose a naval blockade on the entire island and provided the Port Moresby regime with the aircraft, helicopters and Pacific Class speedboats needed to enforce the blockade. As a result, the island’s people started dying from starvation and more commonly from a lack of medicines. Alongside the hundreds upon hundreds killed by gunfire, 14,000-15,000 Bougainville people ended up dying as a result of the genocidal eight-year blockade. In all the PNG state authorities and their Australian imperialist masters killed off some 10% of the island’s entire population. All this to try and help CRA/Rio Tinto to resume their plunder in Panguna.

Australian workers have also found that when it comes to a clash between their interests and those of the Rio Tinto bosses, the Australian state institutions are inevitably on the side of the latter. And there have been plenty of conflicts between Rio Tinto and its workers for the Australian state to intervene into. Rio Tinto bosses are notorious for their aggressive, anti-union stance. In the late 1980s and 1990s, CRA/Rio Tinto, working together with free-market fundamentalists known as the New Right, spearheaded a campaign that greatly weakened trade union presence in the once heavily unionised mining industry. They began this union-busting offensive in the iron ore mines in Western Australia’s Pilbara and then spread it to the coal mining sector. Rio Tinto developed a carefully planned strategy. First they would refuse to negotiate with the workers union and offer pay increases only to workers who signed individual contracts or other agreements “negotiated” without union involvement. Of course, once the union was undercut, then the company would slash back the pay of the workers who went with the individual contracts. Many workers, however, knew that this is what Rio was
planning and so refused to be bribed. So the next phase that Rio Tinto would go into was to use intimidation against individual workers and their families to get workers to sign the non-union “agreements.” To help do this, Rio Tinto would announce big job cuts. Those who went on to the individual contracts would be saved from being fired while union activists were put on a blacklist to be sacked. To further coerce union-proud workers to submit, Rio Tinto would transfer these workers from their regular tasks to meaningless “duties” meant to symbolise that their presence was redundant and the falling of the axe was imminent. At the Blair Athol coal mine, Rio once had pro-union workers transferred from mining operations to ... painting rocks and old tyres with small paint brushes! Meanwhile, to stop retrenched union workers from trying to campaign for a return of their jobs, Rio employed private security guards to spy on the sacked mineworkers and their families.

Despite all these vicious methods, Australia’s Arbitration Commission effectively legitimised Rio’s tactics in a September 1999 ruling on a years-long dispute at the Hunter Valley No. 1 Coal Mine. Noting that there was an industrial war going on at the mine, the court said of Rio’s tactics that, “all is fair in love and war.” Yet to Australian state institutions, it was only “fair” when the war was being fought by the corporate bosses! When workers tried to fight they were met by injunctions, litigation and violent repression. This was starkly seen during the class war at Rio Tinto’s Gordonstone (now called Kestrel) coal mine in Central Queensland. At Gordonstone, Rio had worked with the previous owner of the mine ARCO in an elaborate union-busting operation. On 1 October 1997, ARCO sacked its workforce of 312 mineworkers in order to hire a new non-union workforce on individual contracts. Unionists, however, picketed the mine and ARCO was unable to
reopen it with a new workforce. So they sold the mine to Rio Tinto who secretly recruited a non-union scab workforce. In February 1999, Rio sought to reopen the mine with an initial workforce of 22 scabs. However, trade unionists flocked to the picket line. Both acting for Rio Tinto’s interests, police mobilised to shepherd the scab workers through the pickets while the courts agreed to Rio’s injunctions against workers who joined the picket line. On the first day that scabs went to work, police arrested 23 of the 250 or so unionists who had gathered at the picket. Several days later as workers from throughout Queensland swelled the pickets, police arrested another 53 protesters. In the end over 250 trade unionists and their supporters were arrested on the Gordonstone mine pickets. Australia’s “democratic” so-called “justice system” serves and protects the Rio Tinto bosses very well indeed!

All of the above highlights two things. Firstly, it shows that Rio Tinto executives will do absolutely anything they can get away with to maximise profits for themselves and Rio’s mega-rich owners. And it is, by the way, the filthy rich who own most of Rio Tinto – the mythical middle-class “mums-and-dads” shareholders own just a tiny minority of the company. If one looks at Rio Tinto’s 2008 Annual Report, one finds that 97.8% of the shareholders – which include the upper-middle class “mums and dads” - own only 7.5% of the group. By contrast, just 258 accounts on the Australian Stock Exchange and 338 in London own a whopping three-quarters of the company’s $42 billion stock – an average of $70 million of shares each. Just who these tycoons are is somewhat opaque since among Rio’s biggest shareholders are bank nominee companies through which ultra-rich individuals and the businesses that they control can conceal their ownership. It has certainly been well documented over the years that the Queen of England and associates of the British Royal family have
a very big stake in Rio Tinto. However, the current exact value of their holdings is unknown.

A group of Rio’s big shareholders that a bit more is known about is the company’s executives. According to the company’s 2009 Annual Report, a cool $9.9 million of the wealth produced by Rio’s mineworkers and other employees was snatched as renumeration last year by CEO Tom Albanese! For his part, Australian Sam Walsh, Rio Tinto’s Chief Executive of Iron Ore and Chairman of Rio Tinto China, took nearly $6.8 million. Then we should not forget the Rio Tinto-associated leaches who receive billions in royalties from the company. Gina Reinhart who with a total wealth of $3.47 billion is Australia’s fourth richest person acquired most of her money from royalties from Rio’s Pilbara iron ore operations while Michael Wright and Angela Bennett have also become billionaires through royalties from the same mines.

The greed and extreme wealth of Rio’s bosses (and associated parasites) is well known. However, what the events in Weipa, Bougainville and Gordonstone illustrate is not only the greed of Rio’s bosses but the fact that their maniacal drive for profits is almost always backed up by state institutions. This is the case whether Rio is operating in its home bases in Britain and Australia or in “Third World” countries like PNG and Indonesia. So the Rio Tinto tycoons must have got an awful shock when four of the company’s most senior executives in China were detained last July by the Shanghai State Security Bureau on serious corruption charges. The four included Australian citizen Stern Hu, the multimillionaire boss of Rio Tinto’s Shanghai office. The four executives’ three day trial beginning on March 22 received enormous media coverage in Australia. On March 29, the Shanghai No. 1 Intermediate People’s Court delivered its verdict: each of the Rio executives were guilty of both receiving huge bribes from privately-owned Chinese steel mills and of using illegal means to obtain the commercial secrets of state-owned Chinese steel companies. The Rio Tinto high fliers were appropriately given robust sentences from seven years upwards as well as fines and confiscations of their wealth. Stern Hu as the
top boss of Rio Tinto Shanghai was given a ten year sentence while Wang Yong who took the biggest bribes received a fourteen year jail term.

Rio Tinto Executives & Rio Tinto Head Office: Both Guilty As Hell
Despite the best efforts of the Australian media to present the China trial as “murky,” the evidence proving the charges was specific and very conclusive. Let us examine separately each of the two distinct sets of convictions that was delivered to a packed Shanghai courtroom by Judge Liu Xin.

Firstly, let us look at the bribery charges. Each of the executives received large bribes. The bribes were taken by the Rio bosses from small and medium sized Chinese private steel bosses who wanted to get Rio Tinto to supply their mills with iron ore rather than selling its ore to China’s big state-owned steel producers. The biggest bribe was taken by Wang Yong, who received $US9 million ($A9.8 million) from the former head of Rizhao Steel, Du Shuanghua. Du who at the time was China’s second richest person confessed to the court that he payed the bribe. Meanwhile, Stern Hu was found to have taken two separate bribes between December 2008 and January 2009 totalling 6.4624 million yuan ($A1.04 million). The first bribe was taken from Hebei Jingye Steel company and the second larger bribe of $US798,600 (5.46 million yuan) was receieved on 14 January 2009 from Tangshan Guofeng Steel company. Stern Hu’s wife confirmed he had stashed away the bribes in their family safe. The verdict read that “Zhu Xiaoli (Stern Hu’s wife also known as Jolie) testified that
Hu Shitai (Stern Hu’s Chinese name) took home 1 million yuan cash and put it in the safe.” It continued that Mrs Hu told police: “this money is not Hu’s salary.” She also testified that Hu took home $US300,000 and that money too was not his salary. The verdict stated that on August 26 last year police confiscated amounts of $US300,000 and 1 million yuan from Hu’s home.

The details of the bribery were further confirmed by the private sector bosses paying them. Zhang Zhen, general manager of Tangshan Guofeng, testified about the bribes paid to Hu:

“He received this money under the name of ‘consultancy’ from Hong Kong Guofeng Company, which is an affiliate of Gaofeng company in Tangshan City, Hebei province, which is a private steel mill.
“In 2008, Tangshan Guofeng company signed an iron ore supply agreement with Rio Tinto Singapore. During this process, Hu Shitai put forth that 30 per cent of the iron ore Tangshan Guofeng buys should be a `commission’ or kickback. Tangshan Guofeng company wanted long-term and stable iron ore supply. They understood that in order to obtain this, they must have good relations with Hu. They also understood that only by giving benefits to Hu would a long-term relationship with Rio Tinto be possible.”

--The Australian, 1 April 2010

From the evidence it seems that not only did Stern Hu take the bribes but he actively solicited them. As a result even Australian Foreign Minister Stephen Smith who was doing everything he could get away with to criticise China’s prosecution of the Rio bosses had to admit after the trial that, “there was, according to Australian officials, evidence, indeed if not substantial evidence, that bribery acts had occurred.... And the advice I have is that in addition to Stern Hu’s own admissions, there was other evidence which drew Australian officials to the conclusion that acts of bribery had occurred.”

In the first charge of receiving bribes, the Rio bosses undertook illegal activities to gain dirty money for themselves. However, the second charge is even more explosive. For in the second set of crimes the executives were engaging in corrupt actions for the sake of Rio Tinto - and as the verdict strongly suggests with Rio Tinto’s Australian head office’s direct encouragement. In this second charge, the Rio bosses were found to have lured the heads of Chinese state-owned enterprises with promises/bribes, or through other illegal means, to obtain the Chinese steel companies’ commercial secrets. The charge stated that these actions were done in order “to seek profit for others (emphasis added).” Again the convictions on this charge were based on detailed facts. The strong evidence presented to the court included admissions of particular acts by the Rio executives themselves, confessions by those Chinese bosses that they had bribed/induced, testimony by others who witnessed the illegal acts and emails seized from Rio Tinto computers after the arrests which confirmed the transfer of the stolen secrets.

The Rio bosses were found to have stolen eight separate business secrets on eight separate occasions over a period from April 2005 to June 2009. These include the highly confidential minutes of the China Iron and Steel Association (CISA), the body that negotiates iron ore prices with Rio Tinto. To extract this information, Rio took advantage of the fact that it had a monopolistic hold on the iron ore market and Chinese state-owned steel producers were desperately short of reliable supply. For example, on the evening of 8 June 2009, the day of a crucial meeting of CISA to discuss the next steps in fraught iron ore negotiations with Rio Tinto and co., Stern Hu met Tan Tixin, general manager of an affiliate of Shougang Steel. They made an arrangement, i.e. fixed a bribe. Tan Yixin would divulge the contents of the CISA meeting and Rio in return would ensure that a ship of Rio’s badly required iron ore spots would be delivered to Shougang.

The crime of those Chinese state enterprise managers that succumbed to Rio’s inducements is that they sold out the entire, mostly socially-owned, steel industry for the sake of their particular firm. The motivation for state-owned managers to commit such betrayals is not as great as for private sector bosses as, after all, their enterprises ultimately share the same owner, that is the Chinese state. Some temptation, however, must still arise because Chinese state enterprise managers do receive bonuses if their particular firm achieves high profits not to mention the prestige of running a successful company.

For Rio Tinto the iron ore-for-secrets corruption worked wonders until they got caught. Knowing in advance the
negotiating strategy and target prices of CISA, Rio could devise countermeasures and always stay one step ahead. As judge Liu Xin found, the Rio executives’ actions “put the Chinese steel industry in a powerless position” to negotiate iron ore prices. Cruicially, the stolen information allowed Rio Tinto to calculate in mid-2009 that it could get higher profits by abruptly suspending the annual price negotiations and forcing the Chinese enterprises to instead buy ore at inflated prices on the spot market. The verdict stated that the losses for the Chinese steel industry of these actions was about 1.018 billion yuan.

The eight rigorously proven cases of stealing commercial secrets appear to be just the tip of the iceberg. When the Rio Tinto Shanghai computers and laptops were seized following the arrests last July, highly confidential information that could only have been obtained illegally was found on them dating back six years!

The methods used by Rio Tinto in China are accurately described by the word “bribery” but they can also be described by the word “intimidation.” Rio effectively hit Chinese state enterprise managers with the following threat: You better rat on the rest of the Chinese steel industry or else your steel mills won’t get any iron ore. Such a combination of intimidation and bribery has long been part of Rio’s arsenal which they have especially used against their own workers. “If you quit the union, you will get better pay [in the short term until we drive out the union] but if you defy us and stay in the union we will find a way to sack you.”

Whatever words best describe Rio’s corrupt practices in China, the result of them is clear: they helped to ensure yet higher prices for Rio’s ore which in turn allowed Rio Tinto’s filthy rich executives, big shareholders and royalty-receiving parasites to gain even more wealth while enterprises collectively owned by the still relatively poor people of China had their income gouged. In other words, the rich capitalists from a Western country robbed the poor masses of a developing country. A very familiar scenario? You bet! Familiar outcome? Not this time!

When the four Rio executives were first arrested by PRC authorities, their fellow top Rio Tinto bosses rushed to their defence. They made statements implying that the four were completely innocent. An 11 August 2009 Rio Tinto Press Release stated that “the company remained surprised and concerned over the detention” of its executives and that, “we are still not aware of any evidence that would support their detention.” However, as it became clear just how much evidence the Chinese authorities had against Rio, the company moved to distance itself from the four. Once the verdict was released, Rio Tinto with panicked haste sacked the four convicted executives. Australian head of Rio’s Iron Ore Division, Sam Walsh, described the four executives’ receipt of bribes as follows:

“We have been informed of the clear evidence presented in court that showed beyond doubt that the four convicted employees had accepted bribes.
“By doing this they engaged in deplorable behavior that is totally at odds with our strong ethical culture.”

The four executives did indeed engage in “deplorable behaviour.” But as to Rio Tinto having a “strong ethical culture”? Sure…and pigs can fly! The Rio Tinto heads’ sacking and condemnation of their fellow executives was simply a deceitful attempt to mask their own deep involvement in the corruption. It is telling that while denouncing the four executives for accepting bribes, Rio with unparalleled cynicism insisted that it could not comment on the charge of illegally obtaining commercial secrets as it had not had the opportunity to consider the evidence. Oh yeah? More like because that charge seriously implicated Rio Tinto!

Rio Tinto’s cover-up-job has been slavishly assisted by the Australian media. Rupert Murdoch’s The Australian newspaper ran a front page story on March 24 titled, “Secret Rio Tinto probe cleared company but left Stern Hu in doubt.” The article retails the notion that a supposed “independent audit” of their China operations after the arrest of the four was correct in “clearing” Rio of any wrongdoing. But the whole idea behind the audit, paid for by Rio Tinto no less, was precisely to find the company “innocent.”

The Labor government and right-wing opposition sang the same tune as Mr Murdoch’s scribes. When asked to respond to calls for Australia’s corporate regulator, ASIC, to investigate Rio Stephen Smith incredibly declared that while it was up to ASIC to decide whether it wanted to investigate Rio Tinto, “I’ve seen nothing come across my desk which would cause me to contemplate such a matter in any event” (ABC News Online, 30 March.) Well maybe someone should shove the 70-page verdict from the Shanghai trial on to the Foreign Minister’s desk – then he’ll have to spin another line! For although the Chinese courts (unfortunately) for the sake of preserving diplomatic relations with Canberra somewhat downplayed Rio Tinto’s culpability in the case, the court’s verdict still does expose the company’s role. The verdict refers umpteen times to Stern Hu emailing the stolen secrets on to his superiors (in Singapore and Australia.) Most notably, the verdict notes how on 17 June 2009 an email from higher up Rio executives (the Australian Rio office) instructed Stern Hu to obtain what they could only have known was a strictly confidential secret: details of ongoing iron ore price negotiations between China’s CISA and Rio’s Brazilian rival Vale. When Stern Hu and his colleague Wang Yong extracted and passed on that information that same day, head office emailed back asking Stern Hu and Wang to double check the [illegally obtained] data. In other words, the Australian office headed by Rio iron ore chief Sam Walsh was encouraging, if not ordering Stern Hu and Co, to corruptly acquire confidential PRC company secrets. Indeed, during his trial Stern Hu’s very defence on the stealing secrets charge was that he was simply acting as a go-between passing information up the corporate food chain to Rio’s iron ore chief Sam Walsh (The Australian, 7 April.) In fact, all four executives independently admitted that a big part of the very job description of Rio Tinto’s Shanghai office was to obtain the internal information of China’s steel industry including the contents of its internal meetings. Stern Hu’s colleagues testified how in order to carry out this brief, Hu would sometimes call office meetings to motivate his underlings to go out and get the information. Thankfully, Rio Tinto isn’t involved in any mining operations in China. That is, as long as one doesn’t count their patently very lucrative mining of secrets.

You can bet that any bribes/promises offered to Chinese steel bosses to get the confidential information would have had to be known by Rio Tinto’s Australian headquarters. The Shanghai office would not have had the authority to lower the price of ore sold to China’s major state-owned customers or to suddenly transfer a ship of ore to a particular customer without the approval or at least knowledge of head office. Indeed, even in its frontpage March 24 article “exonerating” Rio Tinto, The Australian newspaper had to admit that:

Rio Tinto China effectively runs its payments and receipts through the iron ore head office in Perth. In particular, it cannot make substantial payments without external approval and all material receipts have to be accounted for.

Now, Rio Tinto does not appear to be directly implicated in the first charge of receiving bribes. Yet even here the conduct of the four executives has been shaped by Rio Tinto’s culture of extreme greed. After all they are not just four ordinary employees who were proven to be receiving bribes. We are talking about the four top executives in Rio Tinto’s biggest market! The fact is that bribery, manipulation and espionage are all part of the array of methods Rio Tinto uses to maximise its profits. The company is especially notorious for using such methods in the “Third World” where they are usually able to strongarm whoever needs to be strongarmed to get away with using such tactics. However, the socialistic PRC is one developing country where such methods might backfire! Having no actual production operations in China – just a big trade relationship – Rio Tinto and its bosses did not get the opportunity to learn just how risky such behaviour could be in the PRC. But now they are learning!

The culpability of Rio’s Australian-based bosses in the corruption does not mean that one should feel much sympathy for the Shanghai four. Far from it. Stern Hu and the other three were not just victims of Rio Tinto’s greed ... they were victims of their own greed. Firstly, they solicited huge bribes for their own benefit. Secondly, although when they lured Chinese steel managers to hand over secret information they were doing so at the behest of Rio Tinto, they were hardly reluctant players in it all. They knew that the result of Rio Tinto gaining the secret data and thus being able to charge still more exorbitant prices would be higher bonuses and dividends for themselves.

Even leaving out the illegal acts, Stern Hu and Co. were very much part of that class of executives and big shareholders that divides among itself the loot that Rio Tinto exploits out of its workers and rips out from the hands of local and “Third World” peoples. Such plunder is all too legal in most parts of the world but from the standpoint of the toiling masses it is just as criminal as bribery and corruption. Stern Hu was on a salary package in excess of $2.5 million per year. Especially by Chinese standards this was extremely high – his salary was many, many times greater than that paid to the top executives of China’s biggest state-owned enterprises. This “legal” salary combined with his receipt of bribes allowed him to live a spectacular lifestyle. An investigative report by leading Hong Kong newspaper, Wen Wei Po, found that Hu owned at least three luxury villas each worth more than 100 million yuan ($17 million)! Stern Hu and his underlings got what they deserved. It’s just that Rio Tinto’s Australian-based top bosses need to also now be brought to justice.

A Great Time to Stick the Boot into the Rio Tinto Bosses
Despite Rio Tinto’s best efforts to wash their hands of this scandal they have been considerably tainted by it. The PRC’s exposure of the corruption of four of Rio’s top China-based executives and the Shanghai court verdict’s implication of the Australian headquarters’ role has highlighted the immoral greed of Rio Tinto and its ilk. For example, soon after the Rio Shanghai bosses were formally arrested, China’s official Xinhua news agency published an article attacking multinational companies’ lack of ethical responsibility. The article (13 August 2009) detailed other cases where Western corporations (including German conglomerate Siemens, U.S.-based label maker Avery Dennison and a subsidiary of French company Alcatel-Lucent) have been found to have bribed Chinese officals or Chinese state-owned company managers - often through “gifts” and paid sightseeing vacations disguised as business trips. Interestingly, the Xinhua report highlighted the ongoing struggle of the Bougainville people to seek damages from Rio Tinto for crimes against humanity and racial discrimination stemming from its actions over the Panguna mine.

However, Rio’s reputation has been tarnished far beyond China too. Indeed, after the four executives were convicted public pressure was building for the US Securities and Exchange Commission and Britain’s Serious Fraud Office to investigate the corporation. In Australia demands for Australia’s corporate regulator ASIC to investigate Rio have come from a surprising corner – The Greens party parliamentarians. Throughout this drama, Bob Brown and his Greens have acted as poodles for Rio Tinto and its corrupt bosses. Inciting Australian nationalism and appealing to anti-communism, the Greens feverishly denounced the PRC’s efforts to bring the Rio bosses to justice. Immediately after the verdict was announced, Bob Brown ranted that the trial had been “manifestly unfair” and that “Australians should be concerned … the legal system there is corrupt.” With touching devotion to the corporate exploiters, Brown declared the reason for his great concern at the verdict: “This has to be seen as a message to the corporate world to go easy in China or else” (Sydney
Morning Herald website, 29 March.) However, some Greens supporters are not all that fond of corporate thugs like the Rio bosses. No doubt this was a big factor in why Bob Brown changed his tune the very next day. Although he failed to retreat from his disgusting China-bashing stance, Brown now stated:

“Australian authorities should investigate Rio Tinto to find out where that money has gone and who else was involved.
“The Australian Federal Police may also want to investigate Rio Tinto’s part in allegations of bribery and use of commercial secrets as Australia is a signatory to the UN Convention Against Corruption.
“Rio Tinto is reported to have received multi-billion dollar advantages from the activities of Hu and his fellow accused.”

-Greens Press Release, 30 March

The trouble is that one can have no confidence in the ability of either ASIC or the Australian Federal Police to further expose Rio Tinto corruption. Why? Becase these agencies form part of a capitalist state whose very purpose is to enforce the interests of the big business owners. That is after all the reason why Rio Tinto has never been brought to task in Australia – despite often acting in an above the law, mafia-like manner. There is, however, one force that can investigate Rio Tinto and that is the trade unions. The union movement should demand that it be allowed to investigate all of Rio Tinto’s books. To motivate this demand our unions would emphasise that as mass organisations of workers who are exploited by the likes of the Rio bosses, the unions have more capacity to resist being swayed, induced or bribed by Rio than the likes of ASIC do.

Now in carrying out inspections of Rio Tinto accounts, our trade unions should not be too concerned if Rio cheats fellow capitalist companies as that would mainly just mean one lot of leaching multi-millionaire big shareholders and executives stealing from a rival lot. However, when Rio Tinto rips off socialistic state-owned Chinese firms like Baosteel or Anshan Iron and Steel Group, it is ripping off firms that are collectively owned by all the Chinese people. It is effectively stealing from one in five of the world’s people!

Trade union inspectors would not only be looking at Rio Tinto’s machinations against companies but would be mainly examining if the same methods that were so spectacularly blown out of the water in China are being tried by Rio against workers and communities. We know that Rio in the 1990s openly bribed workers to keep them out of the unions – are they still doing that but covertly? Any bribing - whether direct or indirect - of community leaders and organisations in order to quell resistance to the way they have undertaken mining projects must also be exposed. Furthermore, are Rio in Australia replicating their espionage against state-owned Chinese firms by spying on union activists as they did in the past. How much are they paying private security firms, private investigators and scab-herding “troubleshooters” for anti-union and anti-community tasks? What amount of Rio’s revenue goes into paying image consultancy firms and lobbyists? How much do they influence state institutions by funding political parties and semi-political organisations like “rights” groups, social activist networks, foundations and community organisations? To find all this out, union inspectors
will need to see more than just the account books since outlays in these areas can easily be disguised under ledger columns with titles like “Community Assistance,” “Consultancy” etc. Therefore, trade unions should also demand the right to inspect all of Rio Tinto’s internal and external management correspondence.

With corporate corruption very much in the news following the Rio Tinto trial in the PRC, this is a great time for the union movement to demand the right to inspect the books of other corporate giants too including BHP, Xstrata, Qantas, Lend Lease etc. In particular, the workers movement must insist that the restrictions on union rights to inspect company documents contained in Rudd and Gillard’s Fair Work Act be abolished.

Any exposure of the corrupt and devious methods used by Rio and their ilk can only help to popularise the need to oppose their attacks on workers’ rights, unions and jobs. It has been notable that despite the unanimously hostile coverage of the China Rio Tinto prosecutions by the Australian media and the denunciations of the trial verdict by Labor, Liberals and the Greens alike, a significant minority of people in Australia have welcomed the convictions. A poll conducted by the right-wing Australian newspaper found that 28.5% of respondents considered that the jail sentence handed to Stern Hu was fair and a further 7.5% felt it too lenient. The fact is that working class people, the more so after the Global Financial Crisis, see the corporate executives as greedy leaches who do much harm to people’s interests. The high-level corruption at Rio Tinto exposed by China will only add to such justified resentment.

Now that we have seen that a serious force – namely, the PRC state - has struck a blow against the Rio Tinto bigwigs, it is time to take up the offensive here against the anti-worker attacks and unrestrained greed of all the big corporate bullies. Among the points that the Australian union movement should raise in connection with China’s arrest of the Rio Tinto executives include the following:

• Rio Tinto and other private corporations’ greedy acts should be challenged not only in China but
in Australia and elsewhere. We know that Rio Tinto has been ripping off the Chinese people for years. Yet it
is only Rio’s rich owners, executives and royalty-receiving parasites that benefit from this – not its workers. So
despite paying out lavish executive salaries and over $2.6 billion in profits to shareholders for 2008 dividends,
Rio announced in December 2008 that it would slash its workforce by 14,000. It cut hundreds of jobs from its
Alcan alumina refinery in Gladstone, Queensland, its Weipa bauxite mine and its coal operations in Queensland
and NSW. We must not allow companies making such huge profits to slash jobs. We must fight for the demand
that all companies able to grant their owners a dividend or who pay any executive more than a $300,000 annual
remuneration be banned from laying off any workers.

• Rio Tinto must massively increase its payment to the Ngarluma Aboriginal people in Western Australia for
letting the company expand its Pilbara ore traffic through their land. The community are angry that the company
has been trying to cheat on its initial agreement by retrofitting all sorts of additional demands into the deal.

• For Rio Tinto to pay out the compensation justly being demanded by Bougainville people in a current U.S.
court case. The compensation is for crimes against humanity and racial discrimination in connection with Rio’s
actions over the Panguna mine.

• Smash Rio Tinto’s refusal to accept union agreements with workers in key areas! Defeat Rio Tinto’s
attempts to resist bargaining with unions in its Pilbara iron ore operations!

• Smash Rio Tinto’s union-busting actions in Boron, California! Victory to the Boron mine workers!

• Extradite to China the Australian-based Rio bosses like Sam Walsh. Walsh’s office was proven to be
responsible both for receiving the secrets stolen by Stern Hu and for further encouraging or, indeed, even
instigating his corrupt activities.

• Thank you Peoples Republic of China for standing up to the Rio Tinto corporate thugs. But go further -
Expose more fully the role of Australian-based Rio Tinto executives in the corruption!

To fight for these demands a rally has been called for Thursday, May 20 in Sydney city under the slogans, “China is Cracking Down on Private Sector Corporate Greed and Corruption – It’s About Time that Starts to Happen Here! Stop Rio Tinto’s Plundering and Union Busting!” The demonstration will commence at 5pm outside the Sydney headquarters of Rio Tinto at 19-29 Martin Place. Proud trade unionists, supporters of Aboriginal rights and opponents of the exploitation of the “Third World” should join the action.

Of course, the ability to fight for this agenda will be assisted by any further exposure of Rio’s behaviour by PRC authorities. The Shanghai Court verdict of the Rio Tinto trial has stated that those who paid or received bribes from the Rio Tinto executives or handed over secret information will face a separate trial. This presents a vehicle for more details of Rio’s corruption to be brought out – in particular the role of the Australian-based hierarchy. Strongly anti-capitalist elements within the PRC establishment will be pushing for such an exposure while more right-wing sections of the Chinese bureaucracy will resist such an outcome. However, the outcome of these factional disputes will in part be shaped by events abroad, especially in this case in Australia. If PRC authorities see only uniform hostility from Australian society to the Rio Tinto verdict, the pressure will be on for them to tone down any revelations about Rio Tinto’s Australian-based bosses. On the other hand, a strong showing at the May 20 rally, an event that has already gained much publicity within China, will encourage anti-capitalist elements within the PRC state that want to fully expose the crimes of the likes of Rio Tinto.

***********************************************************************************

For the remainder of this article, go to: http://web.aanet.com.au/tplatform/Corporate_Greed_4web.pdf

trotskyistplatf

Here is more of the article:

Australian Media Condemns PRC Anti-Corruption Measures as “Outrageous Actions”

When the Rio Tinto bosses were arrested in Shanghai last July, the rich classes in Australia and indeed throughout the

Western world responded with hysterical fury. How dare the Peoples Republic of China (PRC) do this! Sure, an excorporate

high flier on extremely rare occasions can get nabbed in a Western country too but to jail serving top executives

from an absolute giant like Rio Tinto (the third biggest mining company in the capitalist world) when those executives

were acting to increase profits for the company’s owners … that is sacrilege as far as the capitalist class is concerned!

After all, when was the last time that a serving top boss of a corporate behemoth - like Rio Tinto, BHP or Murdoch’s News

Corporation - was imprisoned in Australia for an economic crime?

In Australia the Rupert Murdoch-owned media outlets led the anti-PRC tirade that followed Stern Hu’s initial detention. In

a 13 July 2009 article the foreign affairs editor of The Australian screamed of China’s supposedly “outrageous actions”

and of a “grotesque injustice done to Hu.” Meanwhile, Australia’s Foreign Minister, Stephen Smith, tried to interfere

in China’s judicial process by rejecting outright the espionage allegations against Stern Hu while Kevin Rudd warned

Beijing that it risked its international commercial reputation in the matter. However, the response of the Australian Labor

government was not enough for the Liberal/National opposition. The Liberal-National Coalition which is quite brazenly

the voice of the capitalists demanded an even more pugnacious response against China.

Yet, despite all this pressure, on August 10 last year China’s National Administration for the Protection of State Secrets

released a report detailing the seriousness of Rio Tinto’s crimes. They said Rio Tinto’s commercial spying involved

“winning over and buying off, prying out intelligence, routing one by one, and gaining things by deceit” over six years. This

prompted a worried Murdoch journalist to write in the finacial pages of The Australian (11 August 2009) that:

The risible allegations published on a reasonably official Chinese website over the weekend doubtless reflect ingrained

antagonism towards Western capitalism and its corporations.

Most notably, The Sydney Morning Herald (10 August 2009) reported that, “Rio executives were shadowed and intimidated

during a recent visit to Shanghai.” A later report (22 March) revealed that one of the three Rio executives trailed by

plain-clothes Chinese state security officers was none other than the 9.9 million dollar man, Rio CEO Tom Albanese. In

reading such reports, union activists who have worked in Rio Tinto operations would be completely justified in thinking

to themselves: those scumbags are finally getting some of their own medicine! During industrial disputes many trade

unionists have experienced being spied on and threatened by Rio Tinto-hired security guards. Now finally someone is

able to dish out the same to the callous Rio Tinto bosses. Awesome!

It is probable that some elements within the PRC state at that time considered arresting Tom Albanese. That would

have been spectacular! This arrest, however, did not take place. This was not because of any innocence on the part of

Albanese but because the PRC wrongly recoiled from such an arrest to avoid the diplomatic assault they would have

copped from Canberra and other imperialist governments over such a move against the overseas-based CEO of a

Western-owned corporate giant.

Also out of such diplomatic considerations, PRC prosecutors downgraded the initial characterisation of the second

charge of “stealing state secrets” to a slightly lesser charge of “stealing commercial secrets.” In the meantime, by a

couple of months after Stern Hu’s initial arrest, Australian politicians started to slightly moderate their denunciations of

the Shanghai arrests. From their own research and briefings and from conversations between Stern Hu and Australian

consular officials in China, the Australian government realised that the Rio Tinto four - and indeed Rio Tinto itself - was

guilty. That put them in a weak position to attack the PRC over the issue. Consequently, even hard right-wing opposition

politicians like Barnaby Joyce toned down their initially rabid rhetoric. No doubt Joyce and Co. were briefed on the facts

too.

However, as the trial approached the issue heated up again. The prospect that top bosses from an Australian corporate

giant would actually go down was too much for the Australian ruling class. When the guilty verdict and sturdy sentences

came through, Liberal, Labor and Greens politicians alike vented their anger at the ruling. The big business lobby, the

Australian Chamber of Commerce and Industry, denounced a supposed “lack of transparency” in the trial and demanded

“clarity” on what is considered a commercial secret in China. The mainstream media were, if anything, even more hard

line with report after report attacking the PRC legal system. Talkback radio hosts did their best to whip up anti-communist,

anti-PRC sentiments, devoting whole hour-long programs to the issue.

Yet in China itself the prosecution of the Rio executives was very popular. One reason for this is simply that the

egalitarian-minded Chinese masses simply don’t like capitalist bosses. Secondly, foreign-owned companies in China

have a reputation for ill-treating locals and exploiting Chinese workers. Although Rio Tinto does not have production

operations within China, the devious methods it used to rip off socially-owned Chinese firms stunk of the greed typical of

Western-owned manufacturing companies operating in China. The fact that the Australian government tried to sway the

trial in favour of Rio only made Chinese working people and leftist youth more determined to see the executives brought

to justice. Such behaviour by Canberra just caused Chinese people to recall the humiliation of the pre-revolutionary

days when in whole industrial regions (known as “concessions”) within key Chinese cities a system of “extraterritoriality”

reigned whereby various Western imperial countries exercised direct legal power and their corporations and personnel

were exempt from Chinese law.

Most significantly, when Rio Tinto rips off state-owned Chinese companies it is ripping off firms that are jointly owned

by the 1.3 billion Chinese people. Furthermore, when Stern Hu and Co. solicited bribes to favour private Chinese steel

companies in ore supply they were buttressing firms owned by capitalist exploiters at the expense of the nationallyowned

enterprises. Consequently, staunch communists inside China rightly saw Rio’s actions as undermining China’s

socialist sector enterprises.

Rio Prosecutions: Part of China’s Broader War against Corporate Corruption

The Australian mainstream media and politicians have tried to claim that the arrests of the Rio Tinto executives are a way

of China improving its bargaining position in iron ore negotiations. Further, they speculated that China is punishing Rio

Tinto for tearing up an agreement for state-owned Chinese company Chinalco to take an 18% stake in Rio. At the most

extreme end of “commentary”, hard right-wing Foreign Editor of The Australian, Greg Sheridan, screeched that “Beijing’s

aim is to intimidate Australia, our government, our corporations and the broader civil society” (23 July 2009.)

A rational look at the issue would find such claims highly flawed. For starters it has now been revealed in the fine print

of the media that “the Chinese government investigation, which led to the arrests, dates back to about a year earlier

....” (The Australian, March 31.) Crucially that is well before the unravelling of the Chinalco-Rio deal. So much for the

“Revenge for the failed Chinalco bid” theory!

Furthermore, those arrested in the scandal include not only the four Rio Tinto executives but executives of Chinese

steel companies that buy iron ore from Rio Tinto. Wang Hongjiu of the Laigang group and Tan Yixin of the Shougang

Group have been arrested. The latter has already been tried on charges of being lured by Stern Hu to hand over strictly

confidential information about the negotiating strategy and price plans of Chinese state-owned steel companies.

For a while the Australian media made much of a claim that the Chinese private steel bosses who confessed to paying

bribes to Rio Tinto executives were not themselves arrested. Yet this line of attack has also been demolished. The

verdict on the trial of the four Rio executives states very clearly that all executives named in the proceedings as having

paid bribes or been lured to divulge trade secrets will be dealt with in a separate case. That includes at least 19 Chinese

nationals including billionaire Du Shuanghua (The Australian, 3 April.)

Indeed, contrary to claims that PRC authorities were picking on Rio Tinto, the PRC has prosecuted many Chinese

company bosses for economic crimes that not only have no connection to the Rio scandal but have no connection to

dealings with foreign companies at all. So on August 7 last year Li Peiying, former chief of the Capital Airports Holding

Company (CAH), was executed after being convicted of accepting bribes. The previous month Chen Tonghai, the head

of China’s biggest oil refiner - i.e. the Chinese equivalent of the head of an Exxon-Mobil or Shell - was given a suspended

death sentence (esentially life imprisonment.) And to top it off just days after Stern Hu and the other Rio Tinto executives

were formally charged China’s (now ex-) richest person, retailing magnate Huang Guangyu, was formally charged with

bribery and illegal business dealings (see below.) So, sorry Mr Greg Sheridan, we all know that as a poodle of Rupert

Murdoch you just adore the bosses of capitalist corporations. But don’t try to portray the Rio arrests as a specific attack

on Australian people – no, it is instead part of the PRC’s offensive against corporate crooks whatever their origins. A war

that is indeed very popular amongst the Chinese masses.

Anti-Communist Conspiracy Theories Blown to Smithereens

All of the Australian media’s theories that the Rio Tinto four had been framed up received a sensational blow on the very

first day of their trial when all four of the executives admitted to taking bribes. Their disappointment over this development

was etched all over the faces of the media commentators that evening on national television. They knew that their best

laid Communist China-bashing plans had just been drenched by a big bucket of cold water.

In desperation the media tried to rescue the situation with some laughable arguments. For one, they claimed that in

China the receipt of bribes is a grey area because the country has a culture of gift giving. Indeed, such a culture does

exist. However, that is for gifts like sweets, pens, small amounts of money, concert tickets, watches etc to friends and

family not “gifts” of $US798,600 or $US9 million to business associates! What is more, when people who have nothing to

hide receive huge sums of money they receive them through money orders, wire transfers etc – they don’t receive huge

amounts of cash stuffed into brown paper bags and cardboard boxes as the Rio executives did!

As to the second set of charges of illegally obtaining commercial secrets, the media again spoke of a “grey area in

China” as to what a commercial secret is and what properly belongs in the public domain. Yet the information illegally

obtained by the Rio bosses was so obviously not public. This is why it was confined to internal minutes of the China

Iron & Steel Association: minutes that even most managers within the member companies – let alone the other side in

negotiations – were not privy to. Stern Hu and his sidekicks of course knew that this information was confidential which

is precisely why they had to use promises/bribes to lure Chinese executives to hand it over! To see just how conscious

the Rio bosses were that they were illegally obtaining commercial secrets, consider the manner in which they got hold of

the sensitive No.66 document of CISA, a document containing China’s iron ore price negotiating strategies. Firstly, Stern

Hu on 27 April 2009 sent a letter to his underling Liu Caikui inquiring whether Liu had gotten relevant internal documents

belonging to the CISA. Tellingly, Stern Hu suggests that the names of the recipient of any CISA document obtained by

Liu be deleted on any copy sent to him (i.e. in case the transfer of the illegal information is exposed). Liu replies the

next day, explaining to Stern Hu that he could get the information but [it would not be easy because] CISA requires all

of the recipients of their documents to keep the documents in confidence and destroy them after reading. These

conversations between Stern Hu and Liu are recorded in the Rio Tinto emails seized by PRC authorities following the

arrest of the four executives. Furthermore, Liu admitted that when he met Wang Hongjiu, a manager with steel maker

Laigang, to get the No. 66 minutes, Wang tried to cover himself by tearing off the fax header (showing his identity) from

the document. Meanwhile, the document itself was marked with the words “confidential document.” Doesn’t sound like

too much grey area around here!

As the facts turned against Rio Tinto, Australian capitalist politicians and media commentators shifted their focus to the

process of the Shanghai trial. Insinuating that the trial would not be fair, Kevin Rudd arrogantly declared to China that

“the world will be watching how this particular court case will be conducted.” Meanwhile, the media cried that the defence

had been kept in the dark about the charges. No doubt they were hoping that no one would have remebered the fine print

in their own reports from the previous month which informed that Chinese courts had handed over to the Rio bosses’

defence team thousands of pages of documents and evidence that reportedly stacked up over a metre high!

If the details of the charges against the executives had been kept away from the Australian public until the verdict then

that is mainly the fault of the Australian government and its consular officials. They knew all the details and were in

contact in the lead up to the trial with Stern Hu, his family and his legal team and with Rio Tinto. Yet they did not reveal

these details because they knew that Stern Hu was guilty. This was especially apparent after the first part of the trial

on receipt of bribes where Australian consular officials were allowed to witness the proceedings. Yet coming out of the

court room, Australian consulate general Tom Connor would only tell the media that Hu was accused of receiving two

bribery amounts and that he “did acknowledge the truth of some of those bribery amounts.” Other than the amounts of

the bribes, the consulate general provided no further details. On the one hand this served to mask the full colour of the

crimes conducted and on the other hand helped to play into the myth of a trial conducted “in the shadows.” The Australian

bourgeois media then built the myth further by refusing to grill the Australian government for more details. The media

never condemned Australian authorities for hiding the details – no it was only the “Communist Chinese authorities” that

were “keeping everyone in the dark.”

Australian politicians and media then made much of the fact that the second portion of the trial was held behind closed

doors. Yet in Australia many cases are also held in secret. This was pointed out in a rare, perhaps even unique, (somewhat)

dissenting voice in the Australian media about the Stern Hu trial by legal affairs reporter Joel Gibson (Sydney Morning

Herald, March 27.) Among the cases that have been held in secret here include cases involving trade secrets and tax

matters. Gibson’s article refers to a case in 2002 where a Rio Tinto subsidiary succeeded in having parts of a Victorian

Supreme Court hearing about its compulsory acquisition of small shareholdings in a diamond trust held in secret. As a

result, the Rio Tinto subsidiary was able to acquire the shares without the small holders being able to be part of the legal

proceedings about whether they were getting a fair price. Gibson reported the response of one of those former small

shareholders, Bob Catto, to the recent Shanghai trial:

“Bob Catto’s ears were burning this week….

“He said it was ‘absolutely hypocritical’ for Rio or Australian politicians to point the finger at Chinese courts.”

Other matters in Australia where secret justice is meted out, in part or in full, include serious terrorism cases and cases

where Australians are refused passports – of which there have been forty in the last nine years. Recently it was announced

that Iranian-born Sydney cleric Mansour Leghaei was being deported despite getting a rave review from none other than

the now federal Attorney General, Robert McClelland. Yet no one, not even the cleric himself, knows why he is being

deported because secrecy provisions in Australian laws have kept the goings-on in courts behind closed doors. At least

Stern Hu and his lawyers were able to attend their entire trial and contest the charges!

Now it is quite understandable that PRC authorities wanted to keep Western media out of the Rio Tinto trial. In a world

where, currently, capitalists hold sway over most of the globe (i.e. outside of China, Cuba, Vietnam, North Korea and

Laos), the moguls who own the Western media have enormous power to shape international public opinion. And feeling an

upper class solidarity to the arrested Rio bosses and an equally upper class hostility to China’s socialistic state structures,

the people who run the Western media have been pushing an intensely partisan line against China’s prosecution of the

Rio executives. It is thus reasonable for the PRC to be worried that this powerful media could either influence the trial

or affect the way the verdict is received. Australian pro-capitalist politicians call that “a lack of openness.” Yet if every

“opening” is smothered with a blanket of biased pro-capitalist media coverage such that no other rays of political light can

be seen, that is hardly “openness.”

“Communist Peoples Republic of China” Offends “Free-Market” Sensibilities

From the time that the Rio Tinto bosses were first arrested it has been evident that underlying the tensions between

Canberra and Beijing over the issue are the differences between the Australian and PRC social/political systems. Thus

one of the aspects of the arrests that infuriated Australia’s political elite the most was China’s initial classification of

the matter as a national security issue. To Australia’s ruling class the idea that an alleged infringement on Chinese

corporations could be considered an attack on the Chinese state proved that Chinese corporations were in fact not

“independent” but part of, and subordinate to, the PRC state. The Australian political establishment were seeing RED

... communist red! National Party senate leader Barnaby Joyce repeatedly thundered that the whole issue proved that

“state owned enterprises of the communist People’s Republic of China are at one in their purpose and organisation with

the Government of China” (ABC 7.30 Report, 9 July 2009.) In this part of their analysis, Barnaby Joyce and his ilk are,

in fact, in large part correct. China’s economy does not function like capitalist economies - where the corporations and

therefore the small number of very rich people who own them basically operate independently of state control and indeed

independently of the the control of the vast majority of the population. In China’s as indeed in Cuba’s socialistic system

the most important corporations are instead state-owned. Notwithstanding the distorting effects of China’s corruption

and bureaucratism, these corporations are ultimately controlled by the socialistic state to serve the overall interests of

the ordinary people. Thus if major state-owned corporations in a “communist peoples republic” are being attacked, like

the steel companies that Rio Tinto stole information from, then this really is an attack on the whole society’s “economic

security” – and in China’s case an attack on the economic well being of 1.3 billion people. This is completely different to

Rio Tinto ripping off Bluescope Steel here, ie one bunch of the very rich ripping off another bunch of the very rich.

Western politicians that represent the interests of wealthy classes, like Barnaby Joyce, of course see the social system

in China and Cuba as abhorrent. However, for China’s working class people the system of state-ownership of key

economic sectors has meant a big improvement in their living standards over the last 60 years. Before China was

pulled on to a socialistic path in 1949 it was a country mired in feudal backwardness and crushed under the boot of

Western colonial powers. Now, not only is China making good progress towards catching up with the countries of its

former imperialist oppressors but in some areas like public education and public transport it is moving ahead of them.

Most importantly, unlike the growth that has occurred in capitalist “emerging economies” like India, China’s development

has truly brought improvements to the lives of the masses. So, while the number of people in dire poverty continues to

increase in many parts of the world, even the Western-dominated World Bank’s figures show that the Peoples Republic

of China accounts for nearly all of the world’s net poverty reduction that has been achieved since 1981.

It is important to understand that the state-owned enterprises in China play a very different role to the state corporations

that exist in capitalist countries like Australia, Pakistan, Papua New Guinea, Britain and the Philippines. In the capitalist

countries state industry is typically only present in those sectors – like utilities - which are relied on by the overall

economy to provide affordable services but which are themselves not necessarily such profitable enterprises when

operating in this manner. In other words, these state firms mainly exist to provide services at a price that will allow their

private sector customers the chance to make big profits. Often, the state corporations themselves are loss-making

operations subsidised by the tax payer. And as soon as private capitalists see a way to make big profits from their

operations, governments dutifully try to privatise these state corporations – as the NSW state government is now trying

to do with electricity generation. In contrast, in the PRC, state-owned companies dominate all the key sectors including

the most profitable ones like banking, insurance, telecommunications, etc. According to 2005 official figures, 95.5% of

revenue from China’s most profitable industry – petroleum and natural gas extraction – went to state-owned firms (see

Bank of Finland, 2007 report, The Chinese government’s new approach to ownership and financial control of strategic

state-owned enterprises.) This is definitely not what happens in Australia – where the rich owners of BHP, Woodside,

Chevron, Shell etc reap the profits of the oil and gas industry – or in India (where the two Ambani brothers control the oil/

gas sector allowing them to possess a combined wealth equal to 5% of India’s entire GDP!) Furthermore, China’s level

of state ownership of this key oil and gas industry is even much more than that which occurs in countries ruled by leftnationalist

governments - like Hugo Chavez’s Venezuela.

Since the Beijing government introduced pro-market reforms thirty years ago, the Chinese state-owned companies have

to a degree operated under the profit motive. Nevertheless, they are still constrained by the PRC state to serve first and

foremost overall social goals – such as women’s rights and development of poorer and ethnic minority regions. This is

especially the case in difficult times. So, during the global recession, it was China’s state sector that pulled its economy

through the crisis and boosted employment to make up for job losses in the private sector. To do this, the state-owned

enterprises had to defy the normal market principle that lower profits should mean reduced investment and employment.

At the height of the crisis in January 2009 as their counterparts in the capitalist world – and in China’s own private sector

– slashed investment, China’s state-owned giants went on a spending splurge to upgrade equipment and build new

infrastructure. They took some 90% of the record 1.6 trillion yuan ($334 billion) in new loans that China’s banks lent out

in that month (The Weekend Australian Finacial Review, 9-13 April 2009.) Such investment during a global recession

is completely irrational if your primary goal is making profits for your owners. But if your aim is to promote the welfare

of working-class people it makes perfect sense since it means workers’ jobs are protected in difficult economic times.

Similarly, when East Star Airlines, one of China’s small private airlines, went bust last August, China’s state-owned

national carrier Air China made a point of immediately recruiting 600 of the 1,000 staff laid off by the bankrupt private

airline – even though the state-owned airline had itself suffered a big losss in 2008. Compare this act by socialistic Air

China with that of capitalist-owned Qantas. Here, Qantas is not only not soaking up jobs lost elsewhere but is itself

cutting its workforce – and that after having made a $479 million after tax profit in 2008.

To be sure, China’s state-owned companies are not without problems. They are yet to reach the level of operating in a truly

socialist way. Although workers congresses within the company give workers some influence over company direction, for

the most part workers do not have channels to participate in the direct administration of the firms. Hence, although all the

people collectively own these state enterprises, decision-making is done in a bureaucratic way by the management. This,

on the one hand, can lead to inefficiencies in the administration of the firm and, on the other hand, to the suppression of

initiative from workers and technical personnel. It was partly to overcome such problems that the Beijing leadership under

Deng Xiaoping turned to market reforms in the late 1970s. The idea was that to a degree the market would be used as

a “whip” – that is, the prospect of higher incomes for some and the threat of lower incomes for others – to spur people

to produce more. Each state enterprise would now keep to itself more of the fruits of its own production as would each

region of the country. This was different to earlier decades when the wealth was more evenly spread. Private and foreign

investors were now invited to take minority stakes in state enterprises and foreign capitalists were allowed to set up their

own maunfacturing plants sometimes in joint ventures with state firms. In the absence of genuine workers’ administration

of society that could really motivate the masses to drive the economy forward, the introduction of such market measures

did to a degree whip people into increasing production. However, this should not be exaggerated. It is not the market

reforms but rather the continuing state ownership of pillar industries and the socialistic state’s control over the economy

that has underpinned China’s rapid growth.

Furthermore, the market reforms have created a host of problems. As the post-1978 reforms were rolled out, the newly

rich private business owners and the managers working for foreign-owned corporations got a taste of capitalism and

pushed for more. Hence, in the late 1990s-early 2000s many smaller state-owned enterprises were privatised. All these

pro-market measures have led to much greater ineqality within China – between rich and poor, between urban areas and

rural areas and between wealthier coastal provinces and poorer Western regions. It has also spawned a great deal of

corruption. Often this has involved state enterprise managers selling off state assets or part holdings of state companies

to themselves or to their friends and relatives. At other times, wealthy private bosses have bribed government officials to

ignore workplace safety concerns or to win development contracts.

Nevertheless, despite all this corruption and weakening of the state sector, the socialistic public sector still to this day

dominates the key planks of the Chinese economy. So if you look at the Chinese equivalents – in terms of areas of

operation and level of market dominance - of BHP, Rio Tinto, Fortescue Metals, Bluescope Steel, OneSteel, Qantas,

Virgin Blue, AMP, QBE Insurance, Woodside, BP Australia, Shell Australia, EDI Rail, United Group, Telstra, Optus, Asciano

Limited (Patricks Stevedoring), DP World, Ford, GM/Holden, Toyota, News Corporation, Fairfax Ltd, Commonwealth

Bank, Westpac, ANZ Bank and National Australia Bank you will will find that each and every one of the equivalents

of these Australian businesses in the Peoples Republic of China are state-owned. Furthermore, even China’s biggest

nominally private corporations often have significant state ownership with sometimes the state even holding control of the

board. Take, for instance, China’s largest “privately”-owned company, computer maker Lenovo. Despite Lenovo’s status

as a “private company” it is 42.3% owned by its parent Legend Holdings which is in turn controlled and 36% owned by

the state-owned Chinese Academy of Sciences Holdings (as well as being 35% owned by its employees.)

The Chinese State’s Vibrant Tune: “Uphold the Basic Economic System

With Public Ownership Playing the Dominant Role …”

Despite the dominance of state-owned firms, the existence in China of a layer of private business bosses and a larger

stratum of privileged upper-middle class people presents a formidable danger to the socialistic foundations of the PRC.

Although in percentage terms these layers form just a small part of the Chinese population, they have much power due to

their wealth. Moreover, they are politically nurtured by their counterparts in the West, Taiwan, Hong Kong and Singapore

- all of whom are eager for capitalist restoration in China. What has to date stopped the pro-capitalist strata from seizing

political power in China is the fact that the state institutions there – including the Peoples Liberation Army (PLA), Chinese

police, peoples courts, state planning bodies etc – at this point remain wedded to the socialistic order. These state organs

were formed in the course of fighting and winning the Chinese Civil War that culminated in the 1949 revolution. The Civil

War was a fierce struggle that saw hundreds of thousands of fighters in the PLA and other revolutionary organisations

give their lives to ensure the victory of impoverished tenant farmers and workers over the landlord/capitalist exploiters.

Thus the PRC state institutions were imbued at birth with a sense of mission that they exist to serve the poor masses and

this tradition has been passed on from one generation of institutions to the next.

This character of the PRC’s state organs naturally also shapes the way that its state-owned enterprises are run. Although

since the market reforms state corporations have been given more autonomy to set their own policies, their boards

are ultimately still subject to supervision by the organisations of the Communist Party within the enterprise – the same

Communist Party that led the anti-capitalist 1949 Revolution. To get a sense of what this means, consider what it would

be like if BHP, Rio Tinto and all the banks in Australia are not only nationalised but are put under the control of committees

made up of the most militant union delegates and the left-wing activists involved in, say, the 2007 anti-APEC protests.

Then you can understand why anti-union right wingers like Barnaby Joyce are hopping mad at the prospect of PRC state

enterprises acquiring companies in Australia!

To be sure, both cynicism bred by corruption and the march of time have weakened the revolutionary character of the

PRC’s state organs. However, the basic character of these state institutions has not been decisively altered. It was

notable that during the lead up to the recent 60th Anniversary of the PRC, PLA soldiers were chanting slogans such as

“Uphold the basic economic system with public ownership playing the dominant role …” and “Build a socialist harmonious

society and promote social equity and justice.” Compare that with the oath/affirmation that all personnel recruited into

the capitalist Australian military are required to take: “That I will well and truly serve Her Majesty Queen Elizabeth the

Second, Her Heirs and Succesors according to law … so that I will resist her enemies and faithfully discharge my duty

according to the law.” Can there be a more glaring contrast! The capitalist military seeps its personnel in allegiance to that

starkest of symbols of elitism and inequality – the hereditary monarchy - while the socialistic military is trained to uphold

social equity and the dominance of collective ownership of the means of production.

With the PRC remaining a workers state even those – all too many – partial inroads that capitalists have made into

the Chinese economy are reversible. This was apparent in a worried report in the Business pages of The Australian

newspaper about the renationalisation of thousands of mines in China’s main coal producing region, Shanxi Province.

The article, angrily titled “What’s Yours is Mine at the Coalface in China,” notes how wealthy private coal mine owners

are being forced to sell their mines to the state at only about 30% of their real value (The Australian, 25 January 2010.)

This amounts to nationalisations without compensation of 70% of these mines. The pro-capitalist journalist concludes his

article by complaining that China is “a country with no private property rights.”

Indeed, the lack of a guaranteed “right” in China to the fruits of capitalist exploitation “oppresses” even the wealthiest

of tycoons. Take, for instance, filthy rich capitalist Du Shuanghua, the until recently owner of China’s biggest privatelyowned

steel works, Rizhao Iron & Steel. In the first half of last year, the firm made a $300 million profit. However, in a

Sydney Morning Herald China “horror” story (August 31) it was reported that a state-owned steel company is now using

evidence of claimed irregularities in Rizhao’s operating licenses to force Du Shuanhua to sell his company at a price less

than a third of what its share value would imply. That plan amounts to the nationalisation without compensation of twothirds

of the main company owned by China’s second richest person. The following month the forced nationalisation of

Rizhao indeed went ahead. Over two thirds of the company was taken over by state-owned Shandong Steel, reportedly

at just a fraction of the market price (now to compound things for Mr Du he his likely to end up in jail for a long time after

having been sprung for paying bribes to Rio Tinto executives.)

Could you imagine a similar thing happening under Australia’s current political system? Could you, for instance, envisage

over two-thirds of the Westfield property group owned by Australia’s second richest person, Frank Lowy, getting forcibly

nationalised for a “compensation” level much less than the market price? No way!

In Australia the Lowys, Richard Pratt’s heirs, James Packer, Gina Reinhart and , are all free to ride high with their billions.

However back in China, Du Shuanghua and the private coal mine owners are finding out the hard way what many other

capitalists have already learnt: that while the PRC’s “market reforms” may have allowed them to extract or the chance

to extract big profits, the “right” to capitalist exploitation is far from guaranteed in the “Communist Peoples Republic of

China.” As one Chinese blogger put it in responding to a much commented article in a Beijing journal about tycoons

and corruption: “Remember that any enterprise that is big will, eventually, become the government’s property” (The

Economist, 5 September.) Although, unfortunately, such mandatory expropriation of big capitalist operations does not yet

always occur, the blogger’s comment does capture a healthy aspect of reality in the PRC.

Nevertheless, the presence of capitalists within China has, of course, affected the PRC state institutions. This occurs

not only through capitalists bribing officials but through all sorts of business and personal contacts between the new

capitalists and the bureaucracy. If this were the only factor at play it would have by now led to the rollback of the

PRC as a workers state and the restoration of capitalism in China. However, what has maintained the pro-socialist

character of the PRC is the strong egalitarianism of the Chinese masses and the determination of decisive sections

of the Chinese working class to maintain the social ownership of key industry. This was seen spectacularly in two

recent workers struggles that successfully reversed privatisations of state-owned steel enterprises. In the first struggle

on 24 July 2009 at the Tonghua plant in China’s northeastern Jilin province, workers’ victory came after thousands

of them seized control of the newly privatised factory and kidnapped the greedy boss appointed by the private firm

(eventually this boss died of injuries sustained from being beaten by the enraged workers.) Notable was the outlook of the

workers participating in the action. Typical was the comment of a worker quoted in Xinhua news agency (5 August 2009):

“We prefer working for the state-owned company. It makes us feel more secure.”

Workers’ feelings on this issue are shaped by an understanding that in the PRC state-owned property belongs to them.

As an economist at the prestigious Tsinghua University, Liang Xiaomin, put it: workers did not like the “transformation

in identity in working for a private enterprise.” A professor at the Jilin Business and Technology Colleges, Liu Qingbo,

explained that: Workers in state-owned enterprises usually reject overtures from private companies which are regarded

as pursuing overwhelmingly business interests but neglecting social responsibilities (Xinhua, 5 August 2009.)

This same sentiment was seen the following month when thousands of steel workers at the Linzhou Steel Corporation

in Henan Province successfully stopped the privatisation of their plant after occupying the factory and seizing hostage

a government official sent to oversee the sell-off. As China Daily reported: Most of the workers see the privatisation as

a move to marginalise and “sell them out” to fill the pockets of the rich and powerful. Striking was a banner unfurled by

workers during the five-day Lizhou occupation:

“Learn from the Tonghua Steel workers! Defend collective wealth!”

Such pro-socialist sentiments of workers gets transmitted through to the PRC’s state bodies. For example, Chinese

provincial governments responded to the Tonghua and Linzhou steel workers’ struggles by asserting that any restructuring

of a company must have prior approval of a workers congress of its employees. Furthermore, even after the Tonghua

private would-be boss was beaten to death some PRC police publicly showed sympathy for the workers involved in the

action and for the workers’ fears of job losses from the, now aborted, privatisation. The state-owned China Daily outlet

quoted one police officer stressing that: “The workers were infuriated by an announcement made by the [new private

company’s] manager Chen that the total number of 30,000 employees in the factory will be reduced to 5,000 after the

merger.” You see, you just can’t beat 25,000 angry, determined workers, not in China anyway. Meanwhile, the PRC

government-owned media have also taken a sympathetic attitude to the Tonghua and Linzhou struggles. For example,

a postscript on the Tonghua incident in Xinhua (5 August 2009) is titled “Steel Company Executive’s Death Reflects

Workers’ Insecurities.” The article goes on to focus on workers’ anxieties at the, now-aborted, privatisation rather than

on the plight of the killed capitalist boss and his family. The article legitimised workers’ rage at the killed executive by

highlighting the fact that the boss was receiving an exorbitant salary while planning to slash jobs and wages. It is worth

contemplating the difference between this media coverage and the slant of Australia’s mainstream media. Can you

imagine how the media here would react if a workers struggle like the one at Tonghua occurred in Australia? Here the

media even goes ballistic if a union official enters a building site to have a few stern words with an unscrupulous boss!