We note without comment this statement by Rio Tinto on their web site regarding the conviction of executives for taking bribes:

“Receiving bribes is a clear violation of Chinese law and Rio Tinto’s code of conduct, The Way We Work. 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 behaviour that is totally at odds with our strong ethical culture. In accordance with our policies we will terminate their employment.

Shortly after the four employees were detained we appointed independent forensic accountants and lawyers to assist us in carrying out an internal investigation into the claims. This was done to the fullest extent possible. It did not uncover any evidence to substantiate the allegations of wrongdoing. Rio Tinto has concluded that the illegal activities were conducted wholly outside our systems.

We have already implemented a number of improvements to our procedures, and we have now ordered a further far-reaching independent review of our processes and controls. We will introduce any necessary additional measures and safeguards the review recommends and will spare no effort in doing everything we can to prevent any similar activity.”

I am aware of a much less newsworthy event of a similar type. A consulting company I know, opened a Chinese office, and had to fire their first manager for much the same reasons: bribery outside the company systems. The consultants told me, that they thought the guy was honest, but it soon proved otherwise. For them too it was an embarrassing and troublesome affair.

It is indeed conceivable that top officials find or try to find their way to potential wealth by skirting and/or corrupting company systems. Recall Enron and the many financial firms of the recent crash. Even the best intentions of a mining company as expressed in vision statements, mission statements, and codes of conduct are vulnerable to being ignored or twisted to selfish benefit. Clearly Rio Tinto is not immunefrom this all too-human tendency.

Here we have an example of the difficulties mining companies face in working in foreign countries where the laws are not the same as back home, where the controls may be weaker, and the courts a lot faster. It may even be true, as the radio said this morning, that the laws are applied “selectively.”

It is hard not to understand the need to deal with corruption in China, for as noted at this report:

“China has chronic problems with corruption so the Rio case “is not as simple as China sending a warning message to a particular country or company” said Jin Linbo, a senior research fellow with the China Institute of International Studies. “It’s time China should deal with this problem or more serious cases will emerge,” Jin said. Beijing is constantly staging anticorruption crackdowns as the ruling Communists strive to clean up an image tainted by graft scandal after graft scandal. But big foreign companies are rarely if ever targeted, making it difficult to know how widespread graft is among international business operating in China.”

Still, this may be but a case of “hard” negotiating:

“Some Australian officials and foreign executives said the arrests looked like retaliation against Rio Tinto because of its tough negotiations over iron ore prices with Chinese state-run steel mills and the company’s decision last summer to scrap plans to accept a $19.5 billion investment from one of China’s biggest mining companies.”

Regardless of the unofficial and official “truths” of this case, maybe some good will come of it, if only it serves to remind mining companies in all countries that bribery, corruption, and immoral acts will out, and that such outing is not in the interests of the mother countriesor the mining industry as a whole. The anti-mining bloggers have not yet cottoned on to the outcome, but they will, and this will be cast as another black eye for mining.