STERN Hu and his three Rio Tinto colleagues marked the first anniversary of their incarceration yesterday, while the steel magnate who paid them the biggest bribe was reportedly buying a golf course in the northern suburbs of Beijing.
Since admitting to bribing Rio Tinto's Wang Yong to the tune of $US10 million - mostly via casinos in Macau - billionaire Du Shuanghua has not only avoided prosecution and indulged his passion for golf but also reversed the Shandong government's theft of his Rizhao Steel factory and set up a 3 billion yuan ($A525 million) private equity construction fund.
At one stage it had looked like Du - worth 35 billion yuan in 2008 and a business partner of President
Hu Jintao's cousin in Hong Kong - had been set up as a key target of this investigation. It is now clear that he placed his bets wisely and has come out in front. In fact there has not been so much as a slap on the wrist for any of the 20 steel makers and traders on the bribe-paying list.
One year on, the Rio Tinto case shows how China can simultaneously be more sinister, more complicated and less effective than many of us imagined.
The investigation began about two years ago with an alignment of state-owned steel interests. Representatives of the big state-owned mills that make up the China Iron & Steel Association saw an opportunity to settle petty internal scores, save face while being pummelled every year in the iron ore price negotiations and, most importantly, hang on to the huge market rents generated by China's iron ore spot market.
For most of the past five years the big state mills secured huge benchmark price iron ore import contracts and sold a proportion of the cargo to traders and private steel mills with mark-ups as high as 100 per cent. The windfall money-for-nothing flowed to the state mills, their executives and their middlemen friends. It drove the state cartel crazy to see how ultra-competitive entrepreneurs like Du Shuanghua had broken into the cheap Australian iron ore club and thereby on to a level playing field.
The sums in question are not small. This year, if iron ore prices average $US130 a tonne, Australian iron ore sales to the world will be worth as much as $US55 billion ($A65 billion), according to Melinda Moore at Credit Suisse. China will be buying more than half that.
The profound irony of this case is that now, a year after Stern Hu was led away from his Shanghai home, the conspiracy to preserve state mill privileges has backfired.
This year's disintegration of the benchmark system means state companies have lost their huge input cost advantage over their private competitors and will now resume losing market share rapidly. The forces of economic nationalism are very real in China, but market forces are even greater.
How CISA - an organisation widely ridiculed within China - gained backing first from the Ministry of Commerce, then State Security, and then the nine leaders who make up the Politburo Standing Committee to initiate this case remains a mystery. There had to have been a rare alignment of personal relationships and interests at and between each level, which has now broken down.
It is worth noting that the Ministry of State Security has at times refused to conduct investigations until receiving bribes from other government agencies, according to a source close to the Communist Party's Discipline and Inspection Commission.
It is also notable that the men in charge of the national and Shanghai security-justice apparatuses that controlled the case are, respectively, the key political ally and the nephew of former president Jiang Zemin. For these men, Zhou Yongkang and Wu Zhiming, any embarrassment caused to President Hu Jintao would have been a bonus.
And the "secrets" part of this case - which enabled agitators to martial the resources of the state by conjuring a question of national security - began when other CISA members grew suspicious about communications between an executive at Shougang (Capital Steel) and Stern Hu. That fits a pattern of rivals cutting the former national champion down to size ever since Shougang's patron, Deng Xiaoping, was on his deathbed.
But as much as Stern Hu was unlucky to be targeted in an industry where bribery is ubiquitous, he did pocket $US900,000 in bribes and his colleagues took millions more at the expense of Rio Tinto shareholders. It is difficult to read the evidence convincingly presented in Judge Liu Xin's court judgment - which has still not been officially released - without wondering if those amounts were merely what he managed to prove beyond all doubt.
