When Rio Tinto Met China's Iron Hand

The price of doing business in illiberal countries sometimes is more than just money. More often than not large companies are faced with two choices: play by the rules and lose, or bend the rules — bribe, cheat and coerce — in order to win.

And with billions of dollars on the line, what does it matter if a few people end up in prison or dead?

Such was the moral dilemma the multinational mining corporation Rio Tinto faced in China. In order to do business in the country — a market worth billions — they needed to be aggressive in their deals with local partners. But in doing so, they opened themselves up to the risk that one day the Chinese government would look unfavorably on them regarding the way they did business.

And in 2009 that day came. Using information likely obtained through hacked communications, the Chinese government learned of a plan to charge local producers significantly higher amounts for iron ore. Soon after, four key employees of the company were arrested on trumped-up charges of corporate espionage and corruption. Controversy followed, lives were destroyed, and Rio Tinto quickly distanced itself from its jailed employees. But did they distance themselves from China?

No, there was still money to be made.