Jail the Negotiators
Research for Online Investors

by John Dalt

3/29/10

Four Rio Tinto (RTP) executives were sentenced earlier today by a Chinese court for 7 to 14 years for taking bribes and stealing commercial secrets. It appears the commercial secrets charge was from confidential strategy meetings of the China Iron and Steel Association (CISA). The CISA negotiated with the big three iron ore importers to China; RTP, BHP, and VALE.

CISA represented the Chinese steel industry.  The court said that over 20 Chinese steelmakers paid almost $15 million in extra ‘advance’ fees last year because of the crimes committed by the four convicts.  The trials were closed, with observers allowed to watch the sentencing.

For the first time we find out two Chinese steel executives were charged, convicted and sentenced in the case.  China did not announce their sentences or when the trial was held.

You can read the complete article from Reuters, China Jails Rio Tinto staff for 7 to 14 Years.

Pretty amazing that a country that hacks into the Google Gmail database to probe dissenters email accounts, arrests and convicts negotiators for gaining information on the other side’s volume needs and requirements during the negotiations.  Adding insult to injury they actually accepted extra payments for shipments.  The court said their crime had “damaged” China’s interests.

Ford (F) stock has been on a tear for the last year and a half.  The company has benefited from government ownership of GM and Chrysler, and Toyota (TM) accelerator problems.  The stock has climbed from $1.26 on Nov. 19, 2008 to recently trade as high as $14.54   The United Auto Workers (UAW) is selling warrants for F stock starting tomorrow.  The UAW was granted these warrants in 2007 contract negotiations.

The warrants allow the owner to purchase one share of Ford stock for $9.20 cents from the company.  The company granted the warrants, and other consideration, to the UAW to fund a “voluntary employee beneficiary association (VEBA).”  This VEBA will pay retired Ford/UAW worker medical benefits for the remainder of their lives.

The market was up today.  Traders for the last six months have bid up the market on Mondays over 75% of the time.   Weekends, it seems, allow investors to become optimistic about all things considering stocks.  The week is loaded with economic news that could derail the bulls, we shall see.

The information presented in this newsletter is based on generally available news releases, corporate filings, current events, interviews and the editor’s opinions.  It may contain errors and you should not make investment decisions based solely on what you believe you have read here.  Do your own research, it is your money.  If you lose it, it is your responsibility, not ours or your grandmothers!  The editor may or may not have a position in any securities discussed.  The editor may have held a position in a security earlier, or in the future.

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