Thursday, March 25, 2010

China thwarts Google's detour around censorship

Google's attempted detour around China's Internet censorship rules was met with countermeasures Tuesday by the communist government, which blocked people on the mainland from seeing search results dealing with such forbidden topics as the pro-democracy movement.

China's maneuver, as well as its public rebuke of Google's decision to stop censoring searches for the government, rattled some of the company's investors, advertisers and users.

The chief concern is whether Google poisoned its business in one of the world's most promising Internet markets. One analyst critical of Google's move predicted the maneuver will cause the company's stock to fall by as much as $50 — or about 10 percent — in the coming weeks.

The stock fell $8.50, or 1.5 percent, to $549 Tuesday.

Last month, Google said it no longer felt comfortable complying with the country's demands that it censor Web content deemed objectionable by the communist rulers. On Monday, Google began sending Web searchers in mainland China from the China-based Google.cn to Google.com.hk, based in Hong Kong. The former British colony has an open Internet, and Google is not legally required to censor results there.

But that end-run doesn't prevent China's government from using its Internet filters — known as the Great Firewall — to block some search results and Web sites from being seen in the mainland.

On Tuesday, a search request from within mainland China about the 1989 Tiananmen democracy protests returned a notice that the "page cannot be displayed." It also caused the Web browser to disconnect for several seconds. Under the old google.cn, a similar query usually returned a list of sanitized sites about Tiananmen Square.

If the Chinese leaders really want to foil Google, they could block all mainland access to the Hong Kong service. Or they could exert their control of Chinese telecommunications companies to slow the speed of queries and responses, to help drive traffic to homegrown rivals.

"It really comes down to the extent of their vindictiveness," said Duncan Clark, managing director of BDA China Ltd., a technology market research firm.

The tensions between Google and China's government already appear to be denting the company's business.
TOM Online, a provider of online and mobile services in China that is owned by a Hong Kong tycoon, said it would not renew an alliance with Google to avoid violating any Chinese laws. Owners of Chinese businesses also may be more reluctant to advertise on Google for fear of reprisals.

If that happens, Google may reduce its sales force in China. For now, the company is maintaining both its engineering and sales staffs in the country, reflecting its hope that the Chinese government's anger will cool off. Google also believes it will be able to revive plans, delayed for now, to have its Android software support more mobile phones and applications in China.

Other foreign companies that have angered the Chinese government have been stymied in the country. American defense contractor Raytheon Co. closed its Beijing offices last year in frustration over its inability to win contracts for commercial aviation and consulting services. American executives believed Raytheon was being penalized for selling its Patriot missiles to Taiwan.

Although Google discussed various options in talks with the Chinese government over the past two months, the company made its decision to shift mainland traffic to Hong Kong without the ruling party's approval.
Google makes relatively little of its money in China now. Analysts have estimated the country accounts for $250 million to $600 million of its $24 billion in annual revenue.

But the pie is expected to get substantially bigger as China's economy expands and the country's Web audience increases beyond the roughly 350 million people online now.

Susquehanna Financial Group analyst Marianne Wolk expects China's Internet ad market to grow from about $3 billion last year to as much as $20 billion in 2014. Google appeared to be well positioned to pick up about $5 billion to $6 billion of that projected 2014 revenue, Wolk said, because its Chinese search engine has a roughly one-third share — a distant second to the homegrown Baidu Inc.

But Google's share is likely to shrink if the Great Firewall blocks or slows traffic.

BGC financial analyst Colin Gillis said he expects Google's dustup with the Chinese government to reduce the company's market value by $10 billion to $15 billion, or $30 to $50 a share.

"What Google has done is a slick trick, but it's also a direct slap in the face to the government," Gillis said. "The repercussions from this will be going on for several years."

In China some Internet users mourned Google's exit, placing flowers and chocolates at the large Google sign in front of the company's offices in Beijing. But others noted that the situation could raise awareness about China's strict online censorship.

Zhang Shihe, a freelance Chinese journalist and well-known blogger, said coverage of Google's departure could spur Chinese to demand more free speech online and offline.

"The incident has angered and saddened a lot of netizens, and now they will understand what type of country we live in," said Zhang, who blogs under the name "Tiger Temple." ''This is another win for freedom of expression."

Associated Press

Wednesday, March 24, 2010

China to unify telecom, TV and internet

China is expected to make substantial progress in integrating telecom, radio and TV, and Internet networks this year. The aim is to promote the development of all three sectors and domestic consumption in related industries.

At this year's China Content Broadcasting Network, or CCBN, integration of the three networks is the main topic for almost every exhibitor. They say the Chinese government's message to develop this sector has been clearer than ever. There is no reason not to tap into this market.

Content protection solution provider Irdeto says the cable networks are ready to launch the next generation of services.

In the next two years, China will carry out pilot programs to connect telecom, Internet, and TV and Radio networks. After that, the three networks will be comprehensively connected by 2015.

China Digital Video, a local visual network solution developer, says much of the technology and infrastructure is already in place.

Zhang Dayong, Dept. Director, China Digital Video, said,“During the past few years, players in the three sectors have done a great deal of work in preparation for the integration of the network, especially infrastructure. That includes 3G mobile technology, digital TV and wireless broadband. It's like the highways have been built by large. And we expect cars to run on the highways very soon, because demand from consumers is real and tangible.”

Google in hot water

Google has recently been warned by several foreign authorities over its controversial services including Google news, Google street view, as well as the latest social network service Google buzz.


Last month, the European Union Commission said it had received various requests for anti-monopoly investigations regarding the Internet search giant.

Last month, the European Union Commission said it had received various requests for anti-monopoly investigations regarding the Internet search giant. They claim Google has been filtering out its competitors on purpose in order to keep more advertisement profits.

In France, the government has formed a special team to investigate lawsuits filed by local media companies against Google. They accuse the company of profiting from their products without reimbursement. Another lawsuit was filed by Louis Vutton. The luxury bagmaker said it has found links on Google's website to pirated products. Italian authorities have also launched an anti-trust investigation against Google filed by the country's print media.

Meanwhile, Google street view, which was introduced in 2007, has challenged privacy laws in Britain and Germany. Though the company has begun to obscure search results for human faces and car license plates, it is still frequently taken to court for violating privacy rights. Its latest social web service, Google Buzz, has also been accused of a privacy breach. The company was ordered by the Canadian government to explain privacy bugs, which have already triggered widespread complaints.

Google's trouble seems to be everywhere. Recently Spanish telecom operator Telofonica accused the company of using free bandwidth for its own benefit. The company said it is considering charging Google for network use.

Tuesday, March 23, 2010

'Good fat' cuts heart risk by a fifth, study shows

Red meat is a source of animal fats

Replacing saturated fats with healthier options can cut the risk of heart disease by a fifth, a US study says.

The Harvard Medical School reports adds weight to the growing evidence about polyunsaturated fats, found in some fish and vegetable oils.

The team analysed the findings from eight previous studies, covering more than 13,000 people, in their research.
Experts said cutting down on saturated fats, found in butter and meat, was just one part of a healthy diet.

It is recommended that adults get no more than 11% of their energy from saturated fats.

Our findings suggest that polyunsaturated fats would be a preferred replacement for saturated fats for better heart health

Dariush Mozaffarian, lead researcher

This is because the fats raise the levels of bad cholesterol that block the arteries to the heart.

In comparison, polyunsaturated fats have the opposite effect by increasing the levels of good cholesterol.

The Harvard analysis suggested that for every 5% increase in polyunsaturated fat consumption there was a 10% fall in heart disease.

The average rise in uptake of such fats was 10% giving the overall figure of a fifth lower risk over a period of just over four years.

Replacement

Lead researcher Dariush Mozaffarian said there was always a risk cutting down on saturated fats meant they were replaced with other bad options such as trans-fats which are found in processed foods such as biscuits and cakes.

He added: "Our findings suggest that polyunsaturated fats would be a preferred replacement for saturated fats for better heart health."

Victoria Taylor, from the British Heart Foundation, said the research reinforced existing recommendations to reduce saturated fats.

But she added: "What this study doesn't consider is whether substitution with monounsaturated fats, such as olive and rapeseed oils, would have similar benefits so more research is needed to understand this area fully.

"While the fat content and profile of your diet is clearly important, it must also be seen as just one part of a heart healthy diet where a low saturated fat and salt intake is combined with the consumption of oily fish and at least five portions of fruit and vegetables a day."

US law enforcement agencies stake out social networks

LONG ARM OF THE LAW: Assistant US Attorney Michael Scoville displaying part of the Facebook page of a fugitive in Seattle. US law enforcement agents are following the rest of the Internet world into social-networking services, going undercover with false online profiles to communicate with suspects and gather private information, according to an internal Justice Department document. — AP

WASHINGTON: US law enforcement authorities have signed up for Facebook, MySpace, LinkedIn and Twitter.

Justice Department and Internal Revenue Service (IRS) documents obtained by the Electronic Frontier Foundation (EFF) reveal some of the ways the FBI and tax agents are allowed to use social networks for investigative purposes.

The documents were posted this week on the website of the EFF after being obtained through a lawsuit filed under the Freedom of Information Act by the San Francisco-based electronic rights group and the Samuelson Clinic of the University of California, Berkeley.

The key documents are from a 2009 training course for IRS employees and an August 2009 Justice Department presentation on “Obtaining and Using Evidence from Social Networking Sites.”

The IRS documents clearly state that employees are not allowed to use false identities to scour social networking accounts while conducting a probe into a taxpayer.

The Justice Department presentation on the other hand includes a slide on “undercover operations” and asks “Why go undercover on Facebook, MySpace etc?”

Among the reasons cited may be to “communicate with suspects/targets,” to “gain access to non-public info” or to “map social relationships/networks,” it says.

The presentation also asks “if agents violate terms of service, is that ‘otherwise illegal activity.’”
The terms of use of most social networks bar the use of fake identities or impersonation.

The Justice Department document lists a number of ways in which evidence from social networking sites can be useful including to “reveal personal communications” or “establish motives and personal relationships.”
Social networks can also be used to “provide location information,” to “prove and disprove alibis” or to “establish crime or criminal enterprise.”

The Justice Department said Facebook is “often cooperative with emergency requests” while Twitter has a “stated policy of producing data only in response to legal process.”

MySpace “requires a search warrant for private messages/bulletins less than 181 days old,” the Justice Department said, while LinkedIn’s “use for criminal communications appears limited.”

Andrew Noyes, a Facebook spokesman, outlined the company’s policies in an e-mail to AFP.

“Like other companies holding personal records — from phone records to medical history — Facebook works with law enforcement to the extent required by law and where appropriate to ensure the safety of Facebook users,” he said.

“Our goal is to respect the balance between law enforcement’s need for information and the privacy rights of our users, and as a responsible company we adhere to the letter of the law,” Noyes said.

“We scrutinise every single law enforcement request; require a detailed description of why the request is being made; and if it is deemed appropriate, share only the minimum amount of information,” he said.

Regarding emergency requests, Noyes said “in rare instances our policies and the law allow for emergency sharing.

“One hypothetical is the case of a kidnapped child where every minute counts. In instances like this, where we’ve verified an emergency, we feel a responsibility to quickly share information that could save someone’s life.” — AFP/Relaxnews

Staking out social networks

NEW FRIENDS: Assistant US Attorney Michael Scoville displaying part of the Facebook page and an enlarged profile photo of fugitive Sopo. US law enforcement agents are following the rest of the Internet world into popular social-networking services to nab suspects and gather private information. — AP

Break the law in the United States and your new ‘friend’ may just be the FBI.

The Feds are on Facebook. And MySpace, LinkedIn and Twitter, too.

US law enforcement agents are following the rest of the Internet world into popular social-networking services, going undercover with false online profiles to communicate with suspects and gather private information, according to an internal Justice Department document that offers a tantalising glimpse of issues related to privacy and crime-fighting.

Think you know who’s behind that “friend” request? Think again. Your new “friend” just might be the FBI.
The document, obtained in a Freedom of Information Act lawsuit, makes clear that US agents are already logging on surreptitiously to exchange messages with suspects, identify a target’s friends or relatives and browse private information such as postings, personal photographs and video clips.

Among other purposes: Investigators can check suspects’ alibis by comparing stories told to police with tweets sent at the same time about their whereabouts. Online photos from a suspicious spending spree — people posing with jewellery, guns or fancy cars — can link suspects or their friends to robberies or burglaries.

Going undercover

The Electronic Frontier Foundation, a San Francisco-based civil liberties group, obtained the Justice Department document when it sued the agency and five others in federal court. The 33-page document underscores the importance of social networking sites to US authorities.

With agents going undercover, state and local police coordinate their online activities with the Secret Service, FBI and other federal agencies in a strategy known as “deconfliction” to keep out of each other’s way.
“You could really mess up someone’s investigation because you’re investigating the same person and maybe doing things that are counterproductive to what another agency is doing,” said Detective Frank Dannahey of the Rocky Hill, Connecticut, Police Department, a veteran of dozens of undercover cases.

A decade ago, agents kept watch over AOL and MSN chat rooms to nab sexual predators. But those text-only chat services are old-school compared with today’s social media, which contain mountains of personal data, photographs, videos and audio clips — a potential treasure trove of evidence for cases of violent crime, financial fraud and much more.

The Justice Department document, part of a presentation given in August by top cybercrime officials, describes the value of Facebook, Twitter, MySpace, LinkedIn and other services to government investigators. It does not describe in detail the boundaries for using them.

“It doesn’t really discuss any mechanisms for accountability or ensuring that government agents use those tools responsibly,” said Marcia Hoffman, a senior attorney with the civil liberties foundation.

The group sued in Washington to force the government to disclose its policies for using social networking sites in investigations, data collection and surveillance.

Covert investigations on social-networking services are legal and governed by internal rules, according to Justice Department officials. But they would not say what those rules are.

Different purposes

The Justice Department document raises a legal question about a social-media bullying case in which US prosecutors charged a Missouri woman with computer fraud for creating a fake MySpace account — effectively the same activity that undercover agents are doing, although for different purposes.

The woman, Lori Drew, helped create an account for a fictitious teen boy on MySpace and sent flirtatious messages to a 13-year-old neighborhood girl in his name. The girl hanged herself in October 2006, in a St Louis suburb, after she received a message saying the world would be better without her.

A jury in California, where MySpace has its servers, convicted Drew of three misdemeanour counts of accessing computers without authorisation because she was accused of violating MySpace’s rules against creating fake accounts. But last year a judge overturned the verdicts, citing the vagueness of the law.

“If agents violate terms of service, is that ‘otherwise illegal activity’?” the document asks. It doesn’t provide an answer.

Facebook’s rules, for example, specify that users “will not provide any false personal information on Facebook, or create an account for anyone other than yourself without permission.”

Twitter’s rules prohibit its users from sending deceptive or false information. MySpace requires that information for accounts be “truthful and accurate.”

Social stakeout

A former US cybersecurity prosecutor, Marc Zwillinger, said investigators should be able to go undercover in the online world the same way they do in the real world, even if such conduct is barred by a company’s rules. But there have to be limits, he said.

In the face-to-face world, agents can’t impersonate a suspect’s spouse, child, parent or best friend. But online, behind the guise of a social-networking account, they can.

“This new situation presents a need for careful oversight so that law enforcement does not use social networking to intrude on some of our most personal relationships,” said Zwillinger, whose firm does legal work for Yahoo! and MySpace.

Undercover operations aren’t necessary if the suspect is reckless. Federal authorities nabbed a man wanted on bank fraud charges after he started posting Facebook updates about the fun he was having in Mexico.

Maxi Sopo, a native of Cameroon living in the Seattle area, apparently slipped across the border into Mexico in a rented car last year after learning that federal agents were investigating the alleged scheme. The agents initially could find no trace of him on social media sites, and they were unable to pin down his exact location in Mexico. But they kept checking and eventually found Sopo on Facebook.

While Sopo’s online profile was private, his list of friends was not. Assistant US Attorney Michael Scoville began going through the list and was able to learn where Sopo was living. Mexican authorities arrested Sopo in September. He is awaiting extradition to the United States.

Levels of cooperation

The Justice document describes how Facebook, MySpace and Twitter have interacted with federal investigators: Facebook is “often cooperative with emergency requests,” the government said. MySpace preserves information about its users indefinitely and even stores data from deleted accounts for one year. But Twitter’s lawyers tell prosecutors they need a warrant or subpoena before the company turns over customer information, the document says.

“Will not preserve data without legal process,” the document says under the heading, “Getting Info From Twitter ... the bad news.” Twitter did not respond to a request for comment for this story.

The chief security officer for MySpace, Hemanshu Nigam, said MySpace doesn’t want to be the company that stands in the way of an investigation.

“That said, we also want to make sure that our users’ privacy is protected and any data that’s disclosed is done under proper legal process,” Nigam said.

MySpace requires a search warrant for private messages less than six months old, according to the company.
Facebook spokesman Andrew Noyes said the company has put together a handbook to help law enforcement officials understand “the proper ways to request information from Facebook to aid investigations.”

The Justice document includes sections about its own lawyers. For government attorneys taking cases to trial, social networks are a “valuable source of info on defense witnesses,” they said. “Knowledge is power. ... Research all witnesses on social networking sites.”

But the government warned prosecutors to advise their own witnesses not to discuss cases on social media sites and to “think carefully about what they post.”

It also cautioned federal law enforcement officials to think prudently before adding judges or defence counsel as “friends” on these services.

“Social networking and the courtroom can be a dangerous combination,” the government said. — AP

Ernst & Young: Lehman accounting in accordance with US's GAAP

Auditors at Ernst & Young [ERNY.UL] are firing back at allegations that the "Big Four" auditor failed to detect accounting tricks at collapsed investment bank Lehman Brothers Holdings Inc

Following are excerpts from a letter sent by Ernst & Young partners to client audit committees in the past few days.
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The concept of an examiner's report is a feature of U.S. bankruptcy law. It does not represent the views of a court or a regulatory body, nor is the Report the result of a legal process. Instead, an examiner's report is intended to identify potential claims that, if pursued, may result in a recovery for the bankrupt company or its creditors.

EY is confident we will prevail should any of the potential claims identified against us be pursued.
We wanted to provide you with EY's perspective on some of the potential claims in the Examiner's Report. We also wanted to address certain media coverage and commentary on the Examiner's Report that has at times been inaccurate, if not misleading.

A few key points are set out below. General Comments:

-- EY's last audit was for the year ended November 30, 2007. Our opinion stated that Lehman's financial statements for 2007 were fairly presented in accordance with U.S. GAAP, and we remain of that view. We reviewed but did not audit the interim periods for Lehman's first and second quarters of fiscal 2008.

-- Lehman's bankruptcy was the result of a series of unprecedented adverse events in the financial markets. The months leading up to Lehman's bankruptcy were among the most turbulent periods in our economic history. Lehman's bankruptcy was caused by a collapse in its liquidity, which was in turn caused by declining asset values and loss of market confidence in Lehman. It was not caused by accounting issues or disclosure issues.

-- The Examiner identified no potential claims that the assets and liabilities reported on Lehman's financial statements (approximately $691 billion and $669 billion respectively, at November 30, 2007) were improperly valued or accounted for incorrectly.

Accounting and Disclosure Issues Relating to Repo 105 Transactions:

-- There has been significant media attention about potential claims identified by the Examiner related to what Lehman referred to as "Repo 105" transactions. What has not been reported in the media is that the Examiner did not challenge Lehman's accounting for its Repo 105 transactions.

-- As recognized by the Examiner, all investment banks used repo transactions extensively to fund their operations on a daily basis; these banks all operated in a high-risk, high-leverage business model. Most repo transactions are accounted for as financings; some (the Repo 105 transactions) are accounted for as sales if they meet the requirements of SFAS 140.

-- The Repo 105 transactions involved the sale by Lehman of high quality liquid assets (generally government-backed securities), in return for which Lehman received cash. The media reports that these were "sham transactions" designed to off-load Lehman's "bad assets" are inaccurate.

-- Because effective control of the securities was surrendered to the counterparty in the Repo 105 arrangements, the accounting literature (SFAS 140) required Lehman to account for Repo 105 transactions as sales rather than financings.

-- The potential claims against EY arise solely from the Examiner's conclusion that these transactions ($38.6 billion at November 30, 2007) should have been specifically disclosed in the footnotes to Lehman's financial statements, and that Lehman should have disclosed in its MD&A the impact these transactions would have had on its leverage ratios if they had been recorded as financing transactions.

-- While no specific disclosures around Repo 105 transactions were reflected in Lehman's financial statement footnotes, the 2007 audited financial statements were presented in accordance with US GAAP, and clearly portrayed Lehman as a leveraged entity operating in a risky and volatile industry. Lehman's 2007 audited financial statements included footnote disclosure of off balance sheet commitments of almost $1 trillion.

-- Lehman's leverage ratios are not a GAAP financial measure; they were included in Lehman's MD&A, not its audited financial statements. Lehman concluded no further MD&A disclosures were required; EY did not take exception to that judgment.

-- If the Repo 105 transactions were treated as if they were on the balance sheet for leverage ratio purposes, as the Examiner suggests, Lehman's reported gross leverage would have been 32.4 instead of 30.7 at November 30, 2007. Also, contrary to media reports, the decline in Lehman's reported leverage from its first to second quarters of 2008 was not a result of an increased use of Repo 105 transactions. Lehman's Repo 105 transaction volumes were comparable at the end of its first and second quarters.

Handling of the Whistleblower's Issues:

-- The media has inaccurately reported that EY concealed a May 2008 whistleblower letter from Lehman's Audit Committee. The whistleblower letter, which raised various significant potential concerns about Lehman's financial controls and reporting but did not mention Repo 105, was directed to Lehman's management. When we learned of the letter, our lead partner promptly called the Audit Committee Chair; we also insisted that Lehman's management inform the Securities and Exchange Commission and the Federal Reserve Bank of the letter. EY's lead partner discussed the whistleblower letter with the Lehman Audit Committee on at least three occasions during June and July 2008.

--In the investigations that ensued, the writer of the letter did briefly reference Repo 105 transactions in an interview with EY partners. He also confirmed to EY that he was unaware of any material financial reporting errors. Lehman's senior executives did not advise us of any reservations they had about the company's Repo 105 transactions.

-- Lehman's September 2008 bankruptcy prevented EY from completing its assessment of the whistleblower's allegations. The allegations would have been the subject of significant attention had EY completed its third quarter review and 2008 year-end audit.

Should any of the potential claims be pursued, we are confident we will prevail.

Rio Tinto Executives Plead Guilty to Bribery in China

VOA News 22 March 2010

Tom Connor, Australia's Consul-General in Shanghai, center, speaks to journalists after the trial of an Australian citizen outside of the Shanghai's No. 1 People's Intermediate Court, 22 Mar 2010

Four mining executives on trial in Shanghai have pleaded guilty to taking bribes in a case that has raised international concern about doing business in China.

Lawyers for the executives from the Australian mining giant Rio Tinto told reporters outside the courtroom Monday that their clients admitted receiving bribes, but are challenging the amounts they are accused of accepting.

Australian Stern Hu and his Chinese colleagues Liu Caikui, Ge Minqiang and Wang Yong were arrested last July during negotiations with Chinese officials over the price of iron ore.

They are accused of obtaining inside information that helped Rio Tinto during the talks, and will face charges of corporate espionage in a separate, closed-door trial this week.

Australia has called for transparency in the case.

The trial has raised concerns among international investors about China's judicial system, which is not fully independent and does not always meet international standards.

China has said all four defendants will have their rights protected.

Rio Tinto chief executive Tom Albanese said Monday that the case is a "great concern" to the company. But he said he would respectfully await the outcome of the Chinese legal process.

Some information for this report provided by AFP, AP and Reuters.

Monday, March 22, 2010

Trial of four Rio Tinto employees opens in China

SHANGHAI (Reuters) - Four employees of mining giant Rio Tinto stood trial in China on Monday, in a case closely watched by foreign investors nervous about navigating a booming economy with often murky legal boundaries.

Australian Consulate General, Tom Connor (C) goes through a security check as he enters the Shanghai Number One Intermediate People's Court on the morning of Rio Tinto trail March 22, 2010. (REUTERS/Nir Elias)

Four police vans swept into the court in Shanghai, China's financial hub, while foreign reporters were excluded from the trial of Australian national Stern Hu and three Chinese employees of Rio, all accused of taking bribes and violating commercial secrets.

The case has highlighted the risks of doing business in a country with a huge market but close ties between the ruling Communist Party, police and courts. Shanghai is likely to want the case over quickly, before its much ballyhooed 2010 World Expo opens in Shanghai in May.

The four employees from Rio's iron ore team, including Hu, were detained last summer at the height of fraught negotiations over 2009 ore prices, creating a furore over China's opaque state secrets laws.

Chinese media last summer accused the four of seeking information about Chinese mines and steel mills, which many firms consider legitimate market information.
Rio has said that its employees did nothing wrong.

China has excluded Australian diplomats from observing the part of the trial concerning commercial secrets, drawing protest from Canberra, which says they have the right to be present for the whole trial, which is scheduled to last three days.

Before entering the court, Australia's Consul-General in Shanghai, Tom Connor, told a crush of reporters he would make a statement after the day's proceedings.

WARNING TO AUSTRALIA
A Chinese researcher in a think-tank run by the nation's Ministry of Commerce said there was a strong case against the Rio employees and warned Australia to keep a distance.

"The Australian government and public need to calmly and rationally consider this question: should the government waste such a large amount of political and financial resources to pay the bill for certain companies' immature and even illegal ways?" the researcher, Mei Xinyu, wrote in the Chinese-language Shanghai Securities News.

"What Rio Tinto and Stern Hu did would be utterly taboo in any host country," wrote Mei.
The trial opened on the same day that, according to one Chinese news report, Internet giant Google may announce whether it will pull out of China over its complaints about censorship and hacking.

While the trial progresses in a brown and grey concrete building near an elevated highway in Shanghai, Rio's chief executive, Tom Albanese, is in Beijing to address a conference of government and business elites in China, his firm's largest market.

Mindful of the international attention paid to the Rio case, China has stuck strictly to its own legal deadlines for moving the case from police to the court system.

Defence lawyers interviewed on Friday did not yet know in which order the charges would be considered, or which days would be open. The verdict may not be immediately announced.