China Sentences US Geologist in Secrecy Trial

SHANGHAI (Dow Jones Newswires), July 6, 2010

A Chinese court sentenced an American geologist to eight years in prison for trying to buy data about the Chinese oil industry, a heavy penalty that legal experts said is a warning to foreign businesses and a rebuke to Washington after a personal appeal from U.S. President Barack Obama.

The Beijing Number One Intermediate People's Court fined 44-year-old Xue Feng 200,000 yuan, or about $30,000, in addition to the prison sentence Monday, on charges of attempting to obtain and traffic in state secrets.

Tong Wei, Mr. Xue's lawyer, called the sentence -- coming a year after the conviction -- "harsh" and said few details of the allegations against Mr. Xue were made public.

The lawyer said options for a possible appeal will be considered later. Three Chinese nationals were convicted as accomplices, he said.

The U.S. Embassy in Beijing said Washington is "dismayed" at Mr. Xue's sentence, announced during the U.S. Independence Day holiday weekend. The Embassy called for Mr. Xue's "humanitarian release" and deportation.

The U.S. government has taken a strong interest in Mr. Xue's case. But it mounted a quiet diplomatic campaign to win clemency since he was detained in late 2007.

President Obama last year urged Mr. Xue's release during a meeting with Chinese President Hu Jintao, and other U.S. government officials have raised the issue privately. U.S. Ambassador Jon Huntsman took an interest in the case, visiting Mr. Xue in detention and attending Monday's 40-minute sentencing.

For foreign companies, Mr. Xue's case is the latest to highlight questions about the legality of conducting market research in China. Unlike more-celebrated allegations involving Chinese secrets, Mr. Xue's case stems purely from his attempt to purchase commercially available data on the oil industry, according to people involved in his defense.

The case illustrates China's sensitivity that certain data in the hands of foreigners may weaken national security, even while Beijing remains vague in its definitions of what constitutes secret information.

In comparison, this year's prosecution and conviction of four Rio Tinto PLC executives revolved around their alleged possession of steel-industry secrets, but their convictions also hinged on evidence they took millions of dollars in bribes.

The Rio Tinto case concerned mostly iron-ore pricing data. Less is known about the nature of the information Mr. Xue was trying to buy.

Mr. Xue was seeking data on behalf of his then-employer, an information-services business now known as IHS Inc., based in Englewood, Colo. He had switched jobs shortly before he was detained for his work for IHS.

"IHS is extremely disappointed at the news and is very sympathetic to the situation," Ed Mattix, a spokesman for the company, said in a statement. "We are continuing to work with our advisers on the issue."

Like Stern Hu, the Australian national at the heart of the Rio Tinto affair, Mr. Xue was born in China, a reminder that ethnic Chinese may be more vulnerable to pitfalls of the country's legal system than other foreigners. In both cases, the men initially were denied contact with consular representatives, in Mr. Xue's case for months.

Mr. Xue obtained a doctorate in geology from the University of Chicago and lived in Texas, where he has a wife and two children, before returning to China for IHS to work in the natural-resources sector.

Monday's sentence "sends a very bad signal to the foreign business community if they care to examine what happened," said John Kamm, executive director of the Dui Hua Foundation, a San Francisco group that assists those detained in China and that was involved in Mr. Xue's case.

"Where is the damage to justify this?" asked Mr. Kamm, who himself is a former chemical-industry executive in China.

China's government appears to be taking a harder line with foreign nationals than it once did, according to legal experts who cite repeated instances of harsh penalties for foreigners in the face of calls for leniency by their governments.

In March, Rio Tinto's Mr. Hu was sentenced to 10 years in prison. In December, a British national was given a lethal injection for carrying drugs into China, and four Japanese men were executed on drug charges in April.

Mr. Xue's case has underscored the limits of the U.S. government's ability to influence the conduct and outcome of Chinese-espionage charges. The verdict's announcement over the U.S. holiday -- a year after the conviction -- appeared to be a calculated act of defiance.

"One notable aspect of this case was the Chinese government's thumbing its nose at the [U.S. government's] efforts to support Xue," said Jerome A. Cohen, a New York University law professor and authority on China's legal system.

But the case also raises questions about the effectiveness of Washington's decision to remain mostly quiet about Mr. Xue, despite concerns about how he was treated by Chinese authorities after his detention in November 2007. Although people close to Mr. Xue have lobbied the White House starting in 2008 to address it, the case wasn't publicly known until a November 2009 Associated Press report that Mr. Xue had been tortured in detention and that his case was otherwise mishandled by Chinese authorities.

China's Foreign Ministry didn't respond to a request for comment Monday.

Detained in November 2007, Mr. Xue was formally arrested in April 2008 and tried in July 2009.

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