China has sentenced to death a former chairman of top oil refiner Sinopec Corp, but the court gave him a two-year reprieve despite the seriousness of his crime in accepting millions of pounds in bribes.

It was among the harshest penalties to be handed down to a senior official of a state company in recent years and underlines the Government’s determination to try to tackle rampant corruption that is a source of widespread popular discontent.

Chen Tonghai, 61, held a rank equivalent to a cabinet minister before he was abruptly removed from the helm of the state-owned refiner two years ago. He was convicted of accepting 185.7 million yuan (£17.7 million) in bribes while serving in top Sinopec ranks from 1999 to 2007.

The Beijing No 2 People’s Intermediate Court said that his remorse affected the final verdict. “Chen took an extremely large amount of bribes; severe enough for a death sentence... But as he confessed and repented, provided tips about other people's criminal acts, and returned all the bribes, a reprieve was granted."

The sentence effectively means Mr Chen faces a life sentence — unless he commits another crime during the two years of the reprieve.

The court said the sentence should serve as a warning to other officials tempted to abuse their power and position for profit. An unidentified official said: “The criminal case of Chen Tonghai is one that concerns one of the highest and most powerful people, involving one of the largest sums. The influence of the case is deep, wide and shocking... and should be a profound warning to the leaders of state-owned enterprises."

Senior officials in state firms have many opportunities to ask for bribes in a system that lacks checks and balances and in which money has become the driving force in society.

Mr Chen, head of a huge refiner that supplies nearly half the total needs of the world’s second-largest oil market, was placed under investigation in May 2007 and then formally detained at Beijing airport while attempting to flee the country the following month. The position of his father, Chen Weida, an influential Communist Party official and a former revolutionary, failed to protect him.

The severity of the sentence may bode ill for four employees of Australian mining giant Rio Tinto who were detained this month by China’s State Security Bureau on charges of stealing state secrets.

State media reported that Rio Tinto had bribed executives from all 16 of China’s major steel mills, targeting key staffers who negotiate iron prices with large foreign suppliers.

An Australian mining executive for Rio Tinto, Stern Hu, and three Chinese colleagues were detained by counterespionage agents in Shanghai on July 5, prompting a wider investigation. China has not outlined the specific allegations against Mr Hu, but says that it can prove he was guilty of stealing state secrets and causing huge economic loss to the country.

Kevin Rudd, the Australian Prime Minister, stepped into the fray on Wednesday, warning China that it had significant economic interests at stake in detaining Mr Hu on spying charges and the world was watching how it handled the case.

Part of the row appears to have ended after industry sources said the two major miners, Rio and BHP Billiton had secured tacit agreement with Chinese mills for a 33 per cent price cut in iron ore, the same deal agreed with other Asian customers in May, effectively winning the marathon pricing battle.

The Mandarin-speaking Rudd, a diplomat in China in the 1980s, said: "A range of foreign governments and corporations will be watching this case with interest and will be watching it very closely, and they will be drawing their own conclusions as to how it is conducted."

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