Mozambique Mining: Rio Tinto’s Thompson deals with misconduct allegations at AGM

Rio Tinto moz
Former Rio Tinto coal assets, now acquired by India consortium

 

Mining major Rio Tinto has again denied allegations of withholding information from shareholders regarding its Mozambican coal assets, with chairperson Simon Thompson saying that the company would “vigorously” defend itself against these allegations.

The UK’s Financial Conduct Authority (FCA) in 2017 determined that Rio should have impaired an investment in a coal project in Mozambique some six months earlier than the company did, in 2012.

Thompson said that these were “highly complex, technical accounting judgments”, adding that the FCA had the benefit of hindsight.

Rio settled the matter with the FCA and paid a £27-million penalty.

“Importantly, the FCA found no evidence of widespread or systemic failure or of fraud. They simply believed that Rio Tinto should have impaired the asset six months earlier than it did,” Thompson added.

The US Securities and Exchange Commission (SEC) has also now opened a case based on these facts, alleging that Rio’s former CEO and CFO deliberately and fraudulently withheld information regarding the Mozambique coal project, both from the board and from the company’s external auditors.

The SEC claimed that the company and the former two executives had inflated the value of Mozambique coal assets, which were initially acquired for $3.7-billion in 2011, and then divested for A$50-million in 2014.

“We strenuously deny these allegations and we will vigorously defend ourselves in court,” Thompson said.

Rio is also facing scrutiny over its conduct in Guinea, with authorities in Australia, the UK and the US conducting investigations around a 2011 payment of $10.5-million to a consulting advisory service in relation to the Simandou project.

Thompson told shareholders at the company’s annual general meeting (AGM) that an internal investigation into the incident had led not only to Rio self-reporting to the relevant authorities, but also dismissing two senior executives for failing to uphold the company’s standards.

“While this was clearly a very tough decision, the board believed that it was essential to convey the clear message, both internally and externally, that no matter how senior you are in Rio Tinto, you must abide by the rules set out in our code of business conduct,” he added.

Meanwhile, Swiss authorities were reportedly also investigating Rio over allegations of bribery at its Oyu Tolgoi copper and gold mine, in Mongolia, with the attorney general of Switzerland examining whether the world’s second-biggest mining company paid bribes in the development of the project. source: miningweekly.com

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