Australia watchdog expands action against Rio Tinto

Rio Tinto bought the Mozambique assets in 2011 for US$3.7 billion and sold them for just US$50 million three years later, writing off US$3.0 billion from its value
AFP

Sydney (AFP) – Australia’s market watchdog on Tuesday expanded legal action against Rio Tinto and former senior executives of the mining giant related to a troubled 2011 investment in Mozambique coal assets.

The Australian Securities and Investment Commission (ASIC) said the new legal proceedings focused on Rio’s failure to acknowledge losses related to the investment in an interim financial report issued in 2012.

ASIC specifically alleged that former Rio chief executive Tom Albanese and former chief financial officer Guy Elliott “failed to take all reasonable steps” to comply with due diligence and reporting requirements related to the Mozambique operation.

Tuesday’s move builds on a decision by ASIC in March to take the world’s second-largest mining company, as well as Albanese and Elliott, to court for allegedly engaging in “misleading and deceptive conduct” by misrepresenting the value of the Mozambique assets.

The Anglo-Australian firm purchased them in 2011 for US$3.7 billion, and sold them for just US$50 million three years later, writing off US$3.0 billion from its value.

The watchdog already said in March that it wanted to levy fines against Albanese and Elliott and bar them from managing corporations for a period of time.

Rio and the two ex-chiefs were also charged with fraud by US regulator the Securities and Exchange Commission (SEC) in October last year over similar allegations.

Rio Tinto said in response to the SEC charges that the case was “unwarranted”. It made no immediate comment on Tuesday’s move by ASIC.

Rio has also separately settled a case with Britain’s Financial Conduct Authority about the timing of writing down the same projects.

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