By Rhodri Morgan
Rio Tinto has reached a $28m (£22m) settlement agreement with the Securities and Exchange Commission (SEC) after a six-year legal battle over purported executive fraud.
The suit claimed that the company, its former chief executive Thomas Albanese and its former chief financial officer Guy Elliott inflated the value of coal assets in Mozambique in financial reporting.
In 2011, the world’s largest iron ore miner acquired $3.7bn (£2.9b) of coal assets in Mozambique shortly after disclosing huge losses associated with its previous large-scale acquisition of Alcan.
Shortly after learning that the coal quality and quantity were much lower than expected, the SEC said the named executives concealed the “adverse developments” and released misleading financial statements.
The company subsequently raised $5.5bn (£4.3b) from US investors, approximately $3bn of which was raised after May 2012, when executives at Rio Tinto Coal Mozambique had already told Albanese and Elliott that the subsidiary was likely worth negative $680m (£542m).
Rio Tinto announced it will pay the fine, “without admitting to or denying the SEC’s allegations”. Additionally, Former chief executive Tom Albanese will also pay a US$50,000 — nearly £40,000 — fine individually.
The announcement comes just two months after the UK’s Serious Fraud Office (SFO) announced it was closing its long-running corruption investigations into Rio Tinto.
In August, the company posted profits of £4.4bn for the first six months of trading this year, falling more than a third from the £6.7bn bumper figure posted 12 months prior.
The company is now focused on ramping its operations up to pre-pandemic levels, as shipments and production for iron ore are up four and five per cent respectively over the first nine months of trading this year.
