The Australian Securities and Investments Commission (ASIC) yesterday took mining giant Rio Tinto Ltd and two of the company’s former top executives to court for allegedly engaging in “misleading and deceptive conduct” by misrepresenting the value of its Mozambique coal assets.
Rio, the world’s second-largest miner, has drawn the scrutiny of global regulators over the past few years over the purchase of the Mozambique assets for US$3.7 billion in 2011.
The Anglo-Australian firm sold them for just US$50 million three years later, writing off US$3.0 billion from its value. Former Rio chief executive Tom Albanese lost his job over the issue.
Photo: Reuters
The commission yesterday in its submission to the Australian Federal Court in Sydney said that Albanese and former Rio chief financial officer Guy Elliott misrepresented the “reserves and resources” of the Mozambique assets in the company’s 2011 annual report, published after the announcement of the purchase.
“Further, by allowing RTL [Rio Tinto Limited] to engage in such conduct, Mr Albanese and Mr Elliott failed to exercise their powers and discharge their duties with the care and diligence required by law as directors and officers of RTL,” the commission said in a statement.
The miner and the pair breached the country’s Corporations Act through their actions, the commission said, adding that it wanted the court to fine Albanese and Elliott and bar them from managing corporations for a period of time.
Rio and the two former executives were in October last year charged with fraud by the US Securities and Exchange Commission SEC over similar allegations. The regulator accused them of inflating the assets’ value and failing to disclose mounting losses.
There was no immediate comment from Rio yesterday regarding the ASIC action, but the miner last year in response to the SEC charges said that the case was “unwarranted.”
Rio has also separately settled a case with the UK Financial Conduct Authority about the timing of writing down the same projects.
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