Economy

Rio Tinto to 'vigorously defend' United States fraud charges

Rio Tinto to 'vigorously defend' United States fraud charges”

USA regulators on Tuesday sued Rio Tinto PLC and two former top executives over claims they misled investors about the value of Mozambique coal assets obtained in a disastrous acquisition that caused huge losses for the global mining giant.

Rio's issues in Mozambique contributed to former chief executive Albanese and former chief financial officer Guy Elliott stepping down from their positions, and now all three have been charged with violating antifraud, reporting, and other provisions of USA federal securities laws over the ordeal.

Rather, it is an alleged failure to follow accounting standards and hide or delay disclosure of the mounting losses.

"I echo Rio Tinto's confidence that these will be proved baseless in court", Mr Albanese said.

The complaint appears to relate to the Riversdale Mining acquisition in Mozambique, also known as "RTCM", which Rio Tinto acquired for A$3.9 billion in 2011 and subsequently sold for just US$50 million.

"Rio Tinto and its top executives allegedly failed to come clean about an unsuccessful deal that was made under their watch", said Steven Perkin, the SEC's co-director of enforcement.

The SEC said it seeks permanent injunctions, returns of "allegedly ill-gotten gains plus interest" and civil penalties from all defendants, and wants to bar Mr Albanese and Mr Elliott from serving as public company officers or directors.

Rio Tinto responded to the market this morning stating that it would vigorously defend the allegations and that it believed that, when all the facts were considered by the court or jury, the SEC's claims will be rejected.

It claims the African project failed as it was based on the incorrect assumption that Rio could inexpensively mine, transport, and sell large quantities of high-quality coal, chiefly using barges for shipping.

The fraud charge comes as the UK Financial Conduct Authority announced it was fining Rio for breaching disclosure rules in terms of the purchase, "by failing to carry out an impairment test" and then failing to recognise an impairment loss on the value of the assets when publishing its 2012 interim results.

Rio said the case was flawed.



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