Australia Broadens Legal Action Against Mining Titan Rio Tinto
April 30 2018 - 11:37PM
Dow Jones News
By Rhiannon Hoyle
SYDNEY--Australia's corporate regulator has widened legal action
against Rio Tinto Ltd. and two of the company's former executives,
pursuing allegations the mining giant was late in writing down a
troubled African investment.
Rio Tinto has come under scrutiny from officials in the U.S.,
U.K. and Australia over the handling of coal assets it purchased in
Mozambique for about $4 billion in 2011, but which faced
substantial writedowns and were later sold at just $50 million, a
fraction of that price.
The Australian Securities and Investments Commission said
Tuesday that it's lodged new allegations against Rio Tinto, its
former Chief Executive Thomas Albanese, and former Chief Financial
Officer Guy Elliott posing that the assets should have been
impaired in the company's 2012 interim financial statements.
"By not doing so... ASIC alleges Rio Tinto also engaged in
misleading or deceptive conduct," the regulator said.
Mr. Albanese left Rio Tinto--the world's second-largest listed
miner--in 2013, as the company announced a global write-down of $14
billion, including some $3 billion in Mozambique.
"The charges are wholly unwarranted, and Rio Tinto intends to
vigorously defend itself, and is confident that ASIC's allegations
will be rejected once all the facts are considered in court," a Rio
Tinto spokesman said Tuesday.
U.S. officials in October alleged that Rio Tinto had misled
investors about the value of its Mozambique assets.
A Securities and Exchange Commission suit alleges the company
continued to value its mining assets in Mozambique at more than $3
billion after an internal assessment put their worth at negative
$680 million.
The SEC also alleges that Messrs. Albanese and Elliott didn't
disclose the problems with the Mozambique assets because they had
already written down the value of Rio Tinto's Alcan aluminum
division and feared the market's reaction to another unsuccessful
deal.
They did this despite knowing the Mozambique coal business "was
a lemon, " according to a recent U.S. court filing.
The allegations also led Mr. Elliott to resign from the board of
Royal Dutch Shell PLC.
Both men have disputed the U.S. allegations. Neither could
immediately be reached on Tuesday.
The Australian regulator had said in March that it would bring
action against the miner and the executives,alleging they had
misrepresented the reserves and resources of the Mozambique coal
assets.
Former Rio Tinto chairman Jan du Plessis, who served from 2009
until this March, recently called the Mozambique investment
"undoubtedly a low point during my tenure."
Rachel Pannett contributed to this article.
Write to Rhiannon Hoyle at rhiannon.hoyle@wsj.com
(END) Dow Jones Newswires
April 30, 2018 23:22 ET (03:22 GMT)
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