SEC Sues Rio Tinto, Two Former Executives
October 17 2017 - 6:45PM
Dow Jones News
By Dave Michaels
U.S. 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 Tinto continued to value the mining assets in Mozambique at
more than $3 billion despite an internal assessment that they were
worth negative $680 million, according to a lawsuit filed in
Manhattan federal court. The SEC's lawsuit alleges that former
Chief Executive Thomas Albanese and former Chief Financial Officer
Guy Elliott knew about the project's rapidly declining value but
didn't disclose it to investors and misled their board of directors
about the scope of the problems, the SEC said.
The SEC's investigation began in 2013, Rio Tinto disclosed in
December.
Attorneys for Rio Tinto, Mr. Albanese and Mr. Elliott didn't
immediately return calls and emails seeking comment.
Mr. Albanese stepped down in 2013 as Rio Tinto said it would
write off roughly $14 billion in the value of various assets,
including the Mozambique coal operations it acquired in 2011
through its $3.7 billion takeover of Riversdale Mining Ltd. The $14
billion figure included a huge impairment recognized on the value
of Alcan Inc., which Rio Tinto acquired in 2007.
The SEC alleged that Messrs. Albanese and Elliott didn't
disclose the problems with the Mozambique assets because they had
already written down the value of Alcan and feared the market's
reaction to another unsuccessful deal.
"Rio Tinto and its top executives allegedly failed to come clean
about an unsuccessful deal that was made under their watch," said
Steven Peikin, co-director of the SEC's enforcement division. "They
tried to save their own careers at the expense of investors by
hiding the truth."
Write to Dave Michaels at dave.michaels@wsj.com
(END) Dow Jones Newswires
October 17, 2017 18:30 ET (22:30 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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