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Rio Tinto Proceedings Expand

Thursday 3 May 2018


Penalties 


Proceedings against Rio Tinto (RTL) have been expanded to include the former CEO, Thomas Albanese, and the former CFO, Guy Eliot, for engaging in misleading and deceptive conduct.

In October last year, the UK Financial Conduct Authority fined RTL £27,385,400 for breaching transparency disclosure rules as a result of failures to carry out an impairment test. Similarly, the US Securities and Exchange Commission (SEC) have begun proceedings against the company for inflating the value of RTCM.

According to the Australia Securities and Investments Commission (ASIC), the new allegations are related to RTL subsidiary, Rio Tinto Coal Mozambique, and the failures of both Albanese and Eliot to recognise the impairment of the subsidiary in the company’s 2012 financial statements, thus breaching the Corporations Act.

ASIC has indicated that, following RTL’s purchase, subsequent delisting and renaming of Riversdale Mining to RTLM, RTL was supposed to test and recognise the impairment in their 2012 Interim Financial Statements.

The regulator said the former CEO and CFO failed to discharge their duties as directors. The conduct regulator also said that Albanese and Elliot also failed to disclose this to the audit committee.

ASIC has indicated that they are seeking further declarations in relation to: 

  • RTL’s contravening of sections 304, 305 and 1041H of the Corporations Act 2001 (Cth) (the Act) with respect to its 2012 Interim Financial Statements;
  • RTL’s contravening of s674(2) of the Act in failing to comply with its continuous disclosure obligations by failing to disclose a substantial impairment in the carrying value of the operating assets of RTCM in its 2012 Interim Financial Statements. ASIC has sought from the Court a pecuniary penalty against RTL; and
  • Mr Albanese and Mr Elliott’s contravening of s180 of the Act in relation to the above contraventions by RTL and their provision of information to the audit committee and auditors of RTL, and further that Mr Albanese and Mr Elliott contravened s344 of the Act.

ASIC has sought from the Court pecuniary penalties against Mr Albanese and Mr Elliott and seeks that they be disqualified from managing corporations for such periods as the Court thinks fit.