ASIC takes action against Rio Tinto CEO and CFO for misleading and deceptive conduct
2 March 2018, Written by David Simmons
ASIC has launched legal proceedings in the Federal Court against two former leaders of Rio Tinto (ASX: RIO), CEO Thomas Albanese (pictured) and CFO Guy Elliott, accusing the duo of misleading and deceptive conduct surrounding Rio Tinto's 2011 Annual Report.
In December 2010, Rio Tinto announced a takeover offer for Riversdale mining Limited which was completed in August 2011 at a total cost of over US$4 billion.
Following the acquisition, Rio Tinto delisted Riversdale and renamed it Rio Tinto Coal Mozambique (RTCM).
In January, 2013, Rio Tinto announced it expected to recognise a non-cash impairment charge of around US$14 billion in its 2012 full year results, which included approximately US$2 billion relating to RTCM. Albanese also stepped down from his role as CEO at the time.
ASIC's legal proceedings relate to an allegation that RTL engaged in misleading or deceptive conduct by publishing statements in the 2011 annual report, signed by both Albanese and Elliot, misrepresenting the reserves and resources of RTCM.
ASIC also alleges that by allowing Rio Tinto to engage in such conduct, Albanese and Elliot failed to exercise their powers and discharge their duties with the care and diligence required by law as directors of Rio Tinto.
ASIC is seeking declarations that Rio Tinto and the two directors contravened the Corporations Act.
The watchdog has sought pecuniary penalties against Albanese and Elliot from the Federal Court, and that they be disqualified from managing corporations.
In October 2017, the UK Financial Conduct Authority announced it had fined Rio Tinto £27,385,400 for breaching transparency rules by failing to carry out an impairment test.
On the same date, the US Securities and Exchange Commission commenced civil proceedings in the United States Federal Court against Rio Tinto, Albanese, and Elliot for inflating the value of RTCM.
Shares in Rio Tinto are down 1.27 per cent to $76.86 per share at 4.40pm AEDT.
Business News Australia
Author: David Simmons