News: RIO UPDATE 1-Rio Tinto to pay $28 million fine to settle US SEC fraud case

(Adds settlement details, accusations, case citation)

Rio Tinto RIO.L (RIO) agreed to pay a $28 million civil fine to settle a U.S. Securities and Exchange Commission lawsuit that accused the Anglo-Australian mining company of fraud in its handling of a failed investment in a Mozambique coal project.

The settlement disclosed on Friday in Manhattan federal court would end a lawsuit filed in Oct. 2017, and requires approval by U.S. District Judge Analisa Torres.

Rio Tinto also agreed to retain an independent consultant for two years to ensure that it properly accounts for asset writedowns.

Tom Albanese, a former Rio Tinto chief executive, agreed to pay a $50,000 civil fine to settle related SEC claims. Neither he nor Rio Tinto admitted wrongdoing in agreeing to settle.

Rio Tinto confirmed the settlement but declined to comment on it. A lawyer for Albanese did not immediately respond to a request for comment after business hours.

Both defendants had been accused of deceiving investors about the value of Rio Tinto Coal Mozambique (RTCM), which the company purchased in 2011 for $3.7 billion through a takeover of the former Riversdale Mining.

The SEC said Rio Tinto was later able to raise more than $5.5 billion from unsuspecting U.S. fixed-income investors by overvaluing the coal assets, despite an internal assessment that the assets were worth negative $680 million.

Its case included a claim that Albanese intended to mislead investors in 2012 by describing the Moatize Basin, where RTCM was located, as a world-class basin coal deposit and long-term growth opportunity.

Rio Tinto took a more than $3 billion writedown for Mozambique in January 2013. It sold the assets in late 2014 for $50 million.

The case is SEC v Rio Tinto Plc et al, U.S. District Court, Southern District of New York, No. 17-07994.