SEC charges former Rio Tinto CEO Tom Albanese with fraud
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Former Rio Tinto chief Tom Albanese was named in today's statement by the SEC. Glenn Hunt
by Peter Ker
Rio Tinto and its former chief executive Tom Albanese have been charged with fraud in the US over the handling of the miner's failed $US3.7 billion ($4.7 billion) investment in Mozambique coal assets.
The powerful Securities Exchange Commission in the US accused Mr Albanese and his then-chief financial officer, Guy Elliott, of trying to hide or delay the deteriorating nature of the 2011 Mozambique investment, which was made by acquiring ASX listed company Riversdale Mining.
The SEC has filed the complaint in a Manhattan court and alleged that Mr Albanese and Mr Elliott failed to follow accounting standards and company policies to accurately value and record its assets.
"As alleged in our complaint, Rio Tinto's top executives allegedly breached their disclosure obligations and corporate duties by hiding from their board, auditor, and investors the crucial fact that a multi-billion dollar transaction was a failure," said Stephanie Avakian from the SEC's Enforcement Division.
Another SEC spokesman said the two executives "tried to save their own careers at the expense of investors by hiding the truth".
The Mozambique acquisition was focused on high grade coking coal, but upon acquiring the asset Rio found the quality and quantity of the coal was lower than expected.
Rio's plan to export the coal by barging it down the Zambezi river was also blocked by the Mozambique government.
The SEC says the two executives were told in May 2012 that the Mozambique investments had a value of negative $680 million, but did not disclose that when subsequently raising $US3 billion from investors through US debt offerings.
"They concealed the adverse developments, allowing Rio Tinto to release misleading financial statements days before a series of U.S. debt offerings...The complaint alleges Albanese then repeated and reinforced the false positive outlook for the project in public statements," said the SEC on Wednesday.
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