Rio Tinto CEO was uneasy about ‘the optics’ of Guinean payment: leaked email

Rio’s former CEO told Sam Walsh in 2011 that he was concerned about “the optics” of a payment to a Guinean adviser.

Former Rio Tinto executives Sam Walsh and Tom Albanese at the University of Western Australia in 2009.

Rio Tinto’s two previous chief executives, Sam Walsh and Tom Albanese, have been drawn into the developing Guinea payments scandal that has seen senior executive Alan Davies stood down, with an email trail showing the pair discussing the payment Rio has now referred to US, British and Australian authorities.

In a 2011 email chain obtained by The Australian, Mr Davies, then head of international iron ore operations, asks Mr Walsh, who was head of the company’s iron ore division, for permission to pay French invesmtent banker Francois de Combret $US10.5 million, down from a previous request from Mr de Combret of $US15m.

Mr de Combret, who went to the same school as Guinean President Alpha Conde.

“Sam, I accept that this is a lot of money, but I also put forward that the result we achieved was significantly improved by Francois’ contribution and his very unique and unreplaceable services and closeness to the President,” Mr Davies said in the May 10, 2011 email.

“I am extremely worried if we lose the direct connection to the President that I have cultivated with Francois. Francois has behaved with the utmost integrity and as I say, I have extreme confidence that he will continue to assist us to improve our relationship with the Government of Guinea and the President.”

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The email was sent after Rio Tinto (RIO) had the month before agreed to pay Guinea a $US700m settlement fee to retain Simandou iron ore project mining tenements in Guinea.

Mr Walsh, who succeeded Mr Albanese in 2013, then suggests to Mr Albanese that half the payment be held subject to first shipments of iron ore.

“Sam, Worth giving this a try, but also think about optics to the GoG (Government of Guinea)” Mr Albanese replied.

Rio has said $US10.5m of payments were made.

It also investigated the payment for 6 weeks before deciding to suspend Mr Davies and stand down legal head Debra Valentine, who had previously been intending to step down in May next year.

Mr Walsh, Mr Albanese and Mr Davies have not been able to be contacted for comment.

Rio yesterday revealed it had become aware six weeks ago of emails relating to $US10.5m of payments in 2011 to “a consultant providing advisory services” on the project.

It said subsequent investigations had led to Mr Davies’s suspension and the stepping down of Ms Valentine.

Rio said Ms Valentine had previously told the company she planned to retire in May.

Last night, a Federal Police spokeswoman said the force had “engaged with Rio Tinto in relation to this matter”, but the allegations had not been formally referred to it.

The company has notified the US Department of Justice and the Securities and Exchange Commission, the Serious Fraud Office in Britain and ASIC in Australia, indicating there were concerns about the payments and that the adviser may have been linked to the government.

Rio made no mention of Mr Walsh or Mr Albanese in the statement. Mr Walsh did not reply to emails yesterday. Mr Albanese is now chief executive of London-listed Vedanta Resources, which is controlled by Indian billionaire Anil Agarwal.