AFP ‘aware’ of Rio Tinto bribery scandal

The Australian Federal Police has yet to decide whether to investigate Rio Tinto over the Guinea corruption scandal.

Former Rio Tinto CEO Sam Walsh leaves his home in Perth yesterday. Picture: Colin Murty

The Australian Federal Police has yet to decide whether to investigate Rio Tinto over the Guinea corruption scandal that has seen two senior executives sacked and the reputations of former chief executives Sam Walsh and Tom Albanese tarnished.

The AFP, which has a poor track record prosecuting foreign bribery cases, said it was aware of Rio’s public disclosures on the matter. These centre on $US10.5 million of payments made in 2011 to consultant Francois de Combret to assist in a deal to retain the Simandou iron ore deposits, where Rio paid $US700m to the government.

“The AFP has engaged with Rio Tinto in relation to this matter. However, the matter has not been formally referred to the AFP,” an AFP spokeswoman said.

It is not clear who the AFP would need to refer the matter or why a referral would be needed.

It could mean the initial engagement threw up no solid evidence of wrongdoing, or that the authorities are happy to let better resourced US and British authorities, which Rio says it has notified, do the hard yards.

The continued dearth of information on the case comes after Mr Walsh, who had discussed the payments with Mr Albanese and the sacked executive Alan Davies in a leaked 2011 email thread, evaded media waiting to quiz him on the scandal after giving a closed speech in Perth on leadership on Tuesday.

A spokesman for Britain’s Serious Fraud Office told The Australian that the SFO had been notified about the payment but could not comment further.

Neither the US Department of Justice nor the US Securities and Exchanges Commission would comment on whether they were investigating the matter.

The lack of a stance from the regulators adds to intrigue around the matter.

Rio would not say specifically why it sacked senior executives.

Mr Walsh and Mr Albanese would not comment.

Mr Davies has said there are no grounds for his termination and that he plans to take the strongest legal action.

Rio’s new chief executive, Jean-Sebastien Jacques, will make his first public appearance since the scandal broke when he fronts investors in Sydney today.

Steven Fleming, a partner at law firm Jones Day, said that often the AFP will take a back seat if the Department of Justice is investigating a matter.

“The Department of Justice has broad powers and tends to wield them in an aggressive way,” said Mr Fleming, who specialises in advising corporations and boards on regulatory and compliance matters. “The AFP might be taking the view that Rio is being investigated properly and fully by overseas jurisdictions.”

Australia’s dismal track record in prosecuting foreign bribery cases was in the international spotlight in 2012, when the Organisation for Economic Co-operation and Development issued a scathing report saying it was “seriously concerned” by Australia’s lackadaisical attitude towards corruption and called on authorities including the AFP to be “proactive” in prosecuting cases.

“Australia’s enforcement of its foreign bribery laws has been extremely low, with just a single case leading to prosecutions out of 28 referrals in 13 years,” the OECD said, referring to the still-ongoing Securency note-printing case.

In its most recent report, released in April last year, the OECD pointed to last year’s establishment of a cross-agency Fraud and Anti Corruption Centre, headed by the AFP, as an example of how Australia had lifted its game. It said the number of active investigations had increased from seven to 17 since 2012, but said there was still more work to do to improve Australian law to OECD standards.

Mr Fleming said the AFP had bolstered its focus on foreign corruption in the past couple of years, including forming a dedicated unit, and was keen to bag a scalp.

“The AFP’s priority is to find a foreign corrupt practice matter where they have a good chance of getting a prosecution,” he said.

“This would be a pretty powerful thing to go back to the OECD with to show how they are now serious about it and it would send a message to the business community the like of which has not been seen before.”