ASIC lobs new charges against Rio Tinto, Tom Albanese, Guy Elliott
The regulator has expanded its claims, saying Tom Albanese and Guy Elliott engaged in misleading and deceptive conduct.
ASIC has expanded its legal action against Rio Tinto and former executive directors Tom Albanese and Guy Elliott, saying they engaged in misleading and deceptive behaviour in delaying impairment testing of the disastrous 2011 Riversdale Mining takeover that saw them acquire $4 billion of Mozambique coal assets.
The action, announced today, adds to previous Australian Securities and Investments Commission action in the Federal Court against the trio that alleges they failed to tell shareholders the Mozambique assets had less coal resources than pre-purchase due diligence had assumed.
The latest action brings the Australian corporate watchdog closer in line with a US Securities and Exchanges Commission fraud case brought against Rio, former chief executive Mr Albanese and former chief financial officer Mr Elliott.
The trio have denied all previous allegations from ASIC and the SEC and have said they will vigorously defend them.
Rio gave the same response to today’s charges.
“The charges are wholly unwarranted and Rio Tinto intends to vigorously defend itself and is confident that ASIC’s allegations will be rejected once all the facts are considered in court,” a spokesman said.
“The new allegations relate to Rio’s failure to recognise an impairment of a wholly owned subsidiary, Rio Tinto Coal Mozambique in its 2012 interim financial statements in accordance with the relevant accounting standards, Rio’s failure to disclose the substantial impairment and other related breaches of the Corporations Act,” ASIC said.
The watchdog alleges Rio engaged in misleading or deceptive conduct by not impairment-testing the Riversdale assets in the half-year accounts.
The coal assets were written down to virtually nothing in the company’s 2012 full-year accounts and eventually sold for just $US50 million ($66.4m).
“ASIC alleges that Mr Albanese and Mr Elliott failed to take all reasonable steps to comply with or to secure compliance by Rio with the relevant accounting standards ... and, in addition, by allowing Rio to engage in such conduct, Mr Albanese and Mr Elliott failed to exercise their powers and discharge their duties with the care and diligence required by law as directors and officers,” ASIC said.
“ASIC also alleges that Mr Albanese and Mr Elliott failed to disclose to the audit committee and the auditors information of which they were aware that was relevant to the impairment. “
ASIC is seeking financial penalties against the two former executives and that they be disqualified from being directors and fines against Rio Tinto on the basis it contravened sections of the Corporations Act.
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