Court approves $750,000 settlement of ASIC case against Rio Tinto
Rio Tinto’s disastrous foray into Mozambique coal cost the company at least $5bn a decade ago. Now the company can add another $750,000 to the tally.
Rio Tinto says it will “vigorously” defend the sole remaining action by regulators over its ill-fated 2011 foray into Mozambique, after agreeing to pay a $750,000 fine to dispose of legal action brought by Australia’s corporate watchdog.
The Australian Securities and Investments Commission last week dropped all but one claim against Rio Tinto in the Federal Court in its long-running pursuit of the company over allegations Rio misled the market over its $US3.7bn ($5bn) Mozambique coal debacle.
ASIC launched the legal action against Rio in 2018, along with former chief executive Tom Albanese and former chief financial officer Guy Elliott, over alleged misleading and deceptive conduct over the accounting treatment of the Mozambique metallurgical coal assets in 2012 and 2013.
Last week it dropped its case against Mr Albanese and Mr Elliot and abandoned its case that Rio attempted to deceive investors over the affair, instead agreeing to settle the matter with Rio on a single count of failing to inform the market of a significant material event affecting its affairs.
On Monday Justice David Yates issued his judgment in the case on Monday, ordering the mining giant to pay a $750,000 fine for failing to inform the market it had received information that undermined the case for the development of the assets three weeks before Rio flagged a massive writedown of the asset on January 17, and announced the departure of Mr Albanese.
As part of the agreement between Rio and ASIC, Justice Yates ordered the mining giant to pay the corporate regulators costs in bringing the legal action, and dismissed the complaints against Mr Albanese and Mr Elliot without any order as to costs.
A spokesman for Mr Albanese said on Monday the former Rio boss was “pleased the case against him has been dismissed in its entirety”.
Mr Elliott also welcomed the dismissal of the case.
ASIC deputy chair Sarah Court said Rio’s disclosure failure was always the “core” of ASIC’s case against the mining giant.
“When Rio Tinto was aware of information that Rio Tinto Coal Mozambique was no longer economically viable as a long-life, large-scale, Tier 1 coking coal resource, the market should have been properly informed in a timely manner,” she said.
Rio has already paid a £27m penalty issued by the United Kingdom’s Financial Conduct Authority (FCA) in 2017, after an FCA investigation found Rio should have impaired the Mozambique assets six months before the eventual writedown.
But both Rio and its two most senior executives still face legal action in the US brought by the US Securities and Exchange Commission over the affair – although US authorities have also reduced the scope of their claims, dropping allegations that the executives engaged in “fraud” and misled the market.
Rio welcomed the closure of the ASIC case on what it described as “appropriate and reasonable terms”.
“As part of this court approved settlement between ASIC and Rio Tinto, there were no findings of fraud or any systemic or widespread failure by Rio Tinto,” the company said.
“Rio Tinto will continue to defend itself vigorously against the SEC’s allegations.”
Rio shares closed down 94c to $125.62 on Monday.
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