Rio Tinto has suspended one of its most senior executives after discovering payments made to a consultant working on one of its former projects in Africa – the massive Simandou iron ore project in the West African country of Guinea.
The FTSE tried to hide the news in a release yesterday morning as the rest of the world focused on the US election. Rio shares fell 1.9% to $53.73, a fall that had more to do with the shock US election results than anything else.
Rio said it had recently become aware (as of August 29) of emails from 2011 relating to contractual payments totalling $US10.5m made to a consultant for advisory services on the Simandou project.
It took Rio another two months and 11 days to communicate the news to the market.
“The company launched an investigation into the matter led by external counsel. Based on the investigation to date, Rio Tinto has today notified the relevant authorities in the United Kingdom and United States and is in the process of contacting the Australian authorities,” Rio said in a statement.
“Energy & Minerals chief executive Alan Davies, who had accountability for the Simandou project in 2011, has been suspended with immediate effect.”
“Legal & Regulatory Affairs group executive Debra Valentine, having previously notified the company of her intention to retire on 1 May 2017, has stepped down from her role.”
The decision to suspend Mr Davies came 10 days after Rio agreed to sell its stake in Simandou iron ore project for up to $US1.3bn to Chinese group, Chinalco, in a deal that could see the Chinese group take on development of the world’s largest untapped iron ore resource.
Simandou has had a murky history. In 2008, Rio’s rights to the northern half of the project were confiscated by the Guinean government and handed to BSG Resources, the mining arm of Israeli tycoon Beny Steinmetz’s business empire.
Then in April 2014 the government cancelled the rights held by BSGR and Vale, its Brazilian mining partner, after a two-year inquiry found the former company had won them through corruption.
Rio said it would co-operate fully with any subsequent inquiries from all of the relevant authorities.
