The retiring head of ASIC, the corporate regulator has given the biggest hint yet that Rio Tinto (RIO) could face legal action in Australia over the $US3.7 billion Mozambique coal deal debacle that has seen regulators in the UK and the US take action against the mining giant.
Australian Securities and Investments Commission chair Greg Medcraft told Senate Estimates on Thursday the regulator was considering all enforcement options against Rio Tinto and its executives.
"Watch this space," Mr Medcraft said at what will be his last Senate Estimates as ASIC chairman. He retires in the next few weeks.
"The current investigation is well progressed. All enforcement options are on the table,” Mr Medcraft said, according to media reports yesterday of the hearing.
Last week the US Securities Exchange Commission launched civil fraud action against Rio Tinto, its former chief executive Tom Albanese and former chief financial officer Guy Elliott over the miner’s failed Mozambique coal project.
At the same time Britain’s Financial Conduct Authority secured a £27.38 million ($A40 million) penalty against Rio Tinto as part of its investigation.
In its statement the FCA made it clear it viewed the Rio Tinto case as very serious:
“Reflecting the size of the company, this is the largest fine imposed to date by the FCA for a breach of rules relating to a firm’s official listing and demonstrates how vitally important high standards of disclosure and transparency are to ensuring our markets function fairly and effectively,“ Mark Steward, the FCA’s Executive Director of Enforcement and Market Oversight said in last week’s statement.
Mr Medcraft told the hearing ASIC had been deeply involved in the investigation.
"We’re looking at both Rio Tinto and its executives," Mr Medcraft said.
He said ASIC did not have the same powers as the UK’s FCA to obtain an administrative penalty from Rio Tinto outside of court action.
Australia’s administrative penalties against corporate entities are capped at $100,000. Breaches of directors’ duties in court action are capped at $300,000.
ASIC commissioner John Price, who is in charge of the Commission’s corporate governance department, said it had been working closely with its counterparts in the US and the UK in regards to the investigation.
“We have an investigation that is underway and it is well progressed,” Mr Price told the hearing, adding ASIC was sifting through 90,000 documents it had compelled from Rio Tinto at the moment.
"We’ve been assisting our fellow regulators, the SEC and FCA. They have acknowledged ASIC’s assistance," Mr Price said.
Rio shares ignored the news and rose 0.3% to $69.66.
