Rio Tinto charged with fraud in US over $3.7bn coal deal

Former executives of mining company accused of inflating value of Mozambique assets

The SEC complaint filed in federal court in New York claims Rio concealed setbacks at the Mozambique project, and that former CEO Tom Albanese put forward a “false positive outlook” for the asset. Photograph: David Gray/Reuters

The SEC complaint filed in federal court in New York claims Rio concealed setbacks at the Mozambique project, and that former CEO Tom Albanese put forward a “false positive outlook” for the asset. Photograph: David Gray/Reuters

 

Rio Tinto Group’s calamitous $3.7 billion coal deal in Mozambique keeps coming back to haunt the world’s second-biggest miner, three years after it unloaded the mine.

US authorities filed fraud charges against London-based Rio, former chief executive Tom Albanese and ex-chief financial officer Guy Elliott, claiming they inflated the value of the coal assets acquired in 2011. The unit was sold for $50 million in 2014 following impairments of about $2.9 billion in 2013 and $470 million a year later.

Rio concealed setbacks at the project and Albanese publicly reinforced a “false positive outlook” for the asset, according to a Securities and Exchange Commission (SEC) complaint filed in federal court in New York. Executives told Albanese and Elliott by May 2012 that the Mozambique unit was likely worth negative $680 million, the SEC said.

“Rio Tinto intends to vigorously defend itself against these allegations,” the company said in an emailed statement on the SEC charges. Albanese, Rio’s CEO between 2007 and 2013, said in a separate statement that “there is no truth in any of these charges”.

Elliott, who retired in 2013, also refuted the allegations in a statement issued on his behalf. He stood down as a non-executive director of Royal Dutch Shell Plc, the company said in a statement on Wednesday.