We need to be competitive with manufacturing in the western world: Rio Tinto CEO
Rio Tinto Group has agreed to pay a US$15 million penalty to settle U.S. claims of bribery in Guinea, more than six years after a payment connected to a vast iron ore deposit in the West African nation prompted the mining giant to fire two of its top executives.
The Securities and Exchange Commission said a political consultant working for Rio had tried to bribe a Guinean government official. Additionally, the miner didn’t properly record its payments to the person, the SEC said on Monday, adding that the company had inadequate accounting controls.
Rio Tinto agreed to the penalty without admitting or denying the violations, according to the SEC. The regulator said the conduct was in violation of the Foreign Corrupt Practices Act.
The allegations form part of Rio’s long and turbulent history in Guinea as it tried to get access to the rich iron ore reserves of the Simandou region. Two executives — Alan Davies and Debra Valentine — were terminated in 2016 under then-Chief Executive Officer Jean-Sebastien Jacques, when Rio reported questions over a consultant to the SEC and other watchdogs.
Davies was Rio’s CEO of energy and minerals, while Valentine was group executive of legal and regulatory affairs. Both denied claims of wrongdoing.
Production is yet to begin at Simandou, where Rio now holds a majority stake in two of the four tenements in a joint venture with China’s Chalco Iron Ore Holdings and the Guinean government. The shareholders continue to negotiate details of the project, which Rio describes as the “largest and richest untapped high-grade iron ore deposit in the world”.
Monday’s resolution stems from an investigation into conduct from 2011, when Rio Tinto hired a French investment banker to help with the mining rights issue in Guinea, the SEC said.
The banker, according to the SEC, offered more than US$800,000 to a Guinean government official in an attempt to retain the mining rights. Rio Tinto, which was able to keep them, paid the consultant US$10.5 million for the work.
The bribery allegations were also investigated by the Australian Securities and Investment Commission, which did not take action, and the UK Serious Fraud Office, which has not reported its findings.
--With assistance from Clara Ferreira Marques.