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Category: Iron Ore / Mining Industry / Fraud and Corporate Crime / Regulation / Management

Rio Tinto executives sacked over Guinea consultancy payments

Thursday, 17 Nov 2016 06:24:50 | Peter Ryan

Rio Tinto last month sold its share of the Simandou project to Chinalco. (ABC: Kathryn Diss)

Mining giant Rio Tinto has sacked two top executives over payments to a consultant who provided "advisory services" in the African nation of Guinea.

In a statement, Rio Tinto said it had terminated the contracts of Energy and Minerals chief executive Alan Davies and the head of Legal and Regulatory Affairs, Debra Valentine.

The terminations come after the Rio Tinto board reviewed the findings of an internal probe into $US10.5 million in payments and contractual arrangements with a consultant who provided "advisory services" on the Simandou iron ore project in Guinea in 2011.

"The board's decision does not pre-judge the course of any external inquiries into this matter," the company said in a statement, having referred the matter to authorities in the UK, US and Australia last week.

"However, the board concluded that the executives failed to maintain the standards expected of them under our global code of conduct."

The outcome of Rio's internal probe will be costly for Mr Davies and Ms Valentine who will now not receive short-term incentives for 2016, with unvested incentive plans from previous years also cancelled.

Earlier, Mr Davies — who had overall accountability for the Simandou project — had been suspended from all duties while the investigation was underway.

Rio Tinto has repeated that it is cooperating with regulators in the United Kingdom, Australia and the United States on their subsequent inquiries.

The Anglo-Australian mining giant has refused to comment further while the other investigations are underway.

'No grounds for termination'

Mr Davies has hit back at his former employer, saying he is surprised and disappointed about his dismissal.

"I have not been privy to Rio Tinto's internal investigation report, nor have I had any evidence of the reasons for my termination of my employment given," he said in a statement.

"There are no grounds for the termination of my employment.

"Rio Tinto has made no effort to abide by due process or to respect my rights as an employee and it has given me no opportunity to answer any allegations.

"This treatment of me and my past and recent colleagues is totally at variance with the values and behaviours of the company to which I have devoted my professional life."

Mr Davies said he has been left with no option but to "take the strongest possible legal action in response".

The ABC sought to contact Debra Valentine last week, but had no response.

Rio Tinto puts Simandou behind it

The $US10.5 million in payments occurred in 2011, which the company's records show was the same year it signed a major agreement with the Government of Guinea.

At the time Rio Tinto told shareholders the agreement "secures Rio Tinto's mining title in Guinea and paves the way for first shipment of iron ore by mid-2015".

The agreement also confirmed that a Rio Tinto subsidiary, Simfer, would pay the Government of Guinea $US700 million.

At the time, Rio Tinto praised the Government of Guinea for engaging "so constructively" with the company.

It also praised the Government's commitment to the Extractive Industries Transparency Initiative.

Rio Tinto last month sold its stake in the Simandou project to Chinese mining giant Chinalco in a deal that may net it up to $US1.3 billion.

Mr Davies is being replaced by Bold Baatar who held senior banking roles with JP Morgan before joining Rio Tinto in 2013 as copper international operations president.

Follow Peter Ryan on Twitter @peter_f_ryan and on his Main Street blog.

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