MELBOURNE (Reuters) – Australia’s corporate watchdog said on Friday it has launched court action against global miner Rio Tinto (RIO.AX)(RIO.L) and two former executives for misleading investors about the coal reserves it reported in a $4 billion acquisition in Mozambique.
The Australian Securities and Investments Commission said the company and its former Chief Executive Tom Albanese and former Chief Financial Officer Guy Elliott had made deceptive statements in their 2011 annual report, published in 2012.
“ASIC alleges that RTL (Rio Tinto Ltd) engaged in misleading or deceptive conduct by publishing statements in the 2011 annual report, signed by Mr Albanese and Mr Elliott, misrepresenting the reserves and resources of RTCM (Rio Tinto Coal Mozambique),” the commission said in a statement.
Rio Tinto had no immediate comment on ASIC’s action, but has previously denied any wrongdoing in a similar case brought by the U.S. Securities and Exchange Commission.
Rio Tinto bought Riversdale for $4 billion in 2011, wrote off about $3.5 billion of its value and sacked Albanese and other executives involved in the deal in 2013. The Mozambique deal came on top of hefty writedowns on a previous acquisition.
The SEC alleges that the company and executives inflated the value of coal assets in Mozambique and concealed critical information while tapping the market for billions of dollars.
The company, Albanese and Elliott have all said they would vigorously defend themselves against the allegations.
Rio Tinto already reached a settlement with the UK’s Financial Conduct Authority, agreeing to pay a fine of £27 million ($35.6 million) for breaching accounting rules in connection with the Mozambique assets.
“The investment in 2011 of $4 billion in Mozambique in what ultimately turned out to be inferior quality coal assets was undoubtedly a low point during my tenure,” outgoing Chairman Jan du Plessis said on Friday in his final annual report with the company.
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