You are using an older browser version. Please use a supported version for the best MSN experience.

Two top Rio executives go over payments

AAP logoAAP 8/11/2016 Prashant Mehra

Global miner Rio Tinto has suspended one top executive with immediate effect while another is stepping down over payments made in 2011 related to the Simandou iron ore project in West Africa.

The company has also flagged the issue to regulatory authorities in several countries including the US Department of Justice and Securities and Exchange Commission, The UK Serious Fraud Office and the Australian Securities and Investments Commission.

Rio said it had unearthed email correspondence from 2011 relating to payments of $US10.5 million ($A13.6 million) made to a consultant providing advisory services on the Simandou project in Guinea.

The company said it launched an investigation into the matter, led by external counsel, and had now contacted regulatory authorities based on the investigation to date.

It said Alan Davies, the chief executive of its energy and minerals business, who had accountability for the Simandou project in 2011, had been suspended with immediate effect.

Debra Valentine, in charge of legal and regulatory affairs and a part of Rio's executive committee, had stepped down with immediate effect, the company said in a statement to the ASX.

Ms Valentine was due to retire in May next year.

"Rio Tinto intends to co-operate fully with any subsequent inquiries from all of the relevant authorities. Further comment at this time is, therefore, not appropriate," the company said.

The development comes on the heels of the miner's announcement in October that it will sell its 47 per cent stake in the Simandou project to partner Chinalco for between $US1.1 billion and $US1.3 billion, based on the timing of the development of the project.

Rio in July said it had decided to shelve development of the project - the world's biggest untapped deposit of iron ore - as the enormous cost could not be justified given the huge overcapacity in the iron ore market.

"This is a potentially negative public relations issue which Rio Tinto has managed to avoid, whilst BHP has been dealing with the Samarco dam incident," RBC Capital Markets mining analyst Paul Hissey said.

"Given the scale of Rio Tinto, it would appear unlikely that this development would have a material impact from a monetary perspective," he said.

At 1159 AEDT, Rio Tinto shares were up 0.9 per cent at $55.30 each.

image beaconimage beaconimage beacon