One of Australia’s biggest mining companies and two former executives have faced court following allegations of impropriety in the company’s annual report.
Rio Tinto as well its former CEO Thomas Albanese and former CFO Guy Elliott are the subject of proceedings in the Federal Court in Sydney after ASIC alleged its annual report for 2011 contained deliberately misleading or deceptive information.
The claims pertain to the 2011 acquisition of an African-based mining company called Riversdale Mining. Following the acquisition, with a price tag in excess of US$4 billion, the business was renamed to Rio Tinto Coal Mozambique (RTCM).
According to ASIC, Rio Tinto misrepresented the holdings of this new business unit in its annual report, which was signed by both Mr Albanese and Mr Elliott. In effect, this artificially inflated the value of RTCM, and as a result the Rio Tinto share price.
By doing so, the companies regulator has claimed the pair breached their duties as company officers.
ASIC is pushing for the duo to be banned from managing companies. It follows similar action against Mr Albanese and Mr Elliott in the US, while Rio Tinto - which is also listed on the UK stock exchange - was hit with a fine of more than £27 million (around $48.7 million) in October 2017.
In a statement, ASIC said its investigations into the matter are ongoing, and as such, it would make no further comment on the matter.
Proceedings commenced last Friday, 2 March – almost six years to the day since the offending documents were signed on 5 March, 2012.
The high-profile legal action comes at a time when bank bosses and executives at other financial services businesses are hunkering down as the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry gets underway.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.