Rio Tinto suspends executive after Guinea probe

Rio Tinto has suspended Alan Davies, head of its energy and mineral division, after discovering payments made to a consultant working on one of its former projects in Africa.

The FTSE 100 mining company said it had recently become aware of emails from 2011 relating to contractual payments totalling $10.5m made to a consultant for advisory services on the Simandou iron ore project in Guinea.

“The company launched an investigation into the matter led by external counsel. Based on the investigation to date, Rio Tinto has today notified the relevant authorities in the UK and US and is in the process of contacting the Australian authorities,” Rio said in a statement.

“Energy & Minerals chief executive Alan Davies, who had accountability for the Simandou project in 2011, has been suspended with immediate effect.”

“Legal & Regulatory Affairs group executive Debra Valentine, having previously notified the company of her intention to retire on 1 May 2017, has stepped down from her role.”

The decision to suspend Mr Davies comes just days after Rio agreed to sell its stake in the Simandou iron ore project for up to $1.3bn to Chinalco, in a deal that could see the Chinese group take on development of the world’s largest untapped resource of the steelmaking ingredient.

Simandou has a chequered history. Rio’s rights to the northern half of the project were confiscated by the Guinean government and handed to BSG Resources, the mining arm of Israeli tycoon Beny Steinmetz’s business empire, in 2008.

In April 2014, the government cancelled the rights held by BSGR and Vale, its Brazilian mining partner, after a two-year inquiry found the former company had won them through corruption.

Rio said it would co-operate with any subsequent inquiries from all of the relevant authorities.

Shares in Rio fell 1.9 per cent to A$53.73 on the ASX on Wednesday morning in Sydney, in line with the broader market.

Paul Hissey, an analyst at Royal Bank of Canada, said it was unlikely that the latest development would have a material financial impact on Rio Tinto.

“Rather, this is a potentially negative public relations issue which Rio Tinto has managed to avoid whilst BHP Billiton has been dealing with the Samarco dam incident,” he said.

Rio’s rival BHP has been embroiled in controversy following the collapse of a tailings dam at its Samarco joint venture with Vale in Brazil, an accident in which 19 people died.


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