Australia's corporate watchdog is taking Rio Tinto's (ASX, LON:RIO) former chief executive Tom Albanese and chief financial officer Guy Elliott to court for allegedly misleading investors in relation to the miner's botched coal investment in Mozambique.
According to the Australian Securities and Investments Commission (ASIC), the two ex-executives engaged in "misleading and deceptive" conduct by publishing statements in Rio's 2011 annual report that misrepresented the reserves and resources of RTCM (Rio Tinto Coal Mozambique).
At the centre of the court case are assets Rio acquired for $3.7bn in 2011 and then sold a few years later for barely $50 million.It also alleges that by allowing Rio Tinto to engage in such conduct, they failed to exercise their powers and discharge their duties with required care and diligence.
The mining giant has denied any wrongdoing in a similar case brought by the US Securities and Exchange Commission (SEC), which is seeking fraud charges against Albanese and Elliot, as well as Rio Tinto itself over the same coal deal.
At the centre of the US and Australia court cases are assets Rio acquired for $3.7 billion in 2011 from ASX-listed Riversdale Mining, and then sold a few years later for barely $50 million. Rio ultimately took a $3-billion write down on Riversdale - later renamed RTCM - in January 2013, when it also fired Albanese.
ASIC is asking the court to declare that Rio Tinto broke the Corporations Act and is seeking monetary penalties against Albanese and Elliot.
Rio Tinto told MINING.com it would respond to ASIC's filing once it has had an opportunity to consider the allegations in full.