Why Are SEC Charges for Rio Tinto Plc with Bribery Controls Failures Necessary?

Rio Tinto plc, Securities and Exchange Commission, FCPA
Rio Tinto plc, Securities and Exchange Commission, FCPA information

The Securities and Exchange Commission today reported violations of the Foreign Corrupt Practices Act (FCPA) against Rio Tinto plc, a global mining and metals company, relating to a bribery scheme involving a consultant in Guinea. The corporation has agreed to pay a civil penalty to the SEC in the amount of $15 million.

An Overview of Rio Tinto Plc

Rio Tinto, according to the SEC‘s ruling, retained the services of a French investment banker who was also a close friend of a former top official in the Guinean administration in order to safeguard the company’s mining rights in the Simandou mountain region.

The consultant began working for Rio Tinto Plc without a formal agreement delineating his duties and output. However, Rio Tinto never confirmed whether or not the consultant was worth the $10.5 million he was paid to retain the mining rights.

The SEC determined that the consultant, while acting as Rio Tinto’s agent, improperly promised and attempted to pay at least $822,000 to a Guinean government official for the official’s assistance in Rio Tinto’s efforts to retain its mining rights in Guinea. Rio Tinto also did not have sufficient internal financial controls in place to either detect or prevent the misconduct, and its books and records did not accurately reflect any payments made to the consultant.

The mine has not yet been developed by Rio Tinto.
Even well-designed controls need committed managers in order to be successful,” said Charles E. Cain, chief of the FCPA Section in the SEC’s Division of Enforcement. Poor controls couldn’t stop these managers from hiring a consultant whose only apparent qualification was a personal link with a key government official.

Without admitting or contesting the allegations, Rio Tinto submitted to the SEC’s ruling and agreed to pay a $15 million civil penalty for violating the books and records and internal the SEC’s accounting controls requirements from the 1934 Act on Securities Exchange.

Sana Muttalib led the SEC inquiry under the direction of Ansu N. Banerjee. The SEC is very grateful to the Australian Securities and Investments Commission and the Serious Fraud Office of the United Kingdom.

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