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ASIC files new court case against Rio Tinto, former CEO, CFO in Mozambique case

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ASIC files new court case against Rio Tinto, former CEO, CFO in Mozambique case

The Australian Securities and Investments Commission is taking court action against Rio Tinto and its former CEO, Tom Albanese, and former CFO, Guy Elliott, for delaying the write-downs of Mozambique coal assets, The Australian reported June 9.

ASIC claims that Albanese and Elliott avoided a US$2.4 billion impairment over the Mozambique coal assets by withholding negative information on reserves, valuation and coal transport options from the board's audit committee. ASIC lawyers said a review in 2012 would have resulted in an impairment of at least US$2.4 billion.

In early May, ASIC filed allegations against Rio Tinto, Albanese and Elliott that the company engaged in "misleading or deceptive conduct" by not recognizing the impairment over its Rio Tinto Coal Mozambique unit, and the executives allowed the company to "engage in such conduct" by failing to take all reasonable steps to comply with the relevant accounting standards.

Albanese and Elliott were also accused of failing to disclose information relevant to the impairment to the audit committee and the auditors.

The allegations are in addition to the legal proceedings started by ASIC in March against Rio Tinto, Albanese and Elliott, saying that the parties made misleading or deceptive statements regarding the US$4 billion acquisition.

The company and the former executives are also facing fraud charges from the U.S. SEC for allegedly violating the reporting, books and records, and internal controls provisions of federal securities laws related to the acquisition.