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Australian regulator takes Rio Tinto, former execs to court over Mozambique deal

The Australian Securities and Investments Commission has started legal proceedings against Rio Tinto, and its former CEO Thomas Albanese and former CFO Guy Elliott, saying that the parties made misleading or deceptive statements regarding the US$4 billion Riversdale coal mine acquisition, later named Rio Tinto Coal Mozambique.

The Australian watchdog alleges that Rio Tinto's 2011 annual report, signed by Albanese and Elliott, misrepresented the reserves and resources of Rio Tinto Coal Mozambique, which the executives failed to prevent.

"Albanese and Elliott failed to exercise their powers and discharge their duties with the care and diligence required by law as directors and officers of [Rio Tinto]," the regulator said.

In October 2017, the U.S. SEC filed a civil complaint against Rio Tinto in the District Court for the Southern District of New York alleging that the miner committed fraud by not accurately disclosing the value of coal assets and not impairing the assets in its 2011 yearly accounts released in February 2012 or its interim results disclosed in August 2012.

The SEC accused Albanese and Elliott of inflating the value of coal assets acquired in Mozambique for US$3.7 billion, which were sold a few years later for US$50 million.