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SEC to grill former Rio Tinto execs in Mozambique coal deal probe


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SEC to grill former Rio Tinto execs in Mozambique coal deal probe

Three former Rio Tinto executives will be questioned by the U.S. Securities and Exchange Commission about fraud charges against former CEO Tom Albanese and former CFO Guy Elliott, The Australian reported Sept. 4.

Albanese and Elliott were charged with inflating the value of coal assets acquired in Mozambique for US$3.7 billion in 2011 and then delaying the impairments.

Former Rio Tinto board audit committee member Mike Fitzpatrick, ex-coal chief Doug Ritchie and former coal Chief Development Officer Matt Coulter are scheduled for depositions between January 2019 and March 2019.

According to the report, documents filed in the New York Southern District Court indicated the SEC's plans to take statements under oath from 19 current and former executives, including Jan du Plessis, who was chairman at the time of the Mozambique deal.

The U.S. market regulator asked Judge Debra Freeman, who is overseeing the case, to compel Albanese and Elliott to appear for interviews in November, in New York and in London, respectively.

The interviews are set to take place over the next six months in cities around the globe.

In a letter to Freeman, SEC counsel Greg Miller accused Rio Tinto and its executives of wasting time, including a month and a half lost because they "chose to engage the SEC in a time-consuming debate over deposition protocol."

In January 2013, Albanese stepped down and Rio Tinto recorded a write-down of about $3 billion, or more than 80%, for the project. The miner subsequently sold its Rio Tinto Coal Mozambique unit to an International Coal Ventures Pvt. Ltd. consortium, which included Steel Authority of India Ltd. and Coal India Ltd., for US$50 million in 2014.

In March, the Australian Securities and Investments Commission launched a parallel investigation, claiming Rio Tinto knew that its coal resource estimate for its then-Mozambique asset was "materially" overstated within months of completing the deal. The ASIC filed fresh charges against the miner in May, claiming it failed to recognize an impairment over its unit, Rio Tinto Coal Mozambique, in its 2012 interim statements.

The claim by ASIC came after the legal counsel for Rio Tinto, Albanese and Elliott filed a consolidation motion to have recent U.S. SEC fraud charges against them dismissed. The company also requested that its trade secrets be kept away from the public eye during the investigation.