The U.S. Securities and Exchange Commission (SEC) has charged Rio Tinto (NYSE: RIO; LON: RIO) and two of its former executives with fraud for inflating the value of coal assets the company acquired in Mozambique for $3.7 billion in 2011 and sold for $50 million in 2014.
The SEC’s complaint alleges that Rio Tinto, its former CEO Thomas Albanese, and its former CFO Guy Elliott, did not follow accounting standards and company policies to accurately value and record its assets.
“Instead, as the project began to suffer one setback after another resulting in the rapid decline of the value of the coal assets, they sought to hide or delay disclosure of the nature and extent of the adverse developments,” the SEC noted in its Oct. 17 press release.
“Rio Tinto’s top executives allegedly breached their disclosure obligations and corporate duties by hiding from their board, auditor, and investors the crucial fact that a multi-billion dollar transaction was a failure,” Stephanie Avakian, co-director of SEC’s Enforcement Division, said in a statement.
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