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Rio Tinto has agreed to pay a $28mn penalty to the US Securities and Exchange Commission to settle a suit over a failed $3.7bn coal deal in Mozambique more than a decade ago.
The settlement brings to an end a long-running series of legal disputes over whether Rio Tinto intentionally misled investors over the disastrous investment, which cost former chief executive Tom Albanese his job.
In 2017, the UK Financial Conduct Authority fined the company £27.4mn over the deal, which at that time was the largest penalty the regulator had levied on a company for a listing-rules breach. Last year, Rio Tinto settled a similar claim with the regulator in Australia.
“With this settlement, all investigations of Rio Tinto regarding this matter have been finalised,” the company said on Wednesday.
Rio Tinto acquired the Benga coal project in north-western Mozambique in April 2011. It planned to send the coal by barge down the Zambezi river to an Indian Ocean port but quickly ran into problems.
By November of that year, the company had concluded that its assumptions over moving the coal were unrealistic and, in December, the Mozambique government rejected its application to send the coal by river, citing environmental concerns.
The SEC claimed that Rio Tinto executives hid the extent of the problems from the board and investors, and allowed the audit committee to review an estimate of the project’s value in late 2021 that had “no basis in reality”.
A company employee discovered the alleged deception in December 2012, triggering an internal review that led to Albanese’s departure and a $3bn writedown on the venture, which it later sold for just $50mn.
Under the terms of the settlement, neither Rio Tinto nor Albanese have admitted to or denied the SEC’s allegations. Albanese will pay a $50,0000 penalty as part of the deal, the company said.