IGO to record impairment against nickel assets in strategy shift
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When mining giant Rio Tinto (ASX, LON:RIO) uncovered last week a probe into a payment made to an external consultant over the Simandou iron ore project in Guinea, which caused the suspension of one of its top executives, the miner said it only learned about the issue in August.
But people familiar with the matter have told Financial Times (subs. required) that the company actually discovered the 2011 emails referring to the $10.5 million expense over a year ago, when its lawyers were working on a legal dispute about Simandou.
Rio is said to have learned about the 2011 emails referring to the $10.5 million payment to a consultant over a year ago, when its lawyers were working on a legal dispute related to the Simandou project.
According to the article, the law firm — Quinn Emanuel — reported to the department of Debra Valentine, the Rio executive in charge of legal and regulatory matters.
While it is unclear whether Valentine’s department took any action or contacted then chief executive officer Sam Walsh, current CEO Jean-Sébastien Jacques said earlier this week the investigation has “shell-shocked” the company.
“Some of us may be feeling that we are better informed by the press than by ourselves,” he said in an internal memo. “Speculation is running in some quarters and some of what is being said strikes at the heart of the culture and values of our company, which for me are fundamentally strong and vitally important.”
The ongoing probe, which caused the suspension of Rio’s energy and minerals chief Alan Davies, has already claimed its first victim — Valentine. The company’s legal and regulatory affairs executive was due to retire next May, but she has already stepped down.
Alan Davies was in charge of the iron ore project in 2011, when the payments were made and also the same year that Rio signed a major agreement with the Government of Guinea, which secured the firm’s mining title.
The company announced in October it was fully exiting the project by selling its stake to partner Chinalco for up to $1.3 billion, with payments to begin with commercial production.
Davies, a 20-year veteran at Rio and member of the executive committee, was only promoted to the top role in the energy and minerals division in June this year, after a shake-up of the firm’s operations.
He is also a member of Rio Tinto’s ethics committee.
Comments
2ndOrion
If it is unethical for Consultants to get paid for the work they do on big company Projects, then all consultant companies should stop their consultant work that they do.
The consultant company was doing work for Rio Tinto on the Project. Payments made to them for their work should not be called bribery, since it was for actual work on the project, according to all stories relating to this subject.
A Consultant is a Contractor that should be paid for the work they do.
If all consultant work is called Bribery by Rio Tinto, all Consultants and Contractors should quit working for Rio Tinto. Let Rio Tinto hire their own company personnel to do any work that needs done.
Contractors should avoid Rio Tinto with a passion. There are other companies out there that need contract work done. They would welcome consultants to help them with what they are doing.