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Rio Tinto (ASX, LON:RIO) and two former top executives have filed a motion requesting a U.S. regulator’s lawsuit accusing them of fraud for overstating the value of Mozambique coal assets to be dismissed.
In the 71-page filing, quoted by FT.com, lawyers representing the company, its former chief executive Tom Albanese, and its ex finance director Guy Elliott argue the Securities and Exchange Commission (SEC) lawsuit is “plainly wrong”.
Case relates to allegations of an attempt to cover up multi-billion losses on a coal investment in Mozambique.
The charges originally laid by the SEC in October last year relate to allegations of an attempt to cover up multi-billion losses on a coal investment in the African country.
Those assets were acquired for $3.7 billion in 2011 from ASX-listed Riversdale Mining, but sold a few years later for $50 million. Rio ultimately took a $3-billion write down on Riversdale — later renamed RTCM — in January 2013, when it also fired Albanese.
The SEC argues that Rio should have taken the impairment charge within just 11 months of the acquisition. But at a time, the lawyers said, the company had not yet completed its analysis of the quantity and quality of the available coal or determined whether there was a viable means for transporting the coal to market.
“This is plainly wrong, and each of its claims consequently fail to meet well-established threshold pleading requirements and must be dismissed,” they said.
The professionals also claimed that Rio moved swiftly to impair the value of the coal assets as soon as its received “late-breaking ore-body test results” late in 2012.
The move follows a letter sent in January by Rio and the executives asking the court handling the case to dismiss the fraud charges against them. The SEC rejected such petition.
