Mining and Heavy Industries

Rio prepares for lengthy payment probe

An investigation into the lawfulness of a US$10.5 million payment relating to the massive Simandou iron ore project in Guinea could take several years, Rio Tinto chief executive officer Jean Sebastien Jacques has reportedly told employees.

The international probe stems from leaked emails which reportedly show former Rio bosses Tom Albanese and Sam Walsh were aware of a payment said to have been made to former senior Lazard banker François Polge de Combret in 2011.

According to Bloomberg, de Combret was assisting Rio in negotiations with his former classmate at the Paris Institute of Political Studies, Guinean president Alpha Condé.

Rio ended up winning a share of the rights to develop the $20 billion project, but major development is yet to take place there, as a result of the disintegration of the iron ore price and difficulties in securing rail and port infrastructure partners.

Rio announced this October it would sell its stake in Simandou to Chinese metals business Chinalco.

A fortnight later, it told the ASX it would stand down its energy and minerals chief executive Alan Davies, and said legal and regulatory affairs group executive Debra Valentine would also leave six months ahead of her scheduled retirement on May 1, 2017.

Rio made the announcement and contacted bribery and corruption officials in Europe, the US and Australia after a six-week investigation into leaked emails detailing the payment.

In an internal email this week, Jacques reportedly told staff the investigation could be long-winded.

“Many people across Rio Tinto are still shell-shocked,” Jacques was quoted as saying across multiple sources.

“The day I was made aware of a potential issue we launched an investigation. It wasn’t a decision we took lightly. We will fully cooperate with the authorities. Their investigations may take several years.

“Some of us may be feeling that we are better informed by the press than by ourselves.

“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.”

Meanwhile Israeli billionaire Beny Steinmetz has claimed the ordeal is evidence his mining business, BSGR, was unfairly stripped of half its rights to Simandou by the Condé Government in 2014.

“We have been fighting very powerful forces,” Steinmetz reportedly said in an interview with Bloomberg. “We all knew justice would prevail. I feel vindicated. We knew all along that we were right.

“Our asset was taken away based on lies,” he alleged. “It’s a big conspiracy against us, huge. They tried to paint themselves as nice and clean but they never wanted develop one ton of iron ore. We are the good guys.

“The people of Guinea are the biggest losers,” he reportedly said. “BSGR lost a lot of money, which it deserved to make, because BSGR invested a lot and took on a huge risk.

“This project has gone with the wind.”

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