Company has been investigating emails that reference $10.5 million payout to consultant related to mining rights in Guinea
SYDNEY—Rio Tinto PLC said an executive stepped down and another was suspended in connection with a company investigation into emails that reference $10.5 million of payments made to a consultant for helping to acquire rights to massive iron-ore deposits in Guinea.
The suspension of Rio Tinto’s Energy and Minerals Chief Executive Alan Davies and the resignation of Legal and Regulatory Affairs Group Executive Debra Valentine are the latest twists in a long-running scandal relating to Simandou, one of the mining world’s most coveted prizes because of its size and high quality of iron ore.
Internal Rio Tinto emails reviewed by The Wall Street Journal show that high-level executives at the company, including its chief executive at the time, Tom Albanese, approved the payments in 2011 to a consultant, François de Combret, a former Lazard Frères managing director who was close to senior government officials in Guinea.
On Wednesday, Rio Tinto said it had been investigating the emails since August. The company said it had notified the U.S. Department of Justice, the U.S. Securities and Exchange Commission, the U.K.’s Serious Fraud Office and the Australian Securities and Investments Commission of the emails. The company didn’t say why it forwarded the emails to authorities.
“Rio Tinto intends to cooperate fully with any subsequent inquiries from all of the relevant authorities,” the company said.
Mr. Albanese, who stepped down as Rio’s CEO in 2013 and is now chief executive of Vedanta Resources PLC, declined to comment. Mr. de Combret couldn’t be reached for comment. Efforts to reach Mr. Davies and Ms. Valentine weren’t successful.
Mr. de Combret aided the company in negotiations with Guinea’s government over access to Simandou, according to people familiar with the matter and emails the Journal reviewed. Rio Tinto has said it believed it could turn Guinea into one of the world’s top exporters of iron ore, a steelmaking commodity.
The emails show that Mr. Davies sought approval for the payments to Mr. de Combret from Sam Walsh, then head of Rio’s iron-ore division. “May I please have your approval to agree a final fee with François of US$10.5m,” Mr. Davies wrote in a May 10, 2011, email to Mr. Walsh soon after Rio had agreed to pay $700 million to Guinea to secure the rights to the mine.
Mr. Davies said in the email that Mr. de Combret had provided significant help in obtaining rights to mine two large pieces of the Simandou concession from the Guinea government and noted his “closeness” to Guinea President Alpha Condé.
Mr. Walsh, after reviewing Mr. Davies’s request, sent an email to Mr. Albanese, then CEO of Rio Tinto, recommending that the company make the payment, subject to certain conditions. “Worth giving this a try,” Mr. Albanese replied. Mr. Walsh wasn’t reachable for comment.
The miner became aware of the communications after an unspecified number of emails were published on an open internet forum, a spokesman said. The emails were posted for a short time before being removed, he said.
Rio Tinto began exploring Simandou in the 1990s. The $20 billion Simandou project became engulfed in controversy after the government of now-deceased dictator Lansana Conté in 2008 stripped Rio Tinto of two of the project’s four blocks, saying the miner had failed to develop the project in a timely manner.
The government awarded the rights to BSG Resources Ltd., the mining business of Israeli billionaire Beny Steinmetz, which later struck a deal with Brazil’s Vale SA to buy a 51% stake in the Simandou assets.
The Guinea government later stripped BSGR and Vale of those rights, alleging they were illegally obtained. BSGR has denied any wrongdoing. Rio won the pair of blocks back in 2011.
The Anglo Australian company last month sold its stake Simandou to Aluminum Corp. of China for about $1.3 billion.