Shares in Rio Tinto (LON:RIO) have climbed into positive territory today, as the Anglo-Australian miner said that it had fired two executives following an internal investigation into a $10.5-million payment related to an iron-ore mine in Africa.
As of 10:17 GMT, Rio Tinto’s share price was 0.49 percent higher at 2,978.00p, slightly underperforming the broader London market, with the benchmark FTSE 100 index currently 0.09 percent better off at 6,755.60 points. The group’s shares have gained more than 35 percent over the past year, and are up by some 50 percent in the year-to-date.
Rio Tinto announced in a statement today that it had terminated the contracts of Energy & Minerals chief executive Alan Davies and Legal & Regulatory Affairs Group executive Debra Valentine, having reviewed the findings an internal investigation into 2011 contractual arrangements with a consultant who provided advisory services on the Simandou project in Guinea. The Financial Times notes in its coverage of the news that the miner’s lawyers had uncovered emails, in which Davies, the executive in charge of Simandou, discusses with Tom Albanese, then chief executive, and Sam Walsh, then head of iron ore, paying a $10.5-million fee to François Polge de Combret, a former top French banker and classmate of Guinea’s president.
“The board’s decision does not pre-judge the course of any external inquiries into this matter,” Rio Tinto said in today’s statement. “However, the board concluded that the executives failed to maintain the standards expected of them under our global code of conduct, The way we work. In the circumstances, the board terminated the contracts of both executives.”
The Australian Financial Review meanwhile quoted Davies as saying that the termination of his contract was a ‘great surprise’.
“I have not been privy to Rio Tinto's internal investigation report, nor have I had any evidence of the reasons for my termination of my employment given,” he pointed out, adding that he has “been left with no option but to take the strongest possible legal action in response”.