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Rio dismisses energy chief after Guinea review

Rio Tinto has fired Alan Davies, chief executive of its energy and minerals division, and Debra Valentine, the head of legal affairs, after reviewing a $10.5m payment made for advisory services on a giant iron project in Guinea.

Last week, the FTSE 100 mining company suspended Mr Davies and announced the resignation of Ms Valentine after contacting regulators about the payment of $10.5m to François Polge de Combret, a French consultant, for work on the Simandou project in 2011.

On Thursday, Rio said it had reviewed the findings of an internal investigation into contractual arrangements with Mr de Combret, a former senior banker, and concluded “that the executives failed to maintain the standards expected of them under our global code of conduct”. Rio said it had “terminated the contracts” of the two executives.

People close to the Rio board said the decision to sack the executives had been taken on Monday and was unanimous.

Rio said its decision did not prejudice the course of any external inquiries into the matter. Neither of the executives would be eligible for any short-term incentive plan awards for 2016, it added.

After learning of his dismissal, Mr Davies said he had no option but to take the strongest possible legal action.

“I have not been privy to Rio Tinto’s internal investigation report, nor have I had any evidence of the reasons for the termination of my employment given,” he said in a statement.

“There are no grounds for the termination of my employment. Rio Tinto has made no effort to abide by due process or to respect my rights as an employee and it has given me no opportunity to answer any allegations.”

Ms Valentine could not be reached for comment.

The move by Rio came after it emerged on Wednesday that lawyers working for the miner had uncovered internal emails about the questionable $10.5m payment more than a year ago, but the mining company did not alert law enforcement authorities and investors about the matter until last week.

The Anglo-Australian group said on November 9 that it had notified authorities after discovering emails from 2011 that referred to the payment to Mr de Combret, who helped head off a threat to Rio’s claim to the Simandou iron ore project in Guinea.

In the emails, seen by the Financial Times, Mr Davies, the executive in charge of Simandou, discusses with Tom Albanese, then chief executive, and Sam Walsh, then head of iron ore, paying a $10.5m fee to the consultant.

Following an internal inquiry begun in August, Rio said last week that it had referred the matter to law enforcement authorities in the UK, the US and Australia. The company now faces years of scrutiny and the risk of large fines if it is found to have broken anti-corruption laws.

Late on Wednesday, Rio said that Mr Davies would be replaced by Bold Baatar, who joined the company in 2013 as the miner’s copper international operations president. Chris Lynch, Rio’s chief financial officer, has temporarily assumed accountability for the corporate legal and regulatory affairs function while it searches for a new chief legal counsel.

Via FT