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Rio Tinto is ordered by the SEC to pay $15 million in fines for FCPA offences

Rio Tinto, based in the United Kingdom, will pay a $15 million fine to settle charges of violating the Foreign Corrupt Practices Act (FCPA) brought by the Securities and Exchange Commission (SEC).

Rio Tinto agreed to an SEC order charging that it violated the Securities Exchange Act's books and records and internal accounting controls provisions in 2011 when it conspired with a consultant to bribe government officials in Guinea.

The corporation neither admitted nor denied the findings of the agency.

The SEC noted in a press statement Monday that Rio Tinto engaged a French investment banker and a close friend of a former top Guinean government official as a consultant to assist it keep its mining rights in the Simandou mountain region of Guinea. According to the agency, the consultant was employed without a contract and without adequate due diligence, working for Rio Tinto for four months before getting into a written agreement on services to be given.

In July 2011, Rio Tinto paid the consultant $10.5 million. According to the SEC, the consultant then offered a $822,506 bribe to a senior Guinean official in order to gain mining rights, which Rio Tinto subsequently obtained. Rio Tinto's payment to the consultant was not appropriately reflected in the firm's books and records, according to the agency, and the corporation had sufficient internal controls to detect or deter the misconduct.

According to the SEC's decision, the attempted bribe payment was blocked by the Swiss bank the consultant intended to use to transfer the money to a Hong Kong firm owned by the Guinean official.

“The bank held up the transaction over concerns about the company’s ties to Guinean officials,” the order said, noting the consultant attempted to explain to the bank the payment was being made on behalf of a different, lower-level Guinean official. “… The attempted transaction was ultimately blocked by the bank.”

Compliance implications: According to the SEC, Rio Tinto launched an internal inquiry into the bribery scheme and cooperated with the agency's probe. The workers who were culpable were fired, and the company's internal controls were strengthened.

Rio Tinto, according to the SEC's order:

  • Strengthened its ethics and compliance program;

  • Enhanced its code of conduct and policies and procedures involving gifts, hospitality, due diligence, and the use of third parties;

  • Enhanced its whistleblower program;

  • Improved its monitoring systems and internal controls related to manual payments and third parties;

  • Enhanced its anti-corruption risk assessments and transaction testing of compliance controls; and

  • Increased training of employees and third parties on anti-bribery issues.

Rio Tinto's reaction: Rio Tinto said in a statement that it voluntarily notified the alleged infractions and that it improved its compliance programme in accordance with best practises.

“Under current leadership, we are taking action to build a culture guided by our values of care, courage, and curiosity; an environment where every team member feels comfortable to speak up if something is not right,” said Rio Tinto Chairman Dominic Barton. “We remain committed to conducting business to the highest standards of integrity and ensuring that our projects benefit communities, host governments, shareholders, and customers.”


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