SEC Drops Case Against Former Rio Tinto CFO in Long-Running Mozambique Coal Dispute

On the 9th of January, the U.S. Securities and Exchange Commission on Friday moved to dismiss its lawsuit against Guy Elliott, the former chief financial officer of Rio Tinto, bringing to a close a lengthy fraud case tied to a troubled investment in a coal project in Mozambique by one of the world’s biggest mining groups. In a filing submitted to federal court in Manhattan, the SEC said it was ending its civil action against Elliott “in the exercise of its discretion,” without weighing in on the substance of the claims that were still pending.

The dismissal puts an end to a case that has stretched on for more than eight years, during which Rio Tinto agreed in 2023 to pay a $28 million civil penalty and its former chief executive, Tom Albanese, accepted a $50,000 fine. Elliott has consistently denied any misconduct, and in a joint statement his lawyers described the outcome as “a complete defense victory.” The SEC did not immediately respond to requests for comment on the decision.

The litigation traces back to an October 2017 complaint in which the SEC accused Rio Tinto of misleading investors about the value of Rio Tinto Coal Mozambique, an operation the Anglo-Australian miner acquired in 2011 for $3.7 billion through its takeover of Riversdale Mining. Regulators alleged that Rio Tinto subsequently raised more than $5.5 billion from U.S. fixed-income investors by overstating the worth of the coal assets, even though an internal review concluded that the project was actually worth negative $680 million.

That internal valuation turned negative after the Mozambican government rejected Rio Tinto’s plan to transport coal by barge, a key part of the project’s logistics. The company ultimately recorded a writedown of more than $3 billion related to Mozambique in 2013 and sold the assets the following year for just $50 million.

As recently as last February, U.S. District Judge Analisa Torres had declined Elliott’s request to throw out the SEC’s remaining allegations that he misled Rio Tinto’s accounting firm about the finances of Rio Tinto Coal Mozambique and violated books and records rules, ruling that unresolved factual questions should be decided by a jury.

Separately, Rio Tinto and its rival Glencore said on Thursday that they were in talks about a possible merger that could create the world’s largest mining company.

By fLEXI tEAM