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Rio Tinto hit with FCA fine over financial reporting process for Mozambique purchase; US, Australian regulators also investigating

Published: 07:50 18 Oct 2017 BST

Rio Tinto mine
The miner also revealed that the US SEC has filed civil complaint alleging the firm committed fraud

Rio Tinto PLC (LON:RIO) has been hit with a £27.4mln fine by the UK financial regulator for failings in its financial reporting process relating to the US$3.7bn purchase of mining assets in Mozambique, an issue that US and Australian regulators have also now begun to investigate.

The Financial Conduct Authority (FCA) said in a statement overnight that Rio Tinto misled investors by failing to carry out an impairment test that would have resulted in a material impairment being made to its 2012 half year results, which it did not remedy until in January 2013 when it wrote off roughly 80% of the value of the investment.

READ: Rio Tinto cuts full year copper production guidance after third quarter decline

In a statement this morning, Rio Tinto confirmed the settlement with the FCA and also revealed that it has received notification that the US Securities and Exchange Commission (SEC) has alleged in a civil complaint that the FTSE 100-listed group committed fraud in relation to the disclosures and timing of the impairment of Rio Tinto Coal Mozambique (RTCM).

The global miner said: “The impairment was reflected in Rio Tinto's 2012 year-end accounts. Rio Tinto intends to vigorously defend itself against these allegations.”

Rio says SEC case “unwarranted”

It added: “Rio Tinto believes that the SEC case is unwarranted and that, when all the facts are considered by the court, or if necessary by a jury, the SEC's claims will be rejected.”

It also noted: “The FCA made no findings of fraud, or of any systemic or widespread failure by Rio Tinto. The case is now closed.”

There is, however, Rio added also an investigation underway by the Australian Securities and Investments Commission.

RTCM was acquired in 2011 and divested in 2014.

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