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Tom Fox: Things are getting strange at Rio Tinto

Rio Tinto's Alan DaviesThe Rio Tinto imbroglio around its mining concession in Guinea continues to become stranger and stranger.

One might think that a $10.5 million payment for a third-party consultant to assist in obtaining a lost mining concession in the notoriously corrupt West Africa country of Guinea, approved at the highest level of the company is unusual enough.

Now overlay this with the termination of two senior level company employees, in management and legal, who oversaw the project the mining concession was based on. Add to the mix that the internal investigation which led to the sacking only came after incriminating emails were posted online this past summer. Now thrown in pushback for the company’s swift action.

All of the above were detailed in an article in the Financial Times entitled, "Rio Tinto shareholders flag culture of fear concerns," by Neil Hume and Jamie Smyth.

Not only does this pushback come from other senior managers in the company, claiming there was no institutional justice for the terminated employees, Alan Davies and Debra Valentine, but also from shareholders.

The FT article reported “allies of Davies” believe that because the contract for the third party consultant was “drafted and finalized by Rio’s legal team” this should absolve Davies of responsibility. One shareholder had different concerns saying that the terminations was “creating a culture of fear within Rio Tinto.”

It is very unusual for such corporate actions to have such a very public debate. Moreover for a company to take such drastic action against top level managers never comes without significant internal debate, including discussions with outside counsel.

The article noted that Kirkland & Ellis performed the internal investigation and “is understood to have ploughed through 60 terabytes of data during its investigation.”

One can only assume this story will continue to unfold.


Tom Fox is a Contributing Editor of the FCPA Blog. He has practiced law in Houston for 30 years. He is now the Compliance Ambassador for the Red Flag Group. He's the creator of the award winning FCPA Compliance and Ethics website. His best-selling seminal book, "Best Practices Under the FCPA and Bribery Act: How to Create a First Class Compliance Program” (available from Amazon here) is widely viewed as one of the top volumes on the nuts and bolts of compliance.

Reader Comments (1)

Now, this, at face value, seems like an overt case of bribery. I would think that it could be investigated and resolved within a few months. However, it is very likely that this will remain open for 4 years at least. Can someone bring light into why this is even possible? Can the SEC/DOJ be (more) expedient?
November 29, 2016 | Unregistered Commenterdurban
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