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18-061MR ASIC takes action against Rio Tinto and its former CEO and CFO for misleading and deceptive conduct
ASIC has commenced legal proceedings in the Federal Court in Sydney today against Rio Tinto Limited (RTL) and its former Chief Executive Officer, Mr Thomas Albanese, and its former Chief Financial Officer, Mr Guy Elliott. The proceedings relate to statements which ASIC alleges were misleading or deceptive contained in the RTL annual report for 2011 which was signed on 5 March 2012 and published on 16 March 2012.
In December 2010, RTL announced a takeover offer for Riversdale Mining Limited (ASX:RIV) (Riversdale) which was completed in August 2011 at a total cost of over US$4 billion. Following the acquisition RTL delisted Riversdale and renamed it Rio Tinto Coal Mozambique (RTCM).
ASIC alleges that RTL engaged in misleading or deceptive conduct by publishing statements in the 2011 annual report, signed by Mr Albanese and Mr Elliott, misrepresenting the reserves and resources of RTCM. Further, by allowing RTL to engage in such conduct, Mr Albanese and Mr Elliott failed to exercise their powers and discharge their duties with the care and diligence required by law as directors and officers of RTL.
ASIC is seeking declarations that RTL contravened s1041H of the Corporations Act 2001 (Cth) (Corporations Act) and that Mr Albanese and Mr Elliott contravened s180 of the Corporations Act. ASIC has sought from the Court pecuniary penalties against Mr Albanese and Mr Elliott and that they be disqualified from managing corporations for such periods as the Court thinks fit.
ASIC's investigations are continuing in relation to the circumstances surrounding the impairment of RTCM. ASIC will be making no further comment at this time.
Rio Tinto Limited is an Australian publicly listed company. Rio Tinto plc is a UK publicly listed company. RTL and Rio Tinto plc together operate a dual listed structure and the directors of both companies are the same. Both companies together form the Rio Tinto Group (Rio Tinto) and one set of financial statements are prepared.
In December 2010 Rio Tinto announced a takeover offer for Riversdale Mining Limited (ASX:RIV) (Riversdale) which was completed in August 2011 at a total cost of over US$4 billion. Following the acquisition RTL delisted Riversdale and renamed it Rio Tinto Coal Mozambique.
On 17 January 2013 Rio Tinto announced it expected to recognise a non-cash impairment charge of approximately US$14 billion (post tax) in its 2012 full year results which included approximately US$3 billion relating to RTCM. It was also announced that Mr Albanese had stepped down from his role as CEO.
In October 2017, the UK Financial Conduct Authority announced it had fined Rio Tinto plc £27,385,400 for breaching Transparency and Disclosure Rules by failing to carry out an impairment test and to recognise an impairment loss on the value of RTCM in the Rio Tinto 2012 half year report.
On the same date the US Securities and Exchange Commission commenced civil proceedings in the United States Federal Court in Manhattan against Rio Tinto, Mr Albanese and Mr Elliott for inflating the value of RTCM.
ASIC would like to thank the US SEC and the UK FCA for their assistance and collaboration in relation to this ongoing matter.
Editor's note 1:
The matter has been listed for the first case management hearing on Tuesday 20 March 2018 at 9.30am.
Editor's note 2:
The matter has been listed for a further case management hearing on 1 May 2018.
Editor's note 3:
On 1 May 2018, ASIC expanded its legal proceedings filed in the Federal Court in Sydney against Mr Albanese and Mr Guy Elliott. Refer 18-119MR for more information.
Editor's note 4:
The hearing on 24 July 2018 was vacated as the parties agreed further orders by consent. The matter has now been listed for hearing on 11 December 2018.
Editor's note 5:
The case management hearing on the 11 December 2018 was vacated as the parties agreed further orders by consent. The matter has now been listed for a further case management hearing on 14 May 2019.
Editor's note 6:
The case management hearing on the 14 May 2019 was vacated as the parties agreed further orders by consent. The matter has now been listed for a further case management hearing on 6 June 2019.
Editor's note 7:
The case management hearing on 6 June 2019 was vacated as the parties agreed further orders by consent. The matter has now been listed for a further case management hearing on 6 August 2019.
Editor's note 8:
The case management conference on 6 August 2019 was vacated by consent. The matter has now been listed for 22 August 2019.
Editor's note 9:
The case management conference on 22 August 2019 was vacated. The matter has been listed for a case management conference on 16 June 2020. The court has provisionally listed the matter for trial for five weeks on 1 March 2021.
Editor's note 10:
ASIC’s amended interlocutory application filed on 10 September 2019 has been dealt with by consent and the hearing date of 23 October 2019 has been vacated.
Editor's note 11:
On 19 March 2020, the case management conference scheduled for 16 June 2020 was adjourned to 4 August 2020. On 25 May 2020, the case management conference listed on 4 August 2020 was vacated and listed on 8 September 2020. Orders made on 23 August 2019 to list the matter for a provisional hearing date of 1 March 2021 remain unchanged.
Editor's note 12:
At a case management conference on 8 September 2020, Justice Yates made orders fixing the trial date for 1 March 2021 for a seven week hearing on liability. The matter is next listed for a further case management conference on 23 November 2020.
Editor's note 13:
On 23 November 2020, Justice Yates heard the interlocutory applications of the second and third defendants, to vacate the trial date listed for a seven week hearing on liability on 1 March 2021. On 27 November 2020, Justice Yates delivered his judgment on the interlocutory applications, making orders to vacate the hearing date and fixing the matter for trial from 28 February 2022 for a seven week hearing on liability. View the judgment here.
Editor’s note 14:
On 9 February 2022, Justice Yates ordered, by consent, that the seven-week hearing that was to commence on 28 February 2022 be vacated and that ASIC and RTL file an agreed outline of joint submissions on penalty. The matter was listed for hearing to determine penalty on 28 February 2022.
Editor’s note 15:
On 28 February 2022, the court heard submissions from the parties on final orders in the proceeding, which included, amongst other things, that a declaration be made that RTL had contravened sub-section 674(2) of the Corporations Act in failing to comply with its continuous disclosure obligations and an order imposing a civil penalty. The Court has reserved its decision.