Two Rio Tinto executives are out over Africa payments

The harbour at Conakry, Guinea. Cellou Binani/AFP/Getty Images

Two very senior Rio Tinto executives have lost their jobs over payments to made to a consultant on an iron ore project in Africa.

Rio Tinto today terminated the contracts, and is withholding the bonuses of energy and minerals chief executive Alan Davies and legal group executive Debra Valentine.

The action was taken after the Rio Tinto board reviewed the findings to date of an internal investigation into 2011 contracts with a consultant who provided advisory services on the Simandou iron project in Guinea, West Africa.

“The board concluded that the executives failed to maintain the standards expected of them under our global code of conduct,” the company said in a statement to the ASX.

However, the company says the decision “does not pre-judge the course of any external inquiries”.

Neither executive will be eligible for short-term incentives for 2016. Rio Tinto is also cancelling all unvested incentive plan awards from previous years.

Davies joined the company in 1999 and is based in the UK. According to the company’s annual report, his base pay is £540,000 ($A897,000) and in 2015 was paid a short term incentive of £613,000 ($A1.02 million). He is also member of the board of directors of Rolls Royce Holdings.

Valentine has been head of legal since 2009. She was paid $US696,000 ($A930,000) and received a short term bonus of US$951,000 ($A1.27 million) in 2015.

Rio Tinto has informed regulatory authorities in the UK, Australia and the US and says it intends to fully cooperate with any investigation.

Davies and Valentine were stood down earlier this month over a series of payments totalling $US10.5 million.

The move follows the discovery in August this year of email correspondence from 2011 about payments to a consultant providing advisory services on the Simandou project in Guinea, West Africa.

Rio announced last month that it has signed a preliminary deal to sell its 46.6% stake in the Simandou project to Chinalco, which already has 41.3%.

It expects to receive between $US1.1 billion ($A1.4 billion) and $US1.3 billion ($A1.6 billion).

Simandou project is one of the world’s largest high grade iron ore resources at more than 2 billion tonnes.

Davies is being replaced as energy and minerals chief executive by Bold Baatar, who worked at JP Morgan before taking on chief executive positions with a gold mining company and a diversified investment management business in Mongolia.

He joined Rio Tinto in 2013 as copper international operations president and is the managing director of Marine and vice president iron ore sales.

Chief financial officer Chris Lynch has temporarily assumed accountability for the corporate legal affairs. The recruitment process for a new chief legal counsel has started.

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