'Watch this space': ASIC flags legal action against Rio Tinto over Mozambique deal investment under investigation by US authorities

Trucks work the open pit mine at a Rio Tinto gold mine in Mongolia. Picture: Getty Images

Australia’s corporate watchdog has signalled it will take legal action against Rio Tinto and its executives over suspected frauds involving the miner’s botched Mozambique investment.

Australian Securities and Investments Commission chairman Greg Medcraft told Senate Estimates on Thursday the regulator was considering all enforcement options against Rio Tinto and its executives.

“Watch this space,” Mr Medcraft said at what will be his last Senate Estimates as ASIC chairman. He retires in the coming weeks.

“The current investigation is well progressed. All enforcement options are on the table,” Mr Medcraft said.

Last week the US Securities Exchange Commission launched civil fraud action against Rio Tinto, its former chief executive Tom Albanese and former chief financial officer Guy Elliott over the miner’s failed Mozambique coal project.

Britain’s Financial Conduct Authority has already secured a £24 million ($39 million) penalty against Rio Tinto as part of its investigation.

ASIC commissioner John Price, who is in charge of ASIC’s corporate governance department, said the Australian regulator had been working closely with its counterparts in the US and the UK in regards to the investigation.

“We have an investigation that is underway and it is well progressed,” Mr Price said, adding ASIC was sifting through 90,000 documents it had compelled from Rio Tinto at the moment.

“We’ve been assisting our fellow regulators, the SEC and FCA. They have acknowledged ASIC’s assistance,” Mr Price said.

Former Rio Tinto CEO Tom Albanese. Photo: Leon Neal/ AFP/ Getty Images.

He said that the US regulator had taken action before the Australian watchdog in part because the alleged breaches of the law took place in 2012 and the US statute of limitations on corporate breaches is five years.

The statute of limitations in Australia is six years and thus ASIC had more time to investigate, Mr Price said.

Mr Medcraft told the hearing ASIC had been deeply involved in the investigation.

“We’re looking at both Rio Tinto and its executives,” Mr Medcraft said.

He said ASIC did not have the same powers as the UK’s FCA to obtain an administrative penalty from Rio Tinto outside of court action.

Australia’s administrative penalties against corporate entities are capped at $100,000. Breaches of directors’ duties in court action are capped at $300,000.

Recently Treasury has flagged its intention to increase ASIC’s maximum penalty from $1 million to $3 million, but this will not apply to all of the watchdog’s powers.

When asked by Greens Senator Peter Whish-Wilson if ASIC had allowed its fellow regulators to proceed with court action because it lacked powers, high penalties and whistleblower protections, Mr Medcraft said: “Yes, that might have been a consideration”.

A range of new laws to protect whistleblowers are currently under consideration.

More to come.

This article was originally published by the Sydney Morning Herald’s Business Day. Read the original here, or follow Business Day on Facebook.

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