Simandou is a mountain that is rich in minerals, but it is in the interior of Guinea, a West African country that by some accounts is one of the most corrupt places in the world. The complaint for this class action claims that Rio Tinto PLC became anxious when some of its mining rights were revoked and given to a competitor and that it paid a very large bribe to ensure that it retained its remaining rights.
The class for this action is all persons and entities who acquired the American Depositary Receipts (ADRs) of Rio Tinto between March 16, 2012 and November 17, 2016 and were damaged thereby.
Rio Tinto is a UK mining company that explores for, mines, and processes minerals, including iron ore. Simandou has one of the largest iron ore deposits in the world, evaluated as having a value of $50 billion. The mountain is divided into four blocks, and between 1999 and 2008, the company was granted exploration rights and a concession for all four blocks.
However, in 2008, the government of Guinea revoked the company’s concession and reduced its status to prospecting permit holder in the area, claiming that the company had not developed the mining properties as vigorously as it should have. By the end of the year, the company had no rights at all to blocks 1 and 2, and by 2010 a mining concession in those blocks had been given to a competitor.
Rio Tinto then made extensive efforts to develop its remaining concessions, but according to the complaint, the company feared that the lack of development was just an excuse and that the competitor had in fact paid a bribe to get the mining concession.
Rio Tinto has mandatory codes for the behavior and ethics of its employees, and during the class period, the complaint claims that the company touted these rules, saying, for example, “We do not commit, or become involved in, bribery or corruption of any form. … We do not buy business of favour, no matter where we operate, no matter what the situation is, no matter who is involved.” In addition, the complaint says, the company said it did not expect losses from legal claims and asserted that its disclosure controls and procedures were effective.
All this, the complaint says, was false. The complaint claims that at least four e-mails show evidence that Rio Tinto officials approved a bribe of $10.5 million to make sure of its concessions on Simandou and to cement relations with the Guinea government.
The complaint claims that this was a violation of the Foreign Corrupt Practices Act, which opened the company to prosecution and penalties and threatened its profitability, and that hiding the scheme from investors was a violation of the Securities Exchange Act of 1934.
Article Type: LawsuitTopic: Securities
Most Recent Case Event
Rio Tinto Bribery for Guinea Iron Ore Mining Concessions Securities Complaint
May 30, 2017
Simandou is a mountain that is rich in minerals, but it is in the interior of Guinea, a West African country that by some accounts is one of the most corrupt places in the world. The complaint for this class action claims that Rio Tinto PLC became anxious when some of its mining rights were revoked and given to a competitor and that it paid a very large bribe to ensure that it retained its remaining rights. However, the company continued to claim it did not pay bribes and did business ethically, in violation of the Securities Exchange Act of 1934.
rio_tinto_sec_compl.pdfCase Event History
Rio Tinto Bribery for Guinea Iron Ore Mining Concessions Securities Complaint
May 30, 2017
Simandou is a mountain that is rich in minerals, but it is in the interior of Guinea, a West African country that by some accounts is one of the most corrupt places in the world. The complaint for this class action claims that Rio Tinto PLC became anxious when some of its mining rights were revoked and given to a competitor and that it paid a very large bribe to ensure that it retained its remaining rights. However, the company continued to claim it did not pay bribes and did business ethically, in violation of the Securities Exchange Act of 1934.
rio_tinto_sec_compl.pdf