Sometimes The Man From FCPA really does wonder what the U.S. Justice Department and the U.K. Serious Fraud Office (SFO) can do to get the message out that it is illegal to pay bribes, even right up to the very top of an organization. This past week, the Australian mining giant Rio Tinto announced that it had terminated two top officials after an investigation into payments to a third party to obtain mining rights in the notoriously corrupt country of Guinea. As reported by the Wall Street Journal, the company terminated energy and minerals chief Alan Davies, as well as head of legal and regulatory affairs Debra Valentine, following an internal investigation.
The terminations allegedly sent “shock waves” through the executive ranks of the company. Yet the most interesting or perhaps more appropriate disconcerting item reported by the Journal was that a group of Allies’ supporters were angered that he was not given the opportunity to defend himself. No doubt they also thought the fact that he had run the payment in question up the chain to the-then CEO, who conditionally approved the payment, was a good enough defense to keep his job. Yet even the former CEO cautioned against the “optics” to the Guinea government. The internal investigation raised questions about whether company internal controls for the payment in question were followed.
The swift termination of Allies and the lawyer involved demonstrates a desire to remediate the situation quickly. However, that the issue even arose in the first place by such a high-level executive and his in-house legal counsel raises even more troubling questions about the culture at the company when the events occurred. It remains an open question about whether such swift conduct by Rio Tinto will aid it in the inevitable investigation by the Justice Department over potential FCPA violations and the SFO over potential Bribery Act violations and relevant Australian authorities.