Rio Tinto consented to pay a $28 million fine to resolve charges levied by the Securities and Exchange Commission (SEC) alleging the mining company and its executives committed fraud by inflating the value of coal assets.

The U.S. District Court for the Southern District of New York entered final judgments against Rio Tinto plc and Rio Tinto Limited on Monday, the SEC announced in a litigation release.

In October 2017, the SEC charged Rio Tinto, former Chief Executive Thomas Albanese, and former Chief Financial Officer Guy Elliott with violating the antifraud, reporting, books and records, and internal controls provisions of the federal securities laws. Albanese will pay a $50,000 penalty as part of his judgement, while the case against Elliott remains ongoing.

The details: Rio Tinto, Albanese, and Elliott concealed the rapid decline in value of a coal business in Mozambique the company acquired for $3.7 billion in April 2011, according to the SEC’s complaint. They allegedly hid details of the decline from the company’s board of directors, audit committee, independent auditors, and the market to avoid an impairment analysis.

Rio Tinto raised a total of $5.5 billion in U.S. debt offerings that incorporated materially misleading statements and omissions concerning the coal business’s valuation, the SEC alleged. After an internal review that revealed the issues, Rio Tinto announced it was impairing the coal business’s carrying value by more than $3 billion, the agency said. The coal business would ultimately be sold off for $50 million.

Albanese and Elliott each stepped down from their respective positions in 2013.

Compliance considerations: In addition to paying a penalty, Rio Tinto must retain an independent consultant to review and evaluate its compliance with accounting standards, the SEC said. The consultant will advise on the company’s current policies, procedures, and controls related to impairment, disclosures, and project risk, according to a Rio Tinto press release.

The company and Albanese each agreed to cooperate in the agency’s ongoing litigation against Elliott.

Elliott is seeking dismissal of the SEC’s remaining claims against him. Fraud charges against him were dismissed in 2019.

Company response: “Rio Tinto welcomes closure of the SEC case on appropriate and reasonable terms,” the release stated.

The company and Albanese neither admitted nor denied the SEC’s findings.

Editor’s note: This story was updated Nov. 24 to provide further detail on Guy Elliott’s legal proceedings.