U.K.-based mining and minerals company Rio Tinto will pay a $15 million fine to settle charges of violating the Foreign Corrupt Practices Act (FCPA) lodged by the Securities and Exchange Commission (SEC).
Rio Tinto consented to an SEC order alleging it violated the books and records and internal accounting controls provisions of the Securities Exchange Act when it entered into a scheme with a consultant in 2011 to bribe government officials in Guinea.
The company neither admitted nor denied the agency’s findings.
Rio Tinto hired a French investment banker and close friend of a former senior Guinean government official as a consultant to help it retain its mining rights in the Simandou mountain region in Guinea, the SEC stated in a press release Monday. The consultant was hired without a contract and without proper due diligence, the agency said, working for four months on behalf of Rio Tinto before entering into a written agreement on services to be provided.
Rio Tinto paid the consultant $10.5 million in July 2011. Shortly after, the consultant offered an $822,506 bribe to a senior Guinean official to secure mining rights, which Rio Tinto did eventually obtain, according to the SEC. The money Rio Tinto paid to the consultant was not accurately reflected in the company’s books and records, and the company lacked sufficient internal controls to detect or deter the misconduct, the agency said.
However, the attempted bribe payment was blocked by the Swiss bank the consultant sought to use to transfer the money to a Hong Kong company owned by the Guinean official, according to the SEC’s order.
“The bank held up the transaction over concerns about the company’s ties to Guinean officials,” the order said, noting the consultant attempted to explain to the bank the payment was being made on behalf of a different, lower-level Guinean official. “… The attempted transaction was ultimately blocked by the bank.”
Compliance ramifications: Rio Tinto conducted an internal investigation into the bribery scheme and cooperated with the SEC’s investigation, according to the agency. The company fired the employees responsible and enhanced its internal controls.
According to the SEC’s order, Rio Tinto:
- Strengthened its ethics and compliance program;
- Enhanced its code of conduct and policies and procedures involving gifts, hospitality, due diligence, and the use of third parties;
- Enhanced its whistleblower program;
- Improved its monitoring systems and internal controls related to manual payments and third parties;
- Enhanced its anti-corruption risk assessments and transaction testing of compliance controls; and
- Increased training of employees and third parties on anti-bribery issues.
Rio Tinto response: Rio Tinto said in a statement it voluntarily disclosed the alleged violations and that the company enhanced its compliance program based on best practices.
“Under current leadership, we are taking action to build a culture guided by our values of care, courage, and curiosity; an environment where every team member feels comfortable to speak up if something is not right,” said Rio Tinto Chairman Dominic Barton. “We remain committed to conducting business to the highest standards of integrity and ensuring that our projects benefit communities, host governments, shareholders, and customers.”