Rio Tinto directors’ heads on the chopping block over Africa deal

Rio Tinto chief executive of energy and minerals, Alan Davies. Image: www.wsj.com

Rio Tinto directors are set to meet in London in the next few hours in order to discuss the future of the two of its executives involved in the so-called African payments scandal.

Sources say that the board will be considering whether to dismiss the company’s Australian-born suspended chief executive of energy and minerals, Alan Davies.

Rio announced the suspension of Davies along with legal affairs executive Debra Valentine after emails surfaced detailing a AUD$13.8 million payment to consultant, Francois de Combret,  who allegedly provided political advisory services to Rio for the Simandou iron ore business in the west African country of Guinea.

According to the Australian Financial Review, the leaked emails appear to show Davies discussing the payment with then iron ore boss and later CEO of Rio, Sam Walsh, who in turn sought guidance from then CEO Tom Albanese.

The AFR has also suggested the contract between Rio and de Combret was overseen by Rio’s former managing director of Australian operations Phil Edmands, who was general counsel of the miner’s iron ore division at the time.

This new Guinea controversy comes six and a half years after four Rio employees, including Australian Stern Hu, were arrested in China over bribery allegations and 12 months after Rio director Anne Lauvergeon​ was questioned by French investigators over a number of alleged misleading accounts while CEO of nuclear power utility Areva.

Not that all this legal and corporate mud-slinging has hurt its standing with investors – since the close of trading on Friday, Rio shares actually went up by more than 8 per cent.

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