A US securities regulator has dismissed appeals from Rio Tinto to have fraud charges dropped against former company executive Tom Albanese, accused of fudging company results at Rio Tinto’s former Mozambique operation.
The defence filed by Rio Tinto, Albanese and former chief financial officer Guy Elliot last week was quickly dismissed after being sent to the US District Court in Manhattan.
The American businessman is accused by the Securities Exchange Commission (SEC) of hiding a $US3 billion write-down on the value of an overvalued Rio Tinto coal project in Mozambique; the project was acquired in 2011 for $US3.7 billion and sold in 2014 for $US50 million, leading to large losses and accusations of deceiving investors.
Albanese’s lawyers countered by saying that the valuation was actually made by Albanese’s staff, and that the businessman had placed his trust in a wide range of experts on the matter.
The SEC alleges that had Rio Tinto properly disclosed its write-down, the company’s first-half earnings for 2012 would have been cut in half. Albanese and co. had attempted to suggest that as the loss only represented three per cent of company assets, it did not represent a significant loss to investors, a claim the SEC rejected.
Judge Analisa Torres, the US District Judge presiding over the case, is yet to take further decision.