Rio Tinto, a global mining and metals company, has agreed to pay a $15 million civil penalty to the Securities and Exchange Commission (SEC) for violating the Foreign Corrupt Practices Act (FCPA). The violation is related to a bribery scheme involving a consultant in Guinea.
The Hiring of a Consultant in Guinea
In 2011, Rio Tinto hired a French investment banker and a close friend of a former senior Guinean government official as a consultant to help the company retain its mining rights in the Simandou mountain region in Guinea. However, the consultant began working without a written agreement defining the scope of his services or deliverables.
Violation of the FCPA
The SEC’s investigation found that the consultant acted as Rio Tinto’s agent and offered and attempted to make an improper payment of at least $822,000 to a Guinean government official in connection with the consultant’s efforts to help Rio Tinto retain its mining rights. Rio Tinto failed to have sufficient internal accounting controls in place to detect or prevent misconduct. Additionally, none of the payments to the consultant were accurately reflected in Rio Tinto’s books and records.
Lack of Adequate Internal Accounting Controls
Rio Tinto’s failure to have sufficient internal accounting controls in place to detect or prevent misconduct is a clear violation of the FCPA. The company’s deficient controls were no match for managers determined to hire a consultant whose only ostensible qualification was a personal relationship with a senior government official.
Consent to the SEC’s Order
Rio Tinto consented to the SEC’s order without admitting or denying the findings that it violated the books and records and internal accounting controls provisions of the Securities Exchange Act of 1934.
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