Rio Tinto in spotlight as
Australia fraud police targets resources industry
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[November 18, 2016]
By Sonali Paul
MELBOURNE
(Reuters) - Facing international pressure to get tougher on corruption,
Australian authorities say they are targeting the resources industry but
have yet to be formally asked to look into a high-profile probe into
payments at miner Rio Tinto.
A senior official at the Australian Federal Police said there had been
talks with Rio, the world's second-largest miner, though police had yet
to begin an official investigation into emailed details of payments that
led to two top executives being fired this week.
"We haven't had a matter referred to us for investigation," said Peter
Crozier, the AFP's manager of criminal assets, fraud and
anti-corruption.
There is no evidence of illegal activity involving Rio officials nor a
consultant to whom payments were made, a banker linked to Guinea's
president. But emails detailing the transactions are a blow to the
reputation of a group that has long been vocal in its campaign for
transparency.
Australia has beefed up its resources in tackling corruption and fraud
after the Organisation for Economic Co-Operation and Development chided
the government in 2012 or being slack in prosecuting bribery offences -
at a time when miners and oil firms were expanding everywhere from Papua
New Guinea to the Democratic Republic of Congo.
"In the course of some of the research that we've done, the extractive
industry is obviously one that's very challenged in this space," Crozier
said in an interview.
Rio has moved swiftly to attempt to draw a line under the payments
scandal, alerting authorities to the emails, dating back to 2011, that
discuss $10.5 million in payments to French investment banker Francois
de Combret.
But lawyers and industry analysts expect investigations and potential
court cases could keep the issue simmering.
Such investigations typically take five to 10 years, Crozier said,
citing OECD statistics, with massive resources required.
"The services provided, the relationships that exist, all of those sort
of things are key to actually proving that a person's intent was
potentially to pay a bribe or receive a bribe or influence a public
official," he said.
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A lawyer familiar with AFP investigations said Rio Tinto would be a
choice target for the agencies to set an example to others - if there
was wrongdoing.
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"What I do know is that the AFP is desperate to put somebody in jail as
a deterrent. You couldn't think of a bigger deterrent than a senior
executive from a major corporate being put into jail for this type of
offense," said Steven Fleming, a partner with U.S. law firm Jones Day in
Sydney.
AFP's Crozier said there would be no race for headlines.
"It's not a matter of picking one that's going to make the biggest
impact," he said.
"It's important to put a message out there to say if you are involved in
this sort of activity, you are going to face the full effect of the law.
We have a number of investigations that are ongoing."
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Rio Tinto has declined to comment on the issue, as have two former chief
executives involved in the email exchange.
Tom Albanese, now CEO of Vedanta Resources, declined to comment when
asked about the matter last week, and Sam Walsh has not responded to
efforts to contact him.
Regulators in Britain, the United States and beyond have taken a much
tougher stance on corruption in recent years.
Aluminum producer Alcoa <AA.N> and a joint venture it controlled paid
$384 million in 2014 to resolve charges of bribing officials of a
state-controlled smelter in Bahrain.
BHP Billiton came under scrutiny for payments made in Cambodia on an
exploration project but then the U.S. Securities and Exchange Commission
expanded its probe to the company's hospitality program at the Beijing
Olympics in 2008.
After a six-year investigation, BHP paid a $25 million fine for slack
record keeping tied to the Olympics hospitality.
(Reporting by Sonali Paul; Additional reporting by James Regan; Editing
by Clara Ferreira Marques and Kenneth Maxwell)
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