Rio Tinto’s (ASX, LON:RIO) recently launched probe into a payment made to an external consultant over the Simandou iron ore project in Guinea, just turned nasty, with the company firing two of the executives involved in the case and one of them threatening with legal actions.
The world’s second largest mining company said Thursday it had terminated the contract of Alan Davies, chief executive of its energy and minerals unit, as well as Debra Valentine’s, the Rio executive in charge of legal and regulatory matters as a result of the internal investigation.
Both have also been stripped of any short-term incentive plan awards for this year and Rio said it will cancel all unvested incentive plan awards from previous years. The personal cost would run into millions of dollars.
Davies, who was suspended on Nov. 9 over the $10.5 million payment to a consultant in 2011 for assisting in negotiations with Guinea’s government on the Simandou project, said Thursday Rio Tinto had no grounds to fire him and that he will take the company to court.
“I have not been privy to Rio Tinto’s internal investigation report, nor have I had any evidence of the reasons for my termination of my employment given,” Davies said in an e-mailed statement.
He added that the company has not respected his rights as an employee, nor given him an opportunity to answer any allegations.
Davies was in charge of the iron ore project in 2011, when the payments were made and also the same year that Rio signed a major agreement with the Government of Guinea, which secured the firm’s mining title.
While the miner did not disclose what information prompted the suspension and the sacking of Davies and Valentine, people familiar with the matter told Financial Times on Wednesday that Rio Tinto has known about the 2011 emails referring to the dubious payment for over a year, and not just since August, as it claimed last week when revealing the probe.
The company announced in October it was fully exiting the project by selling its stake to partner Chinalco for up to $1.3 billion, with payments to begin with commercial production.
Davies, a 20-year veteran at Rio and member of the executive committee, was only promoted to the top role in the energy and minerals division in June this year, after a shake-up of the firm’s operations.
He was also a member of Rio Tinto’s ethics committee and will be replaced by Bold Baatar, the current managing director of Marine and vice president Iron Ore Sales and Marketing.