Rio Tinto (LON:RIO) and two of its former chief executives have been charged with fraud in the U.S.
The Anglo-Australian mining company stands accused of hiding losses by inflating the value of its African coal assets in Mozambique.
The multinational firm bought the assets in 2011 for $3.7 billion ($2.8 billion), selling them a few years later for $50 million.
The US Security and Exchange Comission (SEC) alleges that Rio Tinto, former chief executive Tom Albanese, and its previous chief financial officer Guy Elliott failed to meet accounting standards and company requirements to accurately value and record assets.
“Rio Tinto’s top executives allegedly breached their disclosure obligations and corporate duties by hiding from their board, auditor, and investors the crucial fact that a multi-billion dollar transaction was a failure,” SEC Enforcement Division co-director Stephanie Avakian commented in a statement.
Rio Tinto responded by saying it “intends to vigorously defend itself against these allegations”.
The company added: “SEC case is unwarranted and that, when all the facts are considered by the court, or if necessary by a jury, the SEC’s claims will be rejected.”
Alongside the SEC investigation, Rio Tinto received a £27.4 million fine by the UK’s financial watchdog for failing to meet disclosure and transparency rules over regarding its Mozambique mining assets.
The Financial Conduct Authority (FCA) fine is the largest issued to a firm for a listing-rules breach.
The FCA maintained that the penalty would have been a larger £39.1 million, yet had been reduced because Rio Tinto had agreed to settle more promptly.
In light of the case, Shell (LON:RDSA) announced that Guy Elliott was leaving his role as a non-executive director at the oil company, effective immediately, as a result of his involvement in the ongoing legal investigation.
Shares in Rio Tinto are down 1.43 percent as of 11.31AM (GMT).