Author: Nicola Sharp 2 September 2020
Nicola Sharp of business crime specialists Rahman Ravelli outlines what the mining company has to do to avoid prosecution.
The talks between Rio Tinto and the SFO could lead to a deferred prosecution agreement (DPA) being concluded in relation to a $10.5M payment made in 2016 to help secure two development blocks for the company at the giant Simandou iron ore mine. Rio Tinto dismissed two senior managers over the payment and alerted both the SFO and the US Department of Justice.
Rio Tinto had held rights to develop all of Simandou before being stripped of the some of them in 2008. Emails from 2011 that were posted online show senior Rio Tinto executives discussing making the payment to the consultant, Combret. Combret helped Rio Tinto secure its claim to half of Simandou with a $700M payment to the government run by President Alpha Condé.
For Rio Tinto to secure a DPA, it will have to agree to certain terms laid down by the SFO, which could include paying a fine, co-operating with future prosecutions or making changes to working practices.
If Rio Tinto is fully committed to the DPA process, it will have to offer the SFO wholehearted cooperation from the outset. As emphasised in the recent DPA that the SFO concluded with G4S regarding fraud relating to the electronic monitoring of offenders, self-reporting and giving exemplary support to the prosecutor are expected of companies hoping to secure such an agreement.
Rio Tinto will have to provide this if it hopes to receive the benefits of the maximum 50% discount on any fine imposed – a discount that has been awarded in six of the eight previous DPAs. When dealing with the SFO, firms must also be prepared to accept that full co-operation may mean waiving privilege over any internal investigation and witness evidence.
Natural resource sectors, including mining, are vulnerable to instances of bribery due to the significant revenues created by such markets. These markets are subject to differing standards of control and regulation across jurisdictions. The problems caused by this can only be combatted if companies are dedicated to anti-corruption practices and have a robust programme in place to support their commitment to ethical conduct.
This article originally featured on Mondaq, it can be read here.
Nicola is known for her fraud, civil recovery, arbitration and business crime expertise, her experience of leading the largest financial disputes and multinational investigations and her skills in devising preventative measures and conducting internal investigations for corporates.