PERTH (miningweekly.com) – The Australian Securities and Investment Commission (ASIC) has expanded its legal proceedings against mining major Rio Tinto an its former CEO Tom Albanese and former CFO Guy Elliott.

ASIC in March launched legal action in the Federal Court against the company, Albanese and Guy, in relation to alleged misleading or deceptive statements contained in the company’s 2011 annual report.

The mining giant in December 2010 announced takeover offer for ASX-listed Riversdale Mining, which was completed in August 2011 at a total cost of over $4-billion.

Following the acquisition, Rio delisted Riversdale and renamed it Rio Tinto Coal Mozambique (RTCM). In 2013, Rio announced that it expected to recognise a noncash impairment charge of about $14-billion (post-tax), which included about $3-billion relating to RTCM, for the 2012 financial year.

ASIC on Tuesday claimed that Rio’s failure to recognise an impairment for RTCM in its 2012 interim financial statements, in accordance with accounting standards, was a breach of the Corporations Act.

ASIC said that by not reporting an impairment for RTCM in 2012, Rio engaged in misleading or deceptive conduct.

Furthermore, ASIC alleges that Albanese and Elliott failed to take all reasonable steps to comply, or ensure Rio’s compliance with the relevant accounting standards in relation to the 2012 interim financial statements, and in addition, by allowing Rio to engage in this conduct, the two executives had failed to exercise their powers and discharge their duties.

In its original complaint lodged with the Federal Court, ASIC alleged that Rio had engaged in misleading or deceptive conduct by publishing statements in the 2011 annaul report, which was signed by both Albanese and Elliot, misrepresenting the reserves and resources of RTCM.

In addition to the declarations, penalites and disqualifications sought in its orignal proceedings, ASIC was now seeking further declarations that Rio had contravened sections 304, 305 and 104H of the Corporations Act in respect of its 2012 interim financial results, and had contravened section 674(2) of the Act in failing to comply with its continuous disclosure obligations by failing to disclose a substantial impairment in the carrying value of the RTCM assets.

ASIC was also seeking to have Albanese and Elliot found guilty of contravening section 180 of the Act, and has sought pecuniary penalties against the two former executives, asking that they should be disqualified from managing orporations for a period deemed fit by the Court.

The UK Financial Conduct Authority in October 2017 fined Rio Tinto £27.39-million for breaching transparency and disclosure rules by failing to carry out an impairment test and to recognise an impairment loss on the value of RTCM in the Rio Tinto 2012 half-year report.

On the same date, the US Securities and Exchange Commission began civil proceedings in the US Federal Court in Manhattan against Rio Tinto, Albanese and Elliott for allegedly inflating the value of RTCM.