Rio Tinto delays bonuses to former chief over Guinea affair
Sam Walsh will not receive awards due to him amid inquiries into questionable payment
Rio Tinto has delayed the release of bonuses potentially worth millions to former chief executive Sam Walsh until law enforcement authorities have reviewed a questionable payment made to a consultant who helped the mining company secure rights to an iron ore deposit in Africa.
In November, Rio notified authorities in the US, UK and Australia about the $10.5m payment in 2011 to François Polge de Combret, a French consultant who assisted the company in reaching a settlement with Guinea over Simandou, one of the world’s biggest untapped deposits of iron ore.
The Anglo-Australian group faces the risk of large regulatory fines if it is found to have broken anti-corruption laws.
In its 2016 annual report published on Thursday, Rio said it had reached an agreement with Mr Walsh, who retired in July, to delay for at least two years cash and share payments due to him under short and long term performance-based incentive plans.
“The payment of any of these awards is contingent on there being no information in connection with the Simandou matter which would justify [Rio’s] remuneration committee making a determination to cancel, defer or reduce these awards,” it added.
Under the agreement between Rio and Mr Walsh, in 2018 he is due to receive half of the cash and share bonuses he would have been given for last year under a short-term bonus scheme.
Also in 2018, he is set to receive 50 per cent of the shares awarded to him under a long-term incentive plan since 2013.
Then in 2020, he is meant to receive the remainder of the cash and shares due to him under both the short and long-term schemes.
“The board has determined that it would be inappropriate, while investigations are ongoing, to make any determination about Sam Walsh, our former chief executive, or about his outstanding remuneration,” said Rio in the annual report.
Mr Walsh could not immediately be reached for comment.
The company has not said why it reported the $10.5m payment to Mr de Combret to the authorities, but leaked emails from 2011 that were posted online in August showed Rio executives discussing the fee and the consultant’s “closeness” to Alpha Condé, Guinea’s president.
One of those managers was Mr Walsh, who was Rio chief executive between 2013 and July 2016. Another was Alan Davies, the head of energy and minerals who was previously in charge of Simandou.
Mr Davies was fired in November, along with Debra Valentine, Rio’s head of legal.
Jan du Plessis, Rio’s chairman, said in the annual report that the outcome of regulatory investigations into the payment to Mr de Combret was “uncertain”.
He added “we are continuing to co-operate fully with the relevant authorities”.
Rio has been involved in several fierce legal battles since it began exploring the Simandou deposit about 20 years ago.
It lost half the rights to the project in 2008 and only managed to hold on to the remainder in 2011 through a $700m payment to the then new government of Mr Condé: a deal which, the leaked emails indicated, Mr de Combret helped to facilitate.
Rio’s annual report also disclosed Mr Davies and Ms Valentine had been stripped of all their outstanding share awards.
Mr Davies said last year he was considering legal action against Rio following his dismissal. Ms Valentine has not commented since her departure.