New Wisdom Investment Limited

Rio director charged with fraud

(Jun 21, 2017)

One of Rio Tinto’s (LN:RIO) top brass has resigned after charges of dodgy dealing were levelled at him by the UK’s Serious Fraud Office.

Rio director John Varley ran Barclays (LN:BARC) during the financial crisis and has now been called to appear in court on three charges over dealings with Qatar in 2008. He resigned the same the day the charges became public.

The bank raised £12 billion (US$15.2 billion) from the gulf country through capital raisings in June and October 2008 and also loaned it £3 billion in November.

Varley is charged with conspiracy to commit fraud by false representation for both capital raisings and also unlawful financial assistance, which has been linked to £322 million in consultancy fees paid to Qatari investors in 2008.

This leaves Rio down a director, as it works to escape the damaging revelations about its Simandou iron ore project dealings in Guinea, which saw two executives sacked.

The company paid a man linked to president Alpha Condé US$10.5 million and internal emails between former CEO Tom Albanese, Sam Walsh and sacked executive Alan Davies showed the fee was for Francois de Combret’s work in organising a US$700 million payment for Rio to hold onto its two remaining blocks of Simandou.

Varley was appointed to the board in 2011 and chairs Rio’s remuneration committee, which decided this year to hold off on Walsh’s owed bonuses in light of the Simandou issue.

Varley and Rio have not commented on the fraud charges.

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