Rio Tinto has agreed to pay former chief executive Sam Walsh millions of dollars in deferred bonus payments despite continuing bribery investigations, raising corporate governance concerns.
The decision on Thursday to award Mr Walsh almost A$7m (US$4.5m) follows the mining group’s 2017 postponement of cash and share payments owed to the executive under performance-based incentive plans.
Rio had alerted regulators in the US and UK about a $10.5m payment made in 2011 to a French consultant working on the Simandou iron ore project in Guinea. The company also fired two senior executives, arguing they had not met its code of conduct.
At the time of the payment Mr Walsh had been the head of Rio’s iron ore business. Leaked emails from the time — posted online in 2016 — detailed Rio executives including Mr Walsh discussing the fee and the consultant’s “closeness” to Alpha Condé, Guinea’s president.
Mr Walsh was appointed Rio chief executive in 2013 and retired three years later, just before the company contacted British and American authorities about the payment.
Rio on Thursday said it had agreed to make the bonus payments to Mr Walsh following a confidential dispute resolution process.
“Following the completion of the confidential and binding dispute resolution process, a decision was made that the amounts should be paid,” said Simon Thompson, Rio chairman.
Mr Walsh is due to receive future payments worth up to A$17m from Rio under incentive schemes covering his tenure as chief executive.
The decision by Rio to pay the bonus before investigations have been concluded by the UK’s Serious Fraud Office and the Australian Federal Police have been concluded was criticised by corporate governance experts.
“The whole point of a deferral system is that it allows time for negative information to come out,” said Elizabeth Sheedy, a risk management expert at Macquarie University. “The problem in this instance seems to be that the deferral period expired before the regulatory investigation was complete.”
Ms Sheedy said Rio’s deferral scheme should make clear that if there is unfinished regulatory business, the deferral period should be automatically extended until investigations are completed.
Rio faces the risk of large fines if it is found to have broken anti-corruption laws. In 2018 a deal to sell its 45 per cent stake in Simandou to Aluminium Corp of China for up to $1.3bn fell apart.
In a statement on Thursday, Mr Walsh said: “I am pleased that the position with my incentive payments has been resolved in my favour and that there is no basis for those awards to be further deferred by Rio Tinto following the dispute resolution process.”