A British-based performance coach who has worked with some of the world’s leading executives and sportsmen reported “serious misgivings” about alleged unethical behaviour at Rio Tinto to regulators in the UK, US and Australia.
Maurice Duffy, who provided leadership development services to Rio for more than a decade, contacted several regulatory bodies after first raising his concerns with Rio’s board and executive directors, according to people with knowledge of the situation.
Among the issues flagged by Dr Duffy were “potential overstatements” at Oyu Tolgoi, a copper project in Mongolia that has run into difficulties, “inappropriate relationships” and “leaks of emails” that led to the firing of two senior executives, according to correspondence seen by the Financial Times.
Dr Duffy’s claims will raise fresh questions about the corporate culture at Rio, which is already under scrutiny from regulators.
In 2017, the UK’s Serious Fraud Office launched an investigation into a payment made by the company to a consultant working on a controversial iron ore deposit in Guinea. The Anglo-Australian miner is also battling fraud charges brought by the US Securities and Exchange Commission over a bungled coal deal in Mozambique.
Dr Duffy’s claims were made during a three-year stand-off with Rio over who should take ownership and responsibility for information collected by his company GFI Blackswan (GFIB) during a 12-year association with the miner.
Blackswan provided executive coaching for scores of Rio executives until 2017, when it terminated a £1m-a-year consultancy contract because of “serious misgivings about unethical behaviour”, according to a November 2019 email sent by Dr Duffy to Rio’s board, executive committee and lawyers Baker McKenzie. This email was first reported by the Australian Financial Review.
According to Dr Duffy, the appointment of Jean-Sébastien Jacques as Rio’s chief executive in 2016 “brought with it a very different culture”. Mr Jacques stepped down in September this year following an investor backlash over the destruction of a sacred Aboriginal site to make way for a mine extension.
“We have informed your organisation many times since 2017 that we have information that might be pertinent on some legal and ethical grounds,” Dr Duffy said in another email sent to Rio directors in January 2019.
“We ask that the matters of ethics be escalated to the main board of directors, and we ask maybe one more time, if some independent board directors would meet with us to establish the facts and provide some guidance. Some shareholders of significant profile, that we know well, have reached out to us and advised us to contact the board or the authorities.”
Dr Duffy, whose clients include Australian cricketer Steve Smith, declined to comment on the emails. Rio also declined to comment.
In the November 2019 email, Dr Duffy claims an independent investigation into the problems at the Oyu Tolgoi copper mine in Mongolia “excluded information” known by Blackswan since 2017.
The underground expansion of the Oyu Tolgoi copper deposit in the Gobi desert is Rio’s most important growth project but it is running late and over-budget.
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Early in 2019, Rio launched an investigation into claims made by a whistleblower that senior managers were aware of problems at OT months before they were disclosed to investors.
The review was overseen by Baker McKenzie. It found that the claims made by former employee Richard Bowley that Rio had misled the market regarding cost overruns and delays were “unsubstantiated”.
Mr Bowley subsequently reported his allegations to regulators, including the SEC which has been examining his claims.
In October, a US law firm launched a class-action lawsuit against Rio, accusing the miner of making “materially false and misleading statements” about the progress of the underground expansion of OT. Rio has said the lawsuit is without merit.