By Sonali Paul
MELBOURNE (Reuters) - Global miner Rio Tinto (AX:RIO) (L:RIO) said on Wednesday it has suspended a top executive over $10.5 million (8.47 million pounds) in payments to a consultant on its Simandou iron ore project in Guinea, and has alerted U.S. and UK authorities. A second senior executive has stepped down.
Rio Tinto took the steps at a time when mining companies have come under scrutiny in corruption probes, with the world's biggest miner BHP Billiton (AX:BHP) (L:BLT) last year paying $25 million to settle charges that it violated a U.S. anti-bribery law in failing to properly monitor its programme sponsoring foreign government officials at the 2008 Olympics in Beijing.
Rio Tinto said it became aware in August of emails from 2011 "relating to contractual payments totalling $10.5 million made to a consultant providing advisory services on the Simandou project in Guinea".
An internal investigation led it to flag the issue to U.S. and UK agencies, and it said it was in the process of contacting Australian authorities as well.
The company has suspended the head of its energy and minerals division, Alan Davies, who was in charge of Simandou in 2011.
Davies was not immediately available to comment.
The group's legal and regulatory affairs executive, Debra Valentine, who was due to retire next May, has also stepped down, Rio Tinto said.
"Rio Tinto intends to co-operate fully with any subsequent inquiries from all of the relevant authorities. Further comment at this time is therefore not appropriate," the company said in a statement to the Australian stock exchange.
Investors shrugged off the prospect of a bribery probe and the suspension of Davies, whom analysts said is well respected. Rio Tinto's shares rose as much as 1.8 percent in early trade to a more than 16-month high after the announcement in line with gains in the broader market.
"It's too early to say anything, it's an investigation right now. They're just doing the prudent thing," Macquarie analyst Hayden Bairstow said.
"With iron ore at $69, met coal (coking coal) at $307, the whole sector is riding the spot price moves," he said.
Rio Tinto long chased plans to develop Simandou, which it touted as one of the world's most valuable iron ore deposits.
It even sued rival Vale (SA:VALE5) in the United States, alleging the Brazilian giant had conspired with Israeli billionaire Beny Steinmetz and BSG Resources to misappropriate its rights over half the lode in 2008.
That case was dismissed a year ago as the judge ruled Rio Tinto had waited too long to file a case under the Racketeer Influence and Corrupt Organizations Act.
Last week Rio Tinto agreed to sell its stake in the $20 billion project to Chinese state-owned Chinalco, after writing off its investment in Simandou earlier this year on diminished prospects of it being developed anytime soon.
