By Sonali Paul
MELBOURNE (Reuters) -Rio Tinto has agreed to pay a small penalty for overstating its Mozambique coal reserves in 2012 after the Australian corporate watchdog dropped allegations against its top two executives at the time, the Australian Securities and Investment Commission (ASIC) said on Monday.
The settlement of A$750,000 ($538,200) for a single breach of continuous disclosure obligations remains subject to approval by a Federal Court judge, an ASIC spokesperson said.
Rio Tinto (LON:RIO) confirmed a settlement had been reached but declined to confirm the agreed penalty.
ASIC's case, launched in 2018, against Rio Tinto, former chief executive officer Tom Albanese and former chief financial officer Guy Elliott was tied to Rio Tinto's reporting of its coal reserves in Mozambique, which it acquired in 2011 from Riversdale Mining for $3.9 billion.
In 2013, Albanese stepped down as the company wrote off more than $3 billion on the assets.
Hearings on the case had been due to begin on March 1. Ahead of the start, ASIC dropped all allegations against Albanese and Elliott and settled with the global miner.
ASIC had alleged that the company misled investors in its 2011 annual report, signed by Albanese and Elliott, on its coal reserves and resources in Mozambique, which were then heavily reduced the following year.
On Monday, ASIC told the Federal Court final orders in the case included a declaration be made that Rio Tinto Ltd had breached the Corporations Act "in failing to comply with its continuous disclosure obligations and an order imposing a civil penalty."
A Rio Tinto spokesperson confirmed the miner had "reached a prospective settlement" with ASIC on the disclosure of the impairment on the Mozambique assets in its 2012 year-end account.
Albanese and Elliott declined to comment on the outcome until the court approved the settlement.
Rio Tinto in 2017 was fined 27.4 million pounds by the UK Financial Conduct Authority (FCA) for failing to recognise an impairment loss on the value of the Mozambique business in its 2012 half year report.
The company is still fighting the United States Securities and Exchange Commission (SEC) in the Federal Court in Manhattan for allegedly inflating the value of the Mozambique business.
($1 = 1.3935 Australian dollars)