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Rio Tinto says US SEC fraud case should be dismissed

[NEW YORK] Rio Tinto on Tuesday said a US regulator's lawsuit accusing the big Anglo-Australian mining company of fraud for overstating the value of Mozambique coal assets it had bought in 2011 should be dismissed.

In a letter filed with the US District Court in Manhattan, a lawyer for Rio Tinto said the US Securities and Exchange Commission failed to plead that the company intended to commit fraud or made false statements related to asset values. He also said Rio Tinto was not required to write down assets sooner.

Similar letters were also filed by lawyers for former chief executive officer Thomas Albanese and former chief financial officer Guy Elliott, who were also targets of the SEC's civil fraud lawsuit filed last Oct 17.

Mr Albanese "at all times conducted himself in the manner expected of any reasonable CEO," while Mr Elliott "relied on a well-tested and rigorous process" to ensure the proper reporting of Rio Tinto's financials, their respective lawyers said.

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Representatives of the SEC did not immediately respond to requests for comment.

The SEC had accused Rio Tinto, Albanese and Elliott of concealing the deteriorating value of assets at Rio Tinto Coal Mozambique, which the company bought for US$3.7 billion in April 2011 and sold three-and-a-half years later for US$50 million.

According to the SEC, Rio Tinto hid the deterioration while it was raising US$5.5 billion from US investors, including US$3 billion after executives in Mozambique had told Mr Albanese and Mr Elliott that their subsidiary likely had a negative net worth.

Rio Tinto wrote down most of the assets' value in January 2013, reducing it to US$611 million, the SEC said.

The SEC filed its lawsuit on the same day the UK Financial Conduct Authority said Rio Tinto would pay a £27 million (S$49.22 million) fine to settle claims that it breached accounting rules related to the Mozambique assets.

Tuesday's letters set forth arguments that lawyers for Rio Tinto, Mr Albanese and Mr Elliott said they expect to make at a later date, when they formally seek the dismissal of the SEC case.

REUTERS

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