Rio Tinto to further delay bonus payment for former CEO amid investigations

Rio Tinto Group plans to further delay paying outstanding bonuses to its former chief executive as regulators continue investigating payments to a consultant on an iron-ore project in Guinea.

In 2017, the company said it would postpone any shortand long-term incentives owned to Sam Walsh for a minimum of two years. Rio is now planning to extend that time period.

“Given investigations remain ongoing the board has asked Sam to agree to a further deferral until the investigations have concluded,” a Rio spokesman said yesterday.

Mr Walsh retired as CEO in July 2016, months before Rio announced that it alerted authorities, including the US Department of Justice and the UK’s Serious Fraud Office, about payments related to the Simandou iron ore project. The investigation is centred on a $10.5 million payment to an external consultant in 2011 for assisting on negotiations with Guinea’s President Alpha Conde.

Rio later terminated contracts of two senior executives, arguing they failed to maintain standards in the company’s code of conduct. Leaked emails showed former CEOs Tom Albanese and Mr Walsh, then head of Rio’s iron-ore unit, discussing the payment. Mr Walsh has previously said that he always acted lawfully and in accordance with his duties while at the company.

In its 2016 annual report, Rio said that any long-term incentive plan payments, including so-called bonus deferral and performance share plans, that would have vested up to 2020 will be impacted by the agreement and will affect awards going back to 2013.

The value of these awards changes with company performance. In 2016, Mr Walsh’s total pay package was $11.4m, which includes longterm incentives of $6.8m that were deferred.

The Simandou deposit in Guinea was once one of the most prized mineral assets, but a bitter dispute over the licence, collapsing iron-ore prices and huge infrastructure costs resullted in Rio abandoning plans to build it.

Separately, Rio and Mongolia said on Monday they had signed a deal for the supply of power to the miner’s giant copper mine extension at Oyu Tolgoi by mid-2023.

Both sides said the agreement marked a major step forward following delays.

The Oyu Tolgoi project is central to Rio Tinto’s push to diversify its portfolio away from iron ore, but it has faced a series of challenges as Mongolia’s fragile government wrangles over how to maximise benefits for the country.