RIO SACKS EXECUTIVES OVER SIMANDOU PAYMENT

RIO SACKS EXECUTIVES OVER SIMANDOU PAYMENT

RIO Tinto (ASX: RIO) has sacked two executives implicated in a "payment" scandal related to the Simandou iron ore project in Guinea.

Energy and minerals chief executive Alan Davies (pictured) and legal and regulatory affairs group executive Debra Valentine have had their contracts terminated, the company announced today.

The decision has come after the Rio Tinto board reviewed the findings of an internal investigation into 2011 contractual arrangements with a consultant who provided advisory services on the Simandou project.

It has been reported that there was a payment involed that was worth $13.5 million.

"The board concluded that the executives failed to maintain the standards expected of them under our global code of conduct," says the company in a statement.

"In the circumstances, the board terminated the contracts of both executives."

However, Davies has vowed to fight Rio's decision, saying the company had no grounds to fire him and that he would take "every possible" legal action in response.

Neither will be eligible for short-term incentives for 2016, and they will lose entitlement to unvested incentive plan awards from previous years.

Authorities from Australia, the United Kingdom and United States are aware of the matter and Rio Tinto says it will cooperate with any investigations.

Alan Davies will be replaced by Bold Baatar, who will join the executive committee as energy and minerals chief executive.

Bold held several senior investment banking roles with JP Morgan before taking on chief executive positions with a gold mining company and a diversified investment management business in Mongolia.

He joined Rio Tinto in 2013 as copper international operations president and is the managing director of marine and vice president iron ore sales and marketing.

Rio Tinto chief executive J-S Jacques says, appointing Bold to run our Energy & Minerals business will add a fresh perspective to the product group.

"Bold brings broad international and executive experience in a wide range of commercial disciplines," says Jacques.

"He has a proven track record and will be a great addition to our ExCo, particularly with his strong strategic approach and acute understanding of Asia."

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