Rio Tinto drags Ernst & Young into Vale case – by Matt Chambers (The Australian – September 3, 2015)

http://www.theaustralian.com.au/

Rio Tinto has dragged big four audit firm Ernst & Young into a bitter conspiracy and theft case against fellow mining giant Vale, with Rio alleging EY altered an initial assessment of corruption risk in a Guinea iron ore deal after pressure from Vale.

Rio is chasing billions of dollars in compensation from Vale after two of Rio’s four Simandou mining tenements were stripped from it by the government in 2008.

The northern Simandou tenements were given to BSG Resources, a company run by Israeli diamond merchant Beny Steinmetz, who Rio alleges was acting in tandem with Vale as BSGR bribed Guinean officials to take the Simandou tenements from Rio. Rio wants to see EY’s due diligence for a 2010 report on BSGR that was commissioned by Vale on bribery and corruption risk.

“Information showing that Ernst & Young informed Vale that BSGR had engaged in illegal and corrupt practices is relevant to Rio’s allegations regarding the conspiracy involving Vale and BSGR … because Vale did nothing to pull out of the deal,” Rio’s lawyers said in an August letter filed in the southern New York district of the US Federal Court and obtained by The Australian.

Rio’s lawyers said the ­“purported substance” of EY’s analysis was that no instances of corruption and bribery were found. But the lawyers said EY had committed to showing Vale a preview of its findings ahead of the final report.

“Documents produced by Vale appear to demonstrate that Vale used that review process to pressure Ernst & Young to alter its initial conclusion that BSGR’s business practices posed a high risk of production,” the letter said.

For the rest of this article, click here: http://www.theaustralian.com.au/business/mining-energy/rio-tinto-drags-ernst-young-into-vale-case/story-e6frg9df-1227509987953

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