It has been a weird year for Rio Tinto.
On the positive side, its share price has doubled from January lows amid a storming recovery in commodity prices. The stock closed at £30.91 on Friday, valuing the world’s second-biggest miner at £42bn.
Yet the company also tipped itself into a corruption scandal that involves its two most recent chief executives and led to the defenestration of another senior manager. Last week the class action lawsuits started. Usually, such suits are little more than a nuisance. Yet there is growing disquiet, within the boardroom and among investors, about how the crisis has been handled.
A reminder: a few months ago emails surfaced from 2011 in which senior executives discussed a $10.5m payment to a middleman in Guinea, west Africa. Rio investigated. Soon after it reported itself to regulators in America, Australia and Britain, and fired Alan Davies, the exec who argued for the fees.
The former chief executive Tom Albanese and his successor Sam Walsh, who were both intimately involved in the fee discussions, have so far not received so much as a slap on the wrist.
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Both left Rio before the scandal broke. Ditto Guy Elliott, currently a board director at Shell, who was Rio’s finance director at the time. He was not implicated in the email chain.
Davies has vowed to sue, claiming his sacking was without due process.
As the watchdogs’ inquiries rev up, more muck may surface. They will, in the best case, be a huge distraction.
The caper raises questions about the board under chairman Jan du Plessis and chief executive Jean-Sébastien Jacques. Jacques beat Davies to the top job in March and imposed a reshuffle that ousted Andrew Harding, who was also a contender for chief executive.
As if all that were not enough, clouds may be gathering in China. A growing number of analysts predict a rise in China’s steel consumption — a driver of Rio profits — will be shortlived.
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Ill winds blow. Sell.