Expert Corporate Governance Service (ECGS)
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Rio Tinto April 10th, 2019

The Company is currently involved in lawsuits related to a series of scandals.  This includes a bribery scandal, fraud scandal and tax scandal.

In July 2017, the UKns Serious Fraud Office launched an investigation into a 2011 payment of $10.5m made in connection with the Simandou project to François Polge de Combret, a French banking consultant who was a university friend of President Alpha Conde of Guinea and connected to the Simandou project. The Company has stated that it is fully complying with authorities but has not admitted to bribery. The investigation is still ongoing but could lead to costly litigation against the Company, its employees, and directors. In August 2018, the court dismissed a related US class action commenced on behalf of securities holders.

The Company is currently involved in legal charges for fraud by the regulators in the US and Australia.  In October 2017, the US Securities and Exchanges Commission announced that they were charging the Company, its former Chief Executive Officer Tom Albanese and former Chief Financial Officer Guy Elliott with fraud for allegedly inflating the value of their coal mine in Mozambique and concealing critical information.

In March 2018, the Australian Securities and Investments Commission filed a lawsuit against the Company, former CEO Tom Albanese, and former CFO Guy Elliot for the alleged fraud.

In January 2018, the Company, and its Canadian subsidiary Turquoise Hill, were accused of avoiding CAN $700m in Canadian taxes in relation to its Oyu Tolgoi copper and gold mine in Mongolia, and of costing the Mongolian government US $230m in taxes over a five-year period. Please see the attached report for further details.

The structure is not acceptable. The maximum bonus, maximum LTIP award and maximum total incentive pay all exceed guidelines.  30% of the bonus depends on individual criteria that cannot be readily quantified. Accelerated vesting in the event of a change of control is not possible. Actual awards were excessive and actual total variable remuneration exceeded guidelines.

Item 14: Re-appoint the auditors PricewaterhouseCoopers LLP (PwC) have audited the Company for 60 years.  We strongly recommend the rotation of the auditors. A tender for the audit role was most

recently undertaken during the year under review, with the Company selecting KPMG as auditor with effect from 2020. Shareholder approval to confirm KPMGns appointment will be sought at the 2020 AGM. The Company states that they have delayed the rotation of the auditors so that KPMG can shadow the current auditors for half a year and so that non-audit services can be transferred away from them such that they can be considered independent.

Items 19b and 20b:  These items will only be voted on by Rio Tinto Limited shareholders. 

Items 19b and 20b were added to the agenda under section 249N of the Australian Corporations Act 2001 by a representative of shareholders of Rio Tinto Limited,  Market Forces, which acts as agent for 109 shareholders.

In item 19b, they request an amendment to the Constitution of Rio Tinto, which is intended to facilitate shareholder proposals to request information. The proposal is as follows:

To amend the constitution to insert beneath Clause 57 mAnnual general meetingsnthe following new sub - clause: oThe company in general meeting may by ordinary resolution express an opinion or request information about the way in which a power of the company partially or exclusively vested in the directors has been or should be exercised. However such a resolution must relate to a material risk as identified by the company and cannot either advocate action that would violate any law or relate to any personal claim or grievance. Such a resolution is advisory only and does not bind the

directors or the Company.p ECGS would recommend support for this proposal as it is a way for shareholders to clearly request information and accountability from directors without binding the Company to potentially redundant or cost prohibitive responses.

In item 20b, they request that the Board approve the publication of details on transition plans consistent with the goal of the Paris Agreement to limit global warming to 1.5°C.  We would recommend support for this proposal.Please see the attached report for further details.

Rio Tinto PLC

Rio Tinto is engaged in finding, mining and processing mineral resources. Co. has four product groups: iron ore, which supplies the global seaborne iron ore trade; aluminium, which includes bauxite mines, alumina refineries, and aluminium smelters; Copper and Diamonds, which has managed operations in Australia, Canada, Mongolia and the U.S., and non-managed operations in Chile and Indonesia, with by-product including gold, silver, molybdenum and others such as sulphuric acid, rhenium, and lead carbonate; and Energy and Minerals, which comprises mining, refining and marketing operations across borates, coal, iron ore concentrate and pellets, salt, titanium dioxide and uranium sectors.


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