ASIC expands legal action against Rio Tinto, two former execs

The Australian Securities and Investments Commission has expanded its recently announced legal action against miner Rio Tinto and two of its top former executives.

ASIC alleges that Rio Tinto Ltd failed to recognise the impairment of a subsidiary known as Rio Tinto Coal Mozambique, an African coal mining project, in its 2012 interim financial statements in accordance with relevant accounting standards.

The corporate watchdog alleges that by not testing for and recognising an impairment in its published 2012 interim financial statements, Rio Tinto "engaged in misleading or deceptive conduct".

The latest ASIC move was contained in a statement released on Tuesday morning.

Rio completed the purchase of the Mozambique coal business in August 2011 at a cost of more than $US4 billion. But the project ultimately proved to be a costly disaster for the giant miner, and it was eventually sold for a fraction of its purchase price.

The Australian suit comes after the US Securities and Exchange Commission in October charged the Anglo-Australian miner and Mr Albanese and Mr Elliott with fraud for allegedly inflating the value of the African coal assets. Rio Tinto said at the time that it "intends to vigorously defend itself against these allegations".

More to come