Former Rio Tinto CEO Lands Another Job

Sam Walsh is the former CEO of Rio Tinto Ltd [ASX:RIO]. Walsh left on his own terms, retiring from the company.

For his tireless service to Rio and its shareholder, the company sent Walsh away with a parting gift. He received shares in the company and a bonus of around $27 million.

How much is shareholder value worth?

As reported by the Australian Financial Review:

Former Rio Tinto chief executives Tom Albanese and Sam Walsh were involved in discussions over the merits of paying a French consultant $US10.5 million ($13.7 million) to ensure the miner’s relationship with the Guinean government went “smoothly” after a dispute over the massive Simandou iron ore project was resolved.

Great relations with the Guinean government could lead to more iron ore projects — maybe lowering costs charged to Rio for digging ore out of the ground. But is it worth it?

A big slap in Rio’s face

The Australian Financial Review wrote this morning:

Mr Walsh was made a non-executive director by the Mitsui board at a meeting in Tokyo on Wednesday. His appointment is subject to Mitsui shareholder approval at its annual meeting in June. 

The appointment is a huge slap in the face for Rio Tinto because Mitsui is Rio’s joint venture partner in the Robe River iron ore project in Western Australia. 

Within weeks of Rio deferring Mr Walsh’s entitlements because of a corruption scandal in Guinea, a respected Japanese company is endorsing him for the highest standards of probity and integrity.

Regards,

Härje Ronngard,

Junior Analyst, Money Morning

Correction and apology: An earlier version of this article implied that Mr Walsh may have known about the alleged bribery scandal at the time. Our understanding now is that there have been no findings, and that investigations are still ongoing. We apologise for the inaccuracy.


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