The CEO and two other executives have now departed Rio Tinto Limited (ASX: RIO), but shareholders are demanding more.
Chief executive Jean-Sebastien Jacques, iron ore head Chris Salisbury and corporate affairs boss Simone Niven all exited Friday by “mutual agreement”.
The mining giant made the move in reaction to shareholder outrage over the destruction of Juukan Gorge, a site of significant historical and cultural value in Western Australia.
What led to this?
Only two weeks ago, Rio Tinto refused to blame any one person or decision over the May explosion, insisting $7 million reductions in exec bonuses were enough.
That left shareholders, including major superannuation funds and the Future Fund, fuming.
“Does the company feel that £4 million is the right price for the destruction of cultural heritage?” Australian Council of Superannuation Investors (ACSI) chief Louise Davidson said at the time.
Future Fund chair and former federal treasurer Peter Costello reportedly met Rio Tinto chair Simon Thompson to tell him heads would have to roll.
So on Friday morning the Rio Tinto board executed a stunning backflip, cutting loose its CEO and two senior executives.
Sackings welcome but Rio has plenty more to do
However, there was more work for Rio Tinto to do, according to shareholder advocate Australasian Centre for Corporate Responsibility (ACCR).
“The removal of these three executives is just the first step,” ACCR legal counsel James Fitzgerald told The Motley Fool.
“The behaviour of the Board and senior management is reminiscent of the arrogant ignorance that led to Rio Tinto’s withdrawal from Bougainville in 1989.”
While the “tragic destruction” of Juukan Gorge cannot be undone, the “dishonest malaise” in the four months since had disgusted shareholders.
“Investors have stepped up in this instance and demonstrated that they will not accept corporate misinformation and the absolute disrespect to cultural sites that has become Rio’s modus operandi,” said Fitzgerald.
“Shareholder democracy and investor action is alive and well in Australia.”
The ACSI welcomed the executive departures, but also warned more action was required.
“Rio Tinto now has the opportunity to address the necessary remediation, cultural heritage and risk processes with fresh eyes,” said Davidson on Friday.
“Rio Tinto must prioritise working with traditional owners the Puutu Kunti Kurrama and Pinikura people to rebuild their relationship. It is critical that this is not delayed.”
Executives better ‘think twice’
Fitzgerald said captains of industry would now “think twice” before misleading investors, the community and parliamentary enquiries.
“This is just the first step on a long path towards restoring Rio Tinto’s good practice and reputation in its relationships with Indigenous peoples.”
There were reports that Rio Tinto’s own cultural relations employees were muzzled or ignored in the decision-making leading up to the Gorge blow-up.
“The company’s conscientious but beleaguered communities staff deserve to be supported and encouraged in their important work,” said Fitzgerald.
Future board appointments at Rio would be carefully monitored, said Davison, to ensure awareness of community and societal responsibilities.
“We will also be looking closely at the separation arrangements, with the expectation that any exit won’t provide a windfall for executives on their departure.”