Alan Davies
Alan Davies, chief executive of Rio Tinto's diamonds and minerals division, poses with a rare pink diamond in Hong Kong September 6, 2013. The Argyle Pink Diamond Tender, showcasing the finest coloured diamonds from Rio Tinto Ltd's mine in northwest Australia, opens its doors to about 100 carefully selected gem enthusiasts in Hong Kong this week. Reuters/Bobby Yip

Miner Rio Tinto has alerted authorities in the UK and US and is contacting Australian authorities too after the company suspended Alan Davies, Energy and Minerals chief executive. His suspension was triggered by an investigation that Davies paid a consultant US$10.5 million (A$13.6 million) for advisory services on a project in Guinea.

Davies was appointed to his current position in 2016, but he had oversight on the Simandou project in 2011. The payments were made that year which was also when Rio Tinto inked a major agreement with the Guinea government, ABC reports. The mining giant became aware only in August 2016 of the 2011 emails about the contractual payments made to the consultant who provided advisory services on the Simandou project.

Besides Davies, who was immediately suspended, Debra Valentine, legal and regulatory affairs group executive and part of Rio Tinto’s 10-member executive committee, which includes Davies, stepped aside from her role. Valentine is supposed to retire on May 1, 2017, Sydney Morning Herald reports.

The external counsel of the mining giant leads the investigation into the payment. Rio Tinto declines to further comment on the matter since it is not appropriate at this time.

Paul Hissey, RBC Capital Markets analyst, told clients on Wednesday that “Given the scale of Rio Tinto, it would appear unlikely that this development would have a material impact from a monetary perspective, though we will have to see if anything eventuates from this in the future.” But Hissey notes that it could potentially cause negative public relations issue for Rio Tinto which has so far managed to avoid one, unlike BHP Billiton which has been struggling with the Samarco dam incident.

For almost a decade, the Simandou project has been embroiled in legal scandals after the Guinea government stripped Rio – which has been exploring since the 1990s the site containing the largest untapped iron ore deposits in the world – some of its licence area and gave it to BSG Resources.

BSG then partnered with Vale, Rio’s competitor, leading Rio to file in the New York District Court a racketeering suit against BSG and Valle. Although the court threw out the case, the new Guinea government after a review of previous mining contracts, concluded BSG got the mining licence because of bribery.