The case that I will be examining is that of Rio Tinto, a wealthy mining company, who was charged with fraud in October 2017. The issue at hand was the act of inflating the value of assets in the business. The assets were reportedly worth $3.7 billion, but were sold a few years later for $50 billion. The CEO and the CFO of Rio Tinto overlooked accounting standards and company policies to accurately record the assets. This eventually resulted in the fraud case, as they tried to cover up what they had been hiding. They hid this information from the board of directors, audit committee, independent auditors, and investors.
The U.S. Securities and Exchange Committee CEO, Steven Peikin stated “Rio Tinto and its top executives allegedly failed to come clean about an unsuccessful deal that was made under their watch. They tried to save their own careers at the expense of investors by hiding the truth.” It was apparent that this crime was hidden by many and made it even more obvious when the perpetrators had to come clean. When a colleague of the company discovered that the assets were at a much more inflated rate on financial statements, an internal review was completed, eventually resulting in the CEO of the company stepping down. The company immediately reduced the value of the coal assets by more than 80 percent.
The United Kingdom’s Financial Conduct Authority ordered Rio Tinto to pay a hefty fine of $35.6 million to settle claims that the company breached. Though the CEO continues to say the claims against the company are false there is more evidence that proves that very wrong. Because this case is fairly new, happening less than a month ago, there have been no statements on how the company plans to recover from this incident, but the main leadership team that was in place has now stepped down and I believe with those individuals gone it will change the way the company interacts in the future.
As businesses are continuing to change and technology is forcing itself into most business, it can be easy and hard to track compliance in companies. On one hand you have all the information you would ever need at your fingertips, but on the other hand it makes it much easier to hide information if you have some people on your side that are not afraid to hide information, like in the case I examined above.
The United States is continuing to look deeper into the issue of compliance and making sure that they are looking into every aspect of businesses that they can. They are continuing to look more into international affairs, where companies can easily claim they were not aware of international polices or rules, when in fact they are trying to cover information. They are also looking more heavily in the False Claims Act, which ensures that businesses will not fraud the federal government.
As more cases come to light about compliance, it will gain more attention by the government and became a top priority. From reading the assignment, it states the compliance is in the process of becoming its own sector and that makes it seem that this is something that are going to continue to crack down on and make sure that future business owners know this is not something they can easily get away with.
Before this project I had heard of the acronym of GRC, but was not aware of what it was or what they did. In plain terms, compliance is the act of purely following rules to make sure your business stays ethically moral.
In more detailed terms, compliance is the act of abiding by all the federal, state and local rules required to keep a business in good standing. This affects all businesses, in my opinion. If a company does not comply with the demands of the state where it operates then they can put themselves at risk for losing their business. Even greater, if businesses do not comply with rules of the state they can be charged with crimes similar to other cases. I feel that some business does not believe that they need to follow these rules because they will just skip by, but that has been shown many times that that is not the case. I was not aware that compliance is becoming its own industry, but what I have learned so far in this class makes great sense to as why it would become its own industry. It seems to be a large problem within a lot of businesses and seems like an issue that needs to be looked at in more depth.
After looking at jobs in compliance, I believe this would be something I would be interested in after college. I like the variety of different jobs you are able to have with that field, including an analyst, office or specialist in the field. Not only is there a wide variety of industries that you can become a part of, there is a sense of doing things right. Not only for your community, but for your state and government that would give me great pride. If we can make sure that all businesses are operating the way that they should be, then we can make the future brighter for all businesses owners.
I also like this industry because it does not discriminate against any company, small businesses are given just as much thought as large corporations and in order to keep everything fair that is how it should be Eventually, becoming a director in the field would be the end goal. It seems that you have no limits on what industry you can work with on compliance. I think this is a field that would keep me intrigued and continue to teach me new things about business.
The salaries seem really nice with this job, most start around $45,000 to $50,000 and end close to $111,000 to $120,000. This seems like a job that you would continue to grow in and gain connections and rise up to leadership, which is a nice job to have right out of college. Ultimately, I have learned a lot about this industry, not only what they do, but what they stand for and I am interested in continuing to learn about his industry and continue to great work in the industry.