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Rio Unit Pays $19.4 Million to Cancel Ex-CEO Contracts

(Corrects headline of story published Aug. 15 to show contracts refer to additional costs as well as aircraft rental.)

Aug. 15 (Bloomberg) -- Turquoise Hill Resources Ltd., building a Mongolian copper mine with Rio Tinto Group, paid $19.4 million to cancel cost-sharing deals with companies linked to former Chief Executive Officer Robert Friedland.

“These arrangements were on a cost-recovery basis and included aircraft rental and administration and other office services” in London and Singapore, Turquoise, formerly Ivanhoe Mines Ltd. and 51 percent owned by London-based Rio, said in a statement dated yesterday. The deals were with companies 100 percent owned by Friedland, it said.

Turquoise also paid $17.8 million in severance payments to the former management team and booked a non-cash charge of $24 million related to the acceleration of vesting stock options held by former management, it said.

Friedland, who founded Ivanhoe, controls about 10 percent of Vancouver-based Turquoise, according to data compiled by Bloomberg. He resigned as CEO in April, three months after Rio raised its stake in Ivanhoe to 51 percent, allowing it to replace managers.

Turquoise and Rio expect production from Mongolia’s $6.2 billion Oyu Tolgoi mine in the first half of next year. They plan to complete talks on a $3 billion to $4 billion finance package for the project by the end of the year, according to the statement.

Seven directors -- Marc Faber, Edward Flood, Friedland, David Korbin, Livia Mahler, Tracy Stevenson and Dan Westbrook -- resigned from the Turquoise board in April. Three others -- Michael Gordon, David Huberman and Bob Holland -- resigned a month later. A spokesman for Rio Tinto declined to comment.

To contact the reporter on this story: Jesse Riseborough in London at jriseborough@bloomberg.net

To contact the editor responsible for this story: Amanda Jordan at ajordan11@bloomberg.net

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