The former CEO and CFO of Rio Tinto have been charged with fraud by the US Securities and Exchange Commission (SEC), after allegedly inflating the value of its ill-fated Mozambique coal mine acquisition.

Ex-chief executive Thomas Albanese and former chief financial officer Guy Elliott, along with Rio Tinto, face charges of failing to follow accounting standards and company policies to accurately value and record its assets.

The two executives were in situ during Rio Tinto’s $3.7bn (£2.8bn) acquisition of Mozambique coal assets in 2011, which were then sold on for just $50m in 2014. The SEC alleges that problems with the operation were kept hidden, allowing Rio Tinto to release misleading financial statements prior to a multi-billion-dollar fundraising effort.

In a statement to the stock exchange, Rio Tinto said the SEC’s complaint would be “vigorously” defended. “Rio Tinto believes that the SEC case is unwarranted and that, when all the facts are considered by the court, or if necessary by a jury, the SEC’s claims will be rejected,” the company stated.

Rio Tinto has also agreed to settle with the Financial Conduct Authority (FCA) for more than £27m, for failing to disclose the write-down in the Mozambique assets in its 2012 interim results. The FCA states in the settlement that the failure to impair the assets “demonstrated a serious lack of judgment”.

Former CFO Elliott has also stood down as a non-executive director at Royal Dutch Shell, with its chair Charles Holliday wishing for a satisfactory resolution of the SEC proceedings, “and in that event, he would like to be considered for rejoining the board”.

Rio Tinto is currently on the lookout for a new CFO and chairman. Current finance chief Chris Lynch is to step down in September 2018, while chairman Jan Du Plessis is expected to be replaced before the new year. Du Plessis will take on the BT chairmanship in place of Mike Rake from November.