Rio Tinto tried to pull itself out of the frying pan by seeing off its CEO Tom Albanese yesterday. But has the mining giant tossed its shareholders into the fire with the unexpected appointment of iron ore and former car salesman Sam Walsh as Albanese’s replacement?

Walsh has been either on the board of Rio or part of the senior management team in all the poor decisions made by the company with Albanese at the helm — the $38 billion Alcan purchase (now written down to just$10 billion), the failed bid by Chinalco to double its stake in the company, the ensuring arrest and jailing of four China-based iron ore salesmen, the failed BHP/Rio Pilbara merger, the Mozambique coal mine.

Albanese had dodged the bullet that was always going to end his six-year tenure as chief executive of Rio so many times that it was actually a surprise the company’s board found the gumption to pull the trigger when it did.

The world’s second-largest miner showed appalling lack of judgement in mergers and acquisitions. It took another turn for the worse yesterday when it announced a $14 billion writedown on its ill-advised Mozambique coal purchase and across its benighted aluminium business.

Affable Albanese’s public persona was reassuringly dull — not for him the big-talking enthusiasm of Fortescue’s Andrew Forrest or the dismissive wear-your-brain-on-your sleeve confidence of BHP Billiton’s Marius Kloppers. Yet unlike Forrest, whose insistence on talking up every magic moment in the development of the “third force in iron ore”, or Kloppers who has gained a reputation as the man who can’t put a big deal away, Albanese has had compliant capital markets which his board allowed him to use the company’s weight to merrily keep buying his way to growth.

If Kloppers had not run into the obstacles he had — the Canadian government, the Australian regulator — he may well be in the same boat. Still, in the year or so before Rio and BHP would announce their extraordinary attempt to turning their then effective duopoly in Australian top-grade iron ore into a monopoly, Kloppers has comprehensively outplayed Albanese where it matters most for large corporations — not in the mine or sales call, but in Canberra’s corridors of power.

As an American, Albanese could perhaps have been forgiven for not understanding the particular dark art of greasing the wheels of Australia’s Parliament. For that he would have leant on his two most senior Australian executives’ one-time strategy boss — and more recently energy chief Doug Ritchie, who followed his boss out the door last night.

While the diminutive South African du Plessis now seems even more firmly in control of Rio than ever — a strategy his counterpart at BHP Jac Nasser is mimicking — it’s Walsh who will lead the company’s day-to-day operations. While Rio is technically a UK company, its biggest revenue line is iron ore and the majority of its profits come from Australia.

It’s been quite some time since an Australian led either of the two biggest companies that mine the rocks that have underpinned Australia’s extraordinary decades-long economic success. Last year, iron ore and copper together made up 83% of Rio’s profit. Iron ore was a whopping 75% of profit and copper 8% — a figure that should grow when the company’s Mongolian venture Oyu Tolgoi comes on line from this year. In contrast, aluminium 5% and diamonds 4%.

Quite what it was doing buying a coal mine in Africa is a question the board members who spent $4 billion on it ( it’s now worth $1 billion, at least for the time being) should now be asking themselves. From this point of view, the appointment of Walsh, who has a strong operations record and has worked in the iron ore division for the past 23 years since he joined Rio as a mining novice from the auto sector, makes sense on paper.

But he has very much ridden his luck, or rather the China boom and the soaring iron ore price. The times got so good in China that on Walsh’s watch Rio took its eye so far off the ball in its biggest market it left the locals in charge — how’s that for corporate governance? There was plenty of noise from staff in its Shanghai and Singapore offices in the year leading up to the arrest of four of its senior salesmen including Australian Stern Hu.

As the scandal played out, diplomatic relations with China (our largest trading partner) sunk to their lowest ebb in decades. Rio’s reputation suffered in a way that even the worst case scenarios in public relations disaster planning could not have imagined. Rio’s initial reaction was to go firmly on the front foot and deny the men were guilty, a lead also foolishly taken by the Australian government (what do you mean, they get their advice from corporate Australia? ). Whoops.

If its initial reaction was hasty, the retreat that the company beat from the employees was breathtaking in its swiftness and finality. Cut loose and left to hang and dry, even before their trials were completed.

The four men admitted to bribery but not to the industrial espionage charge that accounted of about half the jail terms that ran as high as 14 years (Hu is serving 11 years). Rio did not believe that the charges were legitimate but has not lifted a finger publicly to challenge those verdicts, or have the sentences of their former employees reduced.

But even more curiously — and this is where the company’s entire culture comes up hideously short — the buck stopped right there in China with three Chinese employees and their Australian Chinese leader. Not one Rio Tinto executive was blamed for a situation that they created by omission. That’s a situation neither of their rivals BHP or Brazil’s Vale found themselves in. The men who carried the can for what former Australian ambassador to China Geoff Raby — who saw the case up very, very closely on his watch — has correctly called a management failure, are languishing in a Chinese prison. They receive a visit once a month from family.

Even more recently, Rio — like its counterparts but unlike a handful of smart industry analysts — failed to pick the mid-2012 plunge in iron ore prices and its subsequent rebound. You would think that a company might have a better grip on its main business.

Despite a faux heroic decision by either himself or du Plessis to not get a golden handshake or bonus, Albanese will saunter off into the sunset with his saddlebags overflowing with tens of millions of shareholders cash accumulated as he presided over one of the worst acquisitions in corporate history and the greatest self-inflicted scandal any western company has so far suffered in China.

Albanese has finally paid the price for his lead role in Rio’s serial failures on his watch. Walsh, on the other hand, has been promoted for his. Shareholders will have their fingers crossed he has learned from his patchy history.