By Clara Denina and Melanie Burton

LONDON/MELBOURNE (Reuters) -Australia's securities watchdog has closed its investigation into former Rio Tinto Ltd executive Alan Davies over an alleged $10.5 million payment to a consultant in Guinea, citing insufficient evidence, according to a letter reviewed by Reuters.

Davies, formerly Rio's Energy and Minerals chief executive, was fired in late 2016 after Rio Tinto became aware https://www.reuters.com/article/us-rio-tinto-guinea-terminates-idUSKBN13B2Y4 of emails from 2011 that referred to payments to the consultant in connection with its vast Simandou iron ore project in the West African nation.

According to the letter, ASIC's investigation covered directors duties like care and diligence and operating in good faith, obligations of honesty, and true and correct books and records. It closed the investigation on all individuals involved.

"ASIC has concluded its investigation on the basis that there is insufficient evidence to establish to a court that there has been a breach of the law," the Australian Securities and Investments Commission (ASIC) said in the letter, dated Oct. 19 and addressed to Davies.

"As I said in 2016, Rio Tinto did have no grounds to dismiss me and that continues to be my view," Davies told Reuters.

Rio Tinto had no immediate comment.

ASIC acknowledged the letter, saying it would not take enforcement action. "We've noted that ASIC may recommence its investigation, or commence enforcement action, if circumstances change," a spokesperson said.

A spokesperson at London's Serious Fraud Office, which also started an investigation https://www.reuters.com/article/uk-britain-sfo-rio-tinto-idUKKBN1A9246 into the matter in 2017, said on Thursday that the probe remains active. Rio said at the time it had also referred the allegations to U.S. regulators.

(Reporting by Melanie Burton and Clara DeninaAdditional reporting by Kirstin Ridley in London;Editing by Richard Pullin and Frances Kerry)