Chris Ellison on leave as MinRes mulls options

Mineral Resources managing director Chris Ellison has told big investors he has no intention of standing down and will try to ride out the storm over his involvement in a tax evasion scheme.

Mineral Resources boss Chris Ellison.

Under fire Mineral Resources managing director Chris Ellison has told big investors he has no intention of standing down and will try to ride out the storm over his involvement in a tax evasion scheme.

Mr Ellison has been attempting to reassure investors from overseas, with many backing him to survive and pushing for board members to take the fall over disclosure and other governance failures.

The MinRes board said Mr Ellison remained on leave but was cooperating with its investigations.

The company is facing multiple investigations and has been in crisis meetings with investors over a series of damning revelations about a tax avoidance scheme involving Mr Ellison and related-party transactions.

MinRes is scrambling to respond to questions from the ASX around the 67-year-old’s conduct, his involvement in a tax evasion scheme and the company’s governance.

It remains unclear if Mr Ellison, one of the company’s founders and its talisman leader, will survive as managing director but a number of big investors want him to stay.

MinRes chairman James McClements said the board needed to “strike the appropriate balance of all factors” in responding to the crisis engulfing Mr Ellison.

The MinRes share price recovered slightly to $34.53 on Monday after heavy losses last week that saw more than $3bn wiped off the value of the mining service provider that has diversified to become one of Australia’s biggest lithium and iron ore producers.

The MinRes board said its “present intention” was to reveal its conclusions and plan of action to the market next Monday. It is understood MinRes has started working on a Plan B that would involve installing a new leader and the resignation of some directors.

One big investor, speaking on the condition of anonymity, said any changes in leadership should happen at board level.

“As of yesterday, he (Mr Ellison) still loves the job and he can’t wait to come back to it. He’s very embarrassed and remorseful of course,” the investor said.

“This is a personal stuff up which reflects badly on him, and I’d hate to bring his position, but it shouldn’t change day-to-day operations for the company.”

In a statement issued eight days ago, the board said it had full confidence in Mr Ellison and his leadership despite his involvement in a tax evasion scheme involving companies registered in the British Virgin Islands in the early years of the company.

On Monday, the board said an investigation it commissioned had evolved in light of new allegations that didn’t match the company’s “understanding of the facts”.

In his only public statement on the scandal, Mr Ellison said the tax dodge dated back more than two decades to overseas entities acquiring mining equipment and parts to import into Australia and on-sell.

“Some equipment, prior to MinRes’ listing, was sold to our then-privately owned Australian businesses,” he said on October 20

“Regrettably, revenue generated by the overseas entities that we were beneficiaries of was not disclosed to the ATO at that time. This was a poor decision and a serious lapse of judgement.”

Mr Ellison’s future is in the balance amid allegations the scheme continued after MinRes listed on the ASX in 2006. The scandal and any reparations Mr Ellison made to the company were never revealed to shareholders, and first came to light in the media.

The MinRes-commissioned investigation into Mr Ellison is being run by law firm Herbert Smith Freehills and also involves McGrathNicol.

The Australian Securities and Investments Commission has started an inquiry and, on a separate front, two WA government agencies are investigating animal cruelty claims against MinRes.

Mr Ellison, via his tax advisers, sought to cut a deal with the ATO over the tax evasion scheme in late 2019. He pursued an undertaking that the ATO would not alert ASIC or the federal police as part of a settlement.

It is alleged a handful of other executives from the company’s early years, including former chairman Peter Wade, were involved in the scheme, and that a whistleblower alerted independent directors in 2022.

Mr Ellison was overseas on leave when the scandal broke on October 19. The MinRes board said he would return from leave in November.

“The company is committed to a timely process and to reporting to the market as soon as possible, while ensuring that fair and robust governance processes are followed with everyone concerned,” it said in statement to the ASX before the market opened on Monday.

“Mr Ellison is continuing to cooperate with the investigation while taking planned leave, from which he is scheduled to return in November.”

Mr McClements said the board’s response was driven by “high governance principles and the best interests of MinRes shareholders, now and in the long term”.

“We are determined to ensure that this is the path for MinRes long into the future and we understand our role as a board is to strike the appropriate balance of all factors so this is delivered for our investors.

“At the same time, it remains focused on generating sustainable value for its shareholders, working in partnership with its clients, customers, people and communities.”

AustralianSuper sold a big chunk of its MinRes stake last week and said it was in talks with the board as part of an assessment of its longer-term position on the register. Industry fund HESTA has also engaged with the board in the wake of the allegations.

Originally published as Chris Ellison on leave as MinRes mulls options