Billionaire Gina Rinehart has found an unlikely ally in one of the mining dynasties suing her, which has rubbished long-running claims she mounted a “calculated scheme” to defraud her own children out of their inheritance.
Engineer Don Rhodes’ company has been waging a decade-long war against Rinehart’s Hancock Prospecting for royalties on the Hope Downs mines it operates with Rio Tinto under a 1969 deal with her father Lang Hancock.
Gina Rinehart.Credit: Trevor Collens
The royalty battle was started three years earlier by the descendants of Lang’s business partner Peter Wright, and grew to include Rinehart’s two eldest children Bianca Rinehart and John Hancock in 2016.
The children claim their grandfather left them control of a trust brimming with mining assets under his 1988 will, including Hope Downs, which they claim were later stolen by their mother through a series of secret manoeuvres while they were teenagers.
Hancock Prospecting claims that Lang confessed to unlawfully taking the assets from the family empire on his deathbed as a means of siphoning money and requested it be undone, a wish Hancock Prospecting then executed.
The pair’s barrister, Christopher Withers, SC, claimed to have “smoking gun” documents proving it was fraud, including several detailing Gina’s “special project” to get the assets back, confidential memorandums and legal advice on company transactions.
But on Friday DFD Rhodes’ lawyer Jeremy Stoljar spent hours poking holes in John and Bianca’s 140-page fraud case, which comprises seven steps in a sophisticated scheme they allege was spearheaded by Gina as the “mastermind”.
Stoljar said the children were not just asking Supreme Court Justice Jennifer Smith to make adverse findings against Gina and Hancock Prospecting, but a host of well-respected lawyers.
And he said that list included senior staff from PWC and then-junior lawyer Margaret O’Halloran, the wife of former chief justice Wayne Martin – who is overseeing the private Rinehart-Hancock family arbitration.
“The fraud allegations are very serious and far-reaching, and it’s not just one involving Gina Rinehart, but at least four lawyers; namely Terry Solomon, Tim Cox, David Carrington, and Margaret O’Halloran,” he said.
“Those being accused of being involved in this fraud are experienced lawyers, they held practicing certificates, they’re officers of the court and subject to ethical obligations … and this is 30 years after the fact.
“Your honour is being asked to find that a whole lot of people were caught up in this and apparently behaved – endeavouring to use neutral language – inappropriately, and we say you’re in no position to make any such findings.”
Stoljar took the court through annual reports he said showed the financial issues plaguing the trust entities holding the assets existed while Lang controlled them and, contrary to the children’s submissions, long preceded any involvement by Gina.
And while the trust may have had mining assets, Stoljar said it needed Gina’s company Hancock Prospecting to survive, and sided with the company’s claim that their parlous financial position rendered what transpired “inevitable”.
“The evidence John and Bianca rely on in asserting there has been a conflict is underpinned by evidence which gives rise to an equally compelling inference – that the people involved were not engaging in a sophisticated fraud, but were doing their best to work through the virtually impossible situation left upon Lang Hancock’s death, and that includes Gina,” he said.
“Lang had left the trust and [its entity] in a precarious financial position and irrevocably exposed, including to the ill-fated Romanian venture and the litigation by Rose Porteous.
“The context I’ve described is important because it colours the characterisation of the inferences – was Gina Rinehart trying to do the right thing by her family or was she, as John and Bianca contend, consciously engaged in a sustained and complex fraud to steal from her young children?”
Friday marked the final day of closing submissions in the 50-day trial, which has meant teams of lawyers for the mining dynasties occupying two levels of the WA Supreme Court since July.
Rio Tinto and Hancock Prospecting are expected to front court on Wednesday, where it is anticipated they will discuss who should foot the bill in the event those seeking royalties are successful.
Justice Smith is expected to hand down her judgment in 2024.
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