Embattled miner Mineral Resources has conceded it should have disclosed the rent relief afforded to companies tied to billionaire founder Chris Ellison’s daughter, but believed the deal was not materially price sensitive.
In response to queries from the ASX, the miner’s board said it called time on the 11-year rent relief agreements with Ship Agency Services and Propel Marine after the related-party deal was uncovered last financial year.
Chris Ellison will depart as Mineral Resources managing director within 18 months.Credit: Trevor Collens
Ellison’s daughter Kristy-Lee Craker founded SAS the year before the miner’s deal with its preferred ship agency, and is a shareholder of Propel Marine.
MinRes demanded SAS repay $158,000 after undertaking a review of its records and historical valuations, but told the ASX it did not believe it warranted disclosure.
“Mineral Resources considers that the rent relief arrangements ought to have been but were not disclosed before they were identified and brought to an end in FY23,” the board said.
“Upon identification, the board considered that the information was not materially price sensitive, particularly given the quantum involved, as well as Mineral Resources’ ability to seek payment.
“Accordingly, Mineral Resources did not consider that there was a requirement to make retrospective disclosure in the annual report for FY23.”
The miner confirmed the related party benefits identified following its probe into the tax evasion scheme engulfing Ellison involved more than $30 million in rent paid by MinRes to entities linked to the billionaire.
But it insisted the need to occupy the premises had been assessed periodically, and the board was satisfied the rental arrangements were at a fair market value.
It comes almost two weeks after MinRes confirmed managing director Ellison would vacate his role within 18 months, repay $3.8 million in funds owed and forfeit bonuses worth $9.6 million after a major probe concluded he had used company resources for personal gain.
Chair James McClements will also depart after a 10-year stint with the company.
The decision was the product of an investigation into claims Ellison and four other MinRes executives made millions using offshore companies to peddle an equipment markup scheme two years ago, with the Australian Financial Review making the scheme public last month.
The scheme, devised in 2003, involved using the entities to acquire mining equipment and parts to import and on-sell in Australia.
The board found two further payments were made by MinRes after the $7 billion diversified mining services company’s initial public offering in 2006 to extinguish the liability.
The revenue generated by the overseas entities benefiting was not disclosed to the Australian Taxation Office until 2021 when Ellison made a voluntary disclosure.
The Perth-based billionaire then repaid $3.9 million to the ATO in May 2023, a settlement the board said he failed to disclose until six months later.
The probe also found the miner had provided financial benefits to related parties, with rent paid to entities in which Ellison had an interest, staff directed to work on his personal property — including his boat — and finances and relief afforded to entities tied to Craker.
Ellison, who founded the $7 billion Osborne Park-headquartered company and remains its largest shareholder with an 11.5 per cent stake, said he was “deeply sorry” for his conduct.
The diversified miner’s share price has struggled under the weight of the controversy, a debt-laden balance sheet and a series of mothballed projects, halving over the course of the past year.
Shares in the company dropped 4 per cent on Friday to $33.70.
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