Ellison pays multimillion-dollar penalty over tax scandal as MinRes selects new chair

Embattled Mineral Resources boss Chris Ellison has forked out $3.8 million to service the penalty he was hit with by the company he founded over an offshore tax scandal that is set to cost the managing director his role.

But it could be another six months before the mining giant announces the new board chair tasked with selecting his replacement.

Mineral Resources founder Chris Ellison.Credit: Trevor Collens

In a governance update released on Thursday, MinRes revealed the recruitment process was “well advanced” but that it did not intend to announce chair James McClements’ replacement in the June quarter.

The Osborne Park-headquartered miner embarked on a governance overhaul in November amid shock revelations by the Australian Financial Review that Ellison and four other executives had profited from an alleged offshore tax scheme that ran for a decade.

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 $6.6 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.

Initially, the board vowed to stand by Ellison and claimed it had full confidence in his leadership, branding the issue a “private tax matter”.

But the board of the diversified mining services company soon changed tack and went into damage control amid a plunging share price, divided investors and news the rapidly evolving scandal had piqued the interest of the corporate regulator.

A board-ordered probe concluded Ellison used company resources for personal gain, from rent paid to entities in which he had an interest, staff directed to work on his personal property — including his boat — and relief afforded to entities tied to his daughter Kristy-Lee Craker.

Ellison, who remains the largest shareholder with an 11.5 per cent stake in the $7 billion company, was ordered to repay the $3.8 million in funds owed, forfeit up to $9.6 million in bonuses and donate $5 million to charity before stepping down within 18 months.

But the board has not explicitly ruled out the possibility of the billionaire remaining with the company in some capacity, even as the corporate regulator undertakes its own investigation.

The beleaguered boss has maintained a low profile since the scandal, fronting shareholders in November to express his deep regret for an “error of judgment” which would remain a “dark cloud” over his life.

On Thursday, the company confirmed Ellison had now paid the $3.8 million penalty – a sum just shy of what he paid the Australian Taxation Office to settle the tax debt in May 2023.

It also detailed its progress on the initiatives it vowed to implement to strengthen governance practices in the wake of the scandal, including new protocols for related party transactions and exiting legacy agreements between MinRes and its directors and senior executives.

The overhaul also includes the introduction of new policies to eliminate the use of company resources by key managers, cover the disposal of company assets and manage whistleblower complaints.

The company’s share price has plunged since October when the story broke, wiping more than $2 billion from the value of the $6.6 billion business.

Shares in the company were up 7.3 per cent following the update to trade at $34.20.

Start the day with a summary of the day’s most important and interesting stories, analysis and insights. Sign up for our Morning Edition newsletter.