MinRes defends handling of Chris Ellison tax scandal claims
The troubled miner has rejected claims it may have breached ASX rules around market disclosures over tax issues involving its managing director Chris Ellison.
Mineral Resources has defended its handling of a tax scandal involving managing director Chris Ellison and rejected claims it may have breached ASX rules around market disclosures.
In response to a series of questions from the market operator, the embattled company said some of the media reporting on the tax scandal was wrong.
MinRes hit back over transactions involving mining machinery that happened in the 2000s, as Mr Ellison continued to assure big investors he had no intention of stepping down.
The ASX compliance team had threatened to suspend trading in the stock unless MinRes shed light on why it opted not to tell the market about allegations around payments to an offshore entity linked to Mr Ellison, his self-reporting of personal tax evasion and subsequent settlement with the ATO, or MinRes hiring a law firm to investigate.
MinRes said on Tuesday it did not think any of the information would have had a material effect on the company’s share price.
The Australian Securities and Investments Commission has started a separate inquiry and more than $3bn has been stripped from the value of the company since October 20 when MinRes issued a statement in response to media reports on the tax scandal.
The share price was up almost 5 per cent by early afternoon on Tuesday as MinRes provided more details about a controversy that has led to AustralianSuper, HESTA and other backers seeking assurance about its governance standards.
Perth-headquartered MinRes said it first hired external lawyers to investigate allegations about Mr Ellison and deals involving companies registered in the British Virgin Islands in mid-2022.
More detailed allegations were received in June and November last year, including details of Mr Ellison’s dealings with the ATO.
MinRes said Mr Ellison “confirmed the facts” to the company in November 2023 and it again hired lawyers to investigate. The full board, excluding Mr Ellison, received a briefing on the investigation in June this year.
On the deals under the microscope, MinRes said there had been two payments to Far East Equipment Holdings Limited, an offshore company linked to Mr Ellison, under sales agreements made before the company listed on the ASX in 2006.
The first payment was made by MinRes subsidiary Crushing Services International Limited in August 2006 and the second by MinRes itself in January 2008, with the two payments totalling $3.79m.
MinRes said the pre-IPO sales contracts were recognised as liabilities in the company’s financial statements at the time and were in respect of mining equipment purchased from Far East Equipment in 2004.
It did not consider the information materially price sensitive on the basis that the payments were made more than 15 years ago to discharge a liability that was recognised in the prospectus and financial statements in 2006.
Mr Ellison reached a confidential settlement with the ATO after voluntarily disclosing undeclared income and agreeing to pay unpaid taxes, interest and penalties, with the matter settled in May 2023.
“Contrary to recent media commentary the ATO has not issued any amended assessments to MinRes with respect to depreciation claims made on assets acquired from Far East Equipment,” MinRes told the ASX.
“Mr Ellison did not agree to repay depreciation claims on behalf of MinRes, and no such amounts were repaid as part of, or in connection with, the voluntary disclosure of his private tax affairs.”
MinRes said Mr Ellison’s dealings with the ATO were over his personal tax affairs and he was not acting in his capacity as managing director.
“While Mr Ellison’s failure to declare income to the ATO was a serious error of judgment on his part, it did not displace the board’s confidence in his capacity to manage MinRes,” the company said.
The MinRes board plans to reveal its conclusions and plan of action in response to the recent revelations to the market next Monday.