Palmer overcharged us by $14m, Chinese say

THE federal MP has backed down in his bid to liquidate Sino Iron.

FEDERAL MP Clive Palmer has been accused in the Federal Court of overcharging his estranged business partner, Chinese state-owned giant Citic Pacific, by almost $14 million in the past two years.

In documents filed in the court, Citic’s Australian subsidiary Sino Iron said Mr Palmer’s private company, Mineralogy, had been paid $18.9m in port administration costs in 2012 and 2013 when its true expenses were only about $5m.

The company said Mineralogy had provided no justification for its spending through the budgets it had submitted.

“A budget encompasses more than simply a spreadsheet with numbers in it,” Sino Iron said in a submission filed in court.

“A properly prepared budget should include a detailed breakdown of the proposed expenditure together with a justification as to why that expenditure is required and an explanation of how the figures have been derived.

“The information included by Mineralogy in the purported budget falls far short of this standard.”

The claim of overcharging came as Mr Palmer yesterday made a sudden backdown from an attempt to liquidate Sino Iron, which is building a $10 billion iron ore project in the Pilbara on tenements owned by Mineralogy.

Just days after filing a writ in the Federal Court, Mineralogy withdrew its application ahead of a hearing that was scheduled to take place in Perth yesterday.

Mineralogy also agreed to pay Sino Iron’s legal costs.

Mr Palmer had claimed the attempt to wind up Sino Iron was related to $13.4m worth of unpaid administration costs due for 2014, alleging this meant the company was insolvent.

In its submission, Sino Iron said it had refused to pay Mineralogy because it disputed the budget amount - not because it was insolvent.

“According to its most recent financial accounts disclosed to the Hong Kong Securities Exchange, Citic Pacific had cash and bank deposits of $4.82bn, available committed (but undrawn) bank facilities of $1.80bn, net assets of $14.93bn and net current assets of $3.22bn,” it said.

“Mineralogy has not adduced any evidence of the insolvency of Sino Iron.”

The legal stoush between Mr Palmer and Citic is part of a wider war over the Sino Iron project.

The Sino Iron project began exports late last year, but it was four years behind schedule and more than $US6bn ($6.6bn) over budget.

A spokesman for Citic said yesterday: “Ahead of today’s hearing, we received notice from Mineralogy that it will withdraw its application to wind-up Sino Iron and will not move to terminate key agreements associated with this action.

“Furthermore, Mineralogy will pay Sino Iron’s costs associated with its application, on an indemnity basis.

“We welcome Mineralogy’s change in position.”

A spokesman for Mr Palmer said Mineralogy had withdrawn the application after Citic Pacific had undertaken to meet Sino’s debts.

“The undertaking is an increase from $US4.2bn to $US5.6bn,” the spokesman said.