The board of mining giant Mineral Resources is remaining tight-lipped on the external probe it launched into an alleged tax evasion scheme involving its billionaire founder Chris Ellison, as its share price plunges on the back of the saga.
In a statement released on Sunday, MinRes chair James McClements confirmed the board had engaged external lawyers to commence an investigation it said was now “well advanced” as its share price plunged 12 per cent to $40.14 on the news, shaving $1.2 billion off its value.
Mineral Resources boss Chris Ellison.Credit: Trevor Collens
But a spokesperson for the company declined to be drawn on when it launched a probe into the scheme, why it failed to disclose the investigation and whether its findings would be made public.
It comes after an investigation by the Australian Financial Review revealed Ellison and four other MinRes executives profited to the tune of millions of dollars by using offshore companies to peddle an equipment markup scheme.
The scheme, which involved using the entities to acquire mining equipment and parts to import and on sell in Australia, was devised in 2003.
It continued operating three years after the $9 billion diversified mining services company’s initial public offering in 2006, with the payments listed as liabilities in financial statements at the time.
The revenue generated by the overseas entities benefiting from the scheme was not disclosed to the Australian Taxation Office at the time.
According to the AFR, Ellison struck a deal with the tax office to repay the taxes he owed several years ago on the condition that it did not disclose the agreement to the corporate watchdog.
McClements said the board was committed to transparency, but the company did not respond to questions concerning when it came to find out about the scheme, when it commissioned the review and whether it would make the findings public.
The board declared it would stand by Ellison and had full confidence in his leadership.
“As to his private tax matters, Mr Ellison self-reported to the Australian Taxation Office, repaid amounts owed and disclosed these matters to the Board. While this does not diminish what happened, Mr Ellison profoundly regrets his errors of judgment,” he said.
In a separate statement issued within seconds of the board’s comments, Ellison expressed “deep regret” for his actions and said he had ensured he had put the matter right with the ATO.
He acknowledged his failure to declare the profits to the tax office was “a poor decision” and “a serious lapse of judgement”, something he has since done voluntarily.
“All outstanding tax, penalties and interest that should otherwise have been paid by me has been fully repaid, and the matter has been settled with the ATO,” he said.
“I deeply regret and apologise for these actions, and have since ensured that I have put the matter right with the ATO.”
Mineral Resources has become one of the most valuable companies on the ASX and ranks as the fifth-largest iron ore producer in the country.
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