Oh dear, Chris Ellison’s actions at Mineral Resources look much worse when you add them all up.
Oh dear, Chris Ellison’s self-serving actions at Mineral Resources look so much worse when you add them all up.
It is a litany of transgressions which have emerged bit by bit over the past few weeks, wiping billions off the company's market capitalisation.
What’s worse is now the board is in the frame, too.
Today’s release from Mineral Resources, with penalties amounting to about $18 million, all but confirms that Mr Ellison has, as so many suspected, failed to fully discern the difference between a private entity and a public company, or at least did not change his habits enough to acknowledge that difference.
The rest of us are seeing that with a great deal more clarity after various disclosures in the past few weeks, but the board has known something was up for almost two and half years, albeit in fits and starts.
The board’s October 29 response to the ASX Aware letter gave investors an inkling that Mr Ellison had been less than forthcoming in his disclosures.
As the timeline Business News derived from the facts outlined in that release shows, Mineral Resources’ board first knew of allegations of payments made to offshore entities connected with Mr Ellison in June 2022.
At the time, Mineral Resources’ board engaged legal counsel to investigate. It must have been slow going because there’s no mention of an outcome to that investigation and a full year later the company learned of further allegations.
And again, in October last year, there were still more revelations for the board to digest, which Mr Ellison confirmed the next month, prompting the company to again engage external legal counsel to investigate matters.
The board was briefed in June this year about that investigation and, it would seem, had yet to do anything with that report until news broke last month of Mr Ellison’s tax deal with the ATO around dodgy dealings with offshore companies that cost Mineral Resources’ shareholders.
Was the detail that has cost Mr Ellison his job – albeit in 12 to 18 months’ time – swept under the carpet? Or is the update today the result of what they have discovered in the past few weeks, through a third and far more rapid external investigation?
And is there more to come?
“Some inquiries are ongoing,” Mineral Resources said in its update this morning.
“And the company will keep the market appropriately updated in line with its continuous disclosure obligation.”
The biggest shame of it is that a lot of these problems could have been avoided if Mr Ellison and those who advised him had recognised his private interests and the company’s should officially be made separate.
Most other rich-listers would have a family office to run their affairs, long before they reached billionaire status.
Despite our best efforts, Business News could not find any serious notion of such a structure when we looked into Mr Ellison’s wealth for our inaugural Rich List, which launched in April ranking him 10th with $2.18 billion.
He was the wealthiest person on the list without any obviously sophisticated private office to manage his personal affairs.
Today’s update shows why.
According to the company, Mr Ellison had a Mineral Resources employee managing his personal finances, along with company staff working on his boat, private properties and procuring goods and services for his private use.
The entanglement did not end there.
According to the company, financial benefits provided to Mr Ellison’s related parties included rent paid to entities in which he has an interest as well as rent relief and indirect financial arrangements involving his daughter.
Presumably, this relates to reports that millions of dollars of shipping fees were paid to a company founded by Mr Ellison’s daughter, although the update doesn’t state that, so it could be something else.
Even in this threadbare detail the the company suggests that extracting information has been a challenge.
“The board has concluded that, while Mr Ellison had disclosed these matters to the board, he failed to appreciate the importance of transparent and timely disclosure of matters that could give rise to a potential or actual conflict of interest,” the update said.
Just in case investors might conclude that all this is just the sloppy work of an entrepreneur getting on with business, the update does offer something a little more.
“It has recently come to light that a number of company emails relating to FEEHL were deleted in 2019,” the update said with regard to Far East Equipment Holdings Ltd, the offshore company Mr Ellison established before Mineral Resources’ 2006 IPO which was allegedly used for the purpose of tax avoidance.
“The board has concluded that this was an attempt to avoid information regarding FEEHL becoming public.”
That was five years ago.
We all make excuses for bad behaviour when it suits us.
Mr Ellison was one of our own, despite his New Zealand heritage. A tough-talking driver of clever strategies which made him a billionaire and took a lot of others along for the ride.
He could have been forgiven for a dumb tax dodge almost two decades ago, as he took the success of his private entities in the rough and tumble world of mining contracting into the public arena.
But even if diddling the tax office was perceived to be a national pastime, doing it via offshore entities which all but a few shareholders were unaware of rings a far more ominous note.
That makes even the most minor related-party transactions look a lot more disturbing.
The problem for the board is that the timeline is awkward and makes them look like they were sitting on what has turned out to be explosive information.
