Mineral Resources AGM: Investor showdown as Chris Ellison and board face the music over tax, governance mess
Brace yourself, Perth may have never seen an annual general meeting quite like this!
Besieged Mineral Resources founder Chris Ellison will today front angry shareholders who, over the past few weeks, have seen their investment in the lithium and iron ore miner collapse into the mud amid a wave of corporate scandals and boardroom upheaval.
From a market capitalisation of more than $9 billion, it’s dropped to $6.8b. Ouch.
If you’ve been living under a rock, let’s catch you up.
The trouble for Ellison — MinRes’ biggest shareholder and managing director — started late last month when it was revealed he’d allegedly run a tax avoidance scheme in the British Virgin Islands and profited on equipment sold to the listed mining and services group. The matter was settled some years back and outstanding tax, penalties and interest was paid under a secret deal with the Australian Taxation Office.
The billionaire expressed his “deep regret” and admitted to “a serious lapse of judgment”.
A few days later, the board of MinRes revealed that lapse formed part of a long-running probe it had already launched, with the help of outside top-tier lawyers, into Ellison’s affairs.
What followed was the release of a damning report that cost both Ellison and chair James McClements their jobs — Ellison said he’d walk within the next 12 to 18 months while Clements would vacate his post sometime before next year’s AGM.
The report, released on November 1, found “at times Mr Ellison has not acted with integrity” and he “failed to be as forthcoming with the board as he should have been”.
“The board has also concluded that Mr Ellison, on occasions, used company resources for his personal benefit.” This included directing MinRes employees to work on his boat and properties, having a company worker manage his personal finances, and using MinRes to “procure goods and services for his private use”.
Then last week came stunning revelations of a sweet commercial property deal, in which MinRes had given Ellison’s daughter Kristy-Lee Craker “rent relief” over 11 years. The company has since recovered $158,000.
Ship owners transporting the ore MinRes exports from WA were also encouraged to use a shipping agent owned by Ms Craker.
Superannuation funds invested in the miner have expressed their dismay and are asking questions about who on the board or among the C-suite ranks knew what and — more importantly — when. The corporate watchdog is now doing the same.
Now it’s the shareholders’ turn to put the blowtorch to Ellison and the directors.
Expect a few fireworks.
Stay tuned as we bring you all the news from the meeting in Lathlain as it happens.
Key Events
McClements wraps up
After admonishing Ellison’s past actions, the chair offered a final word of praise for the founder and managing director.
“I want to acknowledge the vital contribution that Chris makes to the company’s operations, growth and shareholder value creation,” he told the meeting.
“The decision that the board was faced with making was complex and challenging.
“We unanimously believe our conclusion carefully balanced the need to acknowledge wrongdoing and to ensure significantly-improved governance protocols are put in place, while also protecting your company’s value and a timely way forward for leadership transition.
“Despite the present challenges, this is also a time of significant opportunity and a critical turning point for our company.
“Everyone within our organisation, including Chris, is committed to ensuring the longevity and success of this business.”
No sign yet that Ellison plans to go anywhere before his previously agreed exit within the next 12 to 18 months is up.
What McClements had to say
The last few months have – quite obviously – been very difficult for the company and our shareholders.
The chair opened with an assurance that the issues of the past few weeks would be addressed “at some length”.
He said significant price falls in the company’s key commodities of iron ore and lithium have demanded “quick, decisive responses”. At the same time, the board had been managing the challenges raised by the governance issues.
He conceded Ellison “lacked judgment and used company resources for personal matters”.
“The board accepts that Chris’ intention was never to cause detriment to the company or its shareholders, and there were processes in place for amounts to be repaid to the Company in a timely manner.
“The board has decided, and Chris has agreed, that these practices will not continue.”
We’ll have to wait and see if these statement are enough to appease shareholders when the floor is opened up to questions.
And we’re under way
We’re starting with a Welcome to Country.
Chair James McClements is now up. He acknowledged the issues of the past few weeks but asked everyone to remain respectful, but said everyone would be heard.
Originally published on The West Australian
