Mineral Resources sets date to release findings of probe into Chris Ellison’s tax dodge affairs

The board of Mineral Resources says it is just a week away from making a call on what action it may take in the wake of shocking revelations about founder and managing director Chris Ellison’s past tax-dodging affairs.

The mining giant’s share price has plunged more than 25 per cent in the week since Mr Ellison issued an apology over tax avoidance.

Mr Ellison avoided paying tax for years by not disclosing revenue from co-owned offshore companies that bought and sold mining equipment for on-sale in Australia.

The board last week brought in law firm Herbert Smith Freehills to investigate allegations over Mr Ellison’s conduct. Its own senior counsel and McGrath Nicol are also assisting.

It will look into whether the company and its shareholders were disadvantaged by payments it made to the offshore entities under pre-2006 market float supply contracts.

Mr Ellison is co-operating with the board while taking leave and is due to return next month.

In a statement to the Australian Securities Exchange on Monday, the board said it “fully recognises the requirement to respond appropriately from a governance and process perspective”.

“The board’s present intention is to issue an announcement to the market regarding the conclusions it has reached and the actions it will take by Monday, 4 November 2024,” it said.

“The MinRes board takes seriously allegations in relation to any of its people. This includes, where appropriate, appointing independent external counsel to investigate allegations.”

MinRes said the investigation had so far raised “inconsistencies” that did not match “with the company’s understanding of the facts”.

It also revealed it had been handed questions by market operator ASX since the revelations. No date was given but it said responses would be released “shortly”.

Mr Ellison has admitted the non-disclosures were “a serious lapse of judgment”.

“More than 20 years ago, and prior to MinRes’ listing, we also operated entities overseas for acquiring mining equipment and parts to import into Australia and on-sell,” he said.

“Some equipment, prior to MinRes’ listing, was sold to our then-privately owned Australian businesses.

“Regrettably, revenue generated by the overseas entities that we were beneficiaries of was not disclosed to the Australian Taxation Office at that time. This was a poor decision and a serious lapse of judgment.

“I deeply regret and apologise for these actions, and have since ensured that I have put the matter right with the ATO.”

Mr Ellison said he had since “voluntarily disclosed these matters to the ATO in full”.

MinRes is now facing pressure from one of Australia’s most influential superannuation funds which has raised doubts over Mr Ellison’s role as CEO.

HESTA, which controls nearly $90 billion in member assets, is pressuring MinRes to “take the necessary steps” and improve its corporate governance.

MinRes chair James McClements on Monday said the board’s response had been “driven by high governance principles and the best interests of MinRes shareholders, now and in the long term”.

“We are determined to ensure that this is the path for MinRes long into the future and we understand our role as a board is to strike the appropriate balance of all factors so this is delivered for our investors,” Mr McClements said.

“At the same time, it remains focused on generating sustainable value for its shareholders, working in partnership with its clients, customers, people and communities.

“There has been significant board renewal in the past two years and the board today comprises directors who individually and collectively have an unswerving commitment to strong governance and are committed to continuous review and improvement.”