Proxy adviser Glass Lewis wants more accountability from Mineral Resources directors amid Ellison tax scandal

Powerful proxy adviser Glass Lewis is calling for long-time members of Mineral Resources’ board to be more accountable for founder and managing director Chris Ellison’s tax dodge scandal.

The US-based firm also wants the embattled board to name others who may have benefited from co-owned offshore companies that allegedly profited on equipment sold to the listed mining and services group.

The MinRes board on Monday stunned investors when it released the findings of a long-running investigation that 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”.

He has agreed to step down within 18 months and pay a multimillion-dollar fine and donate $1 million annual over five years to selected charities.

Chair James McClements will also leave sometime after the next annual general meeting, which is due to be held on November 21.

The board announced a raft of corporate governance improvements in the wake of the scandal, but in a note to clients Glass Lewis said “further measures are warranted”, the Australian Financial Review reported.

It said directors on the board during the period before news of the British Virgin Islands company was made public should be more accountable.

According to the AFR, the Glass Lewis note named directors including Xi Xi, Colleen Hayward and Susan Corlett who “had established tenures and fiduciary responsibilities as independent directors during the period when disclosure of Ellison’s offshore activities and tax issues could have been made”.

Ms Xi was appointed to the board in September 2017, Ms Hayward in January 2023 and Ms Corlett in January 2021.

The board on Monday said Mr Ellison did not disclose to the company the matter of his private tax settlement until November 2023.

“Given their roles, we believe they had a duty to uphold transparency on significant governance concerns impacting shareholder interests,” the AFR said the report noted.

“While we acknowledge the board’s proactive measures thus far, we believe that additional transparency and accountability are essential to fully safeguard shareholder interests over the long term.

“Further efforts to address these governance concerns will be critical in rebuilding trust and ensuring sustained confidence among investors.”

Meanwhile, the head of Australia’s Future Fund — which hold $88 million of MinRes stock — said he would seek more details from the board over Mr Ellison’s tax affairs.

Raphael Arndt told a senate estimates hearing on Tuesday night that “the issues raised are serious”, according to The Australian.

“We’ve raised the issue with our investment managers,” Mr Arndt reportedly said.

“We’ve asked them to engage with the company board on it and to let us know. The issues raised are serious. We’ve asked our fund manager to look into it and make sure they’re aware of it.”

The MinRes board’s damning findings came a fortnight after Mr Ellison issued an apology, saying “I deeply regret and apologise for these actions, and have since ensured that I have put the matter right with the ATO”.

The billionaire described the failure to declare the revenue as “a poor decision and a serious lapse of judgment”.

A number of emails related to the issue were deleted in 2019, MinRes said, and other problems involving Mr Ellison came to the board’s attention.

“The board has also concluded that Mr Ellison, on occasions, used company resources for his personal benefit,” MinRes said.

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”.

Mr Ellison’s business arrangement with his daughter Kristy-Lee Craker was also under the microscope. Ship owners transporting the ore MinRes exports from WA are encouraged to use a shipping agent owned by Ms Craker.

He also owns industrial properties that he rents to MinRes on lucrative terms.

Mr Ellison will have to pay the company back $3.8m for the tax dodge, $5m to charity over five years, and he will lose his $3.1m bonus for 2024.

He also has to forfeit future short and long-term incentives worth up to $6.5m.