MINERAL Resources said managing director Chris Ellison will step down within 18 months after an internal probe into undeclared payments made to companies owned by him found the tycoon had engaged in “profoundly disappointing” conduct.
The founder had not acted with integrity, which sits at the core of the company’s values, according to a statement from the company. He was fined A$8.8 million (S$7.7 million) and will forfeit his salary and other incentives worth as much as A$9.6 million. Ellison will remain as managing director until a successor is found.
The investigation found Mineral Resources had made payments of A$3.8 million to an offshore company owned by Ellison for mining equipment and parts. Ellison had not declared the income and the transactions took place after Mineral Resources had been listed in Sydney, raising questions over the transparency of the deals. He has agreed to repay the amount.
Shares of Mineral Resources fell as much as 7 per cent in early trading in Sydney after the announcement.
The miner’s probe also revealed Mineral Resources had been paying rent on properties owned by Ellison along with other rent-related financial benefits to his daughter. On occasion, he also used company resources and staff for work on his private boat and properties, and to manage his personal finances.
“There can be no doubt that the actions, decisions and behaviours of Ellison have been profoundly disappointing and require sanction and penalty,” the company said in a statement.
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Australia’s corporate watchdog has also launched initial inquiries into the claims.
Ellison has fully accepted the board’s decisions, he said in the company statement.
“I am deeply sorry for the events that have occurred and the impact they have had on Mineral Resources’ reputation. I apologise to the rest of the board and to our people, who expect and deserve better from me. I acknowledge that I made mistakes, some of which were driven by my wish to keep private certain events that cause me great personal embarrassment.”
Ellison said on Oct 21 that revenue generated by the overseas entities that he was a beneficiary of was not disclosed to the Australian Taxation Office at that time, describing that as a “poor decision and a serious lapse of judgment”.
According to a report in the Australian Financial Review, Ellison struck a deal with the Australian Taxation Office to pay up the outstanding amount. In exchange, authorities did not disclose the figure owed and he will avoid a police or regulatory investigation.
Mineral Resources announced on Oct 31 that it was selling Australian oil and natural gas exploration permits to billionaire Gina Rinehart’s Hancock Prospecting in a deal worth as much as A$1.1 billion. Shares of the company jumped as much as 16 per cent after the announcement.
Earlier this year, Ellison – a larger-than-life figure even by the standards of Australian business – made headlines after stating he wanted to prevent employees at the company’s office from leaving the building to buy coffee. BLOOMBERG
