When did the MinRes board learn of Chris Ellison’s offshore scandal?
Chris Ellison and Richard White should stand aside
MinRes and WiseTech have done the minimum necessary to buy time. The companies are offering crisis management, not good governance.
Richard White steps down as WiseTech CEO
Over a $90,000 dispute, Richard White’s down $3b and counting
At what point did WiseTech investors start counting the founder’s libido as a contingent liability?
Myriam RobinRear Window editor
Oct 23, 2024
The share price is instructive. News of White’s now-settled attempt to have ex-lover Linda Rogan made bankrupt broke on October 1 and was part of a modest 1.7 per cent WiseTech share price drop.
Richard White’s personal life didn’t matter to investors … until it did. Oscar Colman
Further details, including the fact that White bought a house for Rogan and her claims that he’d offered investment in return for sex, shaved off another 3 per cent. Though the share price veered higher after.
The thing that started WiseTech’s share price falling again was a story in The Australian revealing another woman who claimed she’d befriended White over LinkedIn, only to be presented with a sex toy hidden in a bouquet (smooth).
The sell-off gathered furious pace with further revelations in this newspaper (with The Age and Sydney Morning Herald) of other affairs (consummated and attempted), as well as the considerable governance ruptures that had taken place on WiseTech’s board. The share price plunged nearly 15 per cent at Monday’s open and hasn’t recovered since.
Wednesday revealed White had – while much of this was going on – also conducted a long-standing affair with a WiseTech employee, which ended around the time his current wife Zena Nasser came on the scene. And who could be sure this is the end of it?
All up, in three weeks and 16 trading sessions, some $8 billion has vanished from WiseTech’s market capitalisation.
White owns a little more than a third of the company, and so is some $3 billion poorer. He tried to bankrupt Rogan, seemingly at Nasser’s urging, over a disputed $90,000.
As a risk – capable of unravelling the polite silence that had to that point cloaked his liaisons – the decision to serve Rogan with a bankruptcy notice was a spectacularly bone-headed one.
We don’t know how White bore it. By his own telling, he’s a contingency planner, uncomfortable with uncertainty, circumspect and cautious.
“I’ve either spent time ensuring there are no risks or I’ve got plans when the risks happen,” the logistics software tycoon said in a June interview with this publication. “It’s not something that I go, ‘Oh well, I don’t know if this will work, but I’ll give it a crack.’ I’m not like that at all. I don’t do that at all.”
Alas, no one ever scored without chancing rejection. White’s clearly learned to modify his instincts where other needs prevail.
The other theory is that this is just what the former roadie thinks “making it” looks like. After all, spending enough time around sexually ravenous rock stars can do that to you, and White has repaired guitars for rockers like AC/DC and The Angels.
There seems little confluence between that life and his current one. Apart from one thing.
ASIC confirms probe into MinRes’ decade-long ‘tax dodge’
The corporate watchdog has confirmed it is looking into Mineral Resources following allegations that founder and chief executive Chris Ellison ran a tax evasion racket from the British Virgin Islands for a decade.
Australian Securities and Investments Commission deputy chairwoman Sarah Court confirmed on Wednesday these allegations had triggered a preliminary inquiry into the lithium and iron ore miner in Western Australia.
Mineral Resources CEO Chris Ellison. Michaela Pollock
“We are very aware of the situation. We are monitoring it closely, and we will make some initial inquiries, but it is really not appropriate for us to comment much more than that,” she said.
It is understood ASIC will look at whether directors of the miner breached their duties, and require the company to hand over the report commissioned by the board to investigate the allegations.
Shares in the miner have dropped 21 per cent to $35.99 since The Australian Financial Review reported allegations that a tax evasion scheme was established by Mr Ellison that enriched him and four founding executives, costing the company’s shareholders more than $7 million.
MinRes chairman James McClements confirmed on Sunday there will be an investigation into the scheme operated by Mr Ellison, which ran from 2003 to 2014.
Glyn Lawcock, the leading mining analyst at investment bank Barrenjoey, slashed the broker’s rating on the miner from “overweight” to “neutral” on Wednesday. Mr Lawcock cut the share price target from $54 to $42, citing corporate governance issues, elevated levels of debt while lithium and iron ore prices remain low, and the operational concerns over its lithium mine Wodgina and iron ore mine Onslow.
“There are several overlapping concerns that cause us to lift our equity risk premium,” Mr Lawcock told investors.
The Financial Review revealed allegations this week that Mr Ellison, former MinRes chairman Peter Wade and three other founding executives used Far East Equipment Holdings Limited, a British Virgin Islands-domiciled company, to buy machinery with shareholder funds and on-sell the equipment to the West Australian miner at a higher mark-up.
For example, it is alleged that a second-hand ore crusher bought in 2004 for $250,000 was resold to MinRes in 2008 for $2 million. Mineral Resources then claimed tax deductions that it wasn’t entitled to.
When Mr Ellison’s advisers approached the Australian Taxation Office in December 2019 for a voluntary disclosure deal for himself and the four other executives in return for reduced penalties, they acknowledged that MinRes had made “excess depreciation claims”.
Mr Ellison, who owns about 11 per cent of the company, undertook to make up any tax shortfall, penalties and interest MinRes might face, which the Financial Review estimates to be several million dollars. He said he had since made a settlement with the ATO and all outstanding tax had been paid while describing the scheme as a “serious lapse of judgment”.
