Mining billionaire Chris Ellison has admitted he was a tax cheat who failed to make proper disclosures about a series of companies registered in the British Virgin Islands.
By Brad Thompson
Mining billionaire Chris Ellison has admitted he was a tax cheat who failed to make proper disclosures around a series of companies registered in the British Virgin Islands, and has apologised for what he calls “a serious lapse in judgment”.
Mr Ellison’s future as Mineral Resources managing director is under a cloud amid an investigation into his business affairs and admissions he made to the Australian Taxation Office about failures to report revenue transferred from businesses in Australia to the offshore companies.
MinRes chair James McClements said the company had hired a law firm to investigate the matter and provide advice to the board of the mining company that is also one of Australia’s biggest lithium and iron ore producers.
Mr McClements said Mr Ellison regretted his “errors of judgment”, which relate to the use of credit cards and a series of companies set up for Ellison and other MinRes executives and registered in British Virgin Islands in the early 2000s.
A report at the weekend revealed Mr Ellison eventually asked his lawyers to strike a deal with the ATO whereby he offered to pay back any taxes he owed on top of a multimillion dollar fine.
Mr Ellison’s offer to come clean with the ATO was made years after the offshore companies were set up and came on the condition that the ATO did not make the offer or any related investigation known to the police or the Australian Securities and Investments Commission.
It is understood the undeclared income may have totalled about $13m across Mr Ellison and the other executives involved. Voluntary disclosures of undeclared income can qualify for an 80 per cent reduction in any ATO penalties
In a statement released late on Sunday, Mr Ellison sought to explain his actions.
“More than 20 years ago, and prior to MinRes’s listing, we also operated entities overseas for acquiring mining equipment and parts to import into Australia and on sell. Some equipment, prior to MinRes’s listing, was sold to our then-privately owned Australian businesses,” he said.
“Regrettably, revenue generated by the overseas entities that we were beneficiaries of was not disclosed to the ATO at that time. This was a poor decision and a serious lapse of judgment.
“I have since voluntarily disclosed these matters to the ATO in full. All outstanding tax, penalties and interest that should otherwise have been paid by me has been fully repaid, and the matter has been settled with the ATO. These circumstances have also been disclosed to the MinRes board.
“I deeply regret and apologise for these actions, and have since ensured that I have put the matter right with the ATO.”
Speaking in the wake of the revelations about the company’s founder, Mr McClements said the MinRes board was committed to robust corporate governance.
“It has engaged external legal counsel to conduct an investigation into this matter and advise the board,” he said.
“Mr Ellison has co-operated with the investigation and the investigation is well-advanced.”
Mr McClements made reference to payments made by MinRes to offshore entities connected to Mr Ellison since the now $9.3bn company listed on the ASX in 2006.
He said the pre-initial public offering sales were recognised as liabilities in the company’s statements at the time.
Mr McClements said Mr Ellison had made disclosures to the board about his personal tax matters and his self-reporting to the ATO.
“As to his private tax matters, Mr Ellison self-reported to the ATO, repaid amounts owed and disclosed these matters to the board,” he said.
“While this does not diminish what happened, Mr Ellison profoundly regrets his errors of judgment. The board has full confidence in Mr Ellison and his leadership of the MinRes executive team.”
It remains unclear if the ATO ever gave Mr Ellison an undertaking not to pass on information about the matter to Australian Federal Police, ASIC or the Director of Public Prosecutions.
Documents and other evidence published at the weekend indicate big sums of money were transferred to British Virgin Island companies from at least one of the Ellison-controlled private companies in Australia that was used to form MinRes with the offshore funds spent using visa cards.
It was also alleged that transfers continued after MinRes listed on the ASX in what amounted to undeclared related-party transactions that delivered untaxed profits to Mr Ellison and four other so far unnamed executives at the expense of shareholders.
New Zealand-born Ellison is a self-made billionaire who has previously attracted the attention of governance advisory group Ownership Matters over related party business dealings and investment in two lithium exploration companies.
