...the Oct 2021 major support has been taken out and MIN is falling into the abyss.
...from the article below, it appears that the board is compromised and the company has a major conflict of interest issue. Shareholders would certainly prefer to have Ellison to continue to helm the company but now will have to deal with trust issue. Instos may elect to dump the stock.
ASIC eyes Mineral Resources as Ellison circles the wagons
The regulator is now taking an active interest in the crisis engulfing the miner. But major investors have been reassured by the company’s explanations.
Oct 22, 2024 – 5.52pm
Australia’s corporate cop is now sniffing around the corporate governance crisis that has engulfed Mineral Resources, following revelations that founder and chief executive Chris Ellison allegedly ran a tax evasion scheme for a decade.
Multiple sources have confirmed to Chanticleer that the Australian Securities and Investments Commission is taking an active interest in the matter. The watchdog’s initial line of questioning will be focused on director duties, and it also wants to see the report that will eventually be produced by the unnamed external law firm that the MinRes board has tasked with investigating the matter.
ASIC’s interest, which is at a preliminary stage, is not surprising. It is also completely justified.
Such is the seriousness of the conduct involved, there was arguably a case for MinRes to refer the matter to ASIC itself to provide investors and taxpayers with assurance over two key matters: that Ellison has been held properly accountable for what he has admitted was a serious lapse of judgment, and that the board has handled this crisis appropriately.
Instead, the board has responded in a way that looks out of whack with the seriousness of the matter.
Monday’s attempt to portray this as a personal tax matter in a statement to the ASX was laughable. Ellison is a public figure running a publicly listed company. As such, investors place high levels of trust in his judgment, and anything that goes to that acumen matters to the shareholders who own this business.
But calling this a personal tax matter also makes little sense given it directly involved MinRes. This was a scheme in which Ellison and other executives allegedly used a British Virgin Islands-domiciled company to buy machinery and then on-sell the equipment to MinRes at much higher prices.
While MinRes claims that any payments made after its initial public offering related to the Ellison entities were provided for before the float – and so did not use shareholder funds – Australian Taxation Office documents seen by The Australian Financial Review’s Neil Chenoweth dispute this. This needs to be properly cleared up by the MinRes board.
A board that said on Monday it is committed to “robust and transparent corporate governance” should also want to reassure investors that it has handled this whole mess as well as it could have.
There is a distinct lack of clarity about when the board knew what. While the Financial Review only broke this story on Saturday, the MinRes board claims its investigation is well advanced. That alone suggests the directors have known about this matter for a period of time.
While ASIC rightly circles, Ellison and chairman James McClements have been circling the wagons, hitting the phones to reassure investors that the whole matter is a beat-up.
There are three prongs to their argument. First, the decades-old allegations date back to when MinRes was a private company, and have been appropriately dealt with by Ellison, who brought the issue to the ATO’s attention and repaid what he owed. Second, the reporting of the tax scheme is not as it looks in news reports, and is much more prosaic in nature. Third, this is mainly a disclosure problem – and a minor one at that.
While MinRes shares lost more ground on Tuesday, taking losses since the story broke to 18 per cent, major investors appear to have been calmed – for now. Ellison is as much a part of the MinRes story as any of the company’s projects or assets, and unless new information comes out, large investors will be prepared to give the company a chance to explain itself more fully. They continue to trust Ellison and the board.
Still, this matter is likely to hang over the stock for a long time to come. We don’t know what the external review will find. We don’t know whether the matter has been settled with the tax office. Greens senator Barbara Pocock is already questioning how the ATO might have reached a deal and may pursue this question. We don’t know what action other regulators might take.
This is no longer just about Ellison.
His serious “lapse of judgment” needs full investigation by the proper authorities, and investors and taxpayers should expect full transparency. But MinRes directors are now also under scrutiny due to two actions: their decision to minimise this by calling it a personal matter, and their statement of full confidence in Ellison before the results of the investigation are in.
