...after years of insider dealings and plundering and treating the publicly listed company like their own cashcow.
...which is what I've said for a long time now- we have a serious corporate governance issue in ASX, penalties and fines for corporate misconduct needs to include automatic board removal, hefty fine penalties, and being barred from taking any corporate executive and director position in publicly listed companies in addition to possible fraud/misdemeanour charges. MinRes MD Chris Ellison to leave, cops penalty and pay cut
Vesna Poljak
Mineral Resources managing director Chris Ellison will leave the company within 18 months, pay an $8.8 million penalty and take a $9.6 million pay cut, the AGM said.
Chairman James McClements will step down in 2025.
MinRes paid a 70pc mark up to rent Chris Ellison-owned properties Neil Chenoweth and Mark Di Stefano
Nov 4, 2024 – 5.00am
Mineral Resources founder Chris Ellison and other senior executives charged up to 70 per cent above market rates for industrial properties that they have leased to the diversified mining group since 2006, according to independent valuations they themselves commissioned in 2020.
The valuations by Knight Frank raise questions about aggressive rent increases which have resulted in MinRes paying $31.6 million to lease the Ellison properties since the company listed on the ASX. People close to MinRes, speaking on condition of anonymity, estimated that the West Australian group may have overpaid up to $10 million for the properties.
MinRes was founded by Mr Ellison and has expanded from mining services to own iron ore projects, lithium developments and energy assets. It has grown into a company with a market capitalisation of more than $7 billion.
But allegations, first published by The Australian Financial Review last month, that Mr Ellison and other senior figures had enriched themselves through an offshore tax scheme at MinRes’ expense have sent the company’s share price sinking. MinRes said it was investigating the matter, and will publish the results of its inquiries on the ASX on Monday.
The Australian Securities and Investments Commission has also confirmed it has launched a preliminary probe into the matter.
Mr Ellison is now poised to make windfall profits as he sells the four properties in Kwinana and Bibra Lake, two suburbs in Perth’s south, whose values have been boosted by 10-year leases recently signed by MinRes.
In May 2020, Mr Ellison and the other executives who owned the four properties through a series of trusts commissioned Knight Frank to provide them with a detailed valuation of the real estate.
The firm valued the properties at $17.5 million, and said that the market rate for rents across the four combined should total $1.27 million.
Six weeks later, rents charged to MinRes were lifted 4.5 per cent to $2.22 million, $945,000 more than the Knight Frank estimate. The higher lease arrangements represented a 74 per cent premium on the market rate.
The last lease on the four properties ran for five years from July 2015. Two adjoining properties in Thorpe Way, Kwinana, were leased for $420,000 a year with annual increases of 3.25 per cent; 25 Wellard Street in Bibra Lake for $440,000 with 4.75 per cent annual increases; and nearby 147 Barrington Street for $914,600 with 5 per cent yearly increases.
In 2016, MinRes listed $1.78 million paid in rents to related parties, noting in its annual report that “all transactions were made on normal commercial terms and conditions and at market rates”.
The leases were set to expire at the end of June 2020. When no new lease was drawn up, MinRes continued to rent the properties on the previous conditions – which meant a 4.54 per cent rise, or $96,000 more, from July 1, making the miner one of the few companies to have increased the amount it paid in rent right in the middle of the COVID-19 pandemic.
The rents rose another $100,000 in 2022. They have been frozen at that level – $2.3 million – for the past two years. The last MinRes annual report noted that “rental fees and payment terms are reviewed and revised periodically”.
The rent freeze came amid an investigation by Herbert Smith Freehills triggered by a complaint to the board about Mr Ellison and other executives. MinRes disclosed last week that it had tasked the law firm more than two years ago to investigate a complaint that alleged Mr Ellison, former chairman Peter Wade and three founding executives had used a British Virgin Islands company to sell machinery to the group at huge markups. MinRes’ announcement did not reveal the wide scope of the investigation.
The Financial Review has obtained a copy of the complaint – dated June 3, 2022 – and other emails which indicate that the British Virgin Islands scheme is only one of a number of claims made against Mr Ellison and senior managers that Herbert Smith Freehills is investigating.
SAS operated out of Wellard Street in Bibra Lake, one of the properties leased by MinRes from Mr Ellison and the other executives. Days after the investigation began, MinRes auditor RSM Australia told ASIC that it was no longer the registered office for SAS. Six months later, SAS moved out.
MinRes says that SAS, which has earned more than $10 million from its work transporting the company’s cargoes, is paid at market rates.
It was in this period that rent on the properties was frozen. They are now for sale, with Wellard Street offered with vacant possession. The new 10-year leases begin on December 31, with 3.5 per cent annual increases. Rent for Barrington Street has been cut by 20 per cent, a saving of $250,000 a year.
