The board of Mineral Resources has confirmed that it was made aware of CEO Chris Ellison’s alleged tax evasion more than two years ago but chose not to disclose the probe to the public. In June 2022, the board engaged law firm Herbert Smith Freehills to conduct an external investigation into the allegations. Ellison has described the 10-year tax scheme as a “poor decision and a serious lapse of judgement,” prompting the board to defend its actions and label the matter as a personal issue between Ellison and the Australian Tax Office.
Despite the board’s decision not to disclose the investigation, the allegations have had a significant impact on Mineral Resources’ stock price. Following reports in the Australian Financial Review that Ellison and four other executives used offshore companies in a equipment markup scheme, the company’s share price has dropped over 20% and shed nearly $2 billion off its value. The scheme was reportedly initiated in 2003 and continued after the company went public in 2006, with payments listed as liabilities in financial statements and revenue generated not disclosed to the Australian Taxation Office until 2022.
The board has acknowledged that the share price decline is due to media speculation, governance concerns, and uncertainty surrounding Ellison’s leadership. They believe that the situation could persist until a decision is made about the company’s future. The board maintained that the appointment of external legal counsel to conduct the investigation was not inherently price-sensitive information and that disclosing it prematurely could lead to baseless market speculation that they could not address reliably.
Mineral Resources insists that it acted in the best interest of the company by not disclosing the investigation into Ellison’s alleged tax evasion. The board claims that the allegations stemmed from payments made over 15 years ago and were therefore considered a personal matter between Ellison and the tax authorities. They expressed confidence that the decision to hire external lawyers would not have a significant impact on share prices and that market speculation could be minimized by delaying disclosure until more concrete information was available.
Despite the challenges stemming from the controversy surrounding Ellison’s alleged tax evasion, Mineral Resources is continuing to address the situation and navigate the fallout from the revelations. The board’s decision to conduct an external investigation into the matter reflects their commitment to upholding the integrity and transparency of the company’s operations. The ongoing uncertainty regarding Ellison’s leadership and the company’s future direction will likely continue to impact the share price until a resolution is reached.
As Mineral Resources grapples with the repercussions of the allegations against its CEO and executives, the board is facing mounting pressure to address the situation decisively and restore investor confidence. The company’s stock price decline underscores the serious implications of the controversy and highlights the need for transparent communication and effective governance practices. Moving forward, Mineral Resources will need to navigate these challenges carefully and make strategic decisions to mitigate the impact on its operations and reputation in the market.
