“At times, Mr Ellison has not acted with integrity,” said the MinRes board. “Mr Ellison has not placed sufficient separation between his personal interests and the interests of the company as a whole.”
Ellison said he was “deeply sorry” for the impact of his actions on the company’s reputation. “I acknowledge that I made mistakes, some of which were driven by my wish to keep private certain events that cause me great personal embarrassment,” he said.
Ellison, who will continue to serve as managing director until a successor is appointed, has been fined A$9m by the company and stripped of nearly A$10m of remuneration.
The market capitalisation of MinRes, which was built as a mining services business but has expanded into iron ore and lithium mining, has dropped almost 30% in the past month to about A$7 billion after the tax scheme was revealed by the Australian Financial Review newspaper.
The Perth-based company appointed law firm Herbert Smith Freehills to review its corporate governance and moved to reassure investors about the strength of its balance sheet in recent weeks.
Last week, it struck a deal to sell oil and gas assets to Gina Rinehart’s Hancock Prospecting for A$1.1b.
The review found Ellison had “used company resources for personal benefit”, citing examples in which he directed employees to work on his private boat, properties and personal finances, and procuring goods and services for his own benefit through the company.
MinRes said it had paid rent and afforded rent relief to entities in which Ellison and his daughter had an interest.
The company said Ellison had not sufficiently separated his personal interests from those of the company and “failed to appreciate the importance of transparent and timely disclosure”.
The move by Australia’s fourth-largest listed mining company to replace its founder comes less than two weeks after the founder of WiseTech, the country’s largest listed technology business, stood down from his role as chief executive following revelations about his personal life.
Citi analyst Kate McCutcheon slashed her target price on the stock by 30%, saying in a note the company faced uncertainty with a long handover period and a potential review by the corporate regulator.
“The slow pace of change will likely weigh on the stock,” she said.
Ellison, 67, co-founded Mineral Resources as part of a mining merger with three major companies in Australia.
He grew up on a farm outside Dunedin and attended Otago Boys’ High School. He left school at the age of 15 to work as a crane driver.
In 1978, he moved to Western Australia, where he established a rigging firm before winning a contract to work on the North West Shelf Venture, a vast resource development project including gas and oil extraction.
Ellison was appointed New Zealand’s honorary consul in Western Australia in 2013. He was appointed a Member of the New Zealand Order of Merit in the 2022 Queen’s Birthday Honours, for “services to New Zealand–Australia relations”.
He became a notional billionaire in 2020 when shares in Mineral Resources hit a then-record high, and is worth $1.2 billion according to Forbes
Written by: Nic Fildes in Sydney. Additional reporting by NZME.
© Financial Times
