Tax officials probe MinRes and founder Ellison, AFR reports

Australian tax officials have started a new investigation into Mineral Resources Ltd. and its founder and managing director, Chris Ellison, the Australian Financial Review reported Thursday.

The investigation by the Australian Taxation Office is focused on how MinRes and Ellison calculated income and fringe benefits taxes, the newspaper said citing an ATO request sent to the Federal Court. It follows earlier, separate, inquiries by both the Australian Securities and Investments Commission and the Australian Securities Exchange.

A spokesperson for MinRes did not immediately respond to a phone call or emails. The ATO did not respond to questions before publication.

Ellison has been under scrutiny for roughly a year since an internal company probe found he had engaged in “profoundly disappointing” conduct including not paying personal income tax. He was fined A$8.8 million ($5.8 million) by the company and forfeited his salary and other incentives worth as much as A$9.6 million. Ellison also made a commitment to step down from the top job by the middle of next year.

The company’s own inquiry also found MinRes had made payments of A$3.8 million to an offshore company owned by Ellison for mining equipment and parts. He agreed to repay the amount. It also revealed the Perth-headquartered firm had paid rent on properties owned by Ellison and other rent-related financial benefits to his daughter. On occasion, he used company resources and staff for work on his private boat and properties, and to manage his finances.

Under Ellison the company grew from a mining contractor to operating its own mines. MinRes recently brought its massive Onslow iron ore project online, and struck a new joint venture agreement with South Korea’s Posco Holdings Inc. to reduce debt.

(By Paul-Alain Hunt)