Billionaire miner Gina Rinehart’s lawyers have sensationally accused her own late father Lang Hancock in court of brazenly breaching his fiduciary duties to their company by siphoning money to himself under pressure from his then-wife Rose Porteous to fund a “luxurious lifestyle”.
Key points:
- Gina Rinehart’s lawyers have accused her own late father of siphoning money to himself
- They claim he was pressured by his then-wife Rose Porteous to fund a “luxurious lifestyle”
- He also claims memos dating back decades prove Wright Prospecting has no case
In the midst of an ongoing Supreme Court trial into the splitting of iron ore royalties, Hancock Prospecting senior counsel Noel Hutley, SC, said Mr Hancock had moved the Hope Downs and East Angelas tenements into a family trust he controlled so Mrs Rinehart was “left in the dark” as to what he was doing.
Mr Hutley said it gave his client, Mrs Rinehart, “no joy” to revisit these events and address the court on her father’s “breaches” of his obligations to shareholders, including herself.
“It was a period in which he succumbed principally to the pressures of Rose Porteous and her desire for a luxurious lifestyle,” Mr Hutley said.
The comments were made during a hearing of a mammoth civil trial in which Ms Rinehart’s Hancock Prospecting is defending claims by two separate former business partners of her father’s and some of her own children to a share in the mines.
Claims money spent on wife
On the fourth day of his opening address, Mr Hutley turned to Mrs Rinehart’s relationship with her stepmother Ms Porteous, who had initially worked as a maid for Mr Hancock, before marrying him in 1985.
He said “at the behest” of Ms Porteous, Mr Hancock had started to spend “vast sums of money on mansions and the like”.
Mrs Rinehart began to ask questions about those funds and what that meant for Hancock Prospecting and the Hancock Memorial Family Foundation.
Mr Hutley said that led Mr Hancock to remove Mrs Rinehart as a director of both entities to “sadly and wrongly” prevent her from seeing what was going on.
He said as part of that process, Mr Hancock started moving “valuable opportunities and interests” into the family foundation, “so that he could exercise full control over the tenements without Mrs Rinehart being able to scrutinise what he was doing”.
Mr Hancock, the court was told, did this without the consent of shareholders in what was a “patent breach of fiduciary duties so he could do with the tenements whatever he chose without having to be accountable to the shareholders”.
Mr Hutley said it culminated in Mr Hancock attempting to leave the income from Hope Downs and East Angelas to Mrs Porteous, “but shortly before his death, he realised the error of his ways and started to undo his wrongdoings”.
He added that Mr Hancock’s actions disproved Wright Prospecting’s contention that Mr Hancock had acted on behalf of their partnership in regards to securing the East Angelas tenements.
Mr Hutley said Mr Hancock had clearly not acted in Hancock Prospecting or Wright Prospecting’s interests but was “solely focused on his own self interest”.
Ms Porteous has been contacted for comment, through her former husband William Porteous.
‘A load of bunkum’
Earlier in the day, Mrs Rinehart’s lawyers presented the court with a series of “devastating” memos and documents dating back more than 30 years which they say completely “ends the case” to a claim on the Pilbara mines.
Mr Hutley delivered salvos of evidence which he said proved the heirs of Peter Wright, the former business partner of Mrs Rinehart’s father, have known since 1987 they had no rights to the extremely valuable iron ore tenements.
So confident was Mr Hutley in his argument that he said Wright Prospecting was not willing or able to put forward a single witness to say that what he had demonstrated was “a load of bunkum.”
“We say that’s the end of the case,” Mr Hutley told the court on the fourth day of Hancock Prospecting’s opening address in the massive civil trial with billions of dollars at stake.
“There simply can be no case maintained by (Wright Prospecting) that it has any interest in these assets.”
Royalties at stake
Wright Prospecting’s claim rests on the assertion it is owed royalties in several Hope Downs tenements under the terms of multiple agreements between Mr Hancock and Mr Wright in the 1980s.
It also contends it is due an ownership stake in other Hope Downs tenements, known as the East Angelas, because they remained assets in the partnership between the two-iron ore pioneers.
But Mr Hutley has set about trying to dismantle that argument one document at a time.
Chiefly, he sought to show that Mr Wright’s son Michael Wright knew more than 30 years ago the Hope Downs and East Angelas tenements were solely the interests of Hancock Prospecting.
He cited memos dating back to 1989 either addressed, signed by or involving Mr Wright and other parties to demonstrate this.
In one, there is a division of assets between Hancock Prospecting and Wright Prospecting which put Hope Downs and East Angelas in the Hancock ledger.
“That is wholly at odds with the contention advanced by (Wright Prospecting) in this case,” Mr Hutley said.
He added that if Michael Wright had thought those assets belonged in the partnership at the time, he would have expressed his dissatisfaction, but did not.
No issues raised by Wright: SC
Another document from the same time, addressed to Michael Wright, treats Hope Downs and East Angelas as “properties owned by Hancock outside the partnership” and in which Wright Prospecting “had no interests”.
He said that was completely contrary to the case put forward by Wright Prospecting.
“In fact, its hard to understand how the case can be made, frankly,” he said.
Yet another memo from 1989, this time an internal document between directors of Wright Prospecting, stated the assets in question were owned by Hancock and showed the “brutal frankness about what the true position is”.
Mr Hutley then turned to an announcement in 2005 that Rio Tinto would acquire a 50 per cent stake in Hope Downs, as part of a joint venture agreement, including the East Angelas tenements.
He said if Wright Prospecting had thought they had a partnership share in East Angelas, they would have spoken up.
“Any sensibly-run company would register disquiet about that, demand to see all relevant documents and put the joint venture partner on notice that there had been a wrongful dealing, potentially, with its property,” he said.
‘Devastating’ evidence
Further, he cited documents and a conversation involving Ken Rhodes, the son of miner and businessman Don Rhodes, whose family is also claiming a stake in Hope Downs.
Mr Hutley said after the 2005 joint venture announcement, Ken Rhodes told a senior manager at Wright Prospecting that his family company DFD Rhodes had a right to royalties from Hope Downs, under a 1969 agreement.
But he was told that was a matter he should address to Hancock Prospecting as Wright Prospecting “has no further interest in these areas.”
“That is in our respectful submission evidence, which is devastating, further devastating evidence … of the claim made to ownership of East Angelas,” Mr Hutley said.
Mr Hutley also accused Wright Prospecting of a deliberately “calculated” decision to not start its legal case for an ownership share in East Angelas until all relevant witnesses had died and could not give evidence.
Michael Wright had died earlier in the year.
“This case is with respect hopeless, should not have been brought and we invite (Wright Prospecting) to withdraw the claim to East Angelas,” Mr Hutley said.
“It should occur.”
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