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Mineral Resources Ltd. has hired legal counsel to investigate payments made to its founder and managing director Chris Ellison, who failed to declare some revenue to the Australian Taxation Office.
Shares in the Australian miner, which produces iron ore, lithium and natural gas, tumbled as much as 14% on Monday.
Ellison, who has a large stake in the miner, said in an emailed statement that the company set up offshore entities more than 20 years ago that supplied Mineral Resources with mining equipment. However, he did not declare the revenue derived from these equipment supply contracts.
“Regrettably, revenue generated by the overseas entities that we were beneficiaries of was not disclosed to the Australian Taxation Office at that time,” Ellison said. “This was a poor decision and a serious lapse of judgment.”
Mineral Resources said in a corporate filing that it had launched an investigation.
“Mr Ellison self-reported to the Australian Taxation Office, repaid amounts owed and disclosed these matters to the board,” it said. “While this does not diminish what happened, Mr Ellison profoundly regrets his errors of judgment.”
A report in the Australian Financial Review over the weekend said Ellison had cut a deal with the tax office and agreed to pay the outstanding amount. In exchange, the ATO would not reveal the underpayment or investigation to the Australian Federal Police or the Australian Securities and Investments Commission.
“The board has full confidence in Mr Ellison and his leadership of the Mineral Resources executive team,” the company said Monday, adding it will issue a further statement once its inquiries are completed.
Perth-based Mineral Resources has a market value of about A$7.9 billion ($5.3 billion). Earlier this year, Ellison made headlines after stating he wanted to prevent employees at the company’s office from leaving the building to buy coffee.
(By Paul-Alain Hunt)
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