Mineral Resources Confirms Founder's Departure Amid Tax Evasion Allegations, Moody's Cuts Outlook

Mineral Resources MALRF faces uncertain times as founder and managing director Chris Ellison steps down amid serious governance issues.

The issue has triggered a formal investigation by the Australian Securities and Investments Commission (ASIC) and scrutiny from the Australian Taxation Office (ATO).

The probe follows allegations that Ellison evaded taxes using offshore entities and misused company resources for personal benefit. Law firm Herbert Smith Freehills engaged to review the allegations, finding multiple governance lapses within the company's leadership.

Billionaire Ellison, a prominent figure in the mining sector, will remain as a managing director until the board finds a suitable successor within the next 18 months. The board has imposed a financial penalty of $5.85 million on Ellison, alongside $6.37 million in lost remuneration.

"With the interests of shareholders absolutely front and center, the board has determined there needs to be an orderly leadership transition, significant strengthening of governance protocols, and a financial penalty imposed on Mr. Ellison," said chair James McClements per The Guardian.

ASIC's Deputy Chair, Sarah Court, confirmed for AFR that an investigation is underway, noting the ATO's involvement as well. "We've now commenced a formal investigation into these issues," Court said, clarifying that the probe will assess potential breaches of laws under ASIC's jurisdiction.

Following these events, Moody's Investor Service has downgraded Mineral Resources' outlook to negative, citing potential fallout from governance challenges.

"The managing director's transition creates uncertainties around the company's strategic direction and financial policy settings," Moody's stated, pointing at risks that could impact the company's relations with customers, joint venture partners, and lenders.

Ellison addressed the allegations with an apology, stating, "I am deeply sorry for the events that have occurred and the impact they have had on MinRes' reputation. I apologize to the board and our people, who expect and deserve better from me."

Founded in 2006 through a merger of several resource service companies, Mineral Resources has become a diversified player in Australia's mining landscape. It operates across iron ore, natural gas, and energy solutions and holds interests in lithium projects such as the Wodgina mine.

The company has lost 45.5% of its market cap year-to-date, a decline due to falling ore and lithium prices and internal turmoil.

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