Gina Rinehart defrauded her children, lawyer alleges

14 Aug 2023

9News

Australia's richest person, Gina Rinehart, devised an "egregious" seven-step scheme to defraud her children and lie about it, a trial over billions of dollars in iron ore riches has been told.

A lawyer for Rinehart's children said there is clear evidence mining licences were unlawfully transferred to Hancock Prospecting and a subsidiary against her father Lang Hancock's wishes after he died in 1992.

"We don't use the word fraud lightly," lawyer Christopher Withers SC told the Supreme Court trial over mining assets and royalties in Western Australia's north-west on Monday.

Australia's richest person, Gina Rinehart, devised an "egregious" seven-step scheme to defraud her children, including Bianca Rinehart (pictured) and lie about it, a trial over billions of dollars in iron ore riches has been told. (Ben Rushton)

Withers accused Rinehart of exploiting a joint venture agreement with Hamersley Iron to move Hope Downs and East Angeles tenements.

He said she devised a seven-step fraud scheme that allegedly started two months after her father died, with the "Roy Hill diversion" to avoid accruing capital gains tax or stamp duty liability.

"We say the evidence that fraud was perpetuated by Gina on her children is overwhelming," he said, referring to a long-running family feud that is also in arbitration in the Federal Court.

Withers said the action was contrary to Lang Hancock's intentions for Rinehart's eldest children, John Hancock and Bianca Rinehart, to benefit from the assets via a trust.

Under a 1988 agreement penned by Lang Hancock, the children were to be the principal benefactors of his efforts to develop an iron ore mine at Hope Downs and 49 per cent shareholders in Hancock Prospecting.

"Lang was simply not prepared to give Gina everything she wanted, which was everything," Withers said.

The children's lawyer Withers said the action was contrary to Lang Hancock's intentions for Rinehart's eldest children, John Hancock (pictured) and Bianca Rinehart, to benefit from the assets via a trust. (Renee Nowytarger)

"He wanted to put in place arrangements that would provide for his grandchildren."

Withers said Rinehart "deliberately destroyed" the arrangement after Lang Hancock died through a series of transactions that increased her shareholding at the expense of her children.

"The events after Lang died constitute an egregious fraud orchestrated by Gina and carried out by people who did whatever Gina wanted without questioning," he said.

He said the actions were "covered up" with a "false narrative to her children and the public generally that (Hancock Prospecting's) and her personal success was simply a product of hard work rather than dishonesty".

Withers accused Rinehart of exploiting a joint venture agreement with Hamersley Iron to move Hope Downs and East Angeles tenements. (Bloomberg via Getty Images)

Withers said the false narrative was that Lang Hancock dishonestly breached his fiduciary duty and mismanaged Hancock Prospecting, which "Gina had to clean up".

"The truth is Lang discovered the mining areas in the Pilbara. He was the driving force behind the decision to start a mine, which Gina was against," he said in reference to Hope Downs mining complex that Rinehart's company and Rio Tinto operate.

Withers said she lied to her children about her actions and threatened John Hancock and his lawyers when they attempted to investigate the matter.

The claims were made in a high-stakes legal stoush in Perth in which Rinehart's company and her children are defending the claims of Wright Prospecting and DFD Rhodes, with Bianca Rinehart in court on Monday listening to her barrister.

Withers said Rinehart "deliberately destroyed" the arrangement after Lang Hancock died through a series of transactions that increased her shareholding at the expense of her children.

Wright Prospecting has demanded a share of some Hope Downs tenements and royalties amid a claim that it never relinquished the assets and Hancock Prospecting has breached a series of partnership agreements.

The family company of the late prospector Don Rhodes, DFD Rhodes, says it is entitled to 1.25 per cent royalty share of the Hope Downs production.

It claims a deal was struck in the 1960s with Mr Hancock and Mr Wright in which the rights to ore-rich reserves in the Pilbara were handed over.

The Hope Downs mining complex near Newman is one of Australia's largest and most successful iron ore projects, comprising four open-pit mines.

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Rinehart, the executive chair of Hancock Prospecting, secured the development of the mines after signing a deal in 2005 with Rio Tinto - which has a 50 per cent stake in the project.

Hancock Prospecting last week accused Lang Hancock of breaching his fiduciary duties by diverting tenements without disclosing the moves to Rinehart.