Rinehart's offer to step down as trustee only a beginning
It prompted her to raise the white flag in court on Tuesday by offering to step down as trustee of the $5 billion family trust to avoid a trial set for next week.
Her lawyer, Bruce McClintock, argued that her decision to step down should mean "that this litigation is essentially over". But when it comes to the House of Hancock, nothing is ever that simple.
McClintock outlined a range of reasons for the decision, including the "untenable" risk of damage to the family group of companies and the impact on the family, which is "making one ill".
The stakes are high and her two estranged children, John Hancock and Bianca Rinehart, want their day in court to deal with allegations of "deceitful conduct".
It seems the only way Rinehart can avoid a trial is if all parties can come to an agreement on who will be the new trustee and an adequate financial settlement is reached. They are two big hurdles, particularly given she wants the new trustee to be a lineal descendent.
It will depend on how much she wants it all to go away. For John Hancock the news of his mother offering to step down was "a step in the right direction" but he said his next issue in this affair was "professional ethics".
He no doubt was referring to some of the professional advice - and threats of bankruptcy - that had been given over the family trust being allowed to vest on its due date in September 2011. Emails from one of Rinehart's closest lieutenants in the Hancock Prospecting empire, Jay Newby, warned John Hancock he would be hunted down like Christopher Skase unless he ceded control of the family's multibillion-dollar trust to his mother.
Newby sent a series of explosive emails a day after Rinehart warned her four children they would be bankrupted if the trust was allowed to vest.
Hancock later received a private binding ruling from the Australian Tax Office that said no capital gains tax was payable by the beneficiaries on vesting of the trust.
In other emails released to the court it emerged that Newby told accountancy giant PricewaterhouseCoopers to prepare two versions of its advice on the trust vesting and send a "sanitised" version to the children.
Rinehart might have discharged herself as trustee, and hope that the litigation with her children is done, but there will be a lot more twists and turns before the battle reaches its conclusion.
McClintock's words that "she's departed the scene, so to speak" might be a tad premature.
Frequently Asked Questions about this Article…
Gina Rinehart offered to step down as trustee of the roughly $5 billion family trust in court to try to avoid a trial that was due to start. Her lawyer said the move was to reduce the 'untenable' risk of damage to the family group of companies and to ease the personal strain on the family.
No. While Rinehart's lawyer argued that her stepping down should mean the litigation is 'essentially over,' the article makes clear it is not that simple. The case can only be resolved without a trial if all parties agree on a new trustee and reach an adequate financial settlement, so the offer alone doesn't automatically end the dispute.
The dispute involves Gina Rinehart on one side and her estranged children, John Hancock and Bianca Rinehart, on the other. The article also references Jay Newby (a senior aide in the Hancock Prospecting group) and professional advisers such as PricewaterhouseCoopers and the Australian Taxation Office.
John Hancock and Bianca Rinehart want a court hearing to deal with allegations of 'deceitful conduct' related to the management and vesting of the family trust, according to the article.
Two big hurdles noted in the article are: (1) agreeing on who will be the new trustee — Rinehart wants the replacement to be a lineal descendant — and (2) negotiating an adequate financial settlement acceptable to all parties. Both issues will determine whether the matter can be settled without going to trial.
Court-released emails show Jay Newby warned John Hancock he would be 'hunted down like Christopher Skase' unless he ceded control of the trust, and that Newby sent explosive messages after Rinehart warned her children they could be bankrupted if the trust vested. Other emails revealed Newby asked PricewaterhouseCoopers to prepare two versions of advice and to send a 'sanitised' version to the children. Those emails are significant because they relate to professional advice and the conduct of advisers around the trust vesting.
Yes. John Hancock later received a private binding ruling from the Australian Taxation Office stating that no capital gains tax was payable by the beneficiaries when the trust vested, according to the article.
The article notes Rinehart's lawyer warned of an 'untenable' risk of damage to the family group of companies, which is one reason given for her offer to step down. While the piece doesn't detail specific market impacts, it suggests prolonged litigation and public revelations about advisers could pose reputational or operational risk to the family businesses.
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