Aug. 5 (Bloomberg) -- Gina Rinehart, Australia’s richest person, offered to name a co-trustee for a multibillion dollar family trust fund to end a lawsuit by two of her children.
Her lawyer David Russell today told New South Wales Supreme Court Justice Patricia Bergin in Sydney that the offer was being made to resolve claims Rinehart has a conflict of interest in running the trust, which holds assets valued at about A$4 billion ($3.6 billion).
“It’s a very big step,” Bergin said. “It’s necessary for you to give reflection and consideration to what has been offered,” she told Christopher Withers, lawyer representing Bianca Rinehart and John Hancock, the billionaire’s eldest children.
Hancock, Bianca and their sister Hope Rinehart Welker sued in September 2011 to remove their mother, the world’s 40th wealthiest person with a net worth of $17.9 billion, as trustee of the multibillion-dollar trust, claiming she breached her duty, failed to act honestly and has a conflict of interest in administering the fund. Welker withdrew from the lawsuit in March and has been added as a defendant.
“If only it were that simple,” Hancock said in an e-mail today in response to Rinehart’s offer of a co-trustee. He has asked the court to appoint him, or Adelaide businessman Bruce Carter, as trustee.
Gina Rinehart inherited iron-ore mining assets from her father, Lang Hancock, and has an agreement with Rio Tinto Group under which she collects royalties on properties in Western Australia mined by Rio. Hancock created the trust fund for his grandchildren, which now holds 23.5 percent of the voting shares of Hancock Prospecting Pty, the closely held company through which Rinehart operates.
Three days before the trust was due to vest, on Sept. 6, 2011, Rinehart advised her children the capital gains taxes they would owe would put them into bankruptcy and advised them to extend the vesting date to 2068. Rinehart knew there were no tax consequences for the children if the fund were allowed to vest, Withers said today.
Hancock and Bianca Rinehart won a court order today forcing their mother to turn over correspondence between her and PricewaterhouseCoopers LLP, who provided her with a report on the tax implications of the trust vesting over objections from Russell, who called the request “a fishing exercise.”
“We look forward to receiving the background to the PWC advice,” Hancock said in the e-mail.
The case is John Langley Hancock v. Gina Hope Rinehart. 2011/285907, New South Wales Supreme Court (Sydney).
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