Rinehart Trust Shuffle Raises Son’s Suspicion

Gina Rinehart, Asia’s richest woman, acted against the interest of beneficiaries of a multibillion-dollar trust by shuffling shares between companies, said her son John Hancock, who is suing her over control of the trust.

Rinehart transferred 51,584 shares to GH Rinehart as Trustee for the Hope Margaret Hancock Trust from a unit of the trust on April 26, 2012, as part of what John Hancock thought was a dividend reinvestment plan in a May 29 filing with the Australian Securities & Investments Commission, coded DRP. A day after that transfer, she moved two shares of the trust to Hancock Prospecting Pty, a separate filing showed.

DRP, which ASIC usually uses to stand for dividend reinvestment plan, might have been mistakenly used instead of DPR, which might be a preferred-share class code, Jay Newby, chief financial officer at Rinehart’s Hancock Prospecting, said in an e-mail after Hancock’s reaction. Whatever explains the coding, there is no dividend reinvestment plan, he said.

“If there really is a dividend reinvestment plan (I’ve never heard of this, it’s not happened before and I would ask why now) this is against the interest of the beneficiaries who have not received anything from the trust since the litigation started,” Hancock wrote in an e-mail.

Hancock and his sisters Bianca and Hope Rinehart Welker sued to remove their mother as trustee in September 2011, claiming she breached her duty, failed to act honestly and exercised her power for an ulterior and improper purpose.

Divided Sisters

Welker pulled out of the lawsuit earlier this year and is now named as a defendant. Ginia, the youngest of Gina’s four children, has sided with her mother since the suit was filed.

Included in the trust is a 23.5 percent stake in Hancock Prospecting, Rinehart’s iron ore company, which collects royalties from Rio Tinto Group operations and is building its first majority-owned mine. Based on current valuations, the trust holds almost a quarter of Rinehart’s estimated net worth of $19.5 billion, according to the Bloomberg Billionaires Index, which ranks her as the world’s 36th richest person.

The share transfers occurred days before Rinehart allowed the trust to vest on April 30, 2012.

Rinehart previously pushed back the vesting date to 2068 without notice to the children, after they refused to agree to the extension, Hancock said in an amended statement of claim filed May 23 in the Supreme Court of New South Wales.

Date Extension

She insisted on the extension, falsely stating that not doing so would lead to the children’s bankruptcy, according to the filing. She also urged them not to verify their initial statement of claim, writing in a Nov. 16 letter, “If you verify under oath such statement, that will be held against you all your life,” according to the filing.

Hancock, who adopted his grandfather’s last name in 2003, had agreed in 2005 to drop claims against his mother and her company. In exchange, he received A$398,125 ($382,100) in lieu of any distributions from the trust before it was originally due to vest in 2011, on Ginia’s 25th birthday.

“Our mother is trustee of the trust our grandfather set up for his grandchildren’s support and benefit” and controls the family company Hancock Prospecting, Hancock wrote in the e-mail. “She also chooses who does or doesn’t work within the company and their salaries, including the beneficiary family members.”

The case is John Langley Hancock v Gina Hope Rinehart. 2011/285907. New South Wales Supreme Court (Sydney).

(Corrects coding interpretation in filing in second, third paragraphs.)
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