Bloomberg News

Rinehart Loses Final Bid to Keep Fortune Dispute Secret

March 09, 2012

Gina Rinehart, chairwoman of Hancock Prospecting Pty. Photographer: Ron D'Raine/Bloomberg

Gina Rinehart, chairwoman of Hancock Prospecting Pty. Photographer: Ron D'Raine/Bloomberg

Gina Rinehart, Asia’s richest woman, is accused by three of her children of abusing her role as trustee of a multibillion-dollar family fund. Her youngest daughter said the claims showed the greed of her siblings.

“I have no doubt that one day soon my brother and sisters will regret putting money before family,” Rinehart’s daughter Ginia said in a statement yesterday after Australia’s top court refused a request by her mother for a hearing to keep details of a lawsuit by her other children private.

Hope Rinehart Welker, Bianca Rinehart and John Hancock sued their mother in Australian state court in September seeking to have her removed as trustee of the Hope Margaret Hancock Trust. Gina Rinehart has a net worth of $20.3 billion, according to the Bloomberg Billionaires Index, with most of the fortune held in Hancock Prospecting Pty.

The Hope Margaret Hancock Trust was created by Rinehart’s father Lang Hancock for the benefit of his grandchildren. The trust holds almost a quarter of Hancock Prospecting and receives dividends from the company, some of which are distributed to the children, according to lawyers who argued the case since September in closed hearings.

A two-judge panel of the High Court of Australia yesterday upheld an appeal court ruling allowing documents in the lawsuit and arguments made in court to be publicly accessible.

‘Close Public Scrutiny’

“The proper conduct of trustees requires close public scrutiny,” Chief Justice Robert French said in Sydney yesterday in dismissing Rinehart’s request for a hearing.

Australian court procedures require non-parties to a lawsuit to apply for access to the documents and a judge generally must approve the request.

That process won’t be finished until March 12, according to the New South Wales Supreme Court clerk’s office, and the documents weren’t available yesterday.

The family has long sought to keep disagreements out of the public spotlight and agreed on a 2006 pact that required any disputes over the trust be settled in confidential mediation or arbitration.

After the children filed the lawsuit Sept. 5, Rinehart, 58, won a court order prohibiting the publication of any details of the dispute.

The ban was opposed by several Australian publications, including Fairfax Media Ltd. (FXJ), which sought to have it set aside. Sandy Dawson, who represented the media outlets, argued that courts in Australia have consistently ruled that public interest requires an open justice system.

‘Embarrassing Details’

New South Wales Supreme Court Judge Paul Brereton allowed the children’s lawsuit to proceed in state court in an Oct. 7 ruling, and allowed publication of rulings which revealed some details of the dispute. He kept a ban on the publication of evidence filed in the case and argued in court, pending appeal.

The only things remaining covered by the publication ban are “embarrassing details of allegations of serious misconduct,” Andrew Bell, the plaintiffs’ lawyer, told the High Court panel. “We don’t take any pleasure in that.”

He said the children wish to be free of restraints that aren’t imposed on anyone else involved in litigation.

The children enjoyed “very privileged lives,” including private schooling, private tutors, extensive holidays overseas, designer clothes and expensive jewelry, Rinehart’s lawyer Paul McCann said in an e-mailed statement yesterday. Each of the eldest children also received multimillion-dollar homes with water views in addition to the income from the trust, he said.

Iron Ore Prices

The children “have not seen fit to follow sound advice from family friends that if they are not happy they should go out and earn for themselves,” McCann said.

Rinehart became Asia’s richest woman and Australia’s richest person on surging iron ore prices and exports.

She inherited iron ore mining assets from her father and has an agreement with Rio Tinto Group under which she collects royalties on properties in Western Australia mined by Rio. Rinehart agreed in August to sell coal projects in Queensland to GVK Power & Infrastructure Ltd. for $2.2 billion.

Rinehart’s wealth has more than doubled in the past year, as soaring demand for coal and iron ore from China has made her mining assets more valuable.

Ginia, 25, said in her statement yesterday that she was proud to be the daughter of a strong business leader, role model and loving mother.

Rinehart had sought to have the documents sealed on safety concerns ahead of yesterday’s High Court hearing.

Safety Concerns

“Mrs. Rinehart has genuine concerns for the safety of her children, her grandchildren and herself, arising from the worldwide media coverage of her wealth,” McCann wrote in a Feb. 1 application to have a new publication ban imposed.

Her daughter, Hope, also expressed safety concerns. “I don’t think you understand what it means now that the whole world thinks you’re going to be wealthier than Bill Gates,” Hope wrote in a July 30 e-mail, referring to the Microsoft Corp. chairman, the second-wealthiest person in the world. “It means we all need bodyguards and very safe homes!! Especially the children who are small and easily targeted for kidnap.”

Hope, who lives in New York, at the time sought financial assistance from her mother to pay for a cook, a housekeeper and a bodyguard.

The e-mails were released Feb. 2 after New South Wales Judge Michael Ball refused to impose a new publication ban.

Rinehart had also urged Hope and Bianca in the e-mails to drop the lawsuit.

‘Fishing Trip’

“Any prolonging of this unnecessary and irresponsible action and ‘fishing trip’ and lawyer feast will cause continuing media attention and greater jeopardy for the safety of you and your children and family,” Rinehart wrote to Hope.

Rinehart last year bought a 10 percent stake in Ten Network Holdings Ltd. (TEN), Australia’s third-biggest television broadcaster. She also gained a seat on the board of Ten.

She also has a 12.6 percent stake, through Hancock Prospecting, in Fairfax, the publisher of the Sydney Morning Herald and the Australian Financial Review.

According to the Financial Review, she has sought a seat on the board of Fairfax, although no decision on the request has yet been made.

The case is: Rinehart v. Welker. S11/2012. High Court of Australia (Sydney).

To contact the reporter on this story: Joe Schneider in Sydney at jschneider5@bloomberg.net

To contact the editor responsible for this story: Douglas Wong at dwong19@bloomberg.net


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