Thursday, 13 September 2012

Gina Rinehart family imbroglio

Bankrupt threat was wrong, Gina admits

Gina Rinehart has admitted she gave wrong advice to her children when she warned them they would be eligible for a multi-million-dollar tax bill if they allowed the family trust to vest earlier this year. 

In a day of claims, counter-claims and insults between Australia's wealthiest person and three of her children in the NSW Supreme Court, lawyers for Mrs Rinehart have now conceded that tax advice provided to her by accountancy firm PricewaterhouseCoopers -- claiming the children would be "bankrupted' by a capital gains tax bill worth $150 million as soon as the trust vested -- was incorrect. "There was no risk of their being bankrupt," Mrs Rinehart's barrister, David Russell QC, conceded during the hearing.

The claim was central to Mrs Rinehart's attempt to wrest control and change the vesting date of the trust just days before September 6 last year, the 25th birthday of youngest child Ginia and the vesting date of the trust.
In one instance, Mrs Rinehart warned her daughter Hope in an email: "If you choose not to extend the trust you will face the consequences so doing, yes you will then not 'be able to provide for my (your) children' for many years and will have to go to work."

Three of Mrs Rinehart's children, John Hancock, Bianca Rinehart and Hope Welker, are suing their mother for control of the family trust, which has a 23 per cent share in Mrs Rinehart's flagship company Hancock Prospecting. Ginia has sided with her mother in the dispute.

Initially Mrs Rinehart had changed the vesting date of the trust until 2068, but unexpectedly switched the date back to April this year enabling the children to draw on their shares.

Mr Russell said the trust had vested and the three children had every right to draw on their shares if they wished, but they were still concerned about a tax bill if they chose to take full legal control of the shares. "The trustee will agree by a request if such a request is made. What she (Gina) has done is exactly what they asked the court to do on her behalf."

The children will be allowed to gain dividends from the shares only if Hancock Prospecting chooses to issue them -- largely a matter for Mrs Rinehart. Nor can the children sell the shares as they are subject to a deed restricting their sale to lineal descendants of Mrs Rinehart.

Acting for the children, Andrew Bell SC said the threat of bankruptcy and the decision to change the vesting date once again showed Mrs Rinehart to be unfit to control the Hope Margaret Hancock Hancock trust, set up by her late father, Lang Hancock.

"She has shown she is prepared to resort to deception and dishonesty in relation these beneficiaries to get what she wants . . . (Mrs Rinehart) is wholly unsuitable to continue as a trustee," Dr Bell told the court.
Judge Paul Brereton has reserved his decision.

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