Mother Knows Best – Gina's Bitter Email
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Mother knows best – Gina’s bitter email PUBLISHED: 10 MAR 2012 00:01:07 | UPDATED: 10 MAR 2012 12:31:44 ANGUS GRIGG, HANNAH LOW AND PETERԜKERR It was just before 11pm in Perth when Gina Rinehart emailed her four adult children. It was September 5 last year and Australia’s richest person had just been outmanoeuvred legally and was returning fire. Her message left nothing open toԜinterpretation. “Sign up or be bankrupt tomorrow,” Rinehart wrote in an email read to the NSW Supreme Court. “The clock is ticking. There isԜone hour to bankruptcy and financial ruin.” The email forms part of a family feud of Shakespearean proportions that has been playing out in a succession of Sydney courts over the past six months. Because of a suppression order few details have been revealed. But that order was lifted on Friday and so the back story to this fight for control of a family trust – thought to be worth $3 billion – can now beԜtold. It begins with John Hancock and his sisters, Bianca and Hope Rinehart, fearing for their inheritance. Each had fallen out with their domineering mother and feared that younger sister Ginia might benefit most from the familyԜtrust. And so without informing their mother, the three elder children began proceedings in the NSW Supreme Court. The family’s latest high-profile legal battle began on Monday, September 5. The duty judge granted the children’s wish and blocked Rinehart from dispersing any funds from the trust for one month. The coal and iron ore magnate had been blindsided, but only momentarily. In typical fashion, she responded with demands of her own and they were not wrapped in legal niceties. Her emails from Perth that night demanded all four children – including Ginia, who was not party to her siblings’ legal action – grant their mother even greater powers over the trust in question. If they refused, they would forfeit any future dividends. Only Ginia appears to have signed the document. By then the family was officially divided. That this fight began on September 5 is no coincidence. Within days Ginia was to celebrate her 25th birthday and her siblings believed that after this they could access the vast fortune inside the Hope Margaret Hancock Trust. The trust was established by Rinehart’s father, the legendary iron ore prospector Lang Hancock, before his death in 1982. His four grandchildren were named as the beneficiaries and Gina Rinehart, his only child, was appointed trustee. But even this the family can’t agree on. According to Gina, it was she who raised the remaining 9 per cent of the trust shareholding which was initially 15 per cent. Crucially, it was established as a discretionary trust, allowing Rinehart to disperse the funds as she saw fit. It was this discretion that appears to have induced panic in her children and prompted their legal action. As was revealed in court, the trust holds just less than a 24 per cent stake in Hancock Prospecting, a giant company with coal, iron ore and other assets thought to be worth more than $17 billion. It is Australia’s largest family fortune and is controlled entirely byԜRinehart. For the children, Ginia’s 25th birthday was supposed to mark the beginning of their financial independence, the point from which they were no longer reliant on their mother’s grace. But as Justice Paul Brereton told the court, the children had been badly “mistaken”. The trust was not due to vest in the early weeks of September 2011. In fact, Rinehart had secretly changed the vesting date to some point in 2068. Yes, the children would have to wait a further 57 years for access to their inheritance. And so what began as an action to protect their share of the trust has become an action to remove Rinehart as the trustee. This is now the main game for the three older children. If they are successful in removing Rinehart as trustee, they will have aԜgreater say in the running of Hancock Prospecting. They will also have access to the many millions in dividends flowing from the trust each year. But before being able to argue for Rinehart’s removal as trustee, the children had to convince Brereton that the matter should be heard in court at all. This is because of a previous agreement the children had signed saying any dispute would first go to confidential mediation, then arbitration. Only after these steps failed could redress be sought via the courts. It says much about the Rineharts and their history of acrimony that legally sworn documents were required to prevent the family from going to court in the first instance. These agreements were the basisԜon which Brereton first ordered that details of the case beԜsuppressed. In order to make the case that this dispute should be heard in court, Andrew Bell, SC, appearing for the three oldest children, was brutal in his criticism of Rinehart. No rhetorical flourish was too overheated or colourful. “These beneficiaries have been subjected to an extraordinary display of naked power and hubristic conduct,” Bell told theԜcourt. “This is a trustee [Rinehart] that has effectively sought to trick the beneficiaries into granting her rights she does not have.” Bell went on to say Rinehart had breached her fiduciary duties as a trustee to act in the best interest of the beneficiaries. “We are making serious allegations of misconduct,” he told the court. “We are dealing with extraordinary egregious conduct byԜa trustee for a valuable trust estate.” Bell also alleged Rinehart had withheld legal and financial information from the children and, in closing, described her conduct as “high-handed and dictatorial”. Rhetoric aside, his legal argument was convincing. The children won the right to have the dispute heard in court. Their mother appealed and lost again. In winning the first round, Bell delivered a highly unflattering portrait of Rinehart, although it isԜone which has been sketched outԜbefore. This latest family fight may be only six months old, but its foundations lie in unresolved tension from 2004 when John Hancock and his mother went toԜcourt. It was around the time Rinehart was settling with her father’s third and final wife, Rose Porteous. No sooner had this dispute been settled than hostilities began with John. Like this latest saga, that fight was about who would ultimately control the empire. In a 2004 interview, John – who changed his last name by deed poll – said he planned to sever ties with the family company Hancock Prospecting and move to China as his mother would not discuss the issue of succession. “I have, for years, asked my mother for an increasing role in the commercial direction of the company and the best that I have been offered recently was a commission to sell her boat,” he told The West Australianԝ newspaper at the time. He described Rinehart as “a very powerful and controlling person” who was dismissive of his attempts to make money on the sharemarket, calling him a “gambler” after one deal soured. With no resolution in sight, John launched legal action in 2004 over his share of the Hancock fortune and criticised his mother’s role as trustee. He was concerned he was not getting distributions. “I am not simply seeking to be paid some monthly income to cover my living expenses,” he said. “I am pursuing the claim on the basis thatԜmy grandfather envisaged we would be active in the mining industry, or in the business of the iron ore industry. “Growing the family company is all I have wanted to do, but my mother’s attitude makes this impossible. She does not want to relinquish one ounce of control and has a very narrow view of business and relationships.” Seeking privacy amid the escalating and embarrassing publicԜstoush, Rinehart settled the matter confidentially. The peace deal opened the wayԜfor Rinehart to see John’s daughter for the first time in manyԜmonths. What Rinehart pledged about succession that day is unclear. However, during the battle John would reveal the issue at the heart of his manoeuvring. “All companies, whether family or otherwise, should have a succession plan,” he said at the time. “My mother refuses to make or discuss such plans. “I have three sisters and suspect the youngest [Ginia] has now beenԜearmarked.” The spat was settled out of court and as part of the settlement Gina demanded John not ask for access to the trust accounts or attack his mother’s position as trustee. Such an assessment provokes comparisons with Shakespeare’s The Tragedy of King Learԝ or even the unfinished dynastic business of Rupert Murdoch’s family. And, like the Murdochs, all of Rinehart’s children have had their time in the sun, only to either tire of the fight or fall out of favour. Before the rise of Ginia and after John had fallen away, it was Bianca who made a determined tilt at theԜthrone. Rinehart’s second oldest child had spent her early 20s on the Perth party scene, dating famous sportsmen including swimmer Grant Hackett and drifting around Asia, including a stint teaching English in China. She would swap the life of a dilettante for that of a trainee miner in Western Australia’s rugged north. Working in Rio Tinto’s Pilbara iron operations, Bianca would learn to drive 250 tonne mining trucks and live in bleak accommodation blocks known as “dongas”. In 2005, she was front and centre as her mother signed the historic deal with Rio’s iron ore chief Sam Walsh to complete Lang Hancock’s unrealised dream of developing the Hope Downs mine.