Georgina Gina Rinehart, the Australian mining tycoon is the chairman of Hancock prospecting group. She is the daughter of Lang Hancock and was reported as Australia’s wealthiest person in 2011 by Forbes Asia and Business Review Weekly. According to sources, the flagship private company of Gina Rinehart has been fined $130,000 for failing to lodge financial reports in a timely manner.
The company was ordered to pay the penalties after pleading guilty to 13 breaching counts of section 319 of corporations’ act 2001. The act stipulates that every corporation must submit their annual report to Australian Securities and Investment Commission within the time period of four months at the end of financial year. Companies governed by Rinehart namely Hancock minerals, Hancock Prospecting and Hope Downs Iron Ore failed to lodge multiple financial reports on timely basis between 2008 and 2012.
The penalty was declared by magistrate Richard Hudson heard at the Central Law Courts, Perth. The charge was conducted in April, 2015, following an ASIC investigation.
Rinehart criticizes ‘unnecessary’ claim
In a statement, a Hancock spokesperson addressed that the prosecution was not necessary as the companies have already paid their taxes on time. He further added that the financial reports were filed before the charges were placed. He supported the company saying that the Hancock Prospecting Group had paid billion of dollars as taxation in the year 2008.
This fact has raised questions as to why private companies have to pay annual accounts to government when they have already paid tax on time while others do not. The spokesperson from Hancock Group also raised the question saying that ‘when government is attempting to introduce policies that alleviate the decline in the openings of small businesses, decline in investment, decline in explorations, is there a need for such government administrative actions?’
ASIC commissioner defended the decision to prosecute
In a statement, the ASIC commissioner who was in charge of the ASIC investigation defended the decision of prosecuting the penalty. He said that the financial accounts hold important information especially for creditors, shareholders and public as it helps them make informed decisions. The commissioner of ASIC further supported his defense saying that ASIC will continue taking enforcement action in opposition to companies who fail in meeting their financial reporting obligations.
It is known that ASIC has prosecuted as much as 17 public companies, charging the same offense in the time period of July 2014 and April 2015. The Hancock prosecution is regarded as one of the most important. The maximum fine ordered in other prosecutions was $27,000.
ASIC’s perspective over the issue
The company has already been subjected to various over-regulation penalties. The owner of the company Gina Rinehart is supposed to be Australia’s richest person with a total wealth of $20 billion in 2014. However her wealth declined in the following year. The billionaire’s fortune was valued at $14.02 billion by BRW Rich List, 2015.
In this case scenario, each company was initially charged a maximum penalty of $ 13,750. However, magistrate later found that the companies had pleaded guilty and filed the necessary outstanding accounts. This led to the reduction of penalties to $10,000.
The magistrate addressed the court that this penalty be a reminder to the corporate world of Australia that the filings should be met in a timely and appropriate manner. He also said that high profile companies should be leading the way by meeting terms with relevant regulations.
The action by ASIC was not a surprise act. The commission acted after a series of articles that appeared in the popular Sydney Morning Herald in 2012. The articles questioned why companies governed by several wealthy Australians like Rinehart, and Clive Palmer were not filing their accounts to the regulator as requisite.
While government officials support this decision, some other agencies still disapprove it. In news, the Institute of Public Affairs published a note declaring that ASIC has lost its way while hopelessly distorting priorities. The Public Affairs earlier honored Gina Rinehart with ‘Free Enterprise Leader’ award.
Effect on Rinehart’s projects
According to some sources, the fine may affect the upcoming project of Rinehart Group of companies. As it happened, 2015 proves to be a landmark year for Gina as her new Roy Hill project is planned to initiate exporting iron or within the next couple months.
The project was supposed to start exporting iron in September, but chief executive Barry Fitzgerald point that the project could be delayed to be started in October. The Rinehart’s new project Roy Hill is a joint business venture with a Japanese company Marubeni, Taiwan’s China Steel Corporation and Korean Steel giant POSCO.