Lawyers for the company founded by mining pioneer Lang Hancock have told a court he left the company in such a precarious position when he died that he nearly declared it bankrupt.
Sydney Barrister Noel Hutley SC described the ‘mistakes’ Mr Hancock made in later life – all in an attempt to placate his second wife Rose Porteous – in the Western Australian Supreme Court on Friday.
Some of those mistakes came to light in increasingly sharp letters exchanged between the late magnate and his daughter Gina Rinehart, who now runs the family business.
While trying to fend off claims of an ownership and royalty interest in the Hope Downs mining fortune, Mr Hutley painted a clear picture of what he believed to be Mr Hancock’s self-interest and the misguided belief that Hancock Prospecting Pty Ltd (HPPL) purely under his control despite being only a third shareholder.
Correspondence between Mr Hancock and his daughter, herself a mining magnate Gina Rinehart, revealed the tensions between the couple following his second marriage and leading up to his death.
“As you currently spend all three-thirds of the company’s income, you believe that all income is attached only to your one-third and nothing is attached to the other two-thirds,” Mrs. Rinehart wrote to her father some time after he married Mrs. Porteous in 1985.
“As general manager, what will you do to protect our company from further expenses from (Rose)?”
Letters between Lang Hancock and his daughter Gina Rinehart (pictured) exposed the tensions between the couple after his second marriage to Rose Porteous
Western Australian mining magnate Lang Hancock married his former maid Rose Porteous in a private ceremony at his Sydney property (the couple is pictured on their wedding day)
Mrs. Rinehart was so concerned about Mr. Hancock’s “unauthorized” and “illegitimate” spending of company funds that she continued to ask questions throughout 1985, and as her concerns grew, so did her father’s answers.
Mr Hancock – whom Mr Hutley said acted without seeking proper shareholder approval before trading and trading company assets between a range of family businesses to finance mansions, luxury cars, jewelery and a private jet – responded by saying that Ms Rinehart remove all prominent positions. .
“Please remember it’s my business, and I’ll say how the money is spent,” Mr Hancock wrote to his daughter.
Statements, Mr. Hutley argued, were those of a “misguided director,” who took part in a “classic textbook case” in breach of his fiduciary duties.
The court heard that Mr. Hancock did not realize his mistakes until he attempted to quickly sell the McCamey’s mining assets to BHP in an effort to continue funding the lavish lifestyle he and his wife had come to afford.
BHP was keenly interested in acquiring McCameys, Mr Hutley told the court, especially as they valued the property at $150 million.
“[It]gives an idea of the company’s desperate financial position under Lang’s leadership… hearing that he was willing to sell for $31.3 million to push through a sale as soon as possible,” said Mr. Hutley.
A final amendment to Mr Hancock’s will, a month before his death, reduced the estate of Mrs Porteous – who was his maid at the time the couple fell in love – to the right of his maid only and not his widow (on the photo, Mr. Hancock during a 1984 TV interview)
Gina Rinehart and her father Lang Hancock attend a press conference in Sydney in 1982
The court heard that BHP’s due diligence led them to correctly demand evidence that the McCamey’s property was in fact owned by the company Lang was trying to sell it from – Hancock Mining Limited.
Unable to prove that because of the complicated web he had made for himself in an attempt to evade corporate law and keep his own daughter out of the loop about his spending, Mr. Hancock – who had transferred tenements he owned the rights to outside his joint venture between some of his companies – offered a legal statement to explain the company’s position.
It was a move that Mr Hutley said BHP saw right through.
“Around that time, Lang finally had an epiphany and realized his wrongdoing and took steps to address it,” Mr Hutley told the court.
Proceedings often painted a less favorable picture of Mr. Hancock’s life, especially after the death of his first wife, Mrs. Rinehart’s mother, Hope.
While the court heard he didn’t mind spending corporate coin on lavish things, he hated giving it to the Commonwealth.
The court also heard how ruthless Mr. Hancock could be.
Western Australian housekeeper turned socialite, Rose Hancock Porteous, is pictured in 1996. She was married to Lang Hancock from 1985 to 1992.
A final amendment to Mr Hancock’s will, a month before his death, reduced the inheritance of Mrs Porteous – who was his maid at the time the couple fell in love – to the right of only his maid and not his widow.
A decision his lawyer warned him would “effectively disinherit Rose from any tangible benefit beyond the money you’ve set aside for a year’s housekeeping.”
Friday marked the end of a week of complex opening submissions by Hancock’s legal team against each of the claims to the Hope Downs fortune by parties Wright Prospecting Pty Ltd, DFD Rhodes and two of Ms Rinehart’s children, John Hancock and Bianca Rinehart.
Lawyers for Mr. Hancock’s grandchildren are expected to sift through many documents next week and uncover the internal communications of the Hancock family in an effort to secure their own claim to further family assets.
The trial will return to the David Malcolm Justice Center in Perth on Monday.