How Australia's Richest Person Lost $4

In a long-running legal battle, Australia’s richest person, Gina Rinehart, lost control of a $4 billion family trust in May, with the Supreme Court handing control to her daughter, Bianca Rinehart.

Supreme Court Justice Paul Brereton said in his ruling that Bianca had demonstrated the ability to robustly assert the rights of the trust against her mother and Hancock Prospecting. He also said that Gina Rinehart had gone to “extraordinary lengths” to maintain control of the family trust, and that it was a reasonable inference that she would try to influence any trustee who tried to move against her interests.

The action was launched on September 5, 2011, by Rinehart’s third child, Hope Welker, now 28, over the multi-billion-dollar Hope Margaret Hancock Trust that Gina Rinehart has been running on behalf of her four children since 1992. A few days later, Hope’s two older half-siblings, John Hancock, now 37, and Bianca Rinehart, 36, joined the action to have their mother removed as trustee, claiming “deceptive, manipulative and disgraceful conduct” in relation to her management of the trust.

Twenty-seven-year-old Ginia Rinehart, Rinehart’s youngest daughter and the child who is said to most resemble her mother, chose not to join her siblings in the action. Earlier this year, Hope withdrew due to financial pressures and a marriage breakdown, leaving John and Bianca as plaintiffs.

Bianca Rinehart

Bianca Rinehart

The trust, which owns almost 25 per cent of Hancock Prospecting, was set up in 1988 by Lang Hancock for the benefit of Rinehart’s four children to pay for their “education, advancement and benefit”. Once Ginia turned 25, on September 6, 2011, it stated, it would vest, giving each of them financial independence.

The stakes are high. The trust is worth at least $5 billion, based on BRW magazine estimates, which would make each of the children billionaires in their own right. But the reality is they’ve had little access to their inheritance since Rinehart took over from Lang as trustee when the children were minors. Put simply, it has been a case of “Mother knows best”. John and Bianca allege that she is purposely keeping them in the dark about what is going on in the business to keep them under her thumb.

More significantly still, it was also Lang’s intention, stated just before he died, that John and Bianca control the lucrative Hope Downs tenements, which currently generate about $1 billion a year, through the family trust. After his death, these tenements were transferred to Hancock Prospecting, which is majority owned by Rinehart. (“Tenement” refers to the pegging of land to make a legal claim on it with the purpose of exploring and building a mine. Hope Downs was the name given to a piece of the Pilbara that was pegged by Lang Hancock and is the jewel in the company crown.)

The litigation over Rinehart’s empire continues, with Bianca and John back in court in June. They allege that Gina wrongfully transferred assets from the family trust to her own company, Hancock Prospecting so that they could not share in the profits.

For her part, Rinehart believes her warring children are “manifestly unsuited” to running the trust. Documents filed in the court state that none of the plaintiffs has “the requisite capacity or skill or the knowledge, experience, judgement or responsible work ethic” to manage it.

John Hancock

John Hancock

On ABC’s Australian Story John Hancock says that his grandfather “would not be thrilled” to learn of the litigation that surrounded the family trust he set up for his grandchildren. “It is a pity that the actions of our mother, with the assistance of her advisors, has also forced us into litigation to ensure our grandfather’s wishes are restored,” he said.

Although Lang Hancock no doubt wished to protect and care for his grandchildren after his death, it seems that the litigation of his estate will continue into the future.