Lang Hancock’s last-days epiphany laid bare in battle for billions

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Lang Hancock’s last-days epiphany laid bare in battle for billions

By Jesinta Burton

Faced with the prospect of leaving a bankrupt estate, Hancock Prospecting’s lawyers claim founder Lang Hancock spent his final days trying to reverse moves he made siphoning money out of the empire to fund mansions, luxury cars and a private jet for wife Rose Porteous.

Lang’s epiphany came in 1992 amid pointed questions from BHP about the shifting of lucrative mining tenements between his entities, which threatened to derail a quick asset fire-sale for much-needed cash.

Gina Rinehart, right, her children John Hancock and Bianca Rinehart, top, and Rose Porteous with Lang Hancock.

Gina Rinehart, right, her children John Hancock and Bianca Rinehart, top, and Rose Porteous with Lang Hancock.

Unable to prove he did so lawfully, Hancock Prospecting’s lawyer Noel Hutley, SC, told the court Lang embarked on an eleventh-hour bid to reverse them.

For years, Hutley said, Lang had engaged in a “textbook” breach of fiduciary duty, transferring assets, including the Hope Downs mine now at the centre of a multibillion-dollar Supreme Court row, out of Hancock Prospecting to entities in his family trust.

The court was told he did so to get cash for his own benefit and that of Porteous after they wed in 1985, and in a way that kept shareholders, including his concerned daughter Gina Rinehart, in the dark.

And it had the added benefit of allowing him to avoid tax obligations, an issue Hutley said Lang had grown increasingly “obsessed with”.

Rinehart grilled her father over the ever-shifting assets and frivolous spending, prompting him to threaten to confiscate her shareholding or hand her $5 million to walk.

Eventually, the persistent questions led to the demise of Lang and Rinehart’s relationship, Hutley said, which culminated in her being stripped of directorship roles to safeguard him from further scrutiny of his accounts.

The court was told he had also made a series of changes in the company structure and to his will that saw Porteous, despite not being a shareholder, crowned beneficiary of his resource-rich mining tenements.

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But the lawyer said Hancock’s companies were soon haemorrhaging money, courtesy of a Romanian bargaining deal and the tens of millions of dollars he had taken from Hancock Prospecting to bankroll Porteous’ mansions, jewellery, luxury cars and a private jet.

With the BHP deal now in jeopardy, the court was told Lang wrote to his lawyer Martin Bennett to overhaul his will and reverse his convoluted scheme.

He ordered the mining assets and their proceeds be returned to Hancock Prospecting, not Porteous, who was instead allocated $1.2 million.

Hutley said Bennett, who was also representing Porteous, wrote to Lang to express his reservations.

“The inevitable, and I stress inevitable, consequence of this direction is that you personally will have no money with which to repay [the bank] the debt you have personally guaranteed, nor for Hancock Resources or the Hancock Family Memorial Foundation,” Bennett wrote.

“In these circumstances, in the event of your death, it is likely your estate will be bankrupt, and I have no desire to be the trustee and executor of a bankrupt estate of a person of your prominence and importance.”

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Lang reaffirmed his wishes, but he would not live to see his proposed reversal executed.

And as he had been warned, the estate he left behind was declared bankrupt.

Hutley told the court the exchange was evidence of Lang’s desire to right his wrongs and his concession that Hope Downs was taken from Hancock Prospecting without shareholder consent, representing a breach of his fiduciary duty to the company he built from the ground up.

“Whatever the justification for engaging in these subterfuges, they are both sad and, we say, reflective of the position of hopeless conflict he got himself into and his inability to comply with the most basic duties he had to Hancock Prospecting,” he said.

Lang’s final wishes were aired on the final day of Hancock Prospecting’s submissions as it attempts to fend off a multibillion-dollar claim by the descendants of Lang’s former business partner Peter Wright.

Wright Prospecting claims it is entitled to a stake in Hope Downs – now home to four operational mines deemed the country’s most successful – because it never relinquished its interest in the asset under a 1980s partnership deal.

Hutley said while it pained his client to admit the duty breaches, they made it clear Lang had obtained and shifted the Hope Downs asset for his own benefit, and was not acting in the interests of his former business partner’s company.

Gina Rinehart’s other legal opponents – her eldest children, John Hancock and Bianca Rinehart – are expected to begin arguments for their case that Hope Downs was a trust asset left to them by their grandfather on Monday.

The case continues.

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