Clive Palmer wins latest round of Citic legal battle

Citic has lost the latest round of a legal battle with Clive Palmer, the Australian mining magnate turned politician, related to control of its disastrous iron ore joint venture in Western Australia.

Queensland's supreme court on Monday dismissed the Chinese state-owned company's claim that Mineralogy, Mr Palmer's group, misappropriated A$12m (US$9.4m) to finance his election campaign in 2013.

Judge David Jackson ruled that money transferred from a port fund used by Mineralogy was "not held in trust" by the company, and therefore that Mr Palmer had no case to answer.

But he dismissed Mr Palmer's allegation that Citic pursued the case to "improperly apply pressure" on the businessman regarding other legal disputes with the company.

The case is one of several court actions pending between the parties over the A$10bn Sino Iron venture, which was set up in 2006 but has faced delays and technical problems. In March Citic wrote down the value of the Sino Iron venture by US$2.5bn.

At the heart of the dispute is the level of royalties that Citic should pay Mineraology, which owns the rights to mine the ore deposits.

In the current case, Sino Iron and its partner Korean Steel claimed that Mr Palmer was in breach of trust when he moved money out of an administrative port fund to a different bank account in 2013. They allege that he used some of the money on election advertising and that a sham contract was later drawn up by Mineralogy to support its claim in the subsequent dispute.

The claim by Citic that Mr Palmer misappropriated funds to use in the 2013 election caused a political furore in Australia, where the Palmer United party, headed by the resources tycoon, surprised observers by winning several parliamentary seats.

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Mr Palmer later apologised. But his political fortunes have waned over the past year after two senators resigned from his party, cutting back his influence in parliament.

Mr Palmer on Monday said Citic was attempting to discredit him.

"The second world war was fought over resources. [Citic] is a state-owned company and is seeking to crush an Australian resources company," he said.

Mr Palmer alleges that Citic has shipped more than a quarter of a billion dollars in iron ore to China without paying for it.

Citic said that Mineralogy had repaid the A$12m since the court action was launched. The company said that it welcomed the rejection of Mr Palmer's claim it was seeking improperly to apply pressure on him.

"Our view remains that the use of this money to bankroll Mr Palmer's political ambitions and other business interests was inappropriate and unauthorised," said Citic.

In spite of the ruling in favour of Mr Palmer, Judge Jackson raised questions about his behaviour, including the creation of a "false contract" by Mineralogy to justify the payments.

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Clive Palmer versus Citic/Sino Iron

? 2012: Mineralogy takes Citic to court, alleging that the Chinese company was not paying requisite royalties for magnetite ore mined by Sino Iron.

? May 21 2013: Court rules in Mineralogy's favour over the dispute.

? Mineralogy subsequently issues fresh court action over the level of royalties owed to it by Sino Iron. This case is pending.

? Mineralogy issues court proceedings, alleging that Sino iron was denying its right to operate and maintain the port through which the ore is shipped. This case is pending.

? 2014: Sino Iron alleges Mr Palmer misappropriated A$12m to help finance his party's election campaign in 2013.

? August 2014: Mr Palmer launches a tirade against the Chinese, calling them "bastards" and "mongrels" who shoot their own citizens.

? May 2015: Judge David Jackson dismisses Mr Palmer's allegation that Citic applied improper pressure on the tycoon but rules that he has no case to answer with regard to the misappropriation of A$12m.

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