Clive fraud claim
Clive Palmer, facing claims of dishonest and fraudulent involvement in the misappropriation of more than $12 million.

Clive Palmer has been accused of "dishonest and fraudulent" involvement in the misappropriation of more than $12 million as his estranged business partner moves to tighten the noose on the mining magnate turned politician.

China's CITIC Pacific filed a new legal action against Mr Palmer in Queensland on Wednesday, laying out its case against the Queensland political powerbroker in careful detail.

Central to the action is the allegation Mr Palmer personally signed the cheques that siphoned more than $12 million from an administrative account set up by CITIC to pay for his private company's costs at the Cape Preston port.

When challenged, Mr Palmer sought to justify the payments as legitimate expenses by creating a "sham transaction" between three companies he personally controlled, according to CITIC.

The CITIC charges bring to a head an 18-month fight between the two over the use of funds by Mr Palmer's Mineralogy, CITIC's landlord at the $10 billion Pilbara Sino Iron project.

CITIC and Mineralogy have been skirmishing in courts across the country over control of the port, the only export terminal for the iron ore project, and over the allegations Mr Palmer used $12 million from the administrative account for personal purposes.

A separate legal battle is also being fought over Mr Palmer's claim CITIC has refused to pay hundreds of millions of dollars in export royalties on iron ore from the project.

In a signal CITIC is working to build evidence of direct fraud by Mr Palmer - charges which, if successfully prosecuted in a criminal court, could lead to his expulsion from Federal Parliament - the Chinese company is seeking a declaration by the Queensland Supreme Court that Mr Palmer "dishonestly procured or was involved in assisting" a breach of trust by Mineralogy over the alleged siphoning, and a declaration he "knowingly assisted Mineralogy in its dishonest and fraudulent breach of trust".

Mr Palmer has denied any wrongdoing. He told the National Press Club two weeks ago that he could not remember whether he last year signed the two cheques at the heart of the dispute. The first was an August 8 payment of $10 million to Cosmo Developments, a company Mr Palmer controls.

The second cheque for $2.167 million was made out on September 2 to Media Circus Network, the Brisbane agency that booked the advertising for the Palmer United Party in last year's Federal election.

Mr Palmer said Mineralogy was entitled to spend the money as it wanted because CITIC injections into the account of more than $26 million since early 2010 were payments for port services provided by Mineralogy and its subsidiaries at Cape Preston.

"We had an obligation to provide port services and our company Queensland Nickel provided those services and they were paid for them," he said. "It's not the Chinese bank account, it's Mineralogy's bank account and it was paid for at the direction of our companies."

In the statement of claim filed in Brisbane, CITIC says Mr Palmer was personally responsible for the payments, having removed two other signatories from the account just ahead of the two payments.

CITIC says Mineralogy has admitted "there are no documents in its possession" relating Cosmo or Media Circus Network providing services at the port.

It says Mineralogy's port boss Paul Robinson has admitted he had no knowledge of the payments and had "never prepared a logistical plan requiring $12 million of expenditure at the port" and knew of nobody else within Mineralogy who had done so.

Instead, according to CITIC, Mineralogy and Mr Palmer falsified ledgers to describe the payments as being for "port management services", knowing that neither company had provided any port-related services.

CITIC's statement of claim says the payments were "dishonest and fraudulent" and that Mineralogy and Mr Palmer knew it was only entitled to use money paid into the administrative account for the day-to-day expenses of their involvement in the port, or for operational, maintenance and repair work at the facility.

To cover up the siphoning, CITIC says Mr Palmer created a sham contract between Mineralogy, Cosmo and Queensland Nickel, which he also controls. The contract, referred to as the Port Management Services Agreement, was dated June 1, 2013, but CITIC claims it first surfaced in May this year after the allegations of money siphoning received extensive media coverage.

The PMSA was not produced in earlier legal skirmishes between the two companies, when it could have backed up Mineralogy's arguments. CITIC says Mr Palmer's port boss has admitted he was not involved in drafting or signing the document and only became aware of it in May.

Instead CITIC says Mr Palmer, who signed the document on behalf of each of the three companies, created it after being challenged over the payments in order to justify them as legitimate expenses.

A close examination of the document, according to CITIC, shows it "bears all the hallmarks of being created in extreme haste based on a template document".

A spokesman for Mr Palmer said the allegations were "absolutely untrue" and were merely counterclaims to Mr Palmer's legal action against CITIC over allegations the company had failed to pay "hundreds of millions of dollars" in royalties at the Sino Iron project.

The West Australian

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