Hancock Prospecting's executive chair described Lang Hancock's 1988 plan to transfer a 33 per cent share of that company into a trust for his four grandchildren as "undesirable" in a 1994 letter to the consultancy, said Christopher Withers SC, representing the two eldest children.
"This special project is really to cause Hancock Prospecting to buy back those shares and cancel them, which will have the effect of increasing Gina's shareholding 51 per cent to 76 per cent," he told the Supreme Court trial over mining assets and royalties in Western Australia's northwest on Monday.
"Gina is embarking on this special project despite the fact she owed fiduciary duties to her children to preserve the assets of (the trust)."
Mr Withers said Mrs Rinehart's project faced a problem in that Price Waterhouse was putting too high a value on the shares she wanted moved.
"So what Gina decides to do to address it is to say 'we need to find a way to reduce the value of the shares'," he said, referring to Mrs Rinehart's instructions to the firm as outlined in the letter.
"What this special project is, is a directive ... to find a way to deflate the value of the (trust) shareholding in (Hancock Prospecting)."
Mr Withers said Price Waterhouse was instructed to remove Hancock Prospecting's shares from the trust that was designed to benefit her children "by any means possible".
"Despite the fact that the acquisition of that shareholding was exactly what she agreed to with her father in the 1988 agreement," he said.
Mr Withers said Mrs Rinehart had benefited from the deal "because in return for that agreement, her father also gifted her 17 per cent of (Hancock Prospecting) that previously belonged to his wife".
He said the letter was sent to Price Waterhouse while she was battling her father's former wife, Rose Porteous, in court following his death in 1992.
"It must be remembered at the same time as she's giving this special project directive, she was in the Porteous litigation asserting that she was a trustee of the trust."
Mr Withers, who is representing John Hancock and Bianca Rinehart, said Mrs Rinehart also asked Price Waterhouse personnel to sign confidentiality agreements.
"It's not surprising that Gina did not want this document to see the light of day for obvious reasons," he said.
The claims were made in a high-stakes legal stoush in Perth in which Mrs Rinehart's company and her children are defending the claims of Wright Prospecting and DFD Rhodes.
Wright Prospecting is suing for a share of some Hope Downs tenements and royalties amid a claim that it never relinquished the assets and Hancock Prospecting has breached a series of partnership agreements.
The family company of the late prospector Don Rhodes, DFD Rhodes, says it is entitled to 1.25 per cent royalty share of the Hope Downs production following 1960s deal.
The Hope Downs mining complex near Newman is one of Australia's largest and most successful iron ore projects, comprising four open-pit mines.
Mrs Rinehart, Australia's wealthiest person, secured the development of the mines after signing a deal in 2005 with Rio Tinto - which has a 50 per cent stake in the project.
Hancock Prospecting maintains it undertook all the work, bore the financial risk involved in the development at Hope Downs and is the legitimate owner of the assets that the trial is focused on.
Mrs Rinehart is battling her children in the Federal Court over fraud allegations related to the devaluing of the trust, which they say their grandfather left them.
Price Waterhouse and Coopers and Lybrand merged in 1998 to form PricewaterhouseCoopers.
