Cassius: Did Cicero say any thing? Casca: Ay, he spoke Greek.
Cassius: To what effect? Casca: Nay, an I tell you
that, I'll ne'er look you i' the face again; but those that understood him
smiled at one another and shook their heads; but, for mine own part, it was
Greek to me.
Julius Ceasar, Act one, Scene
two.
Estimates: On 7 June 2024, the Finance and Public
Administration Legislation Committee convened to examine the financial
estimates in relation to Cross-Portfolio Indigenous matters (link
here). Senator David Pocock directed some sustained questions to both the
NIAA officials and to the Anindilyakwa Land Council (ALC) and its CEO Mark
Hewitt. Both the NIAA and ALC appeared quite uncomfortable with the scrutiny.
On these issues, the key takeouts from my perspective were
as follows:
The core issues pursued by Senator Pocock were (a) the
conflict of interest that the ALC CEO, Mark Hewitt has by virtue of holding
simultaneous positions as CEO of the ALC, as an unpaid Executive Director of
Groote Holdings Aboriginal Corporation (which funds infrastructure associated
with the proposed mine) and as the co-CEO of Winchelsea Mining; and (b) the
degree of disclosure made in relation to the October 2023 proposal from Mr
Hewitt to the Anindilyakwa Advancement Aboriginal Corporation (AAAC) which owns
70 percent of Winchelsea Mining for him to be gifted ten percent equity in
Winchelsea Mining.
NIAA confirmed that following the media revelations in
early 2024, the Integrity Group has commissioned an ‘independent’ review of the
implementation of the May 2023 ANAO audit recommendations by an accounting firm
based in Canberra, Bellchambers Barrett. What they haven’t done is commission a
forensic audit of the tangled web of influence and money flows between the ALC,
and several local corporations providing funding to Winchelsea Mining and
towards logistics infrastructure for the proposed mine. It is unclear how
independent the reviewer can be given its business model is focussed on
providing consulting services to government, it provided a ‘draft report’ to
the NIAA before Estimates, and the terms of reference are extremely narrow.
NIAA failed to answer Senator Pocock’s question on whether
the Minister had been briefed on Mr Hewitt’s conflicts of interest dating back
to his involvement on both sides of the negotiation of a mining lease to
Winchelsea in 2020. While formal recusal arrangements were put in place, it is
unclear how they could work in practice, and whether the recusal arrangements also
applied to the then ALC Chair and to his wife who I understand is also an ALC
Board member.
When asked about why the CEO had not stepped aside, the
NIAA responded that this is a matter for the ALC Board. However, as I have
documented on this blog previously, there is a risk that individuals associated
with the ALC exercise significant control over ALC Directors by virtue of the
existence of a discretionary mechanism to provide former Directors with
generous financial benefits (see the discussion of the Anindilyakwa Leaders
Future Fund Aboriginal Corporation (ALFFAC) in an earlier post (link
here). This is a matter that should be of concern to the Minister and the
NIAA given their regulatory oversight responsibilities for portfolio bodies
such as the ALC.
When the ALC appeared before the committee, the new Chair,
Ms Cherelle Wurrawilya stated
unequivocally that the ALC Board was aware of the recent media allegations and
stated that ‘the ALC board completely supports the work of our CEO, Mr Mark
Hewitt. He has been our CEO for 13 years and is working hard to deliver the
future that we, the Anindilyakwa people, want for our community.’ There was no
reference to the 235 signatories to the Petition tabled before the previous
Estimates Hearing.
Senator Pocock then asked the ALC CEO to outline how he
dealt with conflicts of interest. The answers revolved around leaving the ALC
Board discussion while Winchelsea matters were discussed; and leaving the
Directors meeting of Winchelsea while ALC matters were discussed. Apart from
the fact that this ignores the possibility of matters being discussed
beforehand with key Directors in both settings, he did not make clear how the
other two key management personnel within Winchelsea resident on Groote, the
ALC Chair and Mr Hewitt’s wife who is
also a part time ALC employee dealt with conflicts. If all three recused
themselves in matters affecting AAC or the ALC or Groote interests generally,
that would only leave the two Directors from AUS China International Mining Pty
Ltd (who only own 30 percent of the
joint venture) making the decisions. That this would be the actual situation
defies belief.
Nor did Mr Hewitt discuss the fact that while AAAC owns 70
percent of Winchelsea Mining, no AAAC Directors sit on the Winchelsea board.
Instead, AAAC is ostensibly represented within Winchelsea by the (former) ALC
Chair and two ALC staff (namely Mr Wurramarrba, Mr Hewitt, and Mr Hewitt’s
spouse). A more likely alternative interpretation however is that it is the ALC
that effectively controls AAAC and the ownership of the equity stake in Winchelsea
(see the discussion of the Corporations Act definition of effective control in my
previous posts: link
here and link
here).
Senator Pocock then pursued details in relation to the
proposal put to the AAAC and Winchelsea by Mr Hewitt for Mr Hewitt and his
spouse to obtain an equity position in Winchelsea (which would have diluted the
AAAC holding). In particular he sought details of whether the Minister was
informed. It appears that she was not, despite the fact that in the ALC
response to the ANAO Audit makes clear that Mr Hewitt and/or the ALC declared
potential conflicts to both Minister Scullion and Minister Wyatt at earlier
decision points. Senator Pocock also
sought clarification on whether the ALC had been informed and approved the
proposal (the answer here was that it had been discussed, but it appeared that
there was no formal decision). Further information was to be provided on notice
in relation to these matters.
At an earlier stage in the Hearing, ALP Senator Ghosh asked
the NIAA a couple of (clearly pre-planned) questions regarding the functions of
the Integrity Unit. The answer provided by the head of the NIAA Integrity Unit –
see page 19 of the transcript - outlined
the Integrity Unit’s program of proactive intervention to ensure ubiquitous probity
across he portfolio. The response was clearly designed to conjure the impression
that all is under control:
we have been taking and
building a far more proactive approach to the detection and management of
noncompliance and fraud. As you would appreciate, it's a continually moving
environment within which we're working, so we have been working to put more
systems in place so that we can identify and address potential issues of noncompliance
and fraud earlier in the piece. Certainly, indications from the matters that
we're now dealing with are that is being more successful. We are getting
involved earlier in circumstances and intervening before things do become an
issue.
I was reminded of the famous quote of Jo Bjelke-Peterson: ‘don’t
you worry about that’! Senator Ghosh then asked about the ALC and was advised
that:
The minister referred the
media reports and concerns that were publicised earlier this year to my group
for review, the objective being that we would review the information and then
determine if referrals to other authorities were required. As a part of the
process, I have commissioned an independent review of the land council's
responses to the issues and recommendations that were raised in the ANAO report
on governance. You might recall that a number of the issues raised in that ANAO
report were the core of the media reports and concerns being raised. That
independent review is currently underway. We expect to have a report for it
finalised by the end of next month, July. It is well underway. As part of the
review, I accompanied the independent reviewer to Groote Eylandt last week. I
was there for three days. We met with management and the board members of ALC
to gather more information as part of the review's work. It is ongoing. Once we
have the report, we will see what it says.
Nothing to see here! It will be interesting to see if the Bellchambers
Review finds a way to address the October 2023 proposal by Mr Hewitt for an
equity share in the mine, a proposal which of course post-dates the ANAO
recommendations, and thus falls outside the remit of the review.
These issues were brought into sharp relief in the following
exchange (on page 39):
Senator DAVID POCOCK: But
in a period of what you describe as instability, you sought to gain a shareholding
and you didn't think that—it seems pretty significant—warranted disclosing. You
mentioned that you disclosed conflicts of interest to Minister Scullion. You
didn't think that required disclosure?
Mr Hewitt: It
was an internal discussion. I simply asked the question to the board. If I were
to step down as the land council CEO and focus on these large projects and
optimise their success, what would be the normal standard for any other
Australian in that situation?
Senator DAVID POCOCK: But
you're not any other Australian. You're employed as the CEO. So I find this
quite extraordinary. In hindsight, now that the legal advice was 'This is
highly irregular; don't do it', do you accept that it should have been
disclosed?
Mr Hewitt: I'm
talking as the CEO of Winchelsea. So there are two sides to the discussion
here—
Senator DAVID POCOCK: And
you're on both sides.
Mr Hewitt: I
manage that conflict.
Senator DAVID POCOCK: It
sounds like you managed it by trying to get a shareholding, to which the legal
advice was 'No, you can't do that.' But you didn't even feel the need to
disclose that you were doing that.
Commentary
For the third consecutive Estimates hearing, the issues
around the involvement of the ALC CEO (and implicitly the former ACL Chair) in
the Winchelsea mine proposal have been the subject of close attention. While the
issues raised most recently revolved around conflicts of interest, it is
important to bear in mind what lies behind the existence of such conflicts:
there are certainly risks of fraud, or of breaches of legislative provisions;
there are risks of poor management and decision making, and of inequitable or
unethical allocations to individuals. However, of most significance from my perspective,
there are risks of poor strategic decisions built upon sub-optimal strategic decisions arising from the existence
of conflicts of interest. For example, as I have pointed out in previous posts,
the ALC allocates around $60m per annum in accordance with section 64(3) of
ALRA to traditional owner corporations. Taking into account the negotiated
payments to the Anindilyakwa Mining Trust ( a separate entity unrelated to the ALC,
but with some overlapping members) there is about a billion dollars a decade in
mining related payments flowing to the Groote population. To the extent that the
ALC is not exercising independent judgment on the best use of these allocations
because key decisionmakers are conflicted, there is a risk of significant commercial
losses and a failure to preserve a long term capital base. This is why eliminating (and not merely
managing) conflicts of interest is so important.
I wrote to the Minister on 1 March 2024 recommending to her
that she take early action to address these types of risk. In particular, I recommended
a forensic audit that went beyond the narrow remit of the ANAO audit, and
encompassed the network of interlinked corporations funded by the ALC. I recommended
a number of other actions which I considered essential while such an audit was
underway. Last week (over three months later), I received a response from the NIAA
CEO which acknowledged that the scope of the current review does not address all
the concerns I raised, but assures me that it will provide ‘information on the
progress made by the ALC to better manage governance arrangements…’ The NIAA’s CEO’s
response also specifically noted that it is standard practice for the NIAA to
refer matters to the appropriate Commonwealth or state and territory entities
for assessment and action. Needless to say, the response does not engender much
confidence that the NIAA and the Minister (who are responsible for regulatory
oversight of the ALC and its role in distribution of substantial mining related
payments) are adopting a proactive approach to getting on top of the issues
that are clearly in play. It is now over a year since the ANAO review was published,
and the NIAA would have had earlier access to the ANAO’s draft report.
It is also worth noting that the Estimates Committee appears
to be failing in its overarching responsibility as a key accountability mechanism
for public policy in the Indigenous portfolio domain. In contrast to Senator
Pocock, neither the ALP nor the Opposition Senators on the Committee evinced much
interest in understanding what is occurring on Groote nor in finding ways to address
the substantial policy risks I have identified previously on this blog and summarised
in this post.
It is beyond the time when the Senate should undertake a rigorous
review of the operations of Estimates Committees, and consider serious reforms
to ensure that discussions are much more focussed and targeted than at present.
Sitting through hours of hearings reminds me more of an extended primary school
‘show and tell’ session than a serious attempt to ensure funded agencies are up
to the mark. In my view, Senators should be obliged to identify issues in
advance, even table core questions, and Committee’s should utilise something
akin to a counsel assisting to raises the questions that require attention. Why
is it that our parliamentary representatives feel no sense of obligation to
seriously focus on the job they are elected to perform?
21 June 2024
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