Groote Eylandt recent developments

 

                                                      Before the times of change, still is it so:

By a divine instinct men's minds mistrust

Ensuing dangers…

Richard III, Act two, Scene three

 

There have been a number of developments since my last post dealing with Groote issues.

 

The first development relates to the impact of Cyclone Megan in March 2024. The headline of an ABC news report, South32 rules out Groote Eylandt manganese exports for rest of 2024 after cyclone damage, says it all (link here). One consequence of the halt in mining and sales will be to negatively affect royalty payments by South32 to the Anindilyakwa Mining Trust which totalled just under $20m in 2022-23 (link here) and royalties to the NT Government, which in turn will negatively impact the royalty equivalent payments into the ABA by the Commonwealth.

 

The ABA is the mechanism used to fund all four land councils (the ALC received just under $8m in 2022-23, plus another $1.5m in various non-ABA government grants); to distribute section 64(3) payments for distribution to local corporations in accordance with section 35 of the NT Aboriginal Land Rights Act (ALRA) (in 2022-23 the ALC allocated approximately $60m. for this purpose), and for more general distribution to Aboriginal people across the NT via the recently established NT Aboriginal Investment Corporation.

 

The loss of production and sales over the majority of 2024 will have a substantial impact on all these funding allocations across the NT as South32’s mine is the largest mine on Aboriginal land by value of production by far. In 2022-23, the NIAA made payments associated with the four land councils of over 214m (link here:p.141) comprising some $109m. for land council administration and $113m. for distribution to corporations whose members are affected by mining.  While the amounts required for land council administration can be drawn down from the existing ABA balance, the amounts available for distribution to traditional owners (TOs) affected my mining will be directly and negatively affected in 2023-4 and possibly 2024-25.

 

For the ALC and Groote Eylandt more generally, the bottom line is that in 2023-23 around $90m was allocated to the ALC region under the ALRA and the mining agreement with South32. This amount is likely to fall over the coming year arising from the damage to the wharf. This temporary setback demonstrates the vulnerability of these allocations to external decisions and events, and reinforces the wisdom of seeking to build a self-sustaining development fund on Groote.

 

The second major development was the announcement last week that the longstanding Chair of the ALC, Mr Tony Wurramarrba was stepping down as Chair and as a member of the Board. His replacement is Ms Cherelle Wurrawilya (link here). Mr Wurramarrba has played a significant role on Groote Eylandt and on the ALC Board for over three decades. In recent years however, he appears to have become increasingly entwined in potential conflicts given the ALC’s crucial role in distributing ABA payments to local corporations affected by mining, and his dual roles on the ALC Board and as a Director of Winchelsea Mining Pty Ltd., and the ongoing statutory role of the ALC in representing traditional owners in negotiations with miners. This latter conflict is also shared by the ALC CEO.

 

The extent of Mr Wurramarrba’s involvement beyond the ALC is listed in the ALC’s financial statements published in the annual report:

Mr Tony Wurramarrba is Chair of the Anindilyakwa Land Council and also a Director of Anindilyakwa Royalties Aboriginal Corporation (ARAC), Anindilyakwa Mining Trust (AMT), Miwatj Health Aboriginal Corporation (MHAC), Aboriginal Sea Company Pty Ltd, Winchelsea Mining Pty Ltd, and Groote Holdings Aboriginal Corporation (GHAC). ARAC, AMT, MHAC and GHAC receive Section 64(3) royalty distributions under Section 35 determinations by the Anindilyakwa Land Council as outlined in Note 10….

The spouse of the Chair of the Anindilyakwa Land Council is an elected

member of the Anindilyakwa Land Council and receives sitting fees, and is

also a director of Groote Eylandt Bickerton Island Primary College Aboriginal College (GEBIPCAC), which receives section 64(3) royalty distributions from the ALC.

 

It is unclear whether Mr Wurramarrba will be stepping down from any or all of his other Directorships. Only when this becomes clearer will we know the extent to which the systemic potential conflicts referred to above have been mitigated.

 

In a previous post (link here) I made the argument that many of the corporations in receipt of section 35 payments appeared to meet the criterion for control laid down in the Corporations Act:

 

Section 910B of the Corporations Act 2001 provides inter alia in relation to the meaning of control that ‘control’ includes: having the capacity to determine the outcome of decisions about the body corporate's financial and operating policies, taking into account: (i) the practical influence that can be exerted (rather than the rights that can be enforced); and (ii) any practice or pattern of behaviour affecting the body corporate's financial or operating policies…  

 

The checks and balances built into the payment distribution mechanisms to affected communities in ALRA implicitly assume that the recipient corporations are not controlled by the Land Council. This systemic independence no longer applies on Groote Eylandt. The May 2023 ANAO Report commented on this indirectly when it pointed to the apparent influence of the CEO in allocating funds to corporations where he was directly involved.

 

One of the corporations I had in mind when I raised my concern about ALC control of related entities was the Anindilyakwa Leaders Future Fund Aboriginal Corporation (ALFFAC). Registered in 2020 by a person employed by the high profile legal firm Arnold Bloch Liebler, presumably acting for the ALC. In the most recent General Report (as of June 2023) the Directors are listed as Ms Serena Bara, Ms Ida Mamarika, Ms Cherelle Wurrawilya, and Mr Wayne Wurrawilya. All four Directors comprise the only living members of the Corporation. All four ALFFAC Directors are also Directors of the ALC.

 

According to the June 2023 financial report for ALFFAC (link here), the Corporation was established ‘to be a charity for the relief of poverty, by providing senior longstanding ALC employees, Members, Chairpersons and Deputy Chairpersons access to voluntary recognition and protection packages.’ In each of the last two years, the ALC directed payments of $200k to the Corporation in accordance with section 35 of the ALRA. In the year ending 2023, the Corporation paid out $155k in payments to TOs, and $17k in ‘consult payments.’ The report states that no remuneration of staff was paid during the year, suggesting that the Royalties Unit in the ALC manages the corporation’s financial affairs (this is supposition on my part). Schedule Four of the Corporation’s Rule Book (link here) spells out the benefits available to eligible beneficiaries, which are capped in some unspecified way. They include rent free housing for the rest of the beneficiary’s life; access to a vehicle and up to $10k in annual maintenance for the rest of their life; a living allowance calculated as a percentage of the beneficiary’s salary based on years of service. For over ten years’ service, it is 70% of salary. And finally assistance in preparing a will. I can think of no other Commonwealth statutory entity that provides these benefits to its Directors.

 

There are two perspectives on this arrangement. One is to take it at face value, and acknowledge that land councils are sui generis cross cultural entities where land council directors deserve special recognition and have dual sets of responsibilities, as statutory officeholders in Commonwealth statutory corporations and as traditional owners, and that there is nothing remiss in the Land Council establishing a scheme to provide benefits sourced from royalty equivalents for Land Council members and staff once they move on from their statutory roles. I have some sympathy for this perspective, but consider that it should be addressed transparently and in accordance with standard governance principles and statutory requirements.

 

The second perspective would emphasise the letter of the law (which after all is the source of the significant funding that flows to traditional owner corporations) and generally accepted governance principles. The NT Land Councils are subject to the PGPA Act administered by the Finance Minister and her Department. That legislation lays down principles that govern the operations of Commonwealth entities. So for example, the legislation provides inter alia, as follows:

 

26  Duty to act honestly, in good faith and for a proper purpose.

 An official of a Commonwealth entity must exercise his or her powers, perform his or her functions and discharge his or her duties honestly, in good faith and for a proper purpose.

 

27  Duty in relation to use of position

An official of a Commonwealth entity must not improperly use his or her position:  (a) to gain, or seek to gain, a benefit or an advantage for himself or herself or any other person; or  (b) to cause, or seek to cause, detriment to the entity, the Commonwealth or any other person. (emphasis added).

 

Whether or not the actions of the ALC in establishing and operating ALFFAC is in breach of these provisions as not being a ‘proper purpose’ (or perhaps in breach of other provisions in the PGPA Act which I have not considered) is not for me to determine. But I venture to say that notwithstanding the high level legal advice obtained by the ALC in establishing ALFFAC, the ALC may be walking close to the edge. There may be additional concerns related to the provisions of the Remuneration Tribunal Act and its relevant determinations for officeholder remuneration, which inter alia provide that remuneration determinations cannot be supplemented. The AFFLAC arrangement may or may not amount to such supplementation.

 

My concern however is in fact a different one, which may or may not be of legal concern, but is rather a governance issue which should certainly be of concern to the Minister. It is that the ALFFAC appears to meet the definition of control by the ALC in the Corporations Act, and also establishes a mechanism which if misused might be used to co-opt and coerce individual Directors of the ALC to make particular decisions which are not in the interests of the clans represented on the Board, or the general interest of the wider Groote population. In other words, the combination of the structure of AFFLAC with its membership comprised entirely of ALC Directors (and potentially future beneficiaries) who are themselves thus conflicted is a problem. Second, the threat of denial of beneficiary status is potentially a potent weapon to use against someone who is not ‘toeing the line’. Third, the fact that the ALC is making decisions, year in and year out, over the distribution of around $60m pursuant to section 35 of ALRA, and there is only a light touch (or perhaps zero touch) regulatory oversight by NIAA should be of deep concern to the Minister.

 

The ANAO in its May 2023 Performance Audit on the ALC identified a series of structural conflicts amongst Directors and senior staff of the ALC. My own research (based wholly on publicly available records) suggests that there have been historical decisions involving potential conflicts of interest which are claimed to have been disclosed to Ministers, but have not been made publicly transparent.

 

The most obvious of these is the mining agreement between the ALC and Winchelsea Mining which presumably involves a range of financial, environmental and social and cultural impact issues. The former ALC Chair and the current CEO presumably played key roles in persuading the ALC Board that the agreement with Winchelsea was an appropriate exercise of their responsibilities. I must note however that I do not know if they recused themselves from all decision making in relation to the Winchelsea project. It is difficult to imagine how such a recusal could be effectively implemented in an organisation as small as the ALC and involving dense networks of overlapping personal and social relations. Even had there been a recusal, the negotiation (if it can be called that) was effectively between themselves since Winchelsea Mining’s five Directors include the former ALC Chair, the ALC CEO, his wife, and two directors of AUS China International Mining Pty Ltd. It seems likely that a former Minister subsequently approved this agreement, despite the clear conflicts of interest, again without public announcement. As an aside, it should be noted that this arrangement demonstrates starkly the extent of ALC control being exercised by the ALC as Winchelsea Mining is majority (70%) owned by the traditional owners of Winchelsea Island via the Anindilyakwa Advancement Aboriginal Corporation (AAAC), yet no members or Directors of AAAC are on the Board of Winchelsea Mining.

 

There are many questions to be answered by the NIAA regarding what went on here. And of course, as the development of the Winchelsea mine progresses, or as Winchelsea seeks to expand operations elsewhere, there may well be decisions occurring that require independent oversight by the ALC. How can the Minister assure the Groote community that she is managing the potential conflicts that appear to be systemically embedded in the complex network of overlapping corporations, largely unregulated section 35 payments, and the apparent existence of ALC control over many of the corporations in existence. If all is above board, why the need for deep secrecy?

 

The key point I wish to emphasise is that conflicts of interest are not silos, isolated and stand alone. They are systemic and interact synergistically, with the potential taint  decision making beyond their institutional location. They can also be used to exercise influence in sophisticated ways beyond simplistic notions of personal benefit. The Minister responded to media revelations around the last Estimates Hearing by announcing (in a media interview, but not formally) that she had requested the NIAA Integrity Unit to undertake an examination of the implementation of the ANAO audit recommendations. She has never released the terms of reference for that investigation, and it is not clear why it should remain confidential if it has in fact been completed. She has never provided a public explanation regarding whether she is satisfied that all is well on Groote, or alternatively whether she has concerns, and what is the basis for whichever view she holds. Yet the conflicts embedded in the mining agreement between the ALC and Winchelsea Mining put in place some years ago were not part of the ANAO report, and nor are the implicit conflicts established and potentially amplified by the existence of AFFLAC . This is why it is important that the Minister (however belatedly) takes urgent action to establish a formal open and independent forensic investigation of the operations of the ALC and its related entities.

 

My suggestion is that she should request the ANAO to undertake a broader and wide-ranging forensic audit and table its results in Parliament. Without such action, she is placing the longer term interests of the wider Aboriginal community on Groote at serious risk. It needs to be remembered that original purpose of land councils under ALRA was to protect the interests of TOs. Unfortunately, systemic conflicts and the absence of focussed and rigorous oversight by NIAA under Ministers past and present have effectively undermined that core raison d’etre for the ALC, and perhaps other land councils, particularly in relation to oversighting third party agreements on TO’s land.

 

 

 

4 June 2024