Slow walking towards disaster: new revelations regarding the proposed Winchelsea mine on Groote Eylandt.

                                                 When we are born we cry that we are come

To this great stage of fools.

King Lear, Act four, Scene six.

 

I recently put up two posts on the Anindilyakwa Land Council (ALC) on Groote Eylandt in the NT, ALC and a murky set of inter-related issues based around the distribution of ABA monies (royalty equivalents) by the ALC and the proposed development of a new mine on Winchelsea Island off the northern coast of Groote Eylandt (link here and link here). These ‘royalty equivalent’ distributions are statutory functions of land councils ostensibly regulated by the Aboriginal Land Rights (Northern Territory) Act 1976 which is Commonwealth legislation.

  

On 11 May, the Sydney Morning Herald (SMH) published an article by investigative journalist Nick McKenzie, based on leaked documents emanating from within the ALC (link here).

 

Key revelations included a report that the ALC CEO Mark Hewitt in 2023 had sought to have up to ten percent equity in the Winchelsea Mining Corporation (WMC) granted to him by the TOs who own 70 percent of the company (the other 30 percent is owned by an Australian corporation with Chinese connections, Aus China International Mining Pty Ltd). The article suggests that the value of the proposed shareholding proposed to be transferred to Mr. Hewitt was significant, and based on internal ALC estimates was currently worth $13m (which places the current valuation of the corporation at $130m) but was potentially worth $50m (which would place the potential value of WMC at $500m). In my previous post I argued that the commercial feasibility of the proposed Winchelsea project appeared to be seriously problematic given the data WMC had provided to the NT Government as part of the EIS processes required for a mine. Nevertheless, it is not clear what other exploration titles WMC owns or might seek to obtain and how prospective they might be. There are suggestions that the seabed surrounding Groote is highly prospective for manganese, but the TOs currently oppose any exploration. This could conceivably change in the future, and if it did, an Aboriginal owned Corporation would be in the box seat.

  

The proposal for an equity transfer to Mr. Hewitt did not proceed after an ALC employed lawyer raised concerns (presumably around conflict of interest) which were confirmed in legal advice sought from an external lawyer Ron Levy. The ALC lawyer’s employment ended two weeks later. According to the SMH article, Mr. Hewitt acknowledged that he had informed the lawyer that his contract would not be renewed.  

 

 

The article also mentions that a complaint had been made to the Commonwealth Ombudsman in relation to the share transfer matter and that the Ombudsman had requested the relevant agency (presumably NIAA) investigate.

  

There are several implications that emerge or arise from the SMH article and its revelations. The first is the discrepancy between Mr. Hewitt’s comments to the Estimates Committee and the latest revelations that demonstrate not only that he came very close to being granted ten percent equity in WMC, but that he had indicated that he only agreed to forgo the offer until he stood down as ALC CEO. In the Estimates committee hearing in February this year Mr. Hewitt  stated:

I just want to say there are some important points I'd like to put out straightaway and correct on the record. I'm not a co-owner of the Winchelsea mine at all—not at all, in part or completely. I'm not silly. The mine is owned by a 70 per cent share with the Bara and Jaragba clans and they represent themselves through Anindilyakwa Advancement Aboriginal Corporation, whose directors comprise senior TOs for that island, where that resource is held. I think also I need to say that the work I undertake with Winchelsea and other major projects are because there are certain big things we need to do before the GEMCO mining operation closes. The biggest piece of it all is the mining project, because the revenue for that will enable all these other important things to occur—in particular, getting our mining trust up to a figure which can sustain valuable, important cultural and community support programs and things of that nature…[emphasis added].

  

While these comments are factually correct, they fail to mention his previous proposal for a transfer of ownership of ten percent of the mining company to himself. In effect, the Committee was misled by omission (although to be fair, as I previously argued, the Committee exhibited an excessive degree of credulousness). Moreover, Mr. Hewitt also failed to mention his plan to take up the offer of a future ownership transfer once he transitioned out of the ALC CEO role.

  

A second, and in my view much more salient implication of the SMH revelations was that in his comments to the SMH justifying the ownership transfer proposal, Mr. Hewitt has made crystal clear his role as the primary architect and most active proponent of the overarching agenda being pursued by the ALC, central to which is the development of the Winchelsea mine. This is the agenda which I was particularly critical of in my previous posts, and for which the Land Council members must be held ultimately responsible. Among the questions that emerge from this implicit admission is how does it coexist with the commitment he gave former Minister Scullion in September 2018 to recuse himself from land council dealings on the mine venture? The SMH has apparently seen the letter making this commitment. It is patently clear that in terms of the substantive issues that the land council has responsibility for, his role as CEO places him in a situation where it would be structurally impossible for him to completely recuse himself. This is the deeper import of the conflicts of interest identified by the ANAO in their May 2023 report.

  

The third and perhaps most serious issue raised by the events outlined by the SMH is the possibility that the degree of control exercised by Mr. Hewitt over the ALC Board (as identified in the ANAO report) may have established a network of reciprocal obligations between key Anindilyakwa TOs and Mr. Hewitt. Such control would be facilitated by the level of control that the ALC holds over the Boards and decision making of associated corporations as discussed in my previous post (link here). Both these outcomes are enabled by the inter-connected memberships between the ALC and the various associated corporations in receipt of royalty equivalent payments from the ALC. If such a network of reciprocity exists (a factual matter yet to be formally determined), it may make it extremely difficult for individual TOs to say ‘no’ to proposals put forward by Mr. Hewitt.  The key issue would then become, are such proposals in the interests of the Anandilyakwa people generally. These are issues that are both philosophical in nature yet also require tangible real-world decisions to be made.

  

The Aboriginal Land Rights Act establishes the system of land trusts and Land Councils to determine these issues in the real world, however imperfectly. Yet the independence of the land council on Groote has potentially been compromised and successive Ministers responsible for ensuring that the governance standards and normal checks and balances are maintained have dropped the ball. While there is an extraordinarily strong case for shining an accountability spotlight on what is happening on Groote, there is also a much more fundamental case for holding Ministers to account for their unwillingness to take appropriate and timely action to ensure strict compliance with the statutory framework in place.

  

The case for action is strengthened by the fact that prima facie, the facts as we now know them are potentially consistent with public officeholders (which could include ALC staff, the Minister and NIAA staff) being involved in two of the four types of corrupt conduct which exist under the National Anti-Corruption Commission Act, namely, breach of public trust and abuse of office.

 

 I wrote to the Minister for Aboriginal Australians ten weeks ago recommending several actions be taken based on a detailed analysis of what has transpired on Groote. Inter alia, I recommended an immediate forensic inquiry extending beyond the implementation of the ANAO report, and immediate action to resolve the conflict of interest held by the Chair and CEO of the ALC who are both directors of WMC. To date I have received no reply.

 

 Last week I lodged an FOI request for various documents including for copies of the report referred to in the Minister’s comments cited in the Canberra Times article. I was advised by the NIAA that following preliminary inquiries with the relevant business area of the agency, it appears that the NIAA does not hold any documents matching my request. There are potentially several alternative explanations for NIAA not having such a report in its possession. However whatever the reason, in the light of the SMH revelations regarding Mr. Hewitt’s September 2023 attempt to be gifted an equity holding in WMC, and its referral to the Ombudsman, who in turn referred it to NIAA, it is difficult to avoid the conclusion that the Minister is slow walking the investigation of these allegations, and delaying taking any action to address what are clearly significant issues both for the Aboriginal population of Groote Eylandt, and for effective and responsible public administration.

  

All I can say is that the longer the Minister delays taking action, the more foolish she will ultimately appear.