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
My recollection from 2020 is that mutual obligation was first dropped temporarily (after initial ministerial opposition) during Covid to avoid infection spread.
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