Imbroglio on Groote Eylandt: a high-level roadmap

                                                            I see, as in a map, the end of all.

Richard III, Act two, Scene four

 

Over the past 14 months, there has been a steady torrent of public complaints, reports and media analyses raising concerns related to the governance of the Anindilyakwa Land Council (ALC), and its then Chair and current CEO.

 

Given the complexity of the institutional environment, let alone the myriad problematic activities that have been aired, I thought it might be useful to try to lay out a very high level roadmap of how the oversight of the issues on Groote emerged, what is currently being done, and where it might go into the future. This post is not aiming for comprehensive detail, but rather aims to set out the context. For more detail, readers are referred to the reports listed below, along with the analysis of some eleven previous posts on this blog which can be accessed in the recent post, Eleven posts foretelling calamity and tribulation on Groote Eylandt (link here).

 

Key events

 

In May 2023, the ANAO issued a performance audit report (link here) into the operations of the Anindilyakwa Land Council, a Commonwealth statutory Corporation established under the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA). The content of the audit was highly critical of governance standards within the ALC, identifying numerous potential conflicts of interest involving the Chair, the CEO and his spouse, amongst numerous other issues of concern. The remit of the audit was limited to the ALC and not to the network of corporations in receipt of royalty equivalent payments, thus limiting the focus of the recommendations to the ALC’s operations. It is worth noting that the ALC and the NIAA would have been provided with a draft report in March or April 2024.

 

On February 2024, a petition signed by 235 residents of Groote Eylandt was tabled in the Federal Parliament raising a range of concerns regarding the operations of the ALC and in particular its CEO. In response, Minister Burney (who is responsible for the operation of the ALRA told a media outlet that she would ask the NIAA Integrity Unit to investigate the concerns raised. Five months later, that investigation (whose terms of reference were limited to the ANAO recommendations) has yet to be released.

 

On 11 May 2024, the SMH published an article (‘CEO’s plan for personal millions form Indigenous mine deal exposed’) by investigative reporter Nick McKenzie (link here) which revealed that in September / October 2023, the ALC CEO had sought approval from the AAAC (the formal owners of 70 percent equity in Winchelsea Mining Pty Ltd) to grant him and his wife (Ms Sophy Liu) a ten percent stake in Winchelsea Mining. Following concerns expressed by an ALC legal officer, and the provision of a second legal opinion, the CEO deferred finalising the transaction

 

On 7 June 2024, during a Senate Estimates hearing, Senator Pocock raised serious concerns with the ALC CEO regarding the negotiation of the terms of the mining agreement between the ALC and Winchelsea Mining. The ALC Chair and CEO had statutory responsibilities to protect the interests of the TOs on Groote Eylandt, yet they were also both the Chair and co-CEO of Winchelsea Mining where they had responsibilities to protect the interests of their shareholders. The terms of the Agreement are not in the public domain, however the ALC CEO claimed that he had briefed the then Minister Nigel Scullion, who had approved the agreement. None of this was made public at the time. At the same Estimates Committee Hearing, the NIAA Integrity Unit indicated that they had received a draft of the investigation and expected the report to be finalised by July.

 

In early July 2024, the Minister’s Office or the NIAA advised the media that the NIAA had referred allegations against either the CEO or the ALC to the National Anti-Corruption Commission (NACC). The Minister would have approved this referral. The referral likely pertains to the proposal to grant the CEO and his spouse a ten percent share in Winchelsea Mining. The NACC had already received a number of referrals related to the actions of the ALC and its CEO from private citizens prior to the NIAA referral; it is unclear if it intends to conduct an investigation, and the extent of its inquiries if such an investigation proceeds.

 

On 20 July 2024, freelance journalists Ben Abbatangelo and Rachel Hoffman published a detailed account in The Saturday Paper (link here) of numerous new allegations of problematic activities on Groote centred around the roles, activities and influence of the ALC CEO and the recently deceased Chair. Key revelations in this article include the following: the role of the ALC royalty development unit in implementing the development the Royalty Shoppa debit card which quarantined significant levels of funds to expenditures in the Royalty Shoppa Warehouse; the apparent inconsistencies in relation to advice to Minister Scullion in relation to cuts to the CEO’s salary to offset his salary from Winchelsea Mining and the actual salary paid by the ALC over subsequent years; allegations that action to mitigate and address conflicts of interest by the former Chair and the current CEO had not been implemented in relation to key ALC decisions; and that concerned TOs had complained to the Minister regarding lack of accountability for a substantial payment by the Anindilyakwa Mining Trust to the Anindilyakwa Royalties Aboriginal Corporation, but had not received a reply.

 

Ways of interpreting the current imbroglio

 

There are at least five legitimate ways to evaluate and assess the ongoing developments on Groote Eylandt, and their interaction with the accelerating momentum of accountability focussed investigation.

 

First, one might assess past, present and future developments through the narrow focus of whether or not there has been fraudulent or illegal behaviour by any of the actors involved in managing the ALC and its associated royalty distributions. Important as this is, I would argue that a focus solely on fraud and accountability is too narrow and will not address wider issues of fundamental importance to the wider community on Groote.

 

Second, one might assess the policy effectiveness of the ALC’s strategic vision and plan for the residents and TOs of the Groote archipelago. The ALC strategy as promulgated on its website is sophisticated and polished. I discussed in in some detail in my earlier post The proposed Winchelsea mine on Groote Eylandt: a strategic opportunity? (link here) where I concluded:

The high level aspirations articulated by the ALC have real merit. I support them if they can be afforded. The strategies being adopted are however deeply flawed, and in my view will likely lead to a disastrous financial meltdown on Groote at some point in the next five years. If this occurs, the socio-economic ramifications will entrench further disadvantage and possibly lead to the unravelling of social cohesion on the island.

I outlined the reasons for that conclusion in the following post (link here). That conclusion has not been refuted by the ALC or the NIAA. Time will tell.

 

If I am right, the current inaction by governments will mean that they share direct responsibility for the outcomes.

 

Third, one might assess the effectiveness of the current regulatory oversight of the activities on Groote since late 2018 when the ALC CEO wrote twice to Minister Scullion advising him of the proposals to establish Winchelsea Mining and purchase the mining tenements on Winchelsea Island. The ALC is a Commonwealth statutory corporation. Unlike private sector corporations, it is not regulated by ASIC and the ACCC, but by the provisions of the ALRA which is administered by the Minister for Indigenous Australians and the Public Governance, Performance and Accountability Act (2013) (PGPA Act) which is administered by the Minister for Finance.

 

See this flipchart for a listing of all PGPA Act entities (link here). Sections 25 to 29 of the PGPA Act impose the following duties on all officials: a duty of care and diligence • a duty to act in honesty, good faith and for a proper purpose • a duty in relation to use of position • a duty in relation to use of information • a duty to disclose interests.

 

Since 1976 when the ALRA was enacted, those two Ministers and their agencies have shared the bulk of the responsibility for regulatory oversight of the actions of the NT Land Councils, with the Indigenous Australians Minister in the lead. Some other accountability agencies have specific roles, for example, the ANAO which undertakes financial audits of NT land councils’ financial affairs and can undertake performance audits (such as the performance audit published in May 2023). The indigenous Australians Minister approves budget estimates for each land council and is required to approve various arrangements set out in the ALRA (eg mining agreements negotiated by a Land Council with a mining corporation).

 

Given this background, the inability of the NIAA at the Estimates Hearing of 7 June 2024 (link here: page 29) to satisfactorily respond to questions from Senator Pocock as to whether the Minister or the NIAA had been advised of Mr Hewitt’s potential conflicts of interest appeared to evoke a level of astonishment. In seeking to deflect the Senator’s apparent incredulity, the NIAA CEO explained that the ANAO Report was directed to the ALC itself. The statement and concomitant inference that the NIAA was not responsible for knowing these matters reflects a deep-seated hands-off approach that is not consistent with the statutory responsibilities of the Minister and her agency. 

 

I am not aware of any detailed analysis of the quality of the Ministerial and NIAA regulatory oversight in relation to Groote, yet the more egregious the situation being uncovered is ultimately found to be, the more we can be confident that it has been facilitated (either consciously or unconsciously) by regulatory failure. The key issue then becomes whether that regulatory failure is a one off, or systemic. Prima facie, the quality of regulatory oversight of the ALC over the past eight years appears to be seriously deficient. In my view, the NACC and the Parliament should make the assessment of this issue a primary focus on their ongoing oversight and investigations.

 

For any sceptics that question my assessment of the existence of regulatory failure, let me provide one personal anecdotal example. I wrote a considered and detailed letter to Minister Burney on 1 March 2024, copied to the Minister for Finance and the ANAO, attaching a detailed analysis of compliance with the legislative requirements for distribution of royalties and the evidence revealed in my own examination of the publicly available financial statements of the key recipient corporations. I framed my analysis as provisional and recommended a detailed forensic audit be commissioned. There are three possible acceptable answers to such a letter: one, I have considered your points and agree and am taking action; two, I have considered your points and disagree for the following reasons and am thus not taking action; three, I am considering the matters raised and will respond when I have reached a conclusion.

 

I received no acknowledgement or reply from the Minister for Finance nor from the ANAO. On 11 June (over three months later) I received a response from the NIAA CEO noting that a review into the implementation of the ANAO recommendations had been commissioned, and explicitly acknowledging that the scope of that review does not address the concerns I had raised. The CEO went on to state that it is worth noting that it is standard practice for the NIAA to refer matters to the appropriate authorities when there are identified concerns regarding the conduct of organisations or individuals that are better managed by those authorities. The letter did not indicate whether any matters had been referred to ‘appropriate authorities’.   Yet the matters I had raised related directly to the regulatory responsibilities of the NIAA and the Minister. I concluded that I had been advised, in the politest terms, to go jump in the lake.

 

Fourth, one might assess the developments on Groote in terms of their implications and consequences for macro-policy issues. These include issues such as the more general effectiveness of the policy and accountability oversight of the land councils in the NT, whether the operation of the ABA which includes funding of Land councils, distribution of royalty and royalty equivalent payments under ALRA;  wider issues related to whether mining related payments more generally are being managed effectively; whether it is time to review the operation of ALRA to assess whether it is still meeting its objectives; and whether the policy capabilities of the NIAA and other agencies (such as The Office of the Registrar of Aboriginal Corporations) have been hollowed out over the past decade leading to loss of corporate memory and policy capability.

 

Again, I am not aware of any considered research or writing, nor any reviews or parliamentary committee focus on these issues in the past decade. My recent post on the draft ANAO work program (link here) discusses some of these issues in more detail. My core point is that the imbroglio unfolding on Groote ought to be seen as an opportunity to proactively finetune and improve the broader institutional frameworks which play an important part in supporting the aspirations and interests of First Nations citizens in northern Australia.

 

Fifth and finally, one might assess the ongoing Groote imbroglio in terms of what it says about the state of our political system. Neither of the major parties appears to have covered themselves in glory so far, and the longer these issues remain unresolved, the greater the likelihood that trust in our political system and democracy will be further diminished. I have commented previously on the disenchantment of remote communities with the current state of politics in the NT (link here: data point three) and I have previously pointed to the deep-seated disinterest of both CLP and ALP Senators in pursuing these issues in the three Estimated Hearings since the ANAO report was tabled. The fact that the NT election is imminent is clearly a salient factor in both sides seeking to keep the lid on these issues.

 

My own take on this is to suggest that the dominance of the Executive over the Parliament is a fundamental issue that requires more critical analysis and attention. Notwithstanding the ubiquitous rhetoric about the importance of democracy, our major parties appear prepared to set aside the public interest (of citizens and voters) in favour of their own political self-interest. The lack of motivation and timely action to date in addressing and disentangling the complex imbroglio on Groote is in my view just one further example of this dynamic. The structural and systemic exclusion of Indigenous interests continues.

 

To sum up, the imbroglio on Groote is cascading out of control. Where it will land, and its wider ramifications, are as yet uncertain. The core argument of this post is that adopting an analytic lens focussed on identifying the existence or not of villains and villainy is crucially important. However, limiting our analytical lenses to this is both overly simplistic and short-sighted. The effectiveness of the ALCs broader strategic policies is also crucial, and so too is the quality of regulatory oversight and the fitness for purpose of broader Commonwealth (and Territory Government) policy objectives and frameworks. Finally, understanding the political drivers in play is also important, as is assessing the longer-term implications of the major political parties continuing to prioritise political self interest over the public interest.

 

 

 22 July 2024