Why!
all delights are vain, but that most vain
Which, with pain purchas'd, doth inherit pain:
As, painfully to pore upon a book
To seek the light of truth, while truth the while
Doth falsely blind the eyesight of his look.
Love’s Labor’s Lost, Act one, Scene one.
The 2023/2024
annual reports across the Indigenous Australians Portfolio were mostly
finalised by November or December 2024. It struck me that there might be merit
to consider a selection of those reports through the lens of the developments
on Groote Eylandt over 2023/24. Given the almost complete absence of any
attempt by Minister McCarthy and her portfolio to keep the Parliament and the
public informed, it seemed worth considering the more formal reporting in
relation to Groote to see what might be gleaned not only for the insights into
developments on Groote, but as a window into the wider approach of the Minister
and her portfolio to transparency and accountability.
The extracts
and commentary below are not presented in any particular order, nor do they
focus in every instance on important policy issues. They inevitably reflect a personal
perspective that has limited profile in current policy discussions. I would
argue however that this in itself is a strength insofar as it opens up a window
into the deeper values that guide the Government’s approach to transparency and
accountability. Apart from presenting an alternative framing and perspective, my
hope in compiling commentary on extracts from disparate reports into a single
post is to demonstrate how the minimalist and simplistic narrative in relation
to Groote and the ALC promulgated by the Minister and her agency is entirely
inadequate.
National
Indigenous Australians Agency
The NIAA Annual
Report (link
here) was signed off by the CEO on
15 October 2024. Itis an impressively designed document, great photographs of
country, concise, clear and well written. It spans 234 pages and seeks to
address the numerous requirements for annual reports set down in the PGPA
legislation and Finance Department regulations (see the list of requirements at
pp 226-234).
The CEO in her
Year in Review assessment mentions that the agency has offices in 50 locations
across Australia, but the report does not appear to indicate where those
offices are located, nor the numbers and seniority of their staffing. For
example, I understand that the agency has an office on Groote, but as far as I
know, it is visited intermittently by an officer from East Arnhem. The
underlying issues here is that a regional presence was once the backbone of the
Aboriginal Affairs portfolio, but this has been significantly degraded over the
past decade.
The
Anindilyakwa Land Council (ALC) is one of five statutory corporations
established under the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA).
The Minister and her agency, the NIAA, are the regulators of these corporate
entities (along with the Department of Finance in respect of compliance with
the PGPA legislation). The NIAA Annual Report acknowledges in an appendix discussing
the Aboriginals Benefit Account (ABA) which allocates funding to the land councils
and other smaller entities such as NAIC and EDTL that ‘The NIAA is responsible
for advising the Minister on the overall policy and financial management of the
ABA’.
The ALC was the
subject of an adverse ANAO performance audit published in May 2023, as well as a
series of robust media reports and ongoing discussions in Senate Estimates
during 2023 and right through calendar year 2024. A petition critical of the
ALC’s operations and signed by 235 residents of Groote Eylandt was tabled in
Parliament in February 2024. During the 2023/24 financial year, Minister Burney
requested the agency’s Integrity Unit to initiate a review of the
implementation status of the ANAO performance audit’s formal recommendations — but
not the detailed findings, nor broader issues raised in various allegations —
which was undertaken by consulting firm BellchambersBarrett. The Bellchambers report
was not finalised until August 2024. At some unknown date during 2024, the NIAA
(presumably with the Minister’s consent) referred unspecified matters related
to the ALC to the National Anti-Corruption Commission.
None of these
developments rated a mention in the NIAA Annual Report for 2023/24.
According to
the index, the NIAA Annual Report mentioned the ALC only four times, in passing
on page 24, and on pages 200, 203 and 206, the last three in the appendixes
dealing with the Aboriginals Benefit Account. The most interesting information
was on page 206, which reported that the ALC received royalty equivalent
payments of $59.1m in 2022/23 and $35.7m in 2023/24 for on-payment to
Aboriginal corporations on Groote Eylandt in accordance with sections 64(3) and
35 of ALRA. The Annual Report did list, at page 62, the receipt by the Barrett
Family Trust No 2 & Others of $305k in consultancy payments during the
financial year, although it is not clear if any of this related to
BellchambersBarrett, nor whether it related to the ALC review.
I did examine the
Annual Report’s explanation of the various audit and risk, and integrity
functions. My takeout is that while they are designed to focus on the
“appropriateness of the NIAA’s financial and performance reporting
responsibilities, risk oversight and management, and system of internal
controls”, they do not extend to oversight of the implementation of the NIAA’s
regulatory responsibilities for statutory and other Commonwealth controlled
entities within the portfolio. This in my view is a serious and significant
gap.
What is
striking about the NIAA Annual Report then is not so much what it includes and
discusses, but what is missing and absent. An assiduous reader interested in
finding our what is happening in relation to the NIAA’s oversight
responsibilities in relation to the ALC is effectively guided to an unequivocal
conclusion: nothing to see here!
Executive
Director of Township Leasing (EDTL)
The EDTL normally
presents a stand-alone annual report. Unfortunately, the 2023/24 EDTL Annual
Report has not yet been published. Its staff are public servants within NIAA,
yet the NIAA Annual report barely mentions the Office of the EDTL. There is a
mention on page 206 that the Office receives administrative funding of $4.9m.
The 2022/23
EDTL Annual Report (link
here) is concise and clear, and well presented. In relation to the Groote
Eylandt, a Statement by the Executive Director reports on the transition of the
Groote Eylandt Township Lease to the community controlled Anindilyakwa
Royalties Aboriginal Corporation (ARAC):
…
This is the first time a Township Lease held in partnership by the Executive
Director (on behalf of the Commonwealth) has been transferred to Traditional
Owners, and represents an important achievement for all involved. .… Importantly,
our partnership with the Warnindilyakwa Traditional Owners has not ended
despite this transfer of responsibilities. The Office continues to partner with
and support ARAC as required. This is largely technical support in the form of
access to our specialised land tenure management system, to assist in the
consistent, accurate and transparent management of documentation and decision
making on land tenure matters.
The 2022/23
Annual Report also noted that on 1 October 2023 [unusually reporting on events
outside the time frame of the report], the Groote Eylandt Township Lease
transitioned to ‘a community controlled entity’ and gave an account of the handover
event attended by both the Minister Linda Burney and Assistant Minister Malarndirri
McCarthy.
The takeout
from this report in my view is three-fold: First, NIAA have had a
detailed involvement with the intricacies of land tenure and leasing on Groote
over the past decade and have been happy to sign off on the transfer of the township
lease to an entity that comprised five ALC Board members and five external
Directors. Second, the technical support being provided to ARAC is in
fact being provided to the ALC (see the discussion below on the ALC Annual
Report). Third, the independence of the five external Directors thus
becomes an important factor (see the discussion below on ARAC). It is uncertain
whether the ALC is driving ARAC’s priorities, or ARAC is acting
independently. Either way, given the
formal legal responsibility of the ARAC Directors, it raises the question
whether it is accurate to describe ARAC, and its decisions on the grant of
leases within the township, as ‘community controlled’. In other words, one
cannot merely assume that the leasing decisions of ARAC in relation to
the granting of s.19A leases will in every instance be in the wider Groote
community’s interest; instead the facts of each sub-lease transaction require
assessment. However, there appears to be no public reporting of these lease
granting decisions.
ALC Annual
Report
The ALC 2023/24
Annual Report was finalised on 14 October 2024 and tabled soon after (link
here). As usual, it is a comprehensive and well produced document with a
clear narrative running through it laying out a vision of the future of Groote
and the ALC’s role in achieving that. There is little in that narrative vision
that I would disagree with per se. Nevertheless, I have serious concerns
regarding the governance of the ALC, and the complex web of overlapping roles,
responsibilities and activities which emanate form the ALC. While the stated aspirations
are largely commendable, whether the reality aligns with those aspirations is
in my view questionable. The extracts I have selected to highlight below are in
large measure direct or indirect reflections of, or contributors to, that
scepticism.
The (former) CEO’s
report notes, inter alia:
Significant
progress has been achieved in the past year in the development of the
Winchelsea Island (Akwamburrkba) resource… A key industry standard report
indicating the size of the resource was achieved… The environmental approvals process for the
Winchelsea resource development is now at an advanced stage.
This reflects
the rhetoric that the development of the mine is central to Groote’s future and
in addition makes clear that the proposed mine is considered to be one of the
ALC’s core priorities.
In relation to
the ANAO issues, he noted, inter alia:
The
ALC has welcomed the NIAA commissioning an independent review on ALC’s
implementation of the ANAO report recommendations, which was nearing completion
at the end of this reporting period. The ALC will be receptive to the insights
provided by the independent review on our efforts to date and on further
improvement opportunities.
On page 19, a
section outlining the experience of the (former) CEO Mark Hewitt notes:
During the reporting period Mark held
positions as the Co-CEO of Winchelsea Mining and as the Executive Director of
Groote Holdings Aboriginal Corporation. Mark is a Director of Aboriginal Sea
Company.
In a section on
organisational structure (page 29), there is an extremely important description
of the ALC’s modus operandi:
Funding and Program Arrangements
The
ALC receives its operational funding under ALRA section 64(1) in line with the
approved budget estimates submitted to the NIAA for the respective financial
years. The ALC also receives grants to run programs, carry out research,
purchase equipment and employ people. A major funding source, for the ALC’s
Land and Sea Department, comes from the NIAA Indigenous Advancement Strategy
Jobs, Land and Economy program. The employees in the Land and Sea
Department referred to in the ALC’s Organisation Chart on page 25 are
predominantly funded by the NIAA grants.
The
ALC has entered into general service deeds with Aboriginal Corporations on the
Groote Archipelago to provide operational support services in line with ALRA
section 27(1A). These services include human resources, payroll and
accounting services, and support to Aboriginal Corporations to meet their
compliance obligations such as annual returns to the Office of the Registrar of
Indigenous Corporations. During the reporting period the ALC provided services
to 13 Aboriginal controlled entities. One of the 13 Aboriginal entities is
ARAC, to which the ALC provides human resources, payroll and accounting
services, and program delivery. Employee costs are charged to ARAC in
accordance with the general service deed between ALC and ARAC.
As
part of the ARAC general service deed, the ALC provides administrative and
other assistance which includes the employment of staff to deliver programs
that include Community Support, Preserving Culture, Infrastructure
Development and the Royalty Development Unit. The employees in the
respective Departments referred to in the ALC’s Organisation Charts on pages
23-28 are predominantly funded by ARAC. [emphasis added].
In relation to
the NIAA grant funding of staff of the ALC Land and Sea Department, one might
ask how that is consistent with the NIAA’s regulatory responsibilities, and
what actions have been taken to ensure that there are no perceived or actual
conflicts.
In relation to
the ALC’s services agreements with Aboriginal Corporations, ALRA section 27(1A)
states:
A
Land Council may, on the request of an Aboriginal and Torres Strait Islander
corporation that has received an amount of money from the Council under this
Act, provide administrative or other assistance to the corporation.
Of course, the
meaning of this provision must be read within the context of the legislation as
a whole, and in particular in relation to provisions such as s.23(1)(ea) and section
23AA(3), section 35, and section 35C. These provisions require the land council
to act in the interests of traditional owners and not just in its own interest.
The limits of
such assistance are to my knowledge untested at law; however it seems fair to
suggest that the ‘assistance’ would not extend to controlling the activities of
the entity. Issues raised by these arrangements (for example in relation to
ARAC) include the extent of the roles and responsibilities of the ARAC
Directors, whether individuals within the ALC are operating as shadow Directors
of the assisted corporations, and whether the ALC’s financial statements are in
fact a true and complete reflection of the ALC’s activities in the event that these
corporations are ‘controlled entities’. The ALC has used the existence of these
provisions to expand the footprint of ALC activities well beyond its formal
remit. A key contributing factor in doing so is the ALC’s role in selecting the
Directors of the key corporations which it is both funding and assisting. Indeed,
in the case of Groote Holdings Aboriginal Corporation (GHAC), the former ALC
CEO was appointed as one of the Directors. Following his termination by the ALC,
he no longer remains in that role.
The ALC appears
to have discovered a magic pudding which allows it to access s64(3) royalty
equivalent payments to fund its organisational empire and priorities well beyond
what the Minister has approved under section 64(1) and to establish a framework
which would allow the ALC to avoid the normal oversight provisions that apply to
the ALC. Whether this expanded remit has led to problematic outcomes would
require a forensic audit; neither the minister, the NIAA nor the public has any
way of knowing if this is indeed the case. Of course, the corollary of
switching s.64(3) funds to s.64(1) uses is that there is less funding available
to assist the legitimate aspirations of local corporations.
A crucial
protection against the sorts of outcomes described above would be for the
assisted corporations to have Directors who are independent of the ALC. In
fact, this is not the case. Many ALC Directors are also assisted corporation
directors. Even the independent directors of some assisted corporations appear
to have potential conflicts.
The consultants
list on pages 84/85 includes several engagements of interest. Rod Tidey
Consulting was engaged to review and assess ALRA s.64(3) distributions, while
Australian Venture Consultants [principal Russell Barnett] was engaged to
review the AMT. Rod Tidey is a former employee of the ALC. Tidey and Barnett
have received consultancy payments over the past four and two years (Tidey to
review section 64(3) payments; Barnett to review the AMT) and both are
Directors of ARAC and AMT. Finally, ARAC has itself been engaged as a consultant
to the ALC to provide ‘operational services’ and most recently ‘governance and
data unit services’ at a total cost of $564k over the past three years. This is
intriguing as ARAC’s operations are conducted by the ALC, and it does not
appear to have the capabilities to deliver consulting services. It is
conceivable that ARAC might sub-contract the engagement, but this begs the
question: why avoid a direct engagement?
Anindilyakwa
Mining Trust (AMT)
The AMT was
established as a charitable trust to receive negotiated royalties paid to the
ALC for the benefit of the traditional owners of Groote. The Australian
Charities and Not-for-profits National Commission (ACNC) is the regulator of
charities. The AMT 2024 Financial Statement, available on the ACNC website,
indicates that it holds net assets totalling $311 million. It distributes
comparatively small amounts of its annual revenue to the Anindilyakwa Royalties
Aboriginal Corporation (ARAC). Its Trust Deed limits its capacity to distribute
payments to corporations representing particular clans. The members of the
Trust are James Durilla, Lionel Jaragba, Elma Yantarnagga, Simone Yantarnagga,
[all of whom were on the ALC Board], Simon Longstaff, Russell Barnett, Adam
Simpson, and Rodney Tidey.
Anindilyakwa
Royalties Aboriginal Corporation (ARAC)
ARAC does not
prepare a comprehensive Annual Report, but as a CATSI Corporation (and
registered charity with Public Benevolent Institution status with FBT exemption
) it uploads regular corporate reports to the website of the Office of the Registrar
of Aboriginal Corporations (ORIC).
ARAC Directors
in 2023/24 were Tony Wurramarrba (ceased 30 June 2024) James
Durilla, Lionel Jaragba, Elma Yantarnagga, Simone Yantarnagga, [all of whom
were on the ALC Board], John Cunningham (resigned November 2023), Simon
Longstaff, Russell Barnett, Adam Simpson, and Rodney Tidey. Apart from Tony
Wurramarrba and John Cunningham, these Directors are also Directors of the AMT.
In the
Directors’ Report provided in its 2024 Financial Statements, the Directors
report that during the 2023/24 financial year, the corporation paid a premium
in respect of a contract insuring the Directors against a liability ‘incurred
by such Director, secretary of executive officer to the extent permitted by the
Act. The contract of insurance prohibits disclosure of the nature of the
liability to be insured and the amount of the premium’.
Note 6 to the
financial report indicates that the insurance costs for the corporation grew
from $70,751 in FY 2023 to $169, 273 in FY 2024, an amount of almost $100k.
The statement
regarding insurance is somewhat intriguing as it suggests that the insurance
company at least may consider that there is a vulnerability to claims against
the Directors. Apart from the normal
risks that apply to a charitable corporation, I see two potential possibilities
that may have been exercising the minds of the Directors.
The first is
the 2022 transfer of responsibility for the township leases on Groote Eylandt
arising from the notional reform to the Commonwealth township leasing scheme (I
say notional because I do not see the change as an unmitigated positive). If
this is the reason for the additional insurance, it represents an additional
cost of the recent transfer of responsibility by the Office of Township Leasing
to ARAC. (see above), which by rights ought to be sourced from the ABA and not
s64(3).
The second
potential issue of concern for Directors may be the allegations first raised in
the Saturday Paper and which I discussed in two earlier posts (link
here and link
here) regarding a 2022 payment of $41m from AMT to ARAC which does not
appear to have been deposited into an ARAC bank account. A related concern may
be any ramifications arising from the (yet to be specified) referral of certain
unknown ALC individuals to the National Anti-Corruption Commission (NACC) (link
here).
Groote
Holding Aboriginal Corporation (GHAC)
Anindilyakwa
Advancement Aboriginal Corporation (AAAC)
Finally, I sought to examine the
financial statements for both GHAC and AAAC. GHAC is a key funder of the
infrastructure which will support the proposed Winchelsea mine. AAAC is the
owner of 70% of the Winchelsea Mine Joint Venture, although as I have pointed
out previously, no AAAC Directors are on the Winchelsea Mining Board.
Both GHAC and AAAC failed to hold their
AGMs within five months of the end of the financial year as required by the
CATSI legislation and have not lodged their 2024 financial statements. They each
applied to the Office of the Registrar of Indigenous Corporations for an extension
of time, citing the fact that their financial statements were not yet finalised
(it is unclear what the reasons for this might be). The Registrar refused each
request, pointing out that the rule book for each corporation did not require
the audited financial statements to be available for the AGM.
Conclusion
This overview
of the 2023/24 annual reports related to Commonwealth regulated corporations
involved in ongoing developments on Groote is a useful lens into the complex
array of entities engaged in managing, allocating, receiving and utilising the
financial payments derived from South32’s GEMCO manganese mine on Groote
Eylandt, and intended to benefit the traditional owners. In 2023/24, the ALC had
revenue of around $24m to fund its operations and distributed just under $36m
in mining agreement payments, a total of around $60m. In 2022/23, the
equivalent figure was around $75m.
While much of
this expenditure underpins the Groote economy, a significant portion is being
allocated to a commercial investment in the proposed Winchelsea manganese mine with
significant commercial and other risks. There have clearly been accountability
and governance issues arise as evidenced by the May 2023 ANAO report, and a
plethora of allegations that neither the Minister, the NIAA, nor the ALC have
seen fit to even try to answer. The failure of the AAAC and GHAC (whose
accounts are kept by the ALC Royalty Development Unit) to lodge audited
financial statements on time suggests governance challenges are ongoing.
My conclusion is
that the Minister and her agency have a responsibility to step up and
proactively manage the financial and social issues within the ALC and the
associated corporations it is assisting. After all, they are the regulator. Their
failure to do so to date has increased the risk that the social and economic
stability on Groote will begin to unravel, and once that occurs, it will be
disastrous for Groote’s population.
I should note
for completeness that I have not examined the linkages between the ALC and the
NT Government. I expect that similar systemic issues to those identified here
would be found to be in play.
In relation to
the systemic issues identified here, I have three high level recommendations
for the Minister:
·
Undertake
a forensic audit across
the span of the ALC and its associated entities.
·
Appoint
an independent administrator
to dig the ALC out of the hole it finds itself in.
·
Initiate
an independent review
of the administration of the ABA and ALRA, encompassing both the NIAA and the
land councils, and focussing on potential legislative reforms to strengthen regulatory
oversight and financial governance.
Taken together
such a three-pronged strategy would ensure that the regulatory responsibilities
of the Commonwealth are fulfilled, and that the NT land councils are fit for
purpose in their primary roles of protecting the interests of traditional
owners of Aboriginal lands across the NT.
In relation
to annual reports, I
recommend less gloss and more substance; in particular, in addition to ticking
of the checklist of annual report requirements, they should include a succinct
and coherent narrative outlining what each entity is seeking to achieve and
their assessment of their performance. There is just too much flim-flam in
these reports at present, and they have an insidious and counter-productive impact
of seeking to distort reality. If citizens are to trust governments, then
governments must come clean and be truly transparent.
18 January 2025
