Annual Reports on Groote: an unconventional assessment

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