Nothing to See Here: NIAA’s answers to recent Senate Questions related to Groote

Let’s talk of graves, of worms, and epitaphs,

Make dust our paper, and with rainy eyes

Write sorrow on the bosom of the earth.

Richard II, Act three, Scene two.

The NIAA has provided answers to a series of Questions on Notice lodged By Senator David Pocock following the last Estimates Hearings in November 2024 (link here). The questions related to the ongoing situation on Groote Eylandt, the status of various issues within the Anindilyakwa Land Council and the NIAA’s actions throughout this rather sorry and complex saga.

Given that there appears to be few external parties taking an interest in these issues (apart of course from the ongoing NACC investigation which may not report for months), I feel it is incumbent upon me to provide some commentary if only for the record. For the larger context, I recommend readers look at my previous post and in particular, the article I co-authored with Bill Gray in the Mandarin (link here).

In this post, I have focussed on those answers which I consider to be inadequate. In a subsequent post, I will address the issues raised by the answer to Question #8.

I have italicised the questions and the NIAA answers and indented my comments in relation to each answer.

 

Senator Pocock Question #1

Will the Minister initiate an independent, comprehensive, forensic audit into the administration and operations of the ALC and of those Aboriginal Corporations that received funding determined by the ALC, so that the new Board of the ALC can move ahead in confidence to regain the trust of the Anindilyakwa community and other key stakeholders, and achieve the standard of governance that will ensure the ALC can properly represent its people and achieve its mission? If not, why not?

NIAA Answer #1

The former Minister for Indigenous Australians, the Hon Linda Burney MP referred concerns regarding Anindilyakwa Land Council (ALC) governance and operations to the National Indigenous Australians Agency (NIAA) for review and action as required. In response, the NIAA commissioned an independent review of the ALC’s responses to the Australian National Audit Office (ANAO) governance audit and has subsequently been overseeing the ALC’s actions to improve its governance, transparency and accountability.

The NIAA has and will continue to refer all relevant matters to law enforcement and other agencies as required. 

Comment mcd #1

A preliminary and more general point: The NIAA is under the direct control of the Minister. Both she and her agency have regulatory responsibility for the ALC (and for the Registrar of Aboriginal Corporations who is the regulator for CATSI Corporations who are the beneficiaries of section 64(3) payments). Any shortcomings of the NIAA are ultimately the responsibility of the Minister. Any failure to answer questions asked are a failure of the Minister as well as her agency.

The Minister/NIAA have not answered the question regarding the forensic audit. The so-called ‘independent’ review commissioned from BellchambersBarrett was constrained in its terms of reference and focussed only on the formal ANAO recommendations and not on the wider issues which were identified by the ANAO in its fine-grained analysis. The NIAA and the ALC were involved in finalising the BellchambersBarrett Report, and for this reason it was clearly not independent. The answer refuses to contemplate an independent forensic review and fails to provide any assurance that this is covered off in some other way. The deeper question this raises is why? Why won’t the Minister initiate the action required to get to the bottom of what has transpired on Groote? Why doesn’t she want to the public to know?

Senator Pocock Question #3

Can the Minister confirm that the conflicts of interest identified by the ANAO in May 2023 and again more recently in the BellchambersBarrett review of August 2024, have now been addressed to the satisfaction of the Minister and NIAA?  If not, what are the issues still outstanding?

NIAA Answer #3

The ALC has developed a schedule of activity to address the ANAO and Bellchambers Barrett recommendations, including those associated with conflicts of interest management. The NIAA has been overseeing the ALC’s performance of those activities and is satisfied that implementation of acceptable arrangements for conflict of interest management will be progressive over the forthcoming months. The conflicts of interest noted in relation to the former ALC Chief Executive Officer (CEO) have been resolved following the termination of Mr Hewitt and his removal from positions in all associated entities. The current ALC Board Chair does not hold any of the positions that gave rise to the conflict of interest concerns in relation to the former Board Chair.

Comment mcd #3

The question has not been answered. The answer makes clear that the Minister is not yet in a position to be satisfied (“acceptable arrangements for conflict-of-interest management will be progressive…”), yet they have not gone on to identify the issues that remain in progress.

The unqualified assertion that the termination of Mr Hewitt and the election of a new Chair addresses the conflicts of the past is problematic. It ignores the complex web of influence previously exercised by the former CEO and his spouse, and the inevitable expectations on Groote that the benefits flowing form those prior arrangements will continue. The current status and oversight of the various positions and financial interests previously held by Mr Hewitt’s spouse remain completely obscure.

One important but unintentional revelation of this answer is the reference to Mr Hewitt’s ‘removal from positions in all associated entities.’ How was this achieved? Did the Minister and NIAA give Mr Hewitt and his spouse some kind of ultimatum to resign (and if so what was the quid pro quo) or did the ALC direct the ‘associated entities’ to dismiss him, thus confirming that they in fact exercise control over these entities? The public interest requires that clarification and answers to these questions be provided.

Senator Pocock Question #4

Has the Minister/NIAA approved any arrangements for the management of the conflicts of interest that were identified in the ANAO and Bellchambers Barrett reports? If so, will the Minister please table those arrangements.

NIAA Answer #4

Formal approval of the ALC’s conflict of interest arrangements is the responsibility of the ALC Board in consultation with the ALC Audit Committee and ALC management.

Comment mcd #4

The implication is that the Minister and NIAA have not approved any arrangements for the management of conflicts of interest. The ALC has been riven with actual and potential conflicts of interest for at least six years; this Blog has previously identified and discussed many of them. Without ministerial engagement and approval of the actions being put in place, there is no guiderail in place to prevent the re-emergence of conflicted influence over decision-making in the future. Moreover, without a forensic audit, it is unclear whether the pre-existing conflicts of interest led to misallocation of funding and resources (with detrimental impacts on individuals and corporations on Groote), and whether there is remedial action required to rectify such misallocations. The laissez-faire approach of the Minister and NIAA is patently inadequate and represents in my view a serious lapse of ministerial responsibility. The minister has numerous and far-reaching powers under ALRA to play a direct role in the ALC’s administration for however long it takes to establish a new set of watertight operational procedures.

Senator Pocock Question #5

Can the Minister confirm that the Aboriginal residents of Groote Eylandt have not been subject to predatory commercial behaviour and financial losses arising from the actions of the former CEO, his spouse and the former Chairman of the ALC? If not, what action is she taking to ascertain the extent of the potential losses to the community?

NIAA Answer #5

As previously noted, the former Minister referred concerns regarding ALC to the NIAA for review and action as required. The NIAA has and will continue to refer all relevant matters to law enforcement and other agencies as required.

Comment mcd #5

One obvious problem with this answer is that not all commercially predatory behaviour will be illegal or corrupt. If it is the case that legal and non-corrupt predatory behaviour has occurred, the question becomes: is the Minister prepared to allow the officers and staff of agencies within her portfolio to engage in such behaviour, and more directly, why was she not prepared to take action within her regulatory powers when she became aware of such activities rather than hiding behind the convoluted and time-consuming processes of law enforcement agencies?

Given the deliberate policy of minimising the disclosure of relevant information, we do not know if the issue of potential predatory commercial behaviour was even of concern to the Minister or her predecessors, nor whether it is of concern to her today.

What were the concerns that she referred to the NIAA and onwards to law enforcement? When were those concerns formally referred to the various agencies? Which agencies received referral? How long transpired between the Minister and her agency becoming aware of the concerns and referrals being made? Why won’t she indicate the general nature of those concerns? I am sure the people who are the subject of any investigations understand that investigations are underway. Why keep the public in the dark? What has the Government got to hide?

The bottom line is that the answer to this question is deliberately designed to hide crucial accountability information. This is not in the public interest.

Senator Pocock Question #6

According to the ALC website, in the period 2019 – 2023, the ALC distributed $361m of s64(3) monies to various corporations and organisations on Groote Eylandt. Can the Minister/NIAA confirm that these distributions were determined by the ALC in compliance with the provisions of the ALRA, including s23(3) & s23 AA of the Act?

NIAA Answer #6

Distributions were determined by the ALC in compliance with the provisions of the Aboriginal Land Rights (Northern Territory) Act 1976 (ALRA).

Comment mcd #6

This answer exudes unwarranted confidence. In my view it is both misleading and wrong. Section 23AA requires the ALC to undertake its functions inter alia, in a fair manner. The ANAO identified a series of payments to corporations where the ALC CEO played a major role in the application and/or was on the Board or had a conflict. The obverse of this favouritism is unfairness to the traditional owners who might otherwise have been beneficiaries.

The ALC’s effective control of associated corporations (in my view implicitly acknowledged in the actions taken by the NIAA to have Mr Hewitt vacate all his positions on associated entities) is itself an effective breach of the legislative requirement that land councils pay 64(3) payments to (independent) corporations and not to an entity it controls.

The provision (s.23(1)(ea)) that allows land councils to assist local corporations has a rider that such assistance must not cause the land council ‘to incur financial liability or enable it to receive financial benefit’. The ANAO found instances where the ALC could not demonstrate that this was the case. More substantively, where a land council effectively controls a corporation, then the liabilities of the corporation are those of the land council. This inevitably leads to a breach of section 23(1)(ea).

In a grave error of judgment, the NIAA and Minister appear to have lost sight of both the first and second Laws of Holes (link here). They should stop digging, and the Aboriginal citizens on Groote are still in a deep hole.

Conclusion

The answers to the questions above are in my view deliberately obfuscatory, are incomplete and by failing to provide the full story have the effect of misleading the Senate. In some cases, they are just wrong. This is a continuation of the approach adopted from the first day the ANAO tabled its performance audit in May 2023, which is best described as a policy of ‘nothing to see here!’ At best, this involves putting the political interests of the Government above the public interest. At its worst, it is much more serious than that. It erodes trust in Government and diminishes the quality of our democracy.

The failure to get to the bottom of what has transpired on Groote (not all of which will necessarily meet the definition of corruption, or criminal behaviour) will lead to ongoing and deep-seated disadvantage to the Aboriginal population of Groote Eylandt and may have wider implications for the viability of the core institutions established by the Commonwealth’s NT land rights legislation. These disadvantages will certainly be political, and financial, but most importantly they will also have social consequences for the fabric of community life on Groote. This is the tragedy that is unfolding.

 

21 February 2025

 

 

 

 

“Don’t you worry about that”: a further Groote issues update

                        Cassius: Did Cicero say any thing? Casca: Ay, he spoke Greek. 

Cassius: To what effect? Casca: Nay, an I tell you that, I'll ne'er look you i' the face again; but those that understood him smiled at one another and shook their heads; but, for mine own part, it was Greek to me.

Julius Ceasar, Act one, Scene two.

Estimates: On 7 June 2024, the Finance and Public Administration Legislation Committee convened to examine the financial estimates in relation to Cross-Portfolio Indigenous matters (link here). Senator David Pocock directed some sustained questions to both the NIAA officials and to the Anindilyakwa Land Council (ALC) and its CEO Mark Hewitt. Both the NIAA and ALC appeared quite uncomfortable with the scrutiny.

On these issues, the key takeouts from my perspective were as follows:

The core issues pursued by Senator Pocock were (a) the conflict of interest that the ALC CEO, Mark Hewitt has by virtue of holding simultaneous positions as CEO of the ALC, as an unpaid Executive Director of Groote Holdings Aboriginal Corporation (which funds infrastructure associated with the proposed mine) and as the co-CEO of Winchelsea Mining; and (b) the degree of disclosure made in relation to the October 2023 proposal from Mr Hewitt to the Anindilyakwa Advancement Aboriginal Corporation (AAAC) which owns 70 percent of Winchelsea Mining for him to be gifted ten percent equity in Winchelsea Mining.

NIAA confirmed that following the media revelations in early 2024, the Integrity Group has commissioned an ‘independent’ review of the implementation of the May 2023 ANAO audit recommendations by an accounting firm based in Canberra, Bellchambers Barrett. What they haven’t done is commission a forensic audit of the tangled web of influence and money flows between the ALC, and several local corporations providing funding to Winchelsea Mining and towards logistics infrastructure for the proposed mine. It is unclear how independent the reviewer can be given its business model is focussed on providing consulting services to government, it provided a ‘draft report’ to the NIAA before Estimates, and the terms of reference are extremely narrow.

NIAA failed to answer Senator Pocock’s question on whether the Minister had been briefed on Mr Hewitt’s conflicts of interest dating back to his involvement on both sides of the negotiation of a mining lease to Winchelsea in 2020. While formal recusal arrangements were put in place, it is unclear how they could work in practice, and whether the recusal arrangements also applied to the then ALC Chair and to his wife who I understand is also an ALC Board member.

When asked about why the CEO had not stepped aside, the NIAA responded that this is a matter for the ALC Board. However, as I have documented on this blog previously, there is a risk that individuals associated with the ALC exercise significant control over ALC Directors by virtue of the existence of a discretionary mechanism to provide former Directors with generous financial benefits (see the discussion of the Anindilyakwa Leaders Future Fund Aboriginal Corporation (ALFFAC) in an earlier post (link here). This is a matter that should be of concern to the Minister and the NIAA given their regulatory oversight responsibilities for portfolio bodies such as the ALC.

When the ALC appeared before the committee, the new Chair, Ms  Cherelle Wurrawilya stated unequivocally that the ALC Board was aware of the recent media allegations and stated that ‘the ALC board completely supports the work of our CEO, Mr Mark Hewitt. He has been our CEO for 13 years and is working hard to deliver the future that we, the Anindilyakwa people, want for our community.’ There was no reference to the 235 signatories to the Petition tabled before the previous Estimates Hearing.

Senator Pocock then asked the ALC CEO to outline how he dealt with conflicts of interest. The answers revolved around leaving the ALC Board discussion while Winchelsea matters were discussed; and leaving the Directors meeting of Winchelsea while ALC matters were discussed. Apart from the fact that this ignores the possibility of matters being discussed beforehand with key Directors in both settings, he did not make clear how the other two key management personnel within Winchelsea resident on Groote, the ALC Chair and Mr  Hewitt’s wife who is also a part time ALC employee dealt with conflicts. If all three recused themselves in matters affecting AAC or the ALC or Groote interests generally, that would only leave the two Directors from AUS China International Mining Pty Ltd (who  only own 30 percent of the joint venture) making the decisions. That this would be the actual situation defies belief.

Nor did Mr Hewitt discuss the fact that while AAAC owns 70 percent of Winchelsea Mining, no AAAC Directors sit on the Winchelsea board. Instead, AAAC is ostensibly represented within Winchelsea by the (former) ALC Chair and two ALC staff (namely Mr Wurramarrba, Mr Hewitt, and Mr Hewitt’s spouse). A more likely alternative interpretation however is that it is the ALC that effectively controls AAAC and the ownership of the equity stake in Winchelsea (see the discussion of the Corporations Act definition of effective control in my previous posts: link here and link here).

Senator Pocock then pursued details in relation to the proposal put to the AAAC and Winchelsea by Mr Hewitt for Mr Hewitt and his spouse to obtain an equity position in Winchelsea (which would have diluted the AAAC holding). In particular he sought details of whether the Minister was informed. It appears that she was not, despite the fact that in the ALC response to the ANAO Audit makes clear that Mr Hewitt and/or the ALC declared potential conflicts to both Minister Scullion and Minister Wyatt at earlier decision points.  Senator Pocock also sought clarification on whether the ALC had been informed and approved the proposal (the answer here was that it had been discussed, but it appeared that there was no formal decision). Further information was to be provided on notice in relation to these matters.

At an earlier stage in the Hearing, ALP Senator Ghosh asked the NIAA a couple of (clearly pre-planned) questions regarding the functions of the Integrity Unit. The answer provided by the head of the NIAA Integrity Unit – see page 19 of the transcript -  outlined the Integrity Unit’s program of proactive intervention to ensure ubiquitous probity across he portfolio. The response was clearly designed to conjure the impression that all is under control:

we have been taking and building a far more proactive approach to the detection and management of noncompliance and fraud. As you would appreciate, it's a continually moving environment within which we're working, so we have been working to put more systems in place so that we can identify and address potential issues of noncompliance and fraud earlier in the piece. Certainly, indications from the matters that we're now dealing with are that is being more successful. We are getting involved earlier in circumstances and intervening before things do become an issue.

I was reminded of the famous quote of Jo Bjelke-Peterson: ‘don’t you worry about that’! Senator Ghosh then asked about the ALC and was advised that: 

The minister referred the media reports and concerns that were publicised earlier this year to my group for review, the objective being that we would review the information and then determine if referrals to other authorities were required. As a part of the process, I have commissioned an independent review of the land council's responses to the issues and recommendations that were raised in the ANAO report on governance. You might recall that a number of the issues raised in that ANAO report were the core of the media reports and concerns being raised. That independent review is currently underway. We expect to have a report for it finalised by the end of next month, July. It is well underway. As part of the review, I accompanied the independent reviewer to Groote Eylandt last week. I was there for three days. We met with management and the board members of ALC to gather more information as part of the review's work. It is ongoing. Once we have the report, we will see what it says.

Nothing to see here! It will be interesting to see if the Bellchambers Review finds a way to address the October 2023 proposal by Mr Hewitt for an equity share in the mine, a proposal which of course post-dates the ANAO recommendations, and thus falls outside the remit of the review.

These issues were brought into sharp relief in the following exchange (on page 39):

Senator DAVID POCOCK: But in a period of what you describe as instability, you sought to gain a shareholding and you didn't think that—it seems pretty significant—warranted disclosing. You mentioned that you disclosed conflicts of interest to Minister Scullion. You didn't think that required disclosure?

Mr Hewitt: It was an internal discussion. I simply asked the question to the board. If I were to step down as the land council CEO and focus on these large projects and optimise their success, what would be the normal standard for any other Australian in that situation?

Senator DAVID POCOCK: But you're not any other Australian. You're employed as the CEO. So I find this quite extraordinary. In hindsight, now that the legal advice was 'This is highly irregular; don't do it', do you accept that it should have been disclosed?

Mr Hewitt: I'm talking as the CEO of Winchelsea. So there are two sides to the discussion here—

Senator DAVID POCOCK: And you're on both sides.

Mr Hewitt: I manage that conflict.

Senator DAVID POCOCK: It sounds like you managed it by trying to get a shareholding, to which the legal advice was 'No, you can't do that.' But you didn't even feel the need to disclose that you were doing that.

 

Commentary

For the third consecutive Estimates hearing, the issues around the involvement of the ALC CEO (and implicitly the former ACL Chair) in the Winchelsea mine proposal have been the subject of close attention. While the issues raised most recently revolved around conflicts of interest, it is important to bear in mind what lies behind the existence of such conflicts: there are certainly risks of fraud, or of breaches of legislative provisions; there are risks of poor management and decision making, and of inequitable or unethical allocations to individuals. However, of most significance from my perspective, there are risks of poor strategic decisions built upon sub-optimal  strategic decisions arising from the existence of conflicts of interest. For example, as I have pointed out in previous posts, the ALC allocates around $60m per annum in accordance with section 64(3) of ALRA to traditional owner corporations. Taking into account the negotiated payments to the Anindilyakwa Mining Trust ( a separate entity unrelated to the ALC, but with some overlapping members) there is about a billion dollars a decade in mining related payments flowing to the Groote population. To the extent that the ALC is not exercising independent judgment on the best use of these allocations because key decisionmakers are conflicted, there is a risk of significant commercial losses and a failure to preserve a long term capital base.  This is why eliminating (and not merely managing) conflicts of interest is so important.

I wrote to the Minister on 1 March 2024 recommending to her that she take early action to address these types of risk. In particular, I recommended a forensic audit that went beyond the narrow remit of the ANAO audit, and encompassed the network of interlinked corporations funded by the ALC. I recommended a number of other actions which I considered essential while such an audit was underway. Last week (over three months later), I received a response from the NIAA CEO which acknowledged that the scope of the current review does not address all the concerns I raised, but assures me that it will provide ‘information on the progress made by the ALC to better manage governance arrangements…’ The NIAA’s CEO’s response also specifically noted that it is standard practice for the NIAA to refer matters to the appropriate Commonwealth or state and territory entities for assessment and action. Needless to say, the response does not engender much confidence that the NIAA and the Minister (who are responsible for regulatory oversight of the ALC and its role in distribution of substantial mining related payments) are adopting a proactive approach to getting on top of the issues that are clearly in play. It is now over a year since the ANAO review was published, and the NIAA would have had earlier access to the ANAO’s draft report.

It is also worth noting that the Estimates Committee appears to be failing in its overarching responsibility as a key accountability mechanism for public policy in the Indigenous portfolio domain. In contrast to Senator Pocock, neither the ALP nor the Opposition Senators on the Committee evinced much interest in understanding what is occurring on Groote nor in finding ways to address the substantial policy risks I have identified previously on this blog and summarised in this post.

It is beyond the time when the Senate should undertake a rigorous review of the operations of Estimates Committees, and consider serious reforms to ensure that discussions are much more focussed and targeted than at present. Sitting through hours of hearings reminds me more of an extended primary school ‘show and tell’ session than a serious attempt to ensure funded agencies are up to the mark. In my view, Senators should be obliged to identify issues in advance, even table core questions, and Committee’s should utilise something akin to a counsel assisting to raises the questions that require attention. Why is it that our parliamentary representatives feel no sense of obligation to seriously focus on the job they are elected to perform?

 

21 June 2024