The ILSC’s most recent annual report highlights its $5 million investment in the pipi project as a showcase example, promoted as a “historic” deal which will create “jobs and training opportunities for the Ngarrindjeri people”. An image of pipi harvesters at work takes prime place at the top of the report.
But the Herald and The Age have been given a more troubling picture by senior members of the Ngarrindjeri Aboriginal Corporation, who are querying who stands most to benefit from the deal.
The NAC, representing thousands of traditional owners, has been made a 50 per cent shareholder in the project. But NAC directors are in the dark about how the deal came to be struck, particularly how the other partner in the deal – an Indigenous charity apparently controlled by one family group – came to hold the other 50 per cent.
NAC chair Clyde Rigney says as a “general principle … grants should not disproportionately benefit one family”.
While there could have been “good reason” for the arrangement, Rigney says in a statement: “We cannot find any evidence of how this decision was made.”
He adds: “ILSC have asserted that a lengthy process of due diligence occurred [but] having reviewed [our] records it has been difficult to find any evidence of what actually happened and what consultation took place, other than with one or two selected individuals.
“As a representative body, NAC would expect that where a significant project was proposed, part of the due diligence and consultation process would have included meeting with [our] full board … it is not clear to us that this occurred at any stage.”
The saga has come to light amid growing calls from some senior Indigenous men and women for a probe into Indigenous governance across the country to fix what they say is a “broken system”.
South Australia’s Liberal government took the first step last week when it backed a parliamentary inquiry into local Indigenous corporations, focusing on governance standards following a series of scandals and failures. The inquiry has been opposed by Labor but backed by the Greens.
Ngarrindjeri traditional owner Mark Koolmatrie says investigations should extend nationally, with a royal commission also training its sights on the ILSC and Indigenous Business Australia, another federal body which invests heavily in Indigenous enterprises.
“The ILSC and IBA should be abandoned,” Koolmatrie says. “They are failing the people”.
Calls to fundamentally reform the sector come on the heels of the Herald and The Age investigation which revealed a loss of confidence in the ILSC chair from federal Minister for Indigenous Australians, Ken Wyatt, the appointment of a chief executive despite strong opposition from Wyatt, and concerns by an independent assessor that the ILSC’s long-term viability was at risk.
Since the stories broke, a number of Indigenous leaders and business experts have warned of due diligence problems across the sector more broadly, leading in some cases to disastrous outcomes for communities.
Aboriginal community advocate Malcolm “Tiger” McKenzie says billions of dollars go to Aboriginal communities and when things go wrong, nobody is held accountable. “Things need to change,” he says.
Adnyamathanha elder Cheryl Waye agrees, saying it was time to clean up the sector after years of abuse, including poor governance and inequitable distribution of benefits within some native title groups.
“This has been going on for years and it’s getting worse,” she says. “If you don’t do what the hierarchies want, you or your family get no money.”
The former head of the National Native Title Tribunal, Raelene Webb, QC, says the system should be overhauled but rather than a royal commission, she wants to see “open dialogue” with communities to achieve a better blend of “Western-style corporate governance” with the way they traditionally manage their lands.
Webb says the focus should be on “whether the broader native title system as it presently stands is apt to achieve the aspirations of Indigenous communities”.
A ginger group of lawyers, business people and others advocating for native title reform have coalesced under the banner of the Aboriginal Reform Group of South Australia. One of its key backers, retired lawyer and former consultant Paul Keath, says the regulators have failed to do their jobs and hold people to account.
A glaring example of how badly things can go wrong is another project backed by IBA.
In 2012, IBA signed a multimillion-dollar joint venture with the peak body and registered native title corporation for the Adnyamathanha people, who have rights and interests in 41,000 square kilometres in the Flinders Ranges region, receiving millions of dollars a year in royalties from mining operations for its 850 members.
The deal between IBA and Adnyamathanha Traditional Lands Association involved the purchase of the tourist destination, Wilpena Pound Resort. IBA took an 87.4 per cent interest and ATLA took the remaining 12.6 per cent.
In keeping with IBA’s philosophy, to partner and invest with Aboriginal and Torres Strait Island people, the expectation was ATLA would increase its shareholding over time.
Indeed, IBA’s publicity spruiks Wilpena Pound as a success story, saying “the investment is expected to create wealth and an ongoing income stream for ATLA, with IBA’s strategy to sell down the equity in the resort to ATLA over time, thereby increasing Indigenous ownership of [the] resort”.
In this case, IBA’s shareholding has not budged since it inked the deal almost a decade ago with an organisation that has been dogged by controversy, raising questions about the quality of IBA’s due diligence and ongoing checks.
Things came to a head in March 2020 when the federal regulator, the Office of the Registrar of Indigenous Corporations, placed ATLA into special administration after prolonged investigations revealed governance issues, “including a lack of records in relation to meetings, memberships, directorships and spending”.
ORIC’s registrar, Selwyn Button, a former police officer, described ATLA’s issues as “systemic”, chronic and severe. At the time of the appointment, it had no office, no staff, poor record-keeping and a board of up to 30 directors.
Bank accounts were frozen, directors stood down and forensic accountants appointed to unravel what the regulator describes as a “labyrinth” of related entities, some of which members don’t even seem to have known about.
The police also launched an investigation into payments made in connection with ATLA and related entities.
The problems stretch to 2013, shortly after the Wilpena Pound deal. Letters seen by the Herald and The Age show that as early as February that year ORIC was asked on behalf of five ATLA directors to investigate, saying there was a lack of reporting of finances and a lack of transparency of deals done.
A key concern was a significant financial restructure that had taken place in 2012. ATLA was swapped out as the trustee of member assets and replaced with a new subsidiary, Cramond Pty Ltd, controlled by a handful of ATLA directors who were related, but there was no documented evidence it had formal ATLA board approval.
ATLA was put on Federal Parliament’s radar on May 30, 2014 when then senator Nick Xenophon referred to funding concerns, allegations of intimidation and poor governance. He says he was told “the books are not transparent, because it has been shifted into a trust. Millions of dollars have gone into a trust arrangement”.
He also told Parliament he’d met a number of Adnyamathanha people who had told him they were not receiving their royalty benefits. “If you did not play the game, if you did not agree or if you were a dissident, you were punished,” Xenophon says.
In 2019, chartered accountancy firm William Buck conducted a confidential investigation into the expenditure of money administered by Cramond “to ensure all key expenditure complies with the established corporate framework.”
It concluded that some payments were “likely to be non-compliant” and noted the lack of co-operation from Cramond’s directors.
It flagged for remedial action the purchase of two caravans valued at $28,500, identified another three transactions totalling $169,670 relating to the financial year ending June 2019 which could not be properly assessed due to poor accounting, and says it couldn’t work out whether the proper payments were being paid to members and whether some parties who weren’t entitled to payments were getting them.
The William Buck report further identified a potential breach of a common law obligation to the Adnyamathanha native titleholders to acquire a further interest in the Wilpena Pound Resort business.
Alarmingly, it noted that the bank account names of Cramond did not reflect that it was acting in the capacity of trustee for the Adnyamathanha Traditional Lands Trust.
In a statement, ORIC says the special administrators had removed Cramond as trustee of Adnyamathanha Traditional Lands Trust and were in the process of transferring Cramond’s interest in the Wilpena Pound Resort and IBA joint venture to ATLA 1 Pty Ltd, a wholly-owned subsidiary of ATLA created by the special administrators.
ORIC says it expects the administration to end in April.
In response to questions from the Herald and The Age, the IBA says the Wilpena Pound business venture was run by a standalone governance structure which meant the police investigation and appointment of special administrators did not impact the running of the resort. And it denied failing to conduct proper due diligence when it entered the deal with ATLA.
But that’s not the way elders like Cheryl Waye see it.
“I feel angry and disappointed at what has gone on and how long it has been going on,” she says.
Waye’s concern is the time it has taken to address issues at ATLA. “What happened is too many of our people have not been helped,” she says. “Some have been buried without headstones due to lack of money.”
Meanwhile, the bulk of the Ngarrindjeri traditional owners are still waiting for answers on the pipi project. The 50:50 split of the project, according to corporate records, rests in a company called Kuti Co Pty Ltd, with one half share held by the Ngarrindjeri Aboriginal Corporation representing all traditional owners, and the other half held by a local Indigenous enterprise called Ngopamuldi Aboriginal Corporation.
A search of regulator databases reveals Ngopamuldi to be registered as both charity and Indigenous corporation with a board made up of members of one family.
The ILSC says both the NAC and Ngopamuldi hold “traditional ownership membership and both are eligible for ILSC assistance”.
The NAC says it’s working through the issues with the ILSC “to make sure that all funds allocated to the Ngarrindjeri nation benefit all Ngarrindjeri people appropriately”.
In Canberra, Wyatt backs the decision of the Liberal government in South Australia to support a parliamentary inquiry but says there are no plans for an inquiry at federal level.
Instead, he points to a recently completed review of the federal Corporations Aboriginal and Torres Strait Islander Act which sets standards for about 3300 Indigenous corporations around the country.
Among 72 recommendations is that the suite of tools available to the regulator, ORIC, be broadened, so it can issue penalty notices and accept enforceable undertakings from directors or corporations that breach the act.
Astonishingly, ORIC does not have such powers at present, leaving it with only the option of prosecuting through a court or appointing a special administrator.
Whatever the merits of the review handed to Wyatt last week, that’s unlikely to be enough to satisfy the critics.
Deborah Snow is a senior writer for The Sydney Morning Herald.
Adele Ferguson is a Gold Walkley Award winning investigative journalist. She reports and comments on companies, markets and the economy.