South West Aboriginal Land and Sea Council faces scrutiny over deal

The carve up of a $38m charitable trust that was established to distribute its income as grants but instead spent $18.5m of capital on a loss-making, dilapidated horse ranch.

WA Attorney General John Quigley is highly critical of some professional trustees who make decisions about Aboriginal trust money and is preparing legislation to tighten rules about the control of trusts. Picture: Colin Murty

One of Australia’s biggest land councils will face members over the carve up of a $38m charitable trust that was established to distribute its income as grants but instead spent $18.5m of capital on a loss-making, dilapidated horse ranch and residential units that were then given away.

The furore over the use of Noongar Charitable Trust money for the property purchases – part of a housing project that the former land council board initially supported – is expected to dominate the annual general meeting of the South West Aboriginal Land and Sea Council on ­Monday.

Some members are furious the deed of the trust was altered in August 2019 to allow the ­purchases without consultation with Noongar people.

Previously the trust rules stipulated that only ­income from the trust’s various investments could be spent.

For example, in the year before the rules of the trust deed were changed, the trust gave away $713,000 in grants to Noongar community events and organisations.

The new land council board has seen an internal report into what happened including the role of the Equity Trustees, the ASX-listed financial services firm that signed off on the purchases as professional trustees paid to manage the fund.

The contentious property purchases are the latest in a string of deals involving Aboriginal trust money to grab the attention of the McGowan government.

West Australian Attorney-General John Quigley has been highly critical of some professional trustees who make decisions about Aboriginal trust money and is preparing legislation to tighten rules about the control of trusts.

In 2020, $5m from the Noongar Charitable Trust was used to buy two lots of units in Perth that were then handed to a new entity called the Aboriginal Housing Recovery Centre Limited. Although the trust paid for those units, it has no ownership or control of them.

They belong to the Aboriginal Housing Recovery Centre, a charity led by the land council’s former chief executive Wayne Nannup.

The trust, however, did not hand over the old El Caballo horse ranch east of Perth which it bought for $12m in 2020.

The former land council board was in favour of that purchase and there were plans to transfer the property to the housing ­charity.

A further $1.5m was taken out of the trust to begin to repair the buildings before the board and Mr Nannup fell out.

Mr Nannup believes firmly that he has been maligned over the purchase of the horse ranch, which he maintains is a viable housing project for impoverished Aboriginal people. The housing charity Mr Nannup now leads continues to manage the old horse ranch.

Despite spending $180,000 on due diligence ahead of the El Caballo purchase in March 2020, there were surprises.

“Upon possession of the property it became apparent that the immediate remedial building works required to bring the property up to a habitable standard were greater than anticipated,” a management report to the land council board said in October 2020.

A draft report for Equity Trustees by accounting firm EY in June estimated El Caballo was worth as little as $7.2m despite WA’s real estate boom.

Mr Nannup, head of the Aboriginal Housing Recovery Centre Limited, does not agree that the trust overpaid for El Caballo.

In emailed responses to The Australian’s questions, he said he had a sworn valuation for the property showing it was worth more than the purchase price and improvements combined.

When The Australian asked to see the valuation on Sunday he replied that it was “not publicly available as yet”.