Groote Eylandt corporations in new funds scandal

Aboriginal corporations operating on a remote NT island allegedly misspent hundreds of thousands of dollars.

Indigenous Affairs Minister Nigel Scullion. Picture: Britta Campion

Aboriginal corporations operating on a remote island off the Northern Territory allegedly misspent hundreds of thousands of dollars under the noses of regulators seeking to clean up one of the worst abuses of mining royalties in a generation.

Reports published by the ­Office of the Registrar of Aboriginal and Torres Strait Islander Corporations, the regulator for more than 2000 Aboriginal ­corporations nationwide, reveal evidence of improper loans, ­travel allowances and other fees and payments made by at least three organisations based on Groote Eylandt in the Gulf of Carpentaria.

Indigenous Affairs Minister Nigel Scullion expressed deep concern that evidence of further wrongdoing should emerge as no one had been punished in relation to the scam allegedly committed more than three years ago. “These (new) allegations are of the most serious nature,” Senator Scullion said. “I will ensure they’re pursued as far as they can reasonably go, through criminal or corporations law.”

According to an ORIC compliance notice issued in August, Amangarra Aboriginal Corporation deducted $230,000 in “consultancy fees” from the purchase price of a Darwin residential home sold to its manager in early 2013.

“The corporation was unable to produce any documents to show how the $230,000 consultancy fee was determined,” an ORIC examiner wrote. “I ­suspect that not all of the corporation’s money has been used to carry out its business.”

Amangarra also allegedly ­issued tens of thousands of dollars worth of irregular loans, travel ­allowances and other payments, while failing to maintain proper records of its membership, directors’ conflicts of interest and authorisations to make payment. A sample of payments found 26 per cent were not approved at directors’ meetings, contrary to corporation rules.

Amangarra’s manager, Brent Woods, declined to discuss details of the allegations, citing ORIC’s ongoing investigation, but denied there had been any wrongdoing.

“Our side of the story is all on track, everything’s good,” Mr Woods said.

The regulator also found evidence that another corporation, Groote Eylandt and Bickerton Island Enterprises, last year made a “questionable” $700,000 early termination payment to its outgoing general manager, Gregory Mitchell, after his annual leave balance sextupled in just over a week.

“The ETP was approved by the former chief financial officer, ­exceeding his financial delegation limit as all payments over $250,000 must be approved by the directors in accordance with the corporation’s financial delegations policy,” ORIC said. “As a result of seeking independent legal advice, it was advised that while the actions of the former general manager were questionable, based on matters occurring prior to the termination event the advice provided was that no immediate legal action be taken against him.”

GEBIE’s chief financial officer was suspended and subsequently resigned. Mr Mitchell could not be reached for comment. New chief executive Coralie Ferguson did not return The Australian’s calls.

Groote Eylandt regularly ­appears near the top of the list of the Territory’s richest postcodes even though most of its Aboriginal population is unemployed, due to generous salaries paid by BHP’s GEMCO manganese mine and to mining royalties handed to traditional owners. Despite decades of mining and billions of dollars of economic activity, the island’s roughly 1700 Aboriginal inhabitants still have chronic social problems including poor health and education and soaring rates of domestic violence. Official figures show attendance rates at one school fell to just 18 per cent this year and to 37 per cent at another.

“The amount of money they’ve had, of royalties, there’s nothing to show for it — there’s zero to show,” Senator Scullion said.

A third organisation, Aminjarrinja Enterprises Aboriginal Corporation, found by ORIC in 2012 not to be keeping proper financial records or records of its membership and board decisions, was found still to have the same problems.

Aminjarrinja’s secretary and contact officer, Keith Hansen, hung up the phone when asked about ORIC’s compliance notices.

In 2012, The Australian revealed that a separate investigation by the NT Department of Business had uncovered evidence that millions of dollars paid to the Groote Eylandt Aboriginal Trust, one of Australia’s oldest and largest royalties funds, was spent on cars, boats, real estate and trips to Darwin’s SkyCity casino.

The government appointed a statutory manager and the trust is now suing its former auditors, accountants and lawyers — Deloitte, KPMG and Minter Ellison — for failing to detect the alleged fraud. A former trust public officer is awaiting trial on charges of theft.

Most of the new alleged mis­uses of royalties and other funds occurred after that alleged fraud was revealed, raising questions about the ability of regulators to ensure compliance.

ORIC’s investigations are understood to be ongoing. All three organisations have been ­ordered to produce documents and meet standards within given timeframes, in relation to breaches of corporate and financial governance rules.

A spokeswoman for ORIC had not responded to questions by the time of publication.