Gagudju Association: Kakadu entity’s crown jewels sold for a fraction of their book value

A cash-flush Aboriginal association sold off a trio of profitable assets at a fifth of their book value on the advice – which has been criticised by a former CEO – that leases would not be renewed.

Mercure Kakadu Crocodile Hotel Gagudju Crocodile Hotel, Jabiru. Picture: File

Documents obtained by the NT News show a cash-flush Aboriginal association sold off a trio of profitable assets at a fraction of their valuation on advice the leases would not be renewed – an assumption the association’s ex-CEO has criticised.

Gagudju Association Ltd, formed in 1980 to benefit 14 clan groups living in Kakadu, covering funeral costs and issuing bursaries among other activities, built up a war chest of $13,926,985 as at June 30, 2023.

Its wealth was substantially driven by three astute investments: 100 per cent of the Puma Aurora Kakadu service station, 30 per cent of the Mercure Kakadu Crocodile Hotel, and 48 per cent of Cooinda Lodge Kakadu.

According to an April 2019 presentation from former Gagudju CEO Steve Smith, the association’s interests were worth approximately $2.034m (service station), $1.1m (Crocodile Hotel) and $4.264m (Cooinda).

However, after a grant of land rights to traditional owners in 2021, the assets were sold at a fraction of their book value, with Gagudju’s current CEO, Claire Thompson, attesting in an affidavit that Gagudju had been told by the relevant traditional owners that leases would not be renewed past their expiry date.

On that advice, Gagudju’s share in the Crocodile Hotel was granted to Gundjeihmi Aboriginal Corporation, representing the Mirarr clan, for free; the service station was sold to Gundjeihmi for approximately $250,000; while Cooinda is in the process of being sold to Djigardaba Enterprise Aboriginal Corporation, representing the Alderson/Murrumburr clan, for $1.2m.

Glamping tents at Cooinda Lodge. Photo: Tourism NT/ Shaana McNaught.

In her affidavit, filed as part of an unsuccessful injunction sought by Gagudju member Charles Nicholson Whittaker to prevent the sale of Cooinda because of its alleged undervaluation, Ms Thompson said the sale prices were the best that could be hoped for.

Updated valuations, considering specifically what the assets were worth with such little time left on the headlease, rendered valuations of nil for the Crocodile Hotel and service station, and between $1.776m–$2.736m for Cooinda.

Gagudju initially offered its share in Cooinda to Djigardaba for $2.2m.

Djigadarba countered with an offer of $2, before subsequently raising it to $200,000, then $1.2m, which was ultimately accepted.

Mr Smith, Gagudju’s acting CEO in 2018–19 and a former CEO of the Aboriginal Investment Group, told the NT News he believes the three assets should have been taken to market, as it may have meant a greater financial benefit to the 12 other Gagudju clans outside of Mirarr and Alderson/Murrumburr.

Former Gagudju Association Incorporated and Aboriginal Investment Group CEO Steve Smith. Picture: Facebook/ Aboriginal Investment Group

“When selling on behalf of members, you need to obtain fair value,” he said.

The presumption that the leases would not be renewed after the land was transferred to traditional owners was shaky, Mr Smith believes.

He said that not one existing business located within the Jabiru township was denied a lease when ownership transferred to Gundjeihmi as the traditional owners, and that, in the case of Cooinda, Gagudju could have been entitled to generous compensation for improvements made over its tenure should the lease not be extended.

According to a May 2020 valuation, this would have amounted to millions of dollars – money Djigardaba does not have.

Cooinda Lodge. Photographer: David Hancock/ SkyScans.

According to its most recent financial report, Djigardaba holds assets worth $12,384.

Mr Smith has lodged a complaint with the National Indigenous Australians Agency (NIAA) regarding Cooinda’s sale.

The sale is being funded via a $1.2m loan from the Aboriginals Benefit Account, which was formerly administered by the NIAA, but now comes under an unrelated entity, the Northern Territory Aboriginal Investment Corporation.

Supreme Court Chief Justice Michael Grant, in recently deciding against Mr Whittaker’s application for an injunction to prevent the sale of Cooinda, said he was not required to rule on whether Cooinda was sold at less than market value.

Mr Whittaker or another interested party would be free to make a claim for damages to test the valuation in court, he said.

Mr Whittaker, who Mr Smith claimed had shelled out $30,000 of his own meagre funds in order to bring the failed injunction, has until Thursday to lodge substantive proceedings in order to pause or reverse the sale.

Gagudju is set to be wound up, with its cash reserves to be distributed to 15 Aboriginal associations and entities, including Djigardaba and Gundjeihmi.

In a statement, Ms Thompson, Gagudju’s current CEO said the Gundjeihmi and Djigardaba, as traditional owners, “have every right to allocate leases as they see fit under the Land Rights Act when leases on their land held by others come to an end”.

Originally published as Gagudju Association: Kakadu entity’s crown jewels sold for a fraction of their book value