By Jane Bardon
An investigation into governance allegations about the Northern Land Council (NLC) has probed the distribution of millions of dollars of grants and loans to entities that were majority owned by, or closely associated with, the council over the past six years.
The ABC has obtained a copy of the internal investigation, which last week prompted Indigenous Affairs Minister Nigel Scullion to intervene and call an extraordinary full council meeting.
The probe was started by the council’s former chief executive Joe Morrison, who was dismissed by the NLC’s executive committee after writing to the Federal Minister to make a series of conflict of interest allegations.
It was carried out by the NLC’s audit committee and overseen by a Department of Prime Minister and Cabinet official, at the request of Senator Scullion.
Mr Morrison asked the committee to investigate whether there was a conflict of interest because seven of the members of the council’s executive hold positions on the board of the NLC majority owned entity, the Aboriginal Investment Group.
He believed the group was charging excessive rent for the council’s Darwin, Katherine and Tennant Creek offices.
The dispute blew up at the end of last year over whether the Aboriginal Investment Group should charge the NLC $1 million or $700,000 per year to rent its Darwin head office.
Mr Morrison was dismissed after he suggested the NLC should be moved out of the Darwin premises.
The NLC executive alleged he had improperly raised his personal assistant’s salary, an allegation Mr Morrison has denied.
In its draft report, the council’s audit committee reported that it understood from the NLC’s chief financial officer that “the NLC could save over $200,000 per annum in rent of the NLC moved premises”.
The report did not reach a conclusion on whether there was a problem with conflict of interest in relation to the rental negotiations.
Grants and loans examined
The audit committee draft report has also looked at a $4 million grant given to the Aboriginal Investment Group in 2013.
And it probed loans given by the Aboriginal Investment Group’s subsidiary and associated entities between 2012 and 2017.
As well as holding positions on the Aboriginal Investment Group board, the seven land council executive members are on the boards of its subsidiary organisations.
The audit committee reported that in 2012 the Northern Land Council received a $13.7-million unexpected windfall from the Federal Government because the council had been underpaid its administrative costs for 10 years.
The money was to be distributed by the NLC to best benefit the traditional owners it represents “in such proportions as the Land Council determines having regard to the need of the Aboriginals concerned” and it was to be “paid to Aboriginal Corporations on the basis of need within six months”.
The audit committee found that from the $13.7 million received, $2 million was granted to the majority NLC-owned Larrakia Development Corporation in Darwin.
The next $4 million grant was given in 2014 to the Northern Aboriginal Investment Corporation, which now trades under the name the Aboriginal Investment Group.
The grant was “in relation to various projects, including to expand business activities in relation to housing and other matters”.
On its website the Aboriginal Investment Group lists its completed projects as three houses in Katherine, a Timber Creek tourism accommodation business Wirib Tourism, and a solar project at Gove.
It is also planning to open a remote laundry in Barunga before the end of February.
The Aboriginal Investment Group told the ABC that its assets are currently worth $18 million.
It also operates as a charity, with a charitable arm called the Northern Australian Aboriginal Charitable Trust, which also has common directors with the seven NLC executive members.
The audit committee reported that in 2016 and 2017 the Aboriginal Investment Group’s associated charitable arm was owed $1.09 million by its Wirib Tourism business, but that it appeared the loan was later written off.
The audit committee said: “There is provision for doubtful recovery of the loans made to Wirib Tourism … the loan amount has been reduced to nil with no explanation.”
“It appears that the loan to Wirib Tourism may have been written off and not paid.”
‘There was no loan’
When asked about the alleged loan by the ABC, Aboriginal Investment Group chief executive Steve Smith said “there was no loan”.
“They were operational costs as part of the business,” he said.
“We didn’t loan money to an entity we owned — we upgraded a tourist park business which was at risk of closing and then handed it back to the local Gunamu Aboriginal Corporation.
“It is well within our charitable remit to support organisations of that nature.
Mr Smith said there was no conflict of interest caused by the group sharing board directors with the NLC executive.
“We have three pieces of legal advice stating categorically that there is no conflict of interest,” he said.
Mr Smith also said he did not have an adequate opportunity to prepare for questioning by the audit committee.
“I was called before the inquiry with 20 minutes notice,” he said.
“I wasn’t given the ability in that time to get my documents together.
In response to the audit committee’s report the current NLC executive has reiterated its comments that it does not believe there was or is any conflict of interest.
Executive committee deputy chairman John Christopherson said: “We have three sets of legal advice which say there is not conflict of interest.”
“We will lay all our cards on the table at the [full council] meeting in March.”
‘No dodginess’, loan may be repaid
The audit committee also reported on loans made by another Aboriginal Investment Group associated entity — the North Australian Aboriginal Development Corporation — to three directors of that corporation.
The report said that loans totalling $345,000 were given between 2014 and 2016 to then North Australian Aboriginal Development Corporation and NLC executive member Bill Risk and his company Barda Contractors.
Mr Risk told the ABC he made sure he did not take part in any of the decisions made in relation to the Barda Contractors loans while he was on the NLC executive.
“They were at arms length,” he said.
Asked whether the loans would be paid back, Mr Risk said: “There’s discussion around that now — yeah, we’re in talks about that now.”
The draft audit committee report did not come to any conclusions or findings in relation to the conflict of interest allegations.
Instead it detailed what the committee could ascertain about where money was spent and loaned.
Some Northern Land Council councillors have complained that they have not been provided with the audit committee report to read before the extraordinary meeting called by Senator Scullion.
They are calling on the council’s executive to release it to all 83 full council members.