NACCHO #HealthElection16 : Fraud suspected in 44 remote Indigenous programs

JM

There are pockets where exploitation has taken place, people have come in and done the wrong thing “

Reconciliation Australia chief executive and former NACCHO Chair Justin Mohamed told the program

“They’re amongst the most disadvantaged people in Australia. The residents of our remote communities who battle chronic unemployment, terrible health problems and third world living conditions. It’s why billions of dollars in taxpayers money has been poured into Indigenous programs aimed at “closing the gap”. So it’s extraordinary to think anyone would want to exploit such vulnerable people.

“How could you do that to us? We trusted you, we had faith in you. I just feel real sad, not ashamed, but sad that this guy could just come in and blind us.” Community Board Member

“In the 2016-17 Budget, the Australian Government allocated $4.9 billion to the IAS, over four years to 2019-20, for grant funding processes and administered procurement activities that address the objectives of the IAS. 2

Of the 996 organisations recommended for funding through the IAS 2014 funding round, 46 per cent were Indigenous organisations (up from 30 per cent) and they received 55 per cent of total funding”

Spokesperson from the Department of the Prime Minister and Cabinet in response to questions from 4 Corners ( see Below )

From the Australian 7 June

Unscrupulous business advisers and a lack of business literacy in indigenous corporations have combined to produce high levels of fraud in ­remote communities, with 44 ­organisations and programs under investigation nationwide.

The ABC’s Four Corners last night revealed a range of questionable schemes in the multi-­billion-dollar sector, including one by Perth businessman Gary Johnson, who in 2013 was paid $6.6 million in management fees and profits through an arrangement with the Marra Worra Worra corporation at Fitzroy Crossing in Western Australia.

The corporation receives more than $14m in taxpayer funding annually to deliver services inclu­ding housing, health and financial counselling. However, in a deal a former board director described as “an unconscionable contract”, Mr Johnson’s agreement with Marra Worra Worra gave him 50 per cent of all profits, 50 per cent of all assets sales and 5 per cent of all turnover.

Board director Lynette Shaw told the program that of two ­directors whose signatures were on the document, one was financially illiterate.

Former director Joe Ross was quoted as saying “the poor directors at the time wouldn’t have had any clue about the ramifications and the implications of what the community was losing in economic benefits from the contract”.

Mr Johnson, who the program said was in the process of remodelling his $5.3m Peppermint Grove mansion, initially refused to answer Four Corners questions. He later sent a statement saying “the contract was willingly entered into by both parties”.

Warren Mundine, chairman of the Prime Minister’s Indigenous Advisory Council, said: “We wouldn’t accept in the wider ­Australian community … people sitting on boards who have no ­financial or no business background. ”

Reconciliation Australia chief executive Justin Mohamed told the program “there are pockets where exploitation has taken place, people have come in and done the wrong thing”.

The Department of Prime Minister and Cabinet was investigating 44 organisations for misuse and waste of funds, the program reported.

In another instance, serial conman Craig Dale swindled the organisation running the East Kimberley town of Warmun of $3m, with promises of a state-funded building program after the town was destroyed by flood.

Statement from the Department of the Prime Minister and Cabinet

Four Corners

Please find below answers to your questions with many links where you can find additional information that may be of use. Should you wish, this can be attributed to a spokesperson from the Department of the Prime Minister and Cabinet.

How many open cases does the PMC’s IAG Risk, Compliance and Integrity Branch currently have as at today’s date? (That is, open cases among the indigenous organisations and corporations funded by the Department which are examining any or all of the following allegations: misuse of funds, nepotism, conflict of interest, probity, performance management and misleading information?)

Answer:

The Department currently has 44 open compliance cases, representing less than 4 per cent of the currently funded organisations under the Indigenous Advancement Strategy (IAS).

IAS grant funding provided by the Department is subject to reporting and risk management requirements. As part of this approach, additional risk mitigation strategies are established for funded organisations that are assessed as higher risk. The Indigenous Advancement Strategy Guidelines March 2016 provides an overview of the Department’s management of organisational risk and compliance. The IAS Guidelines are available at https://www.dpmc.gov.au/indigenous-affairs/grants-and-funding/funding-under-ias.

The Department takes non-compliance matters seriously and has a responsibility to ensure funding is expended in accordance with the relevant funding agreement. The Department’s IAS Provider Compliance Framework outlines strategies to manage non-compliance by funded organisations, including an escalation process where non-compliance is identified. Where there is suspected complex or serious non-compliance, the Department’s undertakes a comprehensive compliance review to address any allegations or potential breaches of the funding agreement.

The Department does not tolerate dishonest or fraudulent behaviour. We are committed to deterring, preventing and detecting such behaviour in the delivery of programmes to disadvantaged Australians. For further information refer to our website at: https://www.dpmc.gov.au/who-we-are/accountability-and-reporting/fraud-control-and-fraud-reporting.

What is the current status of the PMC investigations into: Julalikari Council Aboriginal Corporation, Warmun Community (Turkey Creek) Incorporated, Marra Worra Worra Aboriginal Corporation and Garnduwa Amboorny Wirnan Aboriginal Corporation.

Answer:

The Department is unable to comment on specific matters.

What are the total number of Aboriginal organisations currently funded by PMC and what is the size of the current total funding pool?

Answer:

In the 2016-17 Budget, the Australian Government allocated $4.9 billion to the IAS, over four years to 2019-20, for grant funding processes and administered procurement activities that address the objectives of the IAS. 2

Of the 996 organisations recommended for funding through the IAS 2014 funding round, 46 per cent were Indigenous organisations (up from 30 per cent) and they received 55 per cent of total funding.

More up-to-date IAS grant funding information is published on the Department’s website and is available here: https://www.dpmc.gov.au/indigenous-affairs/grants-and-funding/indigenous-grants-reporting.

In the past five years, how much funding in total has been released to Aboriginal organisations by PMC?

Answer:

Responsibility for most Indigenous policies, programmes and service delivery transferred from eight Australian Government agencies to PM&C as part of the machinery of government changes in September 2013. Refer also to the answer above.

What governance training has PMC provided to these organisations in the past five years? That is, if you can please break down the number of organisations, individuals and training sessions.

Answer:

The Department does not deliver a programme of governance training to Indigenous organisations.

Under the Government’s Strengthening Organisational Governance policy, Indigenous organisations receiving grant funding of $500,000 (GST exclusive) or more in any single financial year from funding administered by the Indigenous Affairs Group within the Department of the Prime Minister and Cabinet are required to incorporate under the Corporations (Aboriginal and Torres Strait Islander) Act 2006 (CATSI Act). Indigenous organisations already incorporated under the Corporations Act 2001 are excluded from the requirement and do not need to change their incorporation status.

Incorporation under Commonwealth legislation provides a more robust regulatory framework and access to specialist assistance that helps to improve public confidence in the security and delivery of services to Indigenous people.

The Office of the Registrar of Indigenous Corporations (ORIC) provides governance training, support and advice to organisations incorporated under the CATSI Act.

Kind regards,

PM&C Media

Communications Branch

FROM THE 4 CORNERS WEBSITE

Background Information

STATEMENTS

Statement from the Department of the Prime Minister and Cabinet [pdf]

Statement from Northern Territory Government Departments [pdf]

Joint Statement from the WA Housing Authority and the Kimberley Development Commission [pdf]

Statement from Ralph Addis, Director General of WA Department of Regional Development [pdf]

Statement from Marra Worra Worra Aboriginal Corporation [pdf]

Statement from Gary Johnson [pdf]

Response from Pat Brahim (Redacted) [pdf]

They’re amongst the most disadvantaged people in Australia. The residents of our remote communities who battle chronic unemployment, terrible health problems and third world living conditions. It’s why billions of dollars in taxpayers money has been poured into Indigenous programs aimed at “closing the gap”. So it’s extraordinary to think anyone would want to exploit such vulnerable people.

“How could you do that to us? We trusted you, we had faith in you. I just feel real sad, not ashamed, but sad that this guy could just come in and blind us.” Community Board Member

On Monday night Four Corners exposes how millions of dollars have been ripped out of remote communities, leaving a trail of broken promises, unfinished work and a burning sense of betrayal.

“We bust arse to try and improve the lives of Aboriginal people and you know there’s this despicable act going on, it was just absolutely gutting.” Indigenous CEO

In some cases, communities have been the victims of out and out fraud:

“(We) were taken in by someone that was extraordinarily clever …It’s hard to describe somebody who would use people like that for some scheme for their own ends.” Former Community CEO

In others, it’s a case of sheer incompetence:

“I just cry out when I see people living in poverty, in destitute situations. And yet they’ve got Aboriginal corporations that have multimillions of dollars there that’s supposed to be there for their own benefit, and it’s not reaching the ground and helping them.” Indigenous Leader

Reporter Linton Besser goes on a 4000km journey to some of Australia’s most remote communities and finds evidence scattered all around, from abandoned constructions sites and dilapidated buildings, to state of the art facilities, locked up – because there’s no money left to run them.

He investigates who’s to blame:

“Linton Besser from Four Corners. I’d just like to ask you some questions…”

And finds communities determined to speak out and demand action:

“It’s taxpayers money and we’re saying taxpayers money is being wasted here, surely that’s government business, to come and work with us to sort it out.” Community Elder

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One comment on “NACCHO #HealthElection16 : Fraud suspected in 44 remote Indigenous programs

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