Indigenous Affairs minister pressured independent body to alter report

By Stephen Easton

Friday April 15, 2016

An attempt by the Minister for Indigenous Affairs Nigel Scullion to whitewash the Indigenous Land Corporation’s most recent annual report — an accusation he has previously sidestepped in questions from Senate Estimates — has been exposed by documents released on the body’s Freedom of Information log.

Scullion demanded the report, authored by the former board, be altered by the current board because he was unhappy with what it said. One email refers to Scullion asking the current board to “reflect on and repudiate” a simple summary of recent history the minister felt was inaccurate.

The former ILC board, chaired by Dawn Casey, approved its annual report to send off to the minister on August 26 last year, but it took until February 10 this year for the report to emerge.

The reason for the six-month delay is now clear. Scullion was demanding the draft report submitted by the previous board be altered by the new board, chaired by Eddie Fry.

A draft briefing paper to the board from acting chief executive Leo Bator from January 16 this year reveals that Scullion threatened to “withhold permission to table the report” unless it was changed to remove passages he didn’t want published.

“It would not be appropriate to remove those parts … ” 

The passages that Scullion did not approve remained in the report, after the new chair could not convince a sufficient number of board members to vote in favour of the minister’s version.

Exactly what Scullion thinks was incorrect about Casey’s version of the ignominious events that led to the board’s replacement — which is accurate according to the FOI documents and several sources who were involved — is not clear.

Scullion has yet to answer The Mandarin‘s questions from February 9, including whether he had queried any of the report’s contents, requested changes, or intended to request changes to it. The minister also gave what appears to be a misleading answer to a question he took on notice in Senate Estimates on February 12.

Senator Rachel Siewert directly asked if Scullion or his office asked Fry and the new board to amend the original report. His full reply:

“The ILC Board decided to include a statement from the incoming Chairperson in the 2014–15 ILC Annual Report outlining the focus of the new Board and its commitment to work with the Australian Government.”

When Senator Nova Peris asked why annual reports from three organisations in his portfolio including the ILC had not been tabled in anything like the normal timeframe, he replied:

“I am not sure that they have not been, first of all. So we will just find out when they were tabled.”

The FOI documents show he approved the ILC report less than two weeks earlier, on February 1. In another answer given on notice he said he received the reports on time and they were tabled “subsequently” but did not say that was about six months later.

Scullion’s media adviser told The Mandarin on February 9 the minister and his staff were too busy with the Closing the Gap report to respond, despite the ILC annual report having been approved in the same office over a week earlier. We received the same response the following day, about an hour before the report was quietly tabled.

A question of truth

The passage that offended the minister referred to his decision that a public inquiry into the purchase of Ayers Rock Resort was not necessary.

In December, 2014, Minister for Finance Mathias Cormann wrote to thank Casey for her dogged pursuit of the matter, adding he looked forward to “the outcome of the upcoming investigation”. He said Scullion was “more appropriately placed” to run it, and suggested the Indigenous Affairs Minister might also call in the Australian Government Solicitor or the auditor-general.

“Is it good governance to vary an annual report of an outgoing chair? Has this previously happened to an ILC report?”

Scullion wrote back detailing two previous reports by consulting firms and a 2013 performance audit of the ILC which he said “did not make significant negative conclusions” about the ARR transaction.

Within the FOI release is a timeline of the events that suggests ILC staff thought Casey’s summary of the various decisions and letters in question was accurate.

No changes, no annual report

Bator’s draft board papers show he initially thought up three options to respond to Scullion: support the draft report as prepared by Casey, remove the parts the minister didn’t like, or remove the entire foreword and replace it with a new one written by Fry.

In the finalised paper on January 13 this year, Bator recommended the board agree to “replace the foreword in its entirety” with a new one that would be attributed to Fry, rather than just removing the offending sentences. Bator wrote:

“It would not be appropriate to remove those parts … given the Chairperson’s foreword was signed by Dr Casey and her signature would remain on the altered document.”

Several drafts of talking points for Fry reveal he decided “the best course” would be to delete Casey’s foreword without inserting new text:

“This would be the neatest, and — I would have thought — least offensive course.”

The talking points confirm Bator and Fry had “significant discussions” with Scullion’s office about the matter and the minister wanted “full repudiation” of Casey’s version of recent history. But the only thing that would satisfy both the minister and the new chairperson would be to remove Casey’s words entirely and replace them.

Fry thought it would be a bad idea to just delete parts of Casey’s statement or “directly repudiate” her summary of events, but was convinced that it was a top priority to resolve the “impasse” in order to fix the “strained relationship” that had developed between Scullion and the ILC in recent years.

The points note that a chairperson’s foreword is not a legal requirement of annual reports but is “generally considered to be good governance practice” and that:

“Under this option, the Minister and the ILC will still likely be called to account for the removal of Casey’s foreword.”

They weren’t called to account, except by Casey — who launched the FOI request — and The Mandarin. The ILC was not called before the most recent Senate Estimates hearing.

Fry’s talking points also contain a supplementary argument he could use: that Casey’s foreword had gone beyond “the appropriate scope” for such a statement.

Between a rock and a hard place

In the end, the annual report was released with Casey’s original foreword, intact, and the new statement from Fry pledging to drop the campaign for an inquiry in the ARR purchase.

The other board members refused to change the original foreword, but agreed to include Fry’s rejoinder. The released documents also shed some light on what the new board hoped to get in return for distancing the ILC from the campaign for an inquiry.

How can the ILC be regarded as Independent of Government when it is prepared to vary core organisational documents?”

Bator had advised that accommodating the minister’s demand might mean Scullion would be more likely to support other proposals to help dig the ILC out of the massive financial hole it was left in after the ARR purchase. But other staff members pointed out fiddling with Casey’s report would expose the entity and the new chair to serious reputational risk.

Fry’s draft talking points confirm again that the ILC believed doing nothing would have meant no annual report at all for 2014-15, and explain:

“We are currently in delicate negotiations with the Government on matters that are crucial to the ILC’s having the resources to go on building a better future for Indigenous Australians — namely, an option to minimise interest payments on refinancing the Ayers Rock Resort debt and coming up with legislative proposals that will enable the capital base of the Land Account to grow.”

The minister had previously indicated he is not inclined to support the “legislative proposals” referred to, which would shift the investment parameters of the Land Account, the ILC’s source of revenue.

In the final letter, Fry told Scullion the new board would not pursue any further investigation of the resort purchase and wanted to focus on how to pay back the huge debts that resulted from it:

“I look forward to discussing with the Minister for Indigenous Affairs and the Minister for Finance a strategic approach to achieving a higher rate of return from the Land Account, benchmarked to returns achieved by the Future Fund.”

Fry, who is concurrently chair of Indigenous Business Australia, pledged to make sure the two organisations — which Scullion wants to merge — worked “in tandem” using their “combined” assets. The new directors are also likely to earn brownie points for reversing the previous board’s support for the Stronger Land Account bill introduced by The Greens.

Another indication of Fry’s attempts to make a clean break from Casey’s time as chair was the removal of various media releases — contained in the FOI releases — from the ILC website shortly after the new board took office.

Under previous legislation Scullion would have been required to table the annual report within 15 sitting days but the Public Governance, Performance and Accountability Act, which superseded the CAC Act, has no strict statutory deadline. Still, the Department of the Prime Minister and Cabinet’s guidelines and Senate resolutions have set the end of October as a reasonable deadline for public sector annual reports.

While the ILC wasn’t called to the last Senate Estimates hearing, possibly due to the annual report being delayed, the FOI documents reveal senior ILC staff were worried about what they might be asked about the matter.

In an email to Bator, the ILC’s executive director of strategy said she and its top lawyer both expected the agency to “attract scrutiny about the delay and any deletions to the annual report at Estimates” especially given Cormann’s “definitive support” for a review of the ARR purchase, which was already on the public record.

The strategy boss suggested asking Scullion to put his request for changes in a formal letter “given the serious reputational risks for the Chair and ILC” — but he never did — and went through some of the awkward questions they might be asked if they complied, suggesting “defensive briefings” be prepared.

Two of those questions in particular still demand answers from Scullion and the current ILC board:

“7. Is it good governance to vary an annual report of an outgoing chair? Has this previously happened to an ILC report? …

“9. How can the ILC be regarded as Independent of Government when it is prepared to vary core organisational documents?”

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