Seeking remedy and deterring

Call corporation meetings

Under Part 10–2 of the CATSI Act, the Registrar may convene a meeting to discuss a matter affecting a corporation, or call a general meeting or an annual general meeting. This kind of action may be in response to a request by members of the corporation, or because a scheduled meeting was not held, or for some other reason that the Registrar believes warrants it. In such cases the Registrar would either chair the meeting or authorise another person to be the chair.

In 2017–18 there were two Registrar-initiated general meetings. In one case the reason was to propose changes to the corporation’s quorum rules to facilitate the convening of meetings. In another it was to appoint directors to conduct business for the corporation.

Issue compliance notices

When the Registrar suspects that a corporation has some governance or financial issues, and often as a result of an examination, the Registrar may send the corporation a compliance notice. The notice sets out the reasons for the suspected non-compliance, and directs the corporation to take action, within a specified timeframe. It provides valuable information to the corporation’s members and other stakeholders (such as funding agencies and creditors) about the standards of corporate governance and financial management within a corporation at a given point in time.

Each notice is made available on the public Register of Aboriginal and Torres Strait Islander Corporations.

In 2017–18, we issued 24 compliance notices. All but one arose from an examination. The other one was issued after a corporation requested the appointment of a special administrator.

Initiate special administrations

Special administrations are a form of external administration unique to the CATSI Act. They allow the Registrar to provide proactive regulatory assistance to corporations experiencing financial or governance difficulties. The special administrator works in the best interests of the corporation and its members.

Special administrations are different to receiverships, liquidations or voluntary administrations under the Corporations Act 2001, as the latter are usually driven by the interests of creditors.

The grounds on which the Registrar can decide to place a corporation under special administration are outlined in section 487–5(1) of the CATSI Act. The grounds are not restricted to insolvency or the
inability to pay a debt.

The Registrar appoints an independent, suitably qualified person (the special administrator) to work with a corporation to remedy any issues and to restore it to good corporate health as soon as possible. At the end of their appointment, the special administrator returns full control of the corporation to its members.

For more information, see the Registrar’s policy statement, PS-20: Special administrations.

In 2017–18:

• six special administrations continued from the previous year.
• six special administrations started.
• eight special administrations completed, with all handed back to members’ control—one by court order
• four special administrations remained in progress as at 30 June 2018.

Two of the six new special administrations in 2017–18 were started after the directors wrote to the Registrar asking for the appointment of a special administrator.

Before any corporation is placed under special administration, the Registrar accords a period of natural justice. The corporation is issued a notice to show cause as to why it should not be put into special administration. The corporation is given a reasonable time to respond to the notice.

In 2017–18, the Registrar issued 11 show cause notices. The activity leading to a show cause notice being issued is not always an examination. For the 11 notices issued during 2017–18:

• six were based on examination findings
• one arose from legal proceedings
• three were requested by directors
• one was instigated after a corporation failed to provide reports to address solvency concerns.

Of the corporations asked to show cause, six were ultimately placed under special administration— one was placed under special administration twice during the year.

The aim of a special administration is usually to achieve one or both of the following:

• restoration of good operational order—usually after a corporation has not complied with the CATSI Act or its rule book, has experienced financial difficulties or there has been a dispute
• a restructure—usually after the directors or members have asked the Registrar to intervene to improve governance standards or organisational structures.

Eight special administrations ended during 2017–18. Of these:

• three were completed within six months in line with ORIC’s key performance indicator
• the average time for completion was six months and 10 days (note: the special administration of one day’s duration was excluded from this calculation, because it’s clearly an outlier)
• in seven cases a successful business turnaround was achieved—that is, the corporation was handed back to members’ control. In one case the corporation was handed back to members by order of the court which prevented the special administrator from completing his work.

As at 30 June 2018, four special administrations remained in progress.

Table 22: Corporations under special administration in 2017–18

* These special administrations were already in progress as at 1 July 2017
** These special administrations remained in progress as at 30 June 2018

Figure 20: Special administrations during 2017–18

Communications with members of corporations under special administration

During the course of a special administration the Registrar requires a special administrator to keep members and stakeholders informed. The special administrator needs to:

• explain the process of a special administration
• discuss necessary changes that must be made
• involve members in planning for the corporation’s future.

To orchestrate the process, special administrators provide newsletters and hold community information meetings. They might also establish one or more advisory groups. ORIC supports the special administrator by checking the wording of notices, newsletters and nomination forms, and designing them in line with the corporation’s own branding.

In 2017–18 ORIC helped produce 27 newsletters and 26 meeting notices.

Seek criminal and civil penalties

As part of its regulatory approach, ORIC may elect to commence civil proceedings for breaches of the CATSI Act. In appropriate cases ORIC will also prepare and refer a brief of evidence to the Commonwealth Director of Public Prosecutions (CDPP) for consideration of criminal proceedings. The decision to prosecute alleged criminal offences under the CATSI Act is made by the CDPP in accordance with the Prosecution Policy of the Commonwealth.

ORIC publishes a summary of its prosecution outcomes on its website.

In 2017–18 the Registrar referred two matters to the CDPP for possible criminal proceedings:

• Robert Beattie, former CEO of Coolgaree Aboriginal Corporation
• minor regulatory prosecutions of corporations that failed to lodge reports for the 2015–16 year.

Also in 2017–18:

• three major criminal prosecutions were finalised and one remained in progress
• nine corporations were found guilty of failing to meet their reporting obligations
• part of one civil prosecution (of two people) was finalised in June 2018
• two litigations to recover significant debts from former prosecutions were successfully prosecuted.

Crimial matters

Criminal matters finalised

Three major criminal matters were finalised in 2017–18.

Sharon Anderson, Rae Fernando, Siffia Fernando, Wayne Fernando and Collin Turnbull, directors of Ellimatta Housing Aboriginal Corporation (Ellimatta)

On 3 April 2017 charges were laid against five directors of the Ellimatta Housing Aboriginal Corporation (Ellimatta). It was alleged that Ms Sharon Anderson, Ms Rae Fernando, Ms Siffia Fernando, Mr Wayne Fernando and Mr Collin Turnbull failed to comply with statutory notices issued under section 453-5(1) of the CATSI Act, to produce documentation and information. Each director was charged under section 453–5(5) of the CATSI Act. The section carries a maximum penalty of $5,400 or imprisonment for six months, or both, for each charge.

Initially, each of the five directors pleaded not guilty on the grounds that they were not directors at the time they were summoned to appear. On 18 October 2017, all five defendants changed their plea to guilty. Each was convicted and fined $600.

Alan Bishop—former CEO of Garnduwa Amboorny Wirnan Aboriginal Corporation (Garnduwa)

On 16 May 2016 charges were laid against the former chief executive officer (CEO) of the Garnduwa Amboorny Wirnan Aboriginal Corporation (Garnduwa).

It was alleged that Mr Alan Hugh Bishop dishonestly misused his position as CEO of Garnduwa on 38 occasions to transfer corporation funds into his own personal bank or credit card accounts. From July 2013 to December 2014, Mr Bishop was alleged to have created false records to raise 38 Garnduwa cheques totalling $239,038.48 which he used for his own personal benefit.

Thirty-eight charges were brought against Mr Bishop under section 265-25(3)(a) of the CATSI Act. The section carries a maximum penalty of $340,000 or imprisonment for five years, or both, for each charge.

On 28 April 2017, Mr Bishop pleaded guilty to each of the 38 charges, and on 20 October 2017 he was sentenced to two years’ imprisonment. He is to be released after serving ten months on a $2000 bond for good behaviour for 18 months.

Selena Lyons—former CEO of Riverina Medical and Dental Aboriginal Corporation (RivMed)

On 8 August 2016 charges were laid against the former chief executive officer (CEO) of the Riverina Medical and Dental Aboriginal Corporation (RivMed).

It was alleged that Ms Selena Joan Lyons misused her position as CEO of RivMed on 27 occasions to authorise payments to herself for travel or accommodation totalling $28,048.90, and that these payments were either for days that Ms Lyons was not travelling for work purposes, or another organisation had already paid for her travel, accommodation and meals. It is also alleged that on one occasion Ms Lyons misused the corporation’s credit card by making an unauthorised purchase.

Twenty-seven charges were brought against Ms Lyons under section 265–25(3)(a) of the CATSI Act. One charge was brought against Ms Lyons under section 265-25(3)(b) of the CATSI Act. These sections carry a maximum penalty of $340,000 or imprisonment for five years, or both, for each charge.

On 22 November 2017 Ms Lyons was found guilty of dishonestly using her position on 24 occasions to claim travel expenses to which she knew she was not entitled. On 12 February 2018 Ms Lyons was sentenced to 15 months’ imprisonment and ordered to serve nine months in custody, at which point she will be released on recognisance with a $500 surety. She was also ordered to pay $24,187.25.

Prosecutions for failing to lodge reports

During 2017–18, the Registrar finalised prosecutions against 16 corporations for failing to lodge their reports by the required time.

• Six corporations were convicted and ordered to pay fines totalling $6300.
• Two corporations were convicted and released without sentence under s. 20(1)(a) of the Crimes Act 1914.
• One corporation was found guilty of the offence but discharged without conviction under s. 20(1)(a)B of the Crimes Act 1914.
• Seven cases were discontinued.

Table 23: Prosecution outcomes during 2017–18 for failing to lodge corporation reports

Criminal matters in progress

As at 30 June 2018 there was one criminal matter in progress.

Robert Beattie, CEO of Coolgaree Aboriginal Corporation

On 6 November 2014, Mr Robert Bruce Beattie, former chief executive officer (CEO) of Coolgaree Aboriginal Corporation (Coolgaree), attended a charity event where he bid for and won tickets to the Clipsal 500 motorsport event being held in Adelaide in 2015.

Mr Beattie used the corporation’s credit card to buy the tickets, though the charity event and purchases were not linked to the corporation’s business and did not further its objectives.

Coolgaree incorporated in 1997 and operated on Palm Island, Queensland, providing an employment and training program for local Aboriginal and Torres Strait Islander people until September 2017.

Charges against Mr Beattie were originally filed in Townsville, but after he moved to Western Australia, proceedings were filed in Perth. Mr Beattie pleaded guilty and on 14 September 2018, he was fined $3000 and issued a reparation order of $3000 to the Commonwealth for dishonestly using his position to gain a financial advantage for himself.

Civil matters

One civil prosecution (of two individuals) was finalised around the end of 2017–18, and during the year the Registrar initiated two debt recoveries as follow-ups to prior prosecutions.

Registrar v Ashley James Taylor & Anor— WAD243/2017

On 31 May 2017, civil penalty proceedings were filed in the Federal Court in Perth against two former officers of the Murchison Region Aboriginal Corporation (MRAC).

MRAC is a charitable corporation based in Geraldton, Western Australia. It provides affordable housing to Aboriginal people in the Murchison and Gascoyne regions of Western Australia.

It was alleged that MRAC’s former executive officer, Mr Ashley Taylor, and former finance officer, Mr Abul Shahid, over a four-year period to November 2014, made significant payments to themselves from MRAC’s funds for their own personal benefit. Allegedly:

• Mr Taylor received 107 payments totalling $211,612.41, repaid $29,085 with $182,527.41 still owing.
• Mr Shahid owes MRAC $217,956.75 after he received 117 payments totalling $1,381,413.55 and repaid $1,163,456.75.

The payments were not approved by the directors of MRAC.

In July 2015, the Registrar successfully obtained interim orders in the Federal Court to freeze the assets of the two men when the payments first came to light. The orders were vacated in February 2016.

On 14 June 2018 Mr Taylor was disqualified from managing corporations for seven years, fined $250,000 and ordered to pay costs and compensation of $187,527.41 to the corporation.

On 17 August 2018 Mr Shahid was also disqualified from managing corporations for seven years. He was fined $100,000 and ordered to pay costs and compensation of $207,956.75 to the corporation.

Damien Matcham

On 15 February 2014 Mr Damien Matcham, former CEO of Katungul Aboriginal Corporation Regional Health and Community Services was ordered to pay a fine of $500,000; Several years later the fine remained unpaid so the Registrar sought an additional court order to recover the debt. It succeeded and Mr Matcham has since paid the fine.

Sonia Murray

On 16 April 2015 Ms Sonia Murray was found to have breached her duties as a director of Bunurong Land Council (Aboriginal Corporation) and failed to ensure the corporation kept proper books and records. Amongst other penalties, Ms Murray was fined $25,000. In 2017–18, the Registrar again prosecuted Ms Murray to enforce that order. The Australian Government Solicitor undertook the litigation, with the outcome that Ms Murray has entered into a repayment arrangement. Should Ms Murray default on any payment, the Registrar will immediately commence proceedings against her.

Register of disqualified officers

The Registrar maintains a publicly available register of people disqualified from managing Aboriginal and Torres Strait Islander corporations. See the Register of Disqualified Officers.