Seeking remedy and deterring

As a regulator we provide support, but will intervene and take action when we identify the need to do so.

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, 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 2016–17 there were several Registrar-initiated general meetings. In one case the reason was to propose changes to the structure of the board of directors set out in the rule book. In another it was to confirm the rightful directors with the members.

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 2016–17, the Registrar issued 19 compliance notices (14 from examinations started in 2016–17 and five from examinations started in 2015–16).

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 prosecution outcomes on its website.

In 2016–17 the Registrar referred three matters to the CDPP for possible criminal proceedings. The CDPP filed charges relating to all three:

• Ellimatta Housing Aboriginal Corporation
• Riverina Medical and Dental Aboriginal Corporation
• 2014–15 minor regulatory prosecution (MRP) program for multiple corporations that failed to lodge annual reports for the 2014–15 year.

In 2016–17, one major criminal prosecution was finalised and one civil action was finalised. Both cases involved directors misusing their positions to gain a personal benefit.

Ten corporations were also found guilty of failing to meet their reporting obligations. (Three of those convictions were for failing to lodge 2013–14 reports. Seven were for failing to lodge 2014–15 reports.)

Four new prosecutions were commenced; three concerned serious criminal matters. The other is a major civil action.

Criminal matters

Criminal matters in progress

As at 30 June 2017 there were four criminal matters in progress.

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 is alleged that 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 have been brought against Ms Lyons under section 265-25(3)(a) of the CATSI Act. One charge has been 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.

Ms Lyons has entered a plea of not guilty and at the time of writing the trial was adjourned for further hearing.

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). A hearing was scheduled for 18 April 2017.

It is 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 has been charged under section 453-5(5) of the CATSI Act. The section carries a maximum penalty of $5400 or imprisonment for six months, or both, for each charge.

On 18 October 2017 the directors entered a plea of not guilty and were each fined $600.

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

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

It was alleged that Mr Alan Hugh Bishop dishonestly misused his position as CEO 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 $237,305.48 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 24 April 2017, Mr Bishop pleaded guilty to all charges. On 20 October 2017 he was sentenced to two years imprisonment. Mr Bishop is to be released from prison after serving ten months on a $2000 bond to be of good behaviour for 18 months.

2014–15 minor regulatory prosecution program

As at 30 June 2017 the CDPP is continuing to pursue a number of corporations for failing to lodge their 2014–15 reports.

Criminal matters finalised

One major criminal matter was finalised in 2016–17.

Trevor Close—former director of Githabul Nation Aboriginal Corporation RNTBC (GNAC)

On 30 June 2016 charges were brought against the former director of the Githabul Nation Aboriginal Corporation RNTBC (Githabul) for dishonestly misusing his position to gain a personal advantage.

Mr Trevor John Close used the proceeds of a sale from a Githabul native title property to cover the rent for his private home in Sydney. Two rental payments were made by Mr Close from corporation funds in July 2013 and one in August 2013.

On 17 May 2017, Mr Close was convicted under section 265-25(3)(a) of the CATSI Act and discharged giving security of $500 and a requirement to be of good behaviour for 12 months. Mr Close was also ordered to make reparations of $7279.25 to Githabul.

Prosecutions failing to lodge 2013–14 reports

The Registrar’s 2013–14 MRP program was finalised during 2016–17. The Registrar finalised prosecutions against three corporations for failing to lodge their 2013–14 reports by the required time:

• one corporation was convicted and ordered to pay a fine of $1500
• two were found guilty of the offence(s) but discharged without conviction under section 19B of the Crimes Act 1914.

Prosecutions failing to lodge 2014–15 reports

During 2016–17, the Registrar finalised prosecutions against seven corporations for failing to lodge their 2014–15 reports by the required time:

• three corporations were convicted and ordered to pay fines totalling $8000
• two were found guilty of the offence(s) but discharged without conviction under section 19B of the Crimes Act 1914
• one was convicted and released without sentence under section 20(1)(a) of the Crimes Act 1914 on condition of deregistration
• in one case the charge was withdrawn on condition of deregistration.

Table 21: Prosecution outcomes during 2016–17 for failing to lodge corporation reports

Civil matters

As at 30 June 2017 one civil matter remained in progress and one had been finalised.

Civil matter in progress

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 is 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. Mr Taylor is alleged to have received 107 payments totalling $211 612.41, repaid $29 085 and to still owe $182 527.41 to MRAC. Mr Shahid is alleged to owe 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.

A case management hearing was set down for 18 July 2017 where the Court ordered that the Registrar and the respondents undertake mediation and that a trial date will be set at the next case management hearing.

Civil matter finalised

Registrar v Fred Monaghan & Others—ACD22/2015

On 30 March 2015 civil penalty proceedings were commenced in the Federal Court in Canberra against three former directors of the Southside Housing Aboriginal Corporation.

The Canberra-based not-for-profit corporation was established in 1995 to provide affordable housing for Aboriginal and Torres Strait Islander people in the ACT.

It was alleged that three former directors, Mr Fred Monaghan, Ms Teresa Monaghan and Ms Kim Peters controlled the corporation and ran it for their own benefit. The directors lived in properties owned by the corporation, did not pay all of their rent, failed to repair the properties and had the corporation pay part of their excess water charges.

In September 2016, the Federal Court in Canberra found all three former directors had breached their duties by not ensuring the corporation kept adequate books and records. Mr and Ms Monaghan were also found to have improperly used their positions and failed to exercise due care and diligence in the management of the corporation and its houses. However, Ms Peters was found to have taken a number of steps and actions to try to address the problems confronting the corporation and therefore no further findings of breaches of her duties were made against her.

On 6 October 2016, the Court made orders that Mr Monaghan and Ms Monaghan were to be banned from managing Aboriginal and Torres Strait Islander corporations for five years and ordered to pay a pecuniary penalty (fine) to the Commonwealth of $38,500 each. They were also ordered to pay the Registrar’s costs, which can only be enforced with the leave of the Court. Mr and Ms Monaghan consented to the orders.

Ms Peters was banned from managing Aboriginal and Torres Strait Islander corporations for six months.

Commence 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.

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 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.

Before any corporation is placed under special administration, the Registrar allows 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.

If the corporation fails to show cause 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.

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

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

In 2016–17:

• Four special administrations continued from the previous year.
• Eight corporations were required to show cause why a special administrator should not be appointed to manage the corporation. Four of these (or 50 per cent) occured after the directors wrote to the Registrar asking for the appointment of a special administrator.
• Eight special administrations started.

Table 22: Corporations under special administration continuing from 2015–16

Table 23: Corporations placed under special administration in 2016–17

Six special administrations ended during 2016–17 (see end dates in tables 22 and 23). For these:

• three were completed within six months in line with ORIC’s key performance indicator
• the average time for completion was six months and 15 days
• in all six cases a successful business turnaround was achieved, that is, the corporation were handed back to members’ control.

As at 30 June 2017 six special administrations remained in progress.

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, and distributing them to members.