Indigenous corporations’ governance confusion

Internal misunderstandings are threatening to undermine genuine efforts to develop economic independence on Indigenous lands. Community members in the Anangu Pitjantjatjara Yankunytjnatjara (APY) area are frustrated with the management of their land. At the heart of the issue is a dispute over the way cattle grazing is managed, with claims little of the returns are flowing to the region’s Indigenous people.

The APY corporation is required to publicly report only how it uses its $2 million per year of government funding. It does not have to provide details about its revenue from private commercial enterprises. This lack of transparency is unfortunately common among Indigenous organisations.

More than $1 billion of federal funding goes to 1000 organisations annually to undertake social and economic development projects. Competing objectives within organisations can create misunderstandings and disagreements, with community interests and business needs not always aligning.

In some remote townships, English is often a second or third language and board members have low levels of literacy and numeracy. Notions of ‘conflicting interests’ and ‘stakeholders’ are not always understood. Consequently, governance issues are the primary cause of failure in Indigenous corporations.

Underpinning the lack of governance understanding is the complicated structure and dynamics of Indigenous organisations.  Instead of registering with Australian Securities and Investments Commission, Indigenous corporations have a separate regulatory body — the Office of the Registrar of Indigenous Corporations (ORIC). The reason for the separate regulatory body was to provide additional governance support for Indigenous organisations. This has caused confusion, with ORIC often criticised for not maintaining the same standards applied to normal corporations.

Ongoing governance problems and the lack of transparency have resulted in an increasing loss of trust in these organisations by Indigenous communities — with complaints more than doubling in the past six years.

It is important to build greater clarity around the functions of Indigenous corporations. If these problems are to be resolved, ORIC must fulfil its obligations as both a trainer and a regulator or risk becoming irrelevant.