The chairman of a powerful Indigenous organisation that controls hundreds of millions of dollars in land assets – including Ayers Rock Resort – is refusing to resign, despite federal Minister Ken Wyatt’s loss of confidence in him and two board motions of no confidence in his leadership.
Eddie Fry, an Indigenous businessman who once ran as a Country Liberal Party candidate in the Northern Territory and has chaired the Indigenous Land and Sea Corporation (ILSC) since 2015, says he has no intention of quitting.
Eddie Fry is an Indigenous businessman who once ran as a Country Liberal Party candidate in the Northern Territory and has chaired the Indigenous Land and Sea Corporation (ILSC) since 2015.Credit:Matt Turner
A board stoush erupted last May and has not resolved with the scale of the dysfunction laid bare in a trove of correspondence between the Minister for Indigenous Australians Mr Wyatt and members of the board seen by The Sydney Morning Herald and The Age.
The ILSC, one of the country’s most significant and politically sensitive statutory Indigenous organisations, receives more than $60 million a year in federal funding, the bulk coming from a $2 billion land acquisition fund.
Set up in 1995 by the Keating government, it helps manage what is known as the national ‘Indigenous Estate’, a portfolio of land and water assets gradually acquired for the benefit of Indigenous Australians in the wake of the High Court’s Mabo decision of 1992, which first recognised native title.
The turmoil at the ILSC comes as the focus on corporate governance and the role of boards has never been greater following last week’s inquiry into Crown Resorts that found the organisation is unfit to hold a casino licence in NSW, a royal commission into the banking sector and Rio Tinto’s Juukan sacred rock shelters disaster.
As well as the resort, the ILSC invests in projects as diverse as blue-fin tuna fishing in South Australia, freshwater prawn farming and sea-cucumber harvesting businesses in Western Australia, Indigenous-run pastoral leases around the country, meatworks and horticulture, and a range of community facilities in cities and towns.
Mr Fry, a heavy-hitter in the Indigenous community, also chairs the prestigious Indigenous Business Australia (IBA), which controls some $1.6 billion in assets to advance the economic self-sufficiency of Aboriginal and Torres Strait Islanders.
Mr Wyatt has not flagged concerns about Mr Fry’s role in relation to the IBA.
But in a series of stinging letters penned late last year, and seen by the Herald and the Age, Mr Wyatt raises serious concerns about the governance of the ILSC and Mr Fry’s role in particular.
The correspondence culminated in Mr Wyatt informing Mr Fry on December 7 that “I have lost confidence in your ability to lead the ILSC as chairperson” and seeking reasons “why I should not ask for your resignation”.
The minister cites numerous grounds for loss of confidence in the chair, including adverse findings and concerns outlined in a January 2020 report by the Commonwealth Ombudsman, complaints from board members, motions of no-confidence, the “significant amount” of time the minister has spent trying to resolve governance issues and a review of the organisation by independent assessor Vivienne Thom who warned that the ILSC’s long-term viability was at risk.
A defiant Mr Fry wrote back to the minister on December 18 defending his record and stating that he found the minister’s loss of confidence in him demeaning and “inexplicable”.
He claimed the ILSC had a “remarkable turnaround” under his leadership, and warned that any “political and bureaucratic interference” would run afoul of the “paramount” need for Indigenous Australians to “break free of the yoke of government”.
Mr Fry also remained defiant in a statement to the Herald and the Age on Friday, insisting that “I have no intention of resigning from the ILSC board”. He said he was determined to “play a key role in leading this organisation that now consistently meets or exceeds its performance targets”. He said he believed the board remains functional and governs effectively.
The legislation which governs the ILSC, the Aboriginal and Torres Strait Island Act, says directors can only be “terminated” if they are physically or mentally incapable or because of “misbehaviour”. However, it does not define what misbehaviour means.
Asked if he lacked the power under the act to remove Mr Fry, a spokesperson for Mr Wyatt said Ms Thom, a former inspector general of the intelligence services, made it clear in her independent review that Mr Fry’s conduct “has apparently not reached the threshold to be considered misbehaviour”.
“The minister does not have confidence in the current chairman and is acting within the powers available to him as minister to progress the best interests of the ILSC,” the spokesperson said on Friday.
Professor Ian Ramsay, the head of Melbourne University’s Centre for Corporate Law and an expert on corporate governance said “the general expectation would be that if a chair has two votes of no confidence against him and also the minister who appoints the board has stated that he does not have confidence in the chair, then the chair would be expected to resign”.
Behind closed doors the toxic board relations have been playing out for months, with factions repeatedly calling on Mr Wyatt to back a side.
Tensions came to a head on May 7, when Mr Fry attempted to ram through changes to the governance of the organisation with less than 48 hours notice, including stopping ILSC directors sitting on subsidiary boards, arguing it was a conflict; a position at odds with the Corporations Act and Australian Institute of Company Directors guidelines on directors sitting on parent companies and subsidiaries.
Mr Fry had expected directors to endorse the changes and when they asked questions it descended into loud berating and bullying as well as a warning they were “treading on fine ground”, one director reported to Mr Wyatt.
Some saw it as an attempt to sideline them while Mr Fry tightened his control as he worked on a strategy to transform the ILSC to create a second board that would diminish the role of the main board. The plan would reduce head count by 31 per cent.
Of the then seven directors, the four who have clashed with Mr Fry are each significant figures in their own right. Dr Donna Odegaard is co-chair of the committee set up by Mr Wyatt to co-design an Indigenous “voice” to government. Roy Ah-See is a former chair of the Prime Minister’s Indigenous Advisory Council. Patricia Crossin is a former Northern Territory senator. And Bruce Martin is also a former member of the Prime Minister’s advisory council.
On June 17, these four directors supported a motion of no confidence in Mr Fry and the ILSC’s acting chief executive Leo Bator, who stepped down immediately.
Dr Odegaard notified Mr Wyatt that the board’s action was a culmination of Mr Fry’s “failure over 12 months to provide leadership”. She said her concerns included the impact of his behaviour on ILSC’s subsidiaries, which included suspending funding without reason and attempting to shut them down, which she said made them unable to perform effectively and efficiently.
Dr Odegaard said she found the situation “harrowing” and her “trust and loyalty to the chairperson has been broken by his actions and my hopes for the ILSC delivering greater benefits for our people compromised if this conduct continues”.
Mr Ah-See told Mr Wyatt in a letter of “extremely poor governance” and Mr Fry “aggressively opposes any director who holds a different opinion to his own and attempts to bully these directors into acting according to his wishes”.
Ms Crossin also complained about Mr Fry’s “failure to consult” and failure to provide updates on a radical transformation plan.
Mr Martin generally echoed the complaints of the others, adding it was symptomatic of larger governance issues, while another director, Daniel Tucker backed Mr Fry, describing the May 7 board meeting as “robust”.
On August 19, ahead of the release of Ms Thom’s report, a second motion of no confidence was carried four votes to two.
Ms Thom’s report, commissioned by Mr Wyatt, concluded that Mr Fry’s conduct had not amounted to bullying but it would be “open” to the board to find it had breached the corporation’s “code of conduct”.
More fundamentally, Ms Thom warned that “there is a high risk that the board cannot currently fulfil the functions as set out in the ATSI [Aboriginal and Torres Strait Islander] Act and its charter. Unless urgent action is taken this will also place at risk the proper and efficient performance of the functions of the ILSC as well as potentially its longer-term viability.”
“The current level of conflict in the board also carries with it significant risks in terms of the morale, wellbeing and, ultimately, retention of ILSC management and staff,” she warned.
It’s not the first time the ISLC has been plagued with problems. Ten years ago, the board, under different leadership, purchased the Ayers Rock Resort for an inflated price of $300 million, saddling the organisation with massive debt, against the advice of the then Indigenous affairs minister.
A former chair, Dr Dawn Casey, later pronounced the deal “the largest single evaporation of public money in the Indigenous policy domain, ever”.
Mr Fry, in his defence, claims he has rescued the corporation from the brink of insolvency and the ILSC had out-performed under his leadership.
He also denies claims of dysfunction or board tensions. “The chairperson continues to serve as per ILSC’s governing legislation and with the support of his fellow directors,” he said.
Upheaval continues with Mr Tucker resigning last week, effective immediately, leaving five people including Mr Fry on the board. It means if any two people are absent from any board meeting there won’t be a quorum.
Directors were contacted for comment, including whether they supported Mr Fry. Ms Crossin declined to respond, saying the trove of documents that had become public “speak for themselves”. Other directors didn’t respond.
Mr Wyatt for his part, is playing a waiting game. Mr Fry’s second term ends in October.
“Given the circumstances that have now evolved, the minister is watching the actions and performance of the ILSC very closely and is considering the options that may be available to him to ensure this situation does not occur again,” a spokesman Mr Wyatt said.
In the meantime, the ISLC board remains in disarray.
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