Million dollar dispute between native title holders

By ERWIN CHLANDA

 

The Alice Springs native title body may seek the return of nearly $700,000 in cash, and of shares in the Yeperenye shopping centre worth $400,000 in annual interest, which were transferred to other entities apparently without proper authority.
This is revealed in a document obtained by Alice Springs News Online. It was prepared for a meeting between the native title body, Lhere Artepe Aboriginal Corporation (LAAC), and what has become known as the “Enterprise Group” earlier this year, in particular some directors and the Public Officer of Lhere Artepe Enterprises Pty Ltd (LAE).
A spokeswoman for the Enterprise Group, Sally McMartin, responding to our request for comment, says: “There appeared to be monies owing to LAAC – the LAE Directors were not however aware of the past arrangements nor for what purpose the monies were used nor any past arrangements around repayment.
“The  LAE Board sought from LAAC some advice and documentation  of the ‘Loans’ and the amounts of each loan because these numbers were also not firm.
“LAE Board subsequently advised LAAC Directors that LAE Board could not source loan agreements nor easily identify where monies had been received and for what purpose. Board minutes could not be found in LAE’s administration files.”

Legacy of past management
The transactions date back to the management of LAAC by Darryl Pearce (pictured),  when he also played a major role in the creation of several other entities over which LAAC had no control, although they bore its name.
All or some of these new entities became involved in the construction of the Mount Johns subdivision on land subject to an Indigenous Land Use Agreement, negotiated by LAAC, under which native title holders were given freehold title to half the land in exchange for extinguishment of native title over the whole development area.
The following is an extract from the briefing document obtained by the News, except for sub-headings and explanatory notes from the editor in square brackets:-
This brief provides background information and suggested areas of focus for those discussions [between LAAC and the Enterprise Group].
It is recommended that the discussions focus on identifying areas of mutual interest and ways of working together more closely. Secondly and most importantly [it seeks] to resolve the issues surrounding loans made to the Enterprise group in 2010/11.
The loans are a crucial issue as the 2010/11 Audit report for the Lhere Artepe Aboriginal Corporation identifies the following loans were made:-
Lhere Artepe Enterprises Aboriginal Corporation – Discretionary Trust – $281,529, and Lhere Artepe Enterprises [Pty Ltd, of which NT Deputy Administrator Pat Miller is the chairperson] – $393,214, a total of $674,743.
It is understood that no agreements were made in relation to these loans but that the funds were transferred to complete the purchase of the IGA supermarkets.
[The Eastside, Flynn Drive and Hearne Place neighbourhood supermarkets were purchased for $14m including a $6m grant from the Federal Government controlled Aboriginal Benefits Account.]

How did the transfer occur?
As there is no formal connection between Lhere Artepe Aboriginal Corporation and the Lhere Artepe “Enterprise Group” it seems strange that such a transfer would occur without an agreement to repay or an equity share in the enterprises in question.
The only connection seems to be a determination by the former CEO of LAAC [Mr Pearce] to build a commercial empire. It is understood he was employed at that time by LAAC and was later employed by the Enterprise Group.
There appears to be a dispute by the directors of the “Enterprise Group” in terms of whether the transaction ever occurred or if they did, whether there is an obligation to repay these monies back to the Lhere Artepe Aboriginal Corporation.
They have however admitted in writing that they were not fully aware of the deals Mr Pearce was making on behalf of the “Enterprise Group” and this finally resulted in them terminating him.
The accounting firm who arranged the transfer of funds advise that the former CEO and the then Chairman Mr Brian Stirling authorised the transfer of these funds stating they had full authorisation from the Board of the Lhere Arterpe Aboriginal Corporation.
The partner of MLCS, Mr Paul Case, confirms no formal agreement was made and it is his opinion that the transfer was for a loan, which is at call and repayable when called by the Directors of the Lhere Artepe Aboriginal Corporation.  If there is a dispute this opinion will need to be tested.
I understand there is a clear Audit trail in relation to these monies.

Financial struggle? 
It is understood that the “Enterprise Group” is struggling financially and serious debts are impeding their ability to repay large creditors.
Their key income is derived from the cash flow from the three IGA supermarkets and from the stage one of the Mount Johns land development.
It is further understood that the Mount Johns development is proving to be slow in terms of land sales but the grapevine in Alice Springs suggests a large parcel of unit development land was recently sold to the Defence Department for unit development.
If the “Enterprise Group” accepts the obligation to repay these monies then the discussion should turn to a repayment schedule.  It would be reasonable to ask the Chairman of the “Enterprise Group” for a letter confirming the acceptance of the obligation to repay these loans.
It would seem reasonable for a loan of this size to suggest that a payment of $10,000 per month would be a reasonable ask by the Lhere Artepe Aboriginal Corporation.
It is recommended that the Lhere Artepe Aboriginal Corporation seeks legal advice and support prior to and during this meeting.
Those attending this meeting should be clear about what they seek to achieve from this meeting.
Someone should keep a formal record of these discussions as there may be actions needed following this discussion.
I have referred to the “Enterprise Group” as there is a complex array of Companies and Trusts but the Chairman and some Directors are the common link.

No formal legal connection 
While there is no formal legal connection between LAAC and the “Enterprise Group”, LAAC is the representative structure for the three Estate Groups [of native title holders], who are the Shareholders of the “Enterprise Group”.
It is therefore important that a relationship be established.
Secondly, LAAC is the Native title body set up to represent the Native Title holders of the Alice Springs Region and is therefore interested in the way in which these businesses are run.
In addition the Mount Johns land development occurred because LAAC, with the strong support from Mr Pearce, agreed to allow the development of this land to be managed by Lhere Artepe Nominees Pty Ltd.
The “Enterprise Group” must recognise the roles and responsibilities of the Lhere Artepe Aboriginal Corporation.  It would be helpful to meet at least every six months and to provide a commercial in confidence report on the financial status of the Companies and trusts.
In summary LAAC should seek the following outcome from this part of the discussion:-
• Recognition of LAAC’s role as the representative body for the three estate groups and the Native title members for Central Arrernte people.
• The need to meet on a regular basis (six monthly).
• A report every six months on the financial health of the various enterprises and trusts which form part of the “Enterprise Group”.
[The Loans] part of the discussion has to centre on an acceptance by the “Enterprise Group” that the LAAC payments were made and that there is an obligation to repay $674,743.

Repayment schedule?
If this is accepted then it’s a matter of negotiating a repayment schedule. I am suggesting that a monthly payment of $10,000 is reasonable on a loan this size. An upfront payment of some $30,000 could also be presented to them. An upfront payment would be a significant gesture of goodwill.
If they do not accept that the loans exist then you will need to seek legal advice on what your options are.
In my opinion you will have two options to pursue should they refuse to accept the obligation to repay.
The first is to take the matter to the courts and seek a ruling.  This could be costly and may result in the demise of the “Enterprise Group” if their financial situation is such that they cannot repay.
The second option is to gain control of the “Enterprise Group” by gaining control of the parent company Lhere Artepe Pty Ltd.  I have provided a separate set of papers on this option.
In summary LAAC should seek the following outcomes from this part of the discussions:
• An acceptance of the obligation to repay the loans.
• A formal letter from the Chair of the Enterprise Group acknowledging the obligation to repay the loans.
• An agreed repayment schedule.

Yeperenye shares transferred?
While Yeperenye Shares should not be a point of discussion the LAAC shares in Yeperenye were transferred around the same time that the loans were made. The removal of this asset from LAAC has reduced the potential annual income for LAAC by some $400,000 per year.
The shares were transferred from LAAC to Lhere Artepe Nominees Pty Ltd and again there appears to be no formal arrangement or commitment back to LAAC.
It is a matter of judgement for the LAAC participants of this meeting whether you want to raise this matter, at this point in time.  In my view LAAC must explore options to return the shareholding back to LAAC.
I expect that the Boards of the “Enterprise Group” will be relying on the anticipated annual cash flow from the Yeperenye Shares to support their current debt problems.

[Extract ends.]
Ms McMartin says further in response to the News’ request for comment: “LAAC and LAE also acknowledged that LAAC owed monies to the LAE Supermarkets – and evidence exists for this expenditure.
“The LAE Board did agree that if monies were owning and documentation is provided, that LAE, when fully satisfied about the debt, would work with LAAC to determine a repayment plan once LAE was in a position to do so.
“In terms of the transfer of shares – after the meeting with LAAC – LAE provided LAAC with evidence of a Board resolution made by LAAC and its directors to transfer the Yeperenye shares to LAE – this would seem to be a formal process where a number of LAAC directors were present.
“LAE also sought from LAAC an invitation to its AGM which was in fact scheduled for February 28 where a full briefing could be given to Native Title holders in relation to the enterprise arm of LAE.
“Unfortunately that AGM was cancelled and LAE understands a new date has not been agreed as yet but awaits confirmation to attend once rescheduled.
“The LAE Board welcomes the opportunity to brief LAAC Directors on the activities of LAE over the last 16 months.
“LAE Board has not received a copy of the report [obtained by the Alice Springs News Online] and does not know the source of the author.”

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3 Comments (starting with the most recent)

NB: If you want to reply to a previous comment, start your comment with this notation: @n where n is the number of the comment you want to reply to.
  1. Jangala
    Posted April 18, 2013 at 9:00 pm

    Wonder who put this organisation in the dump. Stop pointing the finger at people trying to fix up the money owing to other business. Stop whinging about what happened and move on. Antalya people need to break away from Mbantua and Ilpme group. Just a waste of time piggy-backing on other groups’ burden.

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  2. Rodney Baird
    Posted April 11, 2013 at 1:05 pm

    I am a native title holder and a member of this organisation.
    I have in the past asked the board what is going on, without being told anything about these issues.
    As for royalties, the wrong people get these.
    T/Os ARE NOT ADVISED.
    Wrong people get $ to go to the casino and they still receive Centrelink benefits. An investigation should be made into the organisation.

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  3. The Rat
    Posted April 10, 2013 at 2:35 pm

    Lhere Artepe is in such a mess that ORIC or such a body should be called upon to come in and do a full investigation into the whole process and the dealings that were done in the past through the former CEO and Chairperson.

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