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The Commonwealth has put a Northern Territory Aboriginal land council "on notice" after it failed to "sufficiently respond" to recommendations from an audit into its governance, amid claims millions of dollars of mining royalties were misused.
Indigenous Australians Minister Malarndirri McCarthy has also frozen the Anindilyakwa Land Council's (ALC) budget until it can prove it will act on further recommendations from a second independent review, handed down on Tuesday.
The review, commissioned by the National Indigenous Australians Agency (NIAA), probed the council's progress on a set of recommendations from an Australian National Audit Office (ANAO) audit last year.
It found that only two of 15 recommendations had been "largely implemented" by the ALC since the audit's findings were released in May 2023.
The ALC represents the people of the Groote Archipelago in the Gulf of Carpentaria, a region known for its significant deposits of manganese.
Mark Hewitt is the chief executive of the Anindilyakwa Land Council. (Supplied: ALC)
After the audit was handed down, claims emerged that ALC chief executive Mark Hewitt misused millions of dollars in mining royalties.
Figures that ALC provided to senate estimates in July show Winchelsea Mining, a company in which Mr Hewitt serves as co-chief executive, was a beneficiary of more than $24 million in royalties distributed by the ALC over five years.
The estimates figures also show the Groote Holding Aboriginal Corporation (GHAC), of which Mr Hewitt is an unpaid director, received nearly $40 million in royalties for projects that would indirectly support Winchelsea Mining or have a broader benefit.
Last month, the National Anti-Corruption Commission confirmed a Commonwealth government agency had raised Mr Hewitt's actions with the corruption watchdog.
Mr Hewitt has said he managed his conflicts of interest at both Winchelsea Mining and the GHAC, and has consistently denied any wrongdoing in the matter.
Malarndirri McCarthy says she takes governance at land councils "seriously". (ABC News: Che Chorley)
On Thursday, Ms McCarthy said she had withheld approval for the council's 2024-25 budget, instead allowing ALC to run on an operational budget until December.
"The full budget will only be considered when ALC has demonstrated to the NIAA that it is sufficiently prioritising and implementing the recommendations of the review and the ANAO audit," Ms McCarthy said.
Her actions come ahead of ALC board elections next week.
"Good governance is the cornerstone of trust and needs to be based on transparency, fairness, and accountability," Ms McCarthy said.
"Without the trust of the Anindilyakwa people and other key stakeholders, the ALC cannot properly represent its people and achieve its mission."
In a statement, Mr Hewitt said the latest review acknowledged the ALC had made some progress on the audit's recommendations but more work was required.
"As outlined in the NIAA's report, all recommendations have been marked as partly or largely implemented, therefore demonstrating progress and our commitment to improving governance," he said.
"It is important to recognise that change, in response to recommendations, takes time, and we are on track to continue the implementation of recommendations within the advised two-year time frame."
The Groote Archipelago's main mine, Gemco, is expected to cease operations in the next 10 years, ending decades of lucrative mining royalties to the ALC. (BHP Billiton)
The independent review said Mr Hewitt's declared conflict of interest related to the dual chief executive roles was "unlikely to be able to be managed effectively".
As part of its response to the draft review, the ALC said its board would support the review's finding that Mr Hewitt no longer be the chief executive of Winchelsea Mining.
It said Mr Hewitt had proposed to step down from his role as the ALC's chief executive, and commence as a consultant for Winchelsea Mining.
It said he had also proposed to become a consultant for the GHAC, of which he is the unpaid executive director.
"A final decision about the current CEO's proposal will be made by the incoming ALC board … after receiving the NIAA's final independent review," the response said.
In a statement to the ABC, an ALC spokesperson said funding provided to the GHAC was not being used for the development of the Winchelsea Mine.
"The funding provided to GHAC is for economic development on Groote including the community kitchen, Little Paradise logistics base, renewable energy infrastructure, aquaculture enterprises, marine operations and residential living," the statement said.
"The Winchelsea Mine, once operational, may use the Little Paradise logistics base."