Last night the ABC’s 4 Corners program examined the conduct of various staff and directors of, among others, the Jawoyn Association Aboriginal Corporation based in Katherine in the Northern Territory.

In the course of that program and related news coverage, Warren Mundine, now the Federal government’s chief adviser on indigenous affairs, called for a tougher approach to the regulation of the thousands of Aboriginal corporations overseen by the Office of the Registrar of Indigenous Corporations (ORIC).

“They’ve let some people who are sitting on boards and corporations and community organisations get away with blue murder, when the biggest amount of people who have suffered in that are Indigenous people,” Mr Mundine said.

“By taking this kid-glove approach and trying to be kind to Aboriginal people we’ve made the situation worse.”

But is ORIC really treating all Aboriginal corporations with Mundine’s ‘kid gloves’?

In early 2012 I was contacted by a man who told me:

“The fucking cops are chasing me down the main street of Katherine with a summons. I can’t go to fucking Berrimah [jail]. I can’t read or write.”

These were the words of an elderly traditional law-man when he heard that the local cops in Katherine wanted to serve him with a summons for offenses under the Corporations (Aboriginal & Torres Strait Islander) Act (the CATSI Act) for non-lodgment of annual corporate reporting forms.

This man, as well versed in his own law as a $10,000 a day Queen’s Counsel appearing in the High Court is of kardia law, equated the service and receipt of a summons with going straight to goal.

And he may well have been right, because the offences he was being pursued for were ‘strict liability’ offences, where a defendant will be convicted even though they were genuinely ignorant of one or more factors that made their acts or omissions criminal. As with a traffic offence, our man could well have ended up in Berrimah goal for offences committed that he knew nothing of.

And the charges on the summons?

Three counts of failing to lodge annual reports (general, financial and audit) for the Aboriginal corporation he was a director of. Each of those counts carries a maximum fine of $13,750 – a total of $41,250.

It is useful to provide some background to my friend’s corporation, which for present purposes we’ll call the ‘Bull’s Head Aboriginal Corporation.’

Bull’s Head was incorporated under the predecessor to the CATSI Act – the Aboriginal Councils and Associations Act 1976 (the ACA Act) – in 1996 following an application under the NT’s Pastoral Land Act for an excision from a pastoral station for what is known as a ‘Community Living Area’ (CLA).

These CLAs provide those people dispossessed by the vast pastoral estates of the Northern Territory with a means of claiming small ‘pocket handkerchief’ parcels of land from a pastoral lease to which they have historical connections. Grantees of CLAs are often old and frail with poor English skills.

The history of CLA claims in the NT – which in the 1980s and ‘90s were vigorously resisted by the then conservative CLP government in Darwin and local pastoralists – is one characterised by delay, frustration and sorrow.

Many of the original claimants had passed away by the time of grant – or refusal – of their claim many years after it was made. Notwithstanding these difficulties, there are now many typically small CLAs scattered throughout the enormous pastoral estates of the NT. By definition access to land claims and grants under the Aboriginal Land Rights (Northern Territory) Act 1976 is denied because of that land’s status as a pastoral lease.

Each of the successful claimants for CLAs are required to establish a legal entity with the single purpose of holding the title to their land.

So far so good.

As Liberal MHR Warren Entsch told the House of Representatives when introducing the second reading speech for the CATSI Act in June 2005, its predecessor the ACA ACT was:

… developed in the 1970s to cater for the small number of landholding corporations linked to the first land rights legislation. It was meant to offer a simple process for incorporation, with the minimal need for regulation.

Entsch told the House that the purpose of the new CATSI Act was:

 … the need to overcome the ‘rigidity of corporate design’, achieve ‘simplicity’ and improve ‘accountability.’

The CATSI Act was introduced in part to cope with the increasing sophistication of Aboriginal corporations. By the late 1990s and early 2000s many corporations were, as in the case of the Jawoyn Association Aboriginal Corporation the subject of last night’s 4 Corners program, increasingly involved in a broad variety of business ventures beyond the modest scope of the ACA Act.

The CATSI Act established a regime of regulation very much in line with mainstream corporate regulation under the Corporations Law and was the subject of vigorous debate in the parliament and elsewhere around the time of its commencement.

Legal academic Kathleen Clothier made a number of prescient observations about issues of concern for both Aboriginal corporations working under the new CATSI Act regime and their regulator in an article published in the Australian Indigenous Law Review in 2006.

The CATSI Act is a highly complex piece of legislation. It is an amalgam of provisions from the Corporations Act, State Associations Incorporation legislation and untested new provisions unique to the CATSI Act.

…

… many Aboriginal corporations may find significant difficulty in complying with the ongoing compliance obligations. The complexity is exacerbated for small and medium Aboriginal corporations … even allowing for reduced record keeping and financial reporting obligations.

…

And just how aggressive a regulator will ORAC be? Why include such draconian penalties both criminal and civil if, in reality, ORAC’s main focus will be to provide special assistance?

…

Will the Registrar be an active regulator or a ‘toothless tiger’? What will be the perception of Aboriginal communities and Aboriginal corporations, if the Registrar takes aggressive civil action against uninformed but well-intentioned Aboriginal directors who are ‘easy targets’? If it is not the intention of the Registrar to be aggressive, then why have a ‘hammer to smash an acorn’ approach by including so many criminal and civil penalty provisions many of which are strict liability offences?

So how did the law-man and his Bull’s Head corporation fare when they ended up in Court?

I represented a number of small Aboriginal corporations the subject of prosecutions by ORIC (represented by the Commonwealth Director of Public Prosecutions) for breaches of their reporting requirements under the CATSI Act. All of the corporations the NLC provided assistance to were originally charged with 3 counts of failing to lodge annual general, financial and audit reports.

Over the course of months of often difficult negotiations we were able to reduce those counts to a single charge (failing to provide a general report – the minimum reporting standard) because, as our investigations found, all of the corporations had been wrongly categorised as ‘medium’ sized rather than small corporations under the CATSI Act and thus were, by that higher categorisation, required to provide a general, financial and audit report each year.

This erroneous characterisation was due to an administrative deeming decision made by ORIC shortly after the commencement of the CATSI Act in mid-2007 that each corporation would, until evidence to the contrary was provided, be categorized as a ‘medium’ corporation.

Typically, most of the corporations I provided assistance to had never employed anyone, never opened a bank account and never (apart from an interest in their hard-won and dearly-held land) accumulated any assets.

When these matters eventually made their way to Court each corporation entered a guilty plea. On 21 June 2012 Stipendiary Magistrate Sue Oliver made the following comments in her sentencing remarks in relation to eleven corporations:

The common feature with respect to the corporations is that in many of the cases, or indeed of most of the cases, the directors of the corporations have, a large number of those directors have passed away, leaving only one or a small number of quite elderly directors to carry on the reporting obligations of the corporation. The other common feature is that these corporations … have only existed for the purpose of holding title to land.

Magistrate Oliver dismissed the charges against each of the Corporations.

In April 2013 a further two corporations appeared before Stipendiary Magistrate Michael Carey in similar circumstances to those referred to above. Counsel for ORIC told the Court that:

… the large majority of Aboriginal corporations that have been prosecuted by the Commonwealth DPP have in fact never traded or have had any assets or conducted business.

Part of the reason for the prosecution is to get the corporations to either wind up or appropriately lodge the required reports in order for the Register to be updated …

Magistrate Carey also dismissed the charges without conviction.

Unfortunately this is not the first instance of the Registrar’s office using a ‘hammer to smash an acorn’ or picking the low-hanging regulatory fruit.

In mid-1999 I became aware that the Registrar’s office had initiated a number of liquidation proceedings under the ACA Act against a number of small land-holding corporations that had, as with the recent prosecutions, failed to lodge annual returns with the regulator. The problem with this approach was that the land owned by the corporations was effectively valueless for the purpose of being realised to recoup the substantial costs of the liquidation.

Following representations on behalf of the corporations, the then Registrar and the liquidators beat a hasty retreat – but not before some substantial and needless pain being inflicted upon the owners and residents of their land. As Jim Fingleton, who later would write a comprehensive review of the ACA Act, told the ABC’s Murray McLaughlin in a 7.30 Report program in 2000:

The cruel irony was that Aboriginal bodies were being now required to live up to a much higher standard than that required in the mainstream.

Then Federal Opposition Aboriginal Affairs spokesman Darryl Melham told McLaughlin that the Registrar was acting ‘reprehensibly’:

I think that his actions are oppressive, they’re harsh and they’re over the top and I’m very concerned … when Labor gets elected in two years time, the Registrar can find a new job.

Melham didn’t get the chance to sack the Registrar. By late 2000 the Registrar had fallen on his sword and resigned.