07/06/2016 - 15:59

Aboriginal corporation defends joint venture

07/06/2016 - 15:59

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Western Australia’s second largest Aboriginal corporation has defended a joint venture with Perth contractor Gary Johnson following claims the agreement had produced unfair profits for Mr Johnson’s business.

Aboriginal corporation defends joint venture
Marra Worra Worra Aboriginal Corporation chairman Patrick Green.

Western Australia’s second largest Aboriginal corporation has defended a joint venture with Perth contractor Gary Johnson following claims the agreement had produced unfair profits for Mr Johnson’s business.

Fitzroy Crossing-based Marra Worra Worra Aboriginal Corporation and Claremont-based GJ Johnson & Co have jointly owned Kimberley Regional Service Providers since 1998.

KRSP has grown to be a substantial contracting business – in the year to June 2015, MWW’s share of profits amounted to $8.2 million.

The joint venture was a major contributor to MWW’s total revenue of $32 million, which makes it the second largest Aboriginal corporation in WA, according to the BNiQ search engine.

The ABC’s Four Corners program claimed this week the joint venture contract had been signed by an MWW director who was financially illiterate.

It cited a $6.6 million fee paid to GJ Johnson & Co in 2012-13 to suggest the joint venture was unfair to the Aboriginal partner.

Former director Joe Ross was scathing in his assessment of the agreement.

“The poor directors at the time wouldn’t have had any clue about the ramifications and the implications of what the community was losing in economic benefits from the contract,” Mr Ross told Four Corners.

MWW said it was not aware of any basis for the claim one of its directors was financially illiterate.

Independent director and adviser Richard Gregson – who is also a director of accounting firm Hall Chadwick – responded by saying MWW was a ‘best in class’ Aboriginal corporation.

“The whole board has been through extensive corporate governance training,” Mr Gregson said.

“The governance arrangements are very strong.”

Chairman Patrick Green said the KRSP joint venture had helped the Fitzroy valley community create jobs and develop businesses.

“The relationship has helped us go forward as business people and less dependent on government grants,” he said.

The joint venture arrangement includes a management fee paid to GJ Johnson & Co, calculated as 5 per cent of gross revenue.

The remaining profits are distributed on a 50:50 basis.

“We understand there is a management fee and we agree with that,” Mr Green said.

“This is a business relationship; there are no taxpayers’ funds in this.”

The $6.6 million payment from KRSP to GJ Johnson & Co was profit share and management fees accrued in previous financial years but not paid until 2012-13.

Mr Johnson told Business News he has been working in the Fitzroy Valley for 40 years.

He said 65 per cent of KRSP’s workforce was indigenous, and most were focused on delivering municipal services in their communities.

KRSP has trained in excess of 178 workers, in many cases providing a platform for them to go into full-time employment.

Mr Johnson said he took the commercial risk under the joint venture.

“Everyone went into this joint venture with wide open eyes,” he said.

MWW’s total revenue included $14.5 million of government grants, which fund remote housing and community development programs.

This is separate from the municipal contracting delivered by KRSP.

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