Exclusive: Half of the directors of the Northern Australia Infrastructure Facility face questions over links to mining industry

This article is more than 3 years old

This article is more than 3 years old

The independent board overseeing Australia’s $5bn infrastructure agency is again under fire over potential conflicts of interest that now involve half of its directors as a result of mining industry links.

Fresh potential conflicts involving two Northern Australia Infrastructure Facility directors, including its chair Sharon Warburton, emerged after the body was approached about funding a Western Australia iron ore venture.

Balla Balla Infrastructure Group (BBIG) reportedly sought Naif advice on whether it would be eligible for a concessional taxpayer-funded loan for a rail link as part of its $6bn venture in the Pilbara.

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Warburton also sits as a non-executive director on Fortescue Metals, whose own iron ore mine, rail and port in the Pilbara would be in direct competition with BBIG.

In a statement Warburton said Naif “in accordance with good governance”, including guidelines issued by the Australian National Audit Office, “does not release details of specific recusals” made by its directors.

She said directors were aware of their obligations to disclose and manage conflicts, and had “significant experience in deciding whether their personal circumstances give rise to an actual, apparent or potential conflict of interest”.

Fellow Naif director Justin Mannolini is a partner in the law firm Gilbert and Tobin, which BBIG is paying for ongoing advice over the execution of a state agreement with the WA government.

Mannolini is also chair of the board of Jindalee Resources, which has an interest in iron and base metal projects in the Pilbara. Mannolini did not respond to a request for comment.

This means three of the agency’s directors – half of the Naif board – now face questions over potential conflicts of interest in ruling on concessional loans for mining companies.

The revelation in May of the first possible conflict involving another Naif director, Karla Way-McPhail, was a trigger for a Senate inquiry into the agency’s operations and governance.

Naif is also considering a controversial loan application by Adani for a coal rail line that would open up Queensland’s Galilee Basin, to the possible benefit of Way-McPhail’s mining services businesses.

The agency has drawn criticism for its secrecy and the prevalence of mining industry links on its board.

The Naif has defended its procedures to manage conflicts of interests among directors, but has declined to say whether Way-McPhail has recused herself from any deliberations on Adani.

The Naif board lost a seventh director just weeks before the Senate inquiry began, when the Brisbane-based corporate governance expert and company director Sally Pitkin quietly resigned. Pitkin did not respond to emails.

Leaked documents showed Naif was approached by BBIG in relation to a possible concessional loan for a 162km rail line and port, Fairfax Media reported on Monday.

BBIG had sought Naif guidance on whether its Balla Balla project was eligible under the scheme, according to Fairfax.

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Australian Associated Press reported that BBIG had held “preliminary, investigative discussions” with the Naif but had made no formal application.

It is not clear at what point the Naif board directors become involved in assessing a project’s eligibility.

Nikola Casule, a Greenpeace climate and energy campaigner, said the revelations of more possible conflicts of interest at Naif were “disappointing but sadly not surprising”.

“When you fill a board almost entirely with current or former mining executives and ask them to make decisions about distributing $5bn in taxpayer money, largely to mining companies, you can’t be surprised when you find yourself in this situation,” Casule said.

“When you combine this with the other potential conflicts within the board, Naif’s refusal to respond in a substantive way to freedom of information requests, and assertions by prominent figures such as the former federal treasurer that it was set up to operate as a ‘slush fund’, it is clear that the Naif is not fit for purpose.”

The Labor senator Murray Watt said the revelations around Warburton and Mannolini were “further proof that the Naif is riddled with conflicts of interest among its hand-picked directors”.

He said the agency “must immediately reveal what steps have been taken to ensure decisions are made independently and fairly”.

“For months, Labor has been raising concerns that the Naif is being used as a National party slush fund,” he said.

“It’s critical that decisions to allocate $5bn worth of taxpayer money are made independently and are not influenced by any other directorships or shareholdings that Naif directors might hold.

“Both Turnbull ministers and the Naif have refused to reveal what action directors have taken to avoid decisions being tainted by conflicts of interest.”