More than $20 million of taxpayers' money allocated to protect the Great Barrier Reef has been funnelled through a series of companies linked to two tourism operators, one of whom is on the Government board making those funding decisions.

Key points: Conflict-of-interest questions raised over allocation of taxpayer funds in fight against crown-of-thorns starfish

Conflict-of-interest questions raised over allocation of taxpayer funds in fight against crown-of-thorns starfish Money funnelled through series of companies linked to two tourism operators in north Queensland

Money funnelled through series of companies linked to two tourism operators in north Queensland Cairns-based Margie McKenzie says she has managed potential conflicts by declaring all her interests

Governance experts said the potential for conflict is so serious, Cairns-based tourism operator Margie McKenzie should reconsider her position on the board of the Great Barrier Reef Marine Park Authority.

"You can't be a member of the public authority dispersing the funds, and then run a private company receiving the funds," said Professor Thomas Clarke from the University of Technology Sydney business school.

The money in question has been spent on killing crown-of-thorns starfish, which destroy vast amounts of coral when their population booms.

The funds were allocated by the Marine Park Authority to two not-for-profit companies, both of which have subcontracted a third for-profit company — called Gempearl — to do the actual culling.

Ms McKenzie, who sits on the board of the authority, and her husband Col McKenzie, own 100 per cent of Gempearl.

Ms McKenzie has told the ABC she has not taken part in any discussions or voted in decisions about crown-of-thorns funding in her role at the authority.

But the connections between the McKenzies and taxpayer funds run even deeper.

The two companies in the middle that pass the funding on to Gempearl in payment for culling services are both led by Mr McKenzie.

Two corporate governance experts said Ms McKenzie shouldn't be able to keep both her role on the board and her interest in Gempearl.

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How the money flows from the Marine Park Authority to Gempearl

Sorry, this video has expired How money flows from the Great Barrier Reef Marine Park Authority to Gempearl

The Marine Park Authority selected two companies to receive the funds, in a series of limited tenders.

One of those companies, the Reef and Rainforest Research Centre Ltd, has Mr McKenzie on its board. It has received more than $13 million of that funding.

The rest of the $20m has been awarded to a company that is almost entirely run by Mr McKenzie — the Association of Marine Park Tourism Operators Ltd. Mr McKenzie is the executive director and the company secretary.

A new law passed by both houses of federal Parliament in February this year contains an amendment specifically designed to outlaw conflicts like this.

But three months after that law was passed, Ms McKenzie was re-appointed for a term that would see her continue leading the Marine Park Authority until 2023.

The new law is not yet in effect — that could take until March 2019.

Governance experts approached by the ABC said they thought the situation was unacceptable.

"Really, it's a continuous conflict of interest and the only resolution of that is to leave the authority or leave the private company," Professor Clarke said.

Tom Baxter from the University of Tasmania is an expert in corporate governance and a former legal officer at the Great Barrier Reef Marine Park Authority.

He said Ms McKenzie's interlocking directorships raised "thorny governance concerns".

"Certainly, once the Great Barrier Reef Marine Park Amendment (Authority Governance and Other Matters) Act 2018 fully commences by March 2019, it seems to me untenable for Mrs McKenzie to remain on the GBRMPA board," Dr Baxter said.

All my interests are declared: Margie McKenzie

Ms McKenzie said she managed the potential conflict of interest by declaring all her interests and leaving the room when any discussion of crown-of-thorns starfish (COTS) culling arises.

"Potential conflicts of interest is managed through the fact that I absolutely abstain from being part of that conversation," she told the ABC.

"For instance, if COTS is on the agenda, I typically leave the room or I definitely don't participate in that conversation."

Margie McKenzie says she has managed potential conflicts by declaring all her interests. ( ABC News: Michael Slezak )

But documents obtained by the ABC under freedom of information laws show Ms McKenzie failed to declare her interest in Gempearl at board meetings for the first two years she was on the board of the authority.

At a board meeting in 2015, the documents show Ms McKenzie "clarified" her declaration, and amended it to include that she was the managing director of Gempearl.

"I originally didn't think it was required. A change in declaration forms spurred me to include it at this time," Ms McKenzie told the ABC.

But Ms McKenzie has never declared her husband's interest in the Reef and Rainforest Research Centre Ltd, or her husband's interest in Gempearl.

Asked about this, she said: "I do not believe it to be required, it's my declaration, not Col's."

Questions over the effectiveness of culling method

Crown-of-thorns starfish are currently killed one by one. ( Supplied: Lisa Boström-Einarsson )

The control of crown-of-thorns starfish has been a priority for successive governments and the Great Barrier Reef Marine Park Authority.

The starfish are considered by some experts as the second biggest driver of coral loss — and were the single biggest driver before the unprecedented bleaching hit the reef in 2016 and 2017.

The money being spent on killing the starfish is further clouded by widespread doubt over the effectiveness of the existing methods, as well as assessments of its effectiveness that were not disclosed by those receiving the money.

Crown-of-thorns starfish are currently killed one-by-one. Divers use a large syringe to inject bile, collected from oxen, into the invertebrate body.

The injection induces a severe allergic reaction, which appears to virtually melt the starfish from the inside out.

Professor Pratchett thinks individual culling can be effective, but only if it's focussed on the very early stages of a crown-of-thorns outbreak. ( ABC News: Michael Slezak )

Professor Morgan Pratchett from James Cook University, who helped develop the current method for culling the starfish, said the $20m spent so far was unlikely to have made any significant difference to coral cover on the reef.

"Once the outbreaks are very well established, we're talking about dealing with very large numbers of crown-of-thorns, so it becomes somewhat futile," he said.

"The last estimates we heard were that there were 7 million starfish, so I don't think even with the new investment we're going to kill 7 million starfish like that."

Professor Pratchett thinks the individual culling method could be very effective — but only if it's focussed on the very early stages of a starfish outbreak.

Report concluded starfish-killing programs 'risked doing harm'

The effectiveness of the culling program has been assessed by the two companies being awarded the money.

In 2015 they commissioned a report by reef scientist Udo Engelhardt. He concluded the programs did not appear to be doing much good, and that they even risked doing harm by extending the duration of crown-of-thorns outbreaks.

Both Col and Margie McKenzie knew of that report, but it was not handed on to the Marine Park Authority or the Department of Environment until Dr Engelhardt spoke publicly about his views earlier this year.

"Not being aware of the wealth of information on the frequent failings of past COTS controls, shows a remarkable degree of incompetence," Dr Engelhardt told the ABC.

"Being aware of this information, but choosing to ignore it, is clearly negligent."

Divers have played a big role in helping to combat the starfish. ( ABC News: Robin McConchie )

Ms McKenzie told the ABC she didn't tell her colleagues at the Marine Park Authority about the findings because of her conflict of interest.

"COTS is not a subject I talk on — I'm not allowed to talk on COTS and I respect that. I wouldn't bring that up," she said.

Professor Clarke said that was an unusual interpretation of conflict of interest, since she would be unlikely to benefit by disclosing that information.

"If you receive a report saying this work is not being as effective as we imagined … it would be vitally important, it would be imperative, to pass that report on to the authority immediately. It appears that this was not done."

In response to questions about conflicts of interest, a spokeswoman for Environment Minister Melissa Price said in a statement it was the "duty of each board member to ensure they are compliant with all legal requirements, including those pertaining to conflicts of interest".

And a spokeswoman for the Great Barrier Reef Marine Park Authority said those interests were tabled and discussed in each meeting.

"Where declared, the board then discusses an appropriate response to the interests," the spokeswoman said.

"The Marine Park Authority is providing information to all board members about their obligations under the new governance arrangements."

Editor's note: Since this story was published, it has emerged that the report by Udo Engelhardt was uploaded to a Department of Environment portal in 2015. The Great Barrier Reef Marine Park Authority maintains it never received the report.