LEIGH SALES, PRESENTER: A long-running Native Title dispute involving one of Australia's richest miners took a dramatic turn today.

After years of silence, the highest ranking officer of an Indigenous group has conceded the group was created and funded by Andrew 'Twiggy' Forrest's Fortescue Metals Group.

FMG stands accused of setting up the group in an attempt to secure a cheaper Native Title deal.

Bronwyn Herbert reports from Perth.

BRONWYN HERBERT, REPORTER: This man has been a big part of negotiations with Andrew 'Twiggy' Forrest's company, FMG, to mine billions of dollars of iron ore. But he feels betrayed by the billionaire miner.

BRUCE WOODLEY, CHAIRMAN, WIRLU-MURRA ABORIGINAL CORPORATION: Andrew Forrest came to (inaudible) and said that - that he loved all Aboriginal people. He said that on 16th March. Ya know. Everyone took a bite at that and thought, "Oh, he's a good man here talking to us. He's gonna do - qualify our life up a bit, you know." But nothing has come forward yet.

BRONWYN HERBERT: 60-year-old Yindjibarndi elder Bruce Woodley is in Perth for dialysis treatment. He's decided to speak out because he says his people are at breaking point.

BRUCE WOODLEY: Tapped your shoulder and say sweet things, but his promise has not been delivered by him.

BRONWYN HERBERT: Bruce Woodley is the chairman of the Wirlu-Murra Yindjibarndi Aboriginal Corporation. It's a breakaway group of landowners that was formed when FMG's relationship turned sour with the traditional owners by law it was supposed to negotiate with.

??? (March, 2011): We read your agreement. We understand your agreement. And to be frank with you, it's crap, right?

BRONWYN HERBERT: This Native Title meeting held in March last year shows the bitter divide.

This show of hands gave FMG the right to negotiate with the breakaway group. But last week, former Wirlu-Murra lawyer Kerry Savas told 7.30 it was FMG who had funded and helped set up the breakaway group.

KERRY SAVAS, LAWYER (Last week): Wirlu-Murra was set up by FMG in order for FMG to have a party to deal with. So what they did is created their own and they created the Wirlu-Murra.

BRONWYN HERBERT: What's so controversial shall about this?

KERRY SAVAS: Controversial's probably not the word. The word is illegal. The Native Title Act's fairly clear. It doesn't give terribly many rights to the Aboriginal group, but the one thing it affords Aboriginal people is, um, good-faith negotiations.

BRONWYN HERBERT: FMG denies that it orchestrated the breakaway group.

PETER MEURS, FMG, DIRECTOR (Last week): Fortescue definitely did not set up a rival group to YAC. The Yindjibarndi people are - the Yindjibarndi people, they are the landowners. YAC is one organisation that represents the people. And we were approached as Fortescue by other people from the community, particularly the women of the community, that really wanted to work with Fortescue.

BRONWYN HERBERT: But Bruce Woodley says it was FMG that created the corporation he now leads.

BRUCE WOODLEY: So they deny they set up the Wirlu-Murra.

BRONWYN HERBERT: What do you make of that?

BRUCE WOODLEY: Oh, it's very, you know, frustrating to me. It's the first time he reckons that sorta thing. All these things Andrew Forrest said in the first place when he came and wanted to talk to us, he said I'll be 100 per cent behind you lot, you know? How the hell he changed that thing around.

BRONWYN HERBERT: Bruce Woodley also backs up claims aired last week that FMG only paid people from the breakaway group to go to the Native Title meeting.

BRUCE WOODLEY: The elders got sitting fees of $500 each.

ANDREW FORREST, CEO, FORTESCUE METALS (March, 2011): I've had one message I give and I've been giving this ever since I became a businessman: the more you know Aboriginal people, the more you love them.

BRONWYN HERBERT: Both FMG and the Wirlu-Murra board have told 7.30 they don't share Bruce Woodley's views. FMG says it's provided dozens of jobs, some housing and is expanding its vocational training program in Roebourne.

BRUCE WOODLEY: Well they knocked the job back when the share price went down. And all the training has stopped.

BRONWYN HERBERT: He's pushing for the ref of the Wirlu-Murra board to pull out of Native Title talks with FMG and for control of the negotiations to be given back to the legally recognised group YAC.

BRUCE WOODLEY: YAC should take over the land access agreement. They do that and we'll just continue with Wirlu-Murra doing heritage works.

BRONWYN HERBERT: He's called for his own people to make peace.

BRUCE WOODLEY: I don't carry any grudge against any of my people.

BRONWYN HERBERT: Who's your grudge with?

BRUCE WOODLEY: Mining. They're the ones show the sting up and they should pack away now, let us sort our own problems, get back together again.

LEIGH SALES: And Fortescue sent 7.30 a statement saying it has no idea why Bruce Woodley has made his comments. It says it's now provided 61 jobs to people from Roebourne, along with 11 houses and jobs training. Overall the company employs 420 Aboriginal staff, more than 10 per cent of its workforce. Read the company's full statement.

The Wirlu-Murra Yindjibarndi Aboriginal Corporation also gave us a written response to this story.