The Murray-Darling Basin Authority knew about allegations of substantial water theft as early as July 2016 but took no serious action until an ABC investigation broadcast new claims a year later, documents obtained by the Guardian reveal.

That Four Corners program in July 2017 led to the prime minister, Malcolm Turnbull, asking the MDBA to conduct a review into the states’ compliance with the Murray-Darling basin plan, complementing four other investigations.

But documents seen by the Guardian show the authority had been aware of evidence of possible water theft for many months by then. The authority did not take any direct action on the findings, instead passing them on to state enforcement agencies. And its report on the investigation removed the data that appeared most damning and scrubbed all explicit references to the evidence of unlawful water extraction.

The revelations have led to conservationists arguing the MDBA should not conduct the review itself, saying the authority failed to take appropriate action when it uncovered the evidence.

The MDBA told the Guardian it had reviewed the data from the review and concluded it was flawed and did not uncover evidence of illegality – a position that aligns with the landholder of whom the allegations were made. The landholder, Peter Harris, vigorously denies any wrongdoing.

The Barwon river near Brewarrina. Photograph: Dean Lewins/AAP

Evidence

The authority used a satellite monitoring program called Data Cube to track the flow of water down the river. It revealed billions of litres of water bought by taxpayers to improve the environment were being taken from the river in one small part of the Barwon river in New South Wales. Much of it appeared to be taken unlawfully when the river was too low, or during times when pumping was banned to protect the drinking water for Broken Hill.

Data Cube was initially intended not as a compliance-monitoring program but a scientific one, tracking the effects of environmental flows on the river and wetlands.

But when experts from the MDBA and Geosciences Australia examined satellite imagery (showing where water was in the landscape) and flow gauges in the river, the data suggested water bought for the environment upstream was disappearing before it reached the downstream gauge.

A detailed investigation focused on the region between Boorooma and Brewarrina, which the documents make clear contains only two properties with significant water use – Rumleigh and Miralwyn, which are owned by Harris. They were the same properties identified by Four Corners.

Two documents seen by the Guardian show the MDBA had gathered and synthesised evidence to support allegations of water theft at least as early as July 2016 and that all members of the authority’s board were informed of the evidence.

On 12 July 2016, an authority board member, George Warne, emailed every other board member, including the chief executive, Phillip Glyde, a confidential memo informing them the investigation had found “evidence of unauthorised use at some sites”. Those sites were the two Harris properties.

Warne’s email said: “There is initial evidence of unauthorised use at some sites (satellite data, records of hydrographs dropping unexpectedly etc).”

A further leaked document obtained by the Guardian, dated 5 July 2016, consists of a presentation prepared by the MDBA detailing some of the evidence and noting it was looking into the legal implications. It noted water was being taken that was “not supported by water access licences or temporary trade”, which means it was occurring unlawfully.

The leaked documents are supported by a series of files obtained by the Environmental Defenders Office of New South Wales on behalf of the Australian Conservation Foundation under freedom of information laws, which paint a picture of how the Data Cube investigation worked.

It was sparked by reports of pumping appearing to occur outside licensed conditions, adding to multiple lines of evidence. In one email among the FoI documents, an MDBA worker told colleagues about those reports, one of whom replied: “Can you try to pick up these events in datacube?”

The documents show the MDBA was focused on the only two significant water-using properties between those gauges. The gauge data was then compared with satellite imagery that was analysed to see when off-take channels were wet, indicating that water extraction was occurring. Those images suggested the off-take channels were wet at times when the off-take of water was illegal.

The investigation also used advanced satellite imaging of crops, which could be used to calculate how much water they were receiving. In the internal presentation, the MDBA included a bullet point drawn from this data saying: “Allowable take inconsistent with crop production.”

The MDBA examined five “flow events” that appeared to show environmental flows that were bought from irrigators upstream were being harvested by those two properties. One of those five events may have occurred before Harris bought the properties in 2014. They also included part of a period in 2015 when most pumping in that area was not allowed, in order to protect Broken Hill’s water supply.

Water was also taken when water levels were too low to allow pumping, with the MDBA presentation noting that it had occurred “during periods below commence-to-pump thresholds”.

The investigation also showed there was a lot of legal harvesting of environmental flows, meaning that taxpayer money was being spent to buy water upstream, which was then taken by irrigators downstream. In those cases, there was no wrongdoing by the irrigators but the finding adds weight to claims NSW rules are undermining the $13bn Murray-Darling basin plan.

Aftermath

The eventual public report of the Data Cube project published in April 2017 removed all references to any possible illegal activity, and removed all analysis of the water use of the larger of the two properties, of which there appeared to be more damning evidence.

An MDBA spokeswoman told the Guardian the investigation did not amount to evidence of illegality. She said the program was merely meant to test the technology but the test was not successful enough.

“We found that the technology was promising but more was required to turn the information into evidence of any illegal actions,” the spokeswoman said.

She said the MDBA did not think the evidence from Data Cube was valid, since some of its assumptions were not correct.

The MDBA has significant enforcement powers under the law but it told the Guardian it assumed the states would effectively manage compliance enforcement.

“We have been operating on the basis that compliance matters were being managed appropriately by relevant state and territory authorities – and that information and concerns about compliance we refer to those authorities is actioned appropriately,” a spokeswoman said.

Where it has such evidence, it has significant enforcement powers, described in the act as “the appropriate enforcement agency”. In its own compliance strategy, it says: “It has the powers to seek injunctions, declarations, warrants to enter land and issue enforcement notices and enter into enforceable undertakings.”

The spokeswoman said “concerns” had been “formally” passed to NSW water agencies. One of those – WaterNSW – is now investigating legal action.

The admission comes despite Phillip Glyde, the head of the MDBA, telling Four Corners, in comments made in parts of an interview not aired by the program, that the authority did not pass the information on to NSW authorities.

WaterNSW briefed lawyers about the Data Cube evidence, suggesting it did show potential illegality.

“The concerns referred to WaterNSW by the Murray Darling Basin Authority, arising from the Australian Geoscience remote sensing pilot [Data Cube], were among allegations raised with WaterNSW regarding certain properties in mid-to-late 2016,” a WaterNSW spokesman told the Guardian.

“WaterNSW has investigated these allegations and determined that the evidence may be sufficient to warrant further action. As the matters are currently before legal counsel, further comment would be inappropriate.”

The WaterNSW spokesman said the brief went to lawyers after the Four Corners program aired, which was about a year after WaterNSW received the information from the MDBA.

Response

The chief executive of the Australian Conservation Foundation, Kelly O’Shanassy, said the documents showed the MDBA was not the right organisation to investigate compliance issues.



Kelly O’Shanassy of the Australian Conservation Foundation. Photograph: AAP

“The top brass of the authority knew water was going missing for at least a year and we don’t know what they did [as a result],” O’Shanassy said. “It doesn’t appear that they’ve taken proper action. And worse, they have sanitised reports and are hiding the data despite freedom-of-information requests and complaints from affected downstream farmers.”

She said the authority should have made the evidence public, or at least shared it with other state stakeholders who were affected by the suspected actions.

“The authority that is in charge of returning the river to health knew that water is going missing and didn’t raise that publicly – the authority shouldn’t be investigating issues they seemingly ignored in the first place,” O’Shanassy said. “But that is exactly what is happening.

“The prime minister has ordered the authority to do an investigation on something they knew about over a year ago and have hidden that information from the public. We definitely need a national independent judicial investigation that can compel and protect witnesses.”

A spokesman for Harris said: “The analysis put to us by the Guardian relies on unproven and discredited analytical tools, contains fundamental factual errors and false assumptions. It does not provide a shred of evidence to support the baseless claims of ‘water theft’.”

In particular, his spokesman said, the evidence of water in off-take channels did not indicate that water was being removed from the river, since those channels could be wet whenever water was moved around the property.

He also said water could have been taken from the Macquarie river. The Guardian understands the MDBA investigated whether the Macquarie river could have been the source of water and ruled it out. And experts have questioned why a dry off-take channel would be filled in a time of limited water.

The Harris spokesman said: “We vehemently deny any allegations of wrongdoing.

“We have nothing to hide and have fully complied with the obligations in our water licences. If WaterNSW believes it has information which suggests otherwise, it should bring it on in the appropriate forum where facts are properly tested and the rules of evidence apply.

“Any such charges will be vigorously defended. As a farming family with roots to the land dating back to the 1800s we acknowledge and understand there is a huge amount of emotion associated with water usage in the Murray-Darling basin. We are totally committed to the land and to playing our part as a major exporter, local employer and investor in local services in the region.

“We are totally committed to a regime of compliance and ethical operation. We are committed to full transparency and compliance.”