US-based consultancy paid to find new chair for the northern Australia infrastructure facility board before current member got job

This article is more than 1 year old

This article is more than 1 year old

The government spent more than $70,000 searching for a new head of its northern Australia infrastructure facility board for an appointment it ended up making internally.

The besieged Naif initiative, a brainchild of the former prime minster Tony Abbott, which aims to turn northern Australia into an economic powerhouse, has spent almost $2m in consultancy fees since September 2015, including $71,500 to Korn Ferry to find a new board chair.

The US-based Korn Ferry, which counts the former NSW Liberal MP Robert Webster among its ranks, was contracted in June to find a new chair, after the former chair Sharon Warburton stepped down following an illness in her family.

Khory McCormick, a foundation board member, was appointed to the $150,000 part-time chair position in July.

Asked in estimates by Labor senator Chris Ketter about the ultimately internal appointment, the minister who oversees the Naif, Matt Canavan, said Korn Ferry had been paid the $71,500 contract for contributing to his decision.

“The work that Korn Ferry is, in my understanding, fairly typical in the circumstance,” he said.

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“They provided a range of options for me and the government to consider in terms of people with the required expertise that met the criteria under the Northern Australia Infrastructure Facility Act … We considered those suggestions alongside the potential of an appointment from within the board of the Naif.

“I spoke to all the directors of the Naif before making any decision and ultimate we decided that Mr McCormick was the best person for the role.”

Another vacant board position was filled during the same time period, but was done “just after the Korn Ferry work”.

Canavan said he had indicated that existing board directors would be considered for the appointment, “but we wanted to make a thorough search”.

“I did speak to all the directors on their views in regards to this matter, as well as consult with Korn Ferry on this report before making an informed decision,” he told the Senate committee, adding that McCormick had done “great work” in the time he had been at the helm of the facility board.

Canavan defended the appointment process when asked by Guardian Australia as following due diligence procedures.

“Korn Ferry conducted an executive search for candidates to fill vacancies on the Naif board prior to the appointment of McCormick as chair of the Naif board,” he said.

“The purpose of the executive search was to identify additional suitable external candidates for the Naif board chair and Naif board members.

“As minister, I consider a number of sources of information when coming to a decision about appointments.”

Korn Ferry has also been contracted by the government to run the ABC chair recruitment process and stay on for the next two years.

Kristina Keneally (@KKeneally) Korn Ferry won’t just run the recruitment for the next ABC Chair, but the Department also confirmed in #estimates that, because of Korn Ferry’s success in this closed, select tender process, they will also be on a retainer to the ABC Board Nomination Panel for the next 2 years.

The Naif has previously come under pressure for its low strike rate in approving projects, despite its three-year existence.

Announced with a $5bn fund, it is designed to provide companies with government-backed, interest-free loans for approved projects which help to boost the economic performance of northern Australia, primarily the Northern Territory, northern Western Australia and north Queensland.

Tony Shepherd, who had headed the 2013 Abbott government’s ‘commission of audit’, which became the blueprint for the 2014 budget, was awarded a $50,000 contract in 2017 to review the Naif, given its failure to invest in projects after almost two years.

A Senate review followed in mid-2018, with the Labor and Greens-heavy committee recommending increased transparency and the approval of the finance minister for any projects.

As of last week, the parliament was told the “total Naif loan value of projects, either with investment decisions or conditionally approved” was $1.035bn, with the project value coming in at $2.3bn, with a public benefit of $1.9bn.

Approved projects include upgrades to road infrastructure for mining projects, and airports.

The most contentious of the Naif’s proposed projects, $2bn in funding for a railway line from the Adani Carmichael mine in Queensland’s Galilee basin to the port, was rejected by the Queensland government ahead of last year’s state election.