A tiny Aboriginal community in remote Western Australia has moved to evict the operators of its only supermarket amid claims it threatened to withhold hundreds of thousands of dollars.

Key points: A remote WA community has staged a 'takeover' of the local supermarket, changing the locks and telling staff to leave

A remote WA community has staged a 'takeover' of the local supermarket, changing the locks and telling staff to leave The Wirrimanu Corporation says the Outback Stores outlet in Balgo has engaged in "unconscionable conduct"

The Wirrimanu Corporation says the Outback Stores outlet in Balgo has engaged in "unconscionable conduct" The Commonwealth-funded organisation is accused of threatening to withhold profits, which are meant to go back to the community

Outback Stores was issued a Show Cause Notice on October 11 by the corporation representing Balgo, 2,800 kilometres north of Perth near the Northern Territory border, over allegations of unconscionable conduct and breaches of contract.

As a not-for-profit organisation, Outback Stores, which is Commonwealth-funded, is required to return all net profits to the community, whose residents can then choose how to reinvest them.

But the community claims it has not been given sufficient financial information to understand how much net profits are available for distribution, and how quickly these amounts will be returned to the community.

It is the latest controversy to hit the retail company, which is paid millions of tax-payer dollars to operate more than 30 stores in Aboriginal communities across regional Australia.

Outback Stores has been operating the Wirrimanu Community Supermarket for 11 years, with Balgo's 400 residents relying almost entirely on the store for groceries, white goods and clothing.

There have been years of tension between the store at Balgo and local residents, according to Nathaniel Stretch. ( ABC Kimberley: Matt Bamford )

Sackings demanded

The Wirrimanu Aboriginal Corporation (WAC), which represents Balgo's residents and owns the supermarket, alleges Outback Stores denied residents access to bank account records, used "improper accounting practices" and delayed presenting financial reports.

In a legal letter to Outback Stores, WAC outlines a series of allegations dating back to 2016.

In written statements, multiple board members recall a 2018 meeting where an Outback Stores representative demanded the dismissal of WAC chief executives Warren Bretag and Hugh Lovesy.

According to several signed declarations, directors say they were told $450,000 in profits would be withheld from the community if the men were not sacked.

"[They] said words to the effect, 'I will not release the $450k until you sack the two CEOs Warren Bretag and Hugh Lovesy'," wrote WAC chairperson Nathaniel Stretch.

These recollections were shared by two other board members.

The Wirrimanu Corporation represents Balgo residents and owns the township's only supermarket. ( ABC Kimberley: Matt Bamford )

Mystery profits

WAC was also surprised by the size of the funds being discussed, given audits for the 2016/17 and 2017/18 financial years showed net profits were just $23,419 and $66,348, respectively.

In correspondence seen by the ABC, Outback Stores explained the money was funds held in a term deposit.

The $450,000 was released in a series of tranches between December 2018 and May 2019.

Email trails show WAC staff trying to decipher the amount of money owed to the community after a series of inconsistent announcements made by Outback Stores.

Questions remain about how income from the supermarket is retained and distributed.

In a statement to the ABC, Outback Stores refused to address allegations made by WAC.

Instead, a spokesman said the company had a "very strong relationship" with WAC directors and community leaders.

"Our partnership has delivered outstanding social and commercial outcomes for the store owners and the Balgo community in general," he said.

"We are in communication with the (Wirrimanu Corporation) in relation to recent activities and statements made over the past week [and] are focused on engaging with the directors … to provide the best available outcome for the Balgo community.

"Outback Stores remains committed to working with the Balgo community and continuing our relationship with the directors of Wirrimanu Corporation and community leaders into the future.

"Outback Stores is wholly owned by the Commonwealth Government, and operates with a high level of governance and transparency."

Outback Stores says it operates in good faith with Wirrimanu Corporation and is trying to engage with the directors. ( ABC Kimberley: Matt Bamford )

Auditor called

In February, the corporation hired an external auditor to conduct a forensic financial investigation.

Auditor I.J. Painter Consultants has repeatedly asked Outback Stores to hand over crucial financial documents, but not all of the requested documents have been provided.

"We are disappointed by the OBS [Outback Stores] response to our legitimate requests and their failure to comply with requested mediation," a statement from WAC said.

"Adequate financial statements for the [supermarket] have not been provided by Outback Stores, allowing our corporation no transparency for our ongoing financial investigation into serious concerns about undisclosed rebates."

The community launched a takeover of the store last week, replacing Outback Stores staff and changing the locks.

"Our actions to thread reflect a frustration with OBS non-compliance and a need to resolve these issues," WAC said.

Mr Stretch said the decision to take action was not made lightly.

"It's wrong, really, so we are putting it out in the open," he said.

Now it's come to the point where [Outback Stores] must leave Balgo."

Mr Stretch said WAC directors felt meetings with store representatives were rushed and not transparent.

"You don't know the story about what [Outback Stores] are trying to do," he said.

Wirrimanu Aboriginal Corporation is the body corporate for Balgo and Billiluna, WA. ( ABC Kimberley: Matt Bamford )

Challenging year

It is another blow for the community, which has spent much of the year mourning several much-loved young women who took their own lives.

"We were looking forward to building up Balgo and showing what we've got planned," Mr Stretch said.

The Show Cause Notice states Outback Stores had seven days to engage in mediation with WAC.

If mediations are unsuccessful, WAC will call for presentations from other operators to take up a new contract.

"We … look forward to inviting OBS back to the table if they are prepared to modify their management contract and levels of financial transparency," WAC said.

Minister for Indigenous Australians Ken Wyatt is aware of the dispute.

A spokesman said Mr Wyatt "understands Outback Stores is working in good faith" to resolve the matter.