Governance Forum

Many of you would have watched with interest, Monday night's Four Corners episode entitled "Ripped Off" - exposing how millions of dollars have been siphoned out of remote communities, leaving a trail of broken promises, unfinished work and a burning sense of betrayal. (Reported by Linton Besser and photo by Alex McDonald)

These were dramatic stories, with examples in several Kimberley communities of hundreds of thousands to millions of dollars being badly managed or even unscrupulously and fraudulently embezzled from the intended community projects.  Many of the people allegedly responsible for these financial decisions were long term whitefella CEOs or contractors but some were local community members with a position of power in the local Aboriginal corporation.

There is no doubt that this is just a small sample of what is going on in many communities.  Sometimes involving less money and less deliberate action and maybe just plain incompetence or inexperience, but all have a devastating impact on the communities that can least afford it.  Unfinished projects, projects that the community cannot afford to run or insure, government funding withdrawn, people living in substandard housing, over-crowding, health issues and education deficiencies. The gap remains unclosed and the cycle of poverty continues. 

It's a timely reminder to think about how your organisation is being run and what you could do to ensure the money it receives from taxpayers or private companies or the money it earns from business ventures and investments is properly managed and distributed towards the projects that are most needed by your community.

These are some suggestions, you may have many more:

• Take a look at your Board composition - does everyone on the Board have the basic skills necessary to understand financial transactions, read contracts, employ staff and oversee the managers? 
• If you are an organisation managing significant contracts and sums of money, do you have someone on the board with specialist financial skills and/or business skills?
• Ask questions and then ask some more.  Just because something is presented to you on paper, doesn't mean its right.
• Does your board manage Conflicts of Interest well? For example, do all Board members declare conflicts and leave the room when a vote is being taken on something that is related to them?
• Bear in mind that unless Independent directors have specialist qualifications (legal/financial/business), you can't rely on them for specialist advice, just independent, unrelated party advice.

TELL FDIO WHAT YOU THINK
(we'll incorporate some of the responses in our next newsletter):

• What does your organisation do to make sure you are not taken advantage of?
• Who helps you manage the money? What checks and balances do you use to manage money and investments?
• How do you appoint Independent directors (if any)? What are the skills and attributes of an Independent director that work best with your organisation?
• What mistakes have you made and how would you do things differently now?