Opinion, Phillip Williams
Phillip Williams is a senior professional with nearly 20 years in the management Native Title Trusts. He’s worked with TrustWest, Plan B Trustees, Australian Executor Trustees, Macquarie Bank and Australian Unity before joining the Supply Nation accredited business Bulhari Holdings.
Recently I asked a good friend of mine (Mike) to look after my car. I told him I would pay him $2000 for his trouble and I would also cover all his out of pocket expenses.
Mike thought this was fair and agreed to look after my car. He happens to be a mechanic and owns a number of automotive repair and supply shops.
While I’m away, Mike takes good care of the vehicle. It undergoes a major service, has 4 new tyres and is stored in a high spec garage.
I pay Mike $8000 for out of pocket expenses.
But when I look at the invoices, I note all the services were provided by the businesses owned by Mike. I suspect Mike has made more money from maintaining my car then he did for being my trustee.
At no point has Mike considered weather a competitor may provide a comparable service at a better price.
How is this story relevant?
2018 has been a big year for trustees managing the precious resources of native title groups.
There is a correlation between my story and the significant findings of the Banking Royal Commission in relation to the trustees of superannuation funds.
The Australian Prudential Regulation Authority (APRA) raised what it thought were ‘legitimate concerns about the duel structure that sees a single entity act as trustee and investment manager’ (Financial Review 17/12/2018).
If we refer back to my story, Mike is the trustee, and the automotive repair and supply shops are the investment manager.
The argument is that there needs to be independence between the trustee and service providers.
This concept should be addressed by native title groups to ensure it is not having a detrimental effect on their own assets.
In what can be perceived as a complex world of asset management, it appears traditional land owners are not involved in these discussions and are unaware of the potential consequences.
If we were to treat the capital accumulation for native title groups, often referred to as Future Funds, as superannuation we could have a problem.
The Future Funds are designed to future proof groups who might have limited commercial prospects, as well as help to create industry and opportunities for people who might otherwise have none.
If these Future Funds / native title super funds are not protected in the same way as superannuation, Aboriginal people who might otherwise be self-sufficient could end up repeating the cycle of intergenerational welfare.
The regulators and professional stakeholders are aware of the problem.
How long will it take before the information trickles through to the beneficial owners and they demand answers and potential restitution?
By Phillip Williams