Senate grills hort levy boss

Horticulture Innovation Australia Limited CEO John Lloyd was given the option of presenting evidence in camera on the report but chose to answer Senator’s questions in the open public forum.

WA Liberal Senator Linda Reynolds subsequently questioned Mr Lloyd about the confidential report - provided to the Senate Rural and Regional Affairs and Transport References Committee’s inquiry – outlining transparency issues.

Senator Reynolds said HIAL had provided the Committee with a confidential report into the management of a particular peak body’s accounts, which was “quite dismal and quite shocking reading in terms of the failure of basic accountability, accounting and transparency in the use of that commodity's funds”.

She promised to keep her questions to Mr Lloyd on the report “very generic so it will not identify the commodity”.

“It obviously raised a lot of issues not only for that commodity but, in my mind, for how many other commodities' peak bodies may have a similar environment or have the opportunities,” she said.

“Not only is it about bad governance processes and basic accountability but there is also huge opportunity for fraud.

“That came out of that report.”

Senator Reynolds asked Mr Lloyd what actions had been taken to address issues raised in the report and by whom.

She also asked how HIAL knew the situation wasn’t being replicated due to being unreported or not visible across all other peak bodies, and what lessons had been learnt by it, to increase transparency, “in a governance sense”.

Mr Lloyd said in its analysis, HIAL did not believe that fraud had been committed.

But Senator Reynolds said one of the report’s key findings was that a determination – of fraud - was impossible to make because “there simply were not the records to say whether it had occurred or not”.

Mr Lloyd said, “That is correct”.

“In the first instance we looked at a whole series of things we wanted done and they seemed to have been done,” he said.

“We brought PwC in to have a look.

“Approximately half the money that was paid to that organisation could not be reconciled or found in an accounting sense.

“This was contempt for the company more than anything else, is our belief, by the individual concerned and a lack of supervision and governance by the board involved, clearly.”

Mr Lloyd said HIAL “immediately froze that organisation - not to the detriment of the growers”.

“There were ongoing projects, but we took every single decision out of that organisation and placed it in my hands for a period of close to nine months, I believe,” he said.

“So nothing could happen in that organisation or that industry without my direct approval and supervision.

“They appointed a new CEO, who, by the way, was one of our executives.

“He went straight in there.

“We said that funding and the restrictions placed upon that industry would not be released until PwC went back in there - and I think we have supplied you with the second audit - and satisfied themselves and us that the systems and processes in place that had failed or not been given due regard were in place in the organisation.

“That has now been done.”

In addressing Senator Reynold’s question on why HIAL was sure the situation wasn’t being repeated by other peak bodies, Mr Lloyd said consultation funding was no longer being paid”

“Fraud is always an issue and our fraud controls both internal and external are being heightened, but this matter cannot happen again in our new structure,” he said.

“We do not pay this money.”

Earlier in the hearing, Mr Lloyd told the inquiry HIAL had 43 industry groups covering about 80 different commodities and 56 levies collected in over 105 different ways.

“We are eligible as an $8.6 billion industry to receive $43 million worth of government co-contribution,” he said.

“Industry levies themselves are just over half that amount.

“Then there is an additional $15 million to $17 million of marketing levies, which of course are matched.”

Mr Lloyd said a change of management triggered HIAL to conduct the PwC review into the unnamed peak body.

“That is a good time to go and have a look at the books - that is what you do in the commercial world as well,” he said.

In closing, Senator Reynolds asked Mr Lloyd to provide further information to the Committee on the detail of compliance auditing for legislation and regulation and how organisations could actually deliver “tangible outcomes back to the growers”.

“In each of the commodities, how do you measure success?” she asked.

“We have asked a number of commodity peak bodies over the course of this inquiry and they have had quite different visions of what success looks like in terms of output for their commodities.

“Some of it has been quite vague - very polished but, at the end of the day, not very substantive in terms of outcomes.

“If you could have a look at those two things for us and how you are approaching that now in the new organisation, I think we would all be very grateful for that.”