A Northern Territory land council has had its budget withheld over concerns about the organisation's governance, operations and decision-making.
The Anindilyakwa Land Council on Groote Eylandt was referred to the National Indigenous Australians Agency integrity body following a damning audit.
It was subsequently referred to the National Anti-Corruption Commission.
Indigenous Affairs Minister Malarndirri McCarthy confirmed on Thursday she had received a copy of the agency's independent report into the land council's progress in addressing the audit's recommendations.
The agency found that while the land council had started work on addressing the 14 accepted recommendations of the audit, none had been fully implemented.
And yet, the land council recorded a 'closed' status for 13 of the 14 recommendations.
"The review has determined that more work is required to demonstrate that the recommended changes have been adopted as standard practice in the ALC," the report said.
In response to the review, Senator McCarthy made the decision to withhold the land council's 2024/2025 budget, instead approving an operational budget until December 1.
"I take governance at land councils seriously - poor governance and decision making can have a significant and detrimental impact on social, cultural and economic wellbeing," she said.
"The steps I have taken today put the ALC board and management on notice.
"Their failure to sufficiently respond to the recommendations of the independent review and ANAO must not continue, and they need to demonstrate their progress."
An Australian National Audit Office report, released in May 2023, found 50 per cent of 2021/22 mining royalties paid to Anindlyakwa Land Council were invested into Winchelsea Mining, whose executive director was chief executive at the land council.
The report released on Thursday identified four areas to enhance governance at the council.
These included strengthening conflict of interest assessments, monitoring and management strategies, and improving visibility of remuneration, benefits and related-party transactions.
In a response contained in the report, the council's board and management said the organisation had undergone significant changes over recent years to support Traditional Owners' wishes.
"The ALC is committed to transforming governance arrangements on the Groote Archipelago," it said.
"Self-determination remains central to our governance framework, guiding our operations and supporting other Aboriginal corporations."
The land council said it was committed to implementing the recommendations of the audit, but pointed to the difficulty of managing conflicts of interest in a small and remote community like Groote Eylandt.
"Connections to primary stakeholders, such as Aboriginal corporations, are inevitable given the small population and governance structures across the Eylandt stakeholders," the council said.
"In a small population, key leaders often hold multiple leadership positions.
"The ALC has effectively managed conflicts of interest within this operating environment and has significantly improved the documentation of these practices, including more frequent and robust declarations, since the ANAO performance report in May 2023."
The National Indigenous Australians Agency will continue to monitor the land council's progress on the audit's recommendations.
