The purchase of the five-hotel Ayers Rock Resort overlooking Uluru, by the Indigenous Land Corporation is to be investigated by the federal government.
Fairfax Media has learnt that Finance Minister Mathias Cormann has been convinced of the need for an inquiry into the $320 million acquisition in 2010 after lobbying by the new board of the ILC.
Mr Cormann has asked Indigenous Affairs Minister Nigel Scullion to take charge of a review into the actions of the former ILC board as they pushed ahead with buying the resort despite repeated warnings against the plan by former Labor ministers Penny Wong and Jenny Macklin.
The new board of the ILC, led by chairwoman Dawn Casey, has complained that the acquisition has burdened the corporation with debts of $200 million and the former directors paid too much for the resort just before a sector-wide slump in tourism.
The value of the resort has been written down twice and is now valued at just over $200 million, nearly $120 million less than when it was bought from property giant GPT as it liquidated assets after the global financial crisis.
Dr Casey has described the deal as "perhaps the largest single evaporation of public money in the indigenous policy domain, ever" and ILC chief executive Mike Dillon told a Senate committee last year the purchase was "inexplicable and inexcusable".
The ILC's charter is to "assist indigenous people to acquire and manage land to achieve economic, environmental, social and cultural benefits", but Dr Casey said the resort acquisition – by far the biggest in the ILC's 20-year history – will mean the diversion of funds from the $1 billion Land Account that would otherwise be spent on numerous Aboriginal communities across Australia.
Bitter fallout
The bitter fallout over the deal has created a feud between Dr Casey and some of the business community's heaviest hitters, including hotels industry titan David Baffsky, who spearheaded the purchase of the resort during his time as a director.
After the ILC bought the resort, Mr Baffsky established Voyages Indigenous Tourism to run the business and brought in former Qantas boss Geoff Dixon, Investec Bank chairman Richard Longes, property executive Peter Barge and former boss of Indigenous Business Australia, Ronald Morony.
Dr Casey put a broom through the boards of Voyages and ILC when she was appointed in 2011 and has since received two independent reports, including a McGrathNicol review that found holes in the sale process.
McGrathNicol found one of the property valuations used to guide the purchase was 17 months out of date and the $317 million paid exceeded one of three pre-sale valuations by $22 million. But it also found good governance was applied.
An inquiry, which could be led by the federal auditor-general or Mr Scullion's department, would likely focus on governance issues.
On Friday, Mr Baffsky, who spent more than a decade on the audit and risk committee of the ILC, said there was no need for another inquiry and it would be an "obscene waste of money" unless there was new information the finance minister wanted looked at.
But he said he would support any review that put a focus on the indigenous employment generated by the Ayers Rock Resort, which has 200 Aboriginal employees.
'Breathtaking hypocrisy'
Mr Baffsky accused Dr Casey of "breathtaking hypocrisy" after she presided over a near 30 per cent write-down of indigenous tourism assets in her time as chairwoman of Indigenous Business Australia.
"It's a shame the ILC hasn't used [the resort] as a springboard for more indigenous involvement in tourism. That's why I'm most critical of Dawn Casey," he said.
Dr Casey declined to comment directly and an ILC spokesman said: "The ILC prefers not to comment on this matter at this point in time."
A spokeswoman for Senator Scullion signalled he may not agree with Mr Cormann on the need for an investigation. "The Minister will respond directly to the Finance Minister before commenting," she said.
Senator Scullion has in the past spoken positively in Parliament on the performance of Mr Baffsky and former executive David Galvin. In November, he appointed Shirley McPherson, who chaired the ILC during the sale, to the board of the IBA.
Last year, Mr Dillon described Ms McPherson's responses to at least eight letters from Ms Wong and Ms Macklin asking the ILC not to go through with the purchase as "desultory and paltry".
"As paltry as a bandicoot's breakfast. It was pathetic," he said.
Cast of characters:
Dawn Casey, chair of ILC
Mike Dillon, ILC chief executive
David Baffsky, Accor Hotel honorary chairman and former ILC director
Geoff Dixon, former Voyages Indigenous Tourism board
Shirley McPherson, former ILC chair, director of IBA
Finance Minister Mathias Cormann
Indigenous Affairs Minister Nigel Scullion
Penny Wong, former Labor finance minister
Jenny Macklin, former indigenous affairs minister
