Indigenous trust loses millions in failed plan to turn El Caballo equine resort into social housing

Australia Broadcast Center

2 hours ago

An Indigenous organisation has lost millions of dollars after failing to transform an aging horse ranch on the outskirts of Perth into homelessness accommodation, an investigation has found.
The Spanish equine theme park El Caballo in Wooroloo was purchased in 2020 for $12 million, in order to provide a "proof of concept" of a social housing model to tackle homelessness for members of Western Australia's Noongar community.
An additional $1.5 million was then spent on repairs, trying to turn it into liveable social housing.
Three years later, with the property still sitting empty, the accommodation portion of the site was sold for $4 million, at a loss of $4.5 million.
The resort portion of the property remains on the market.
The purchase was funded out of the Noongar Charitable Trust, established in 2011 by the South West Aboriginal Land and Sea Council (SWALSC), as a way to distribute funds to projects supporting members of the Noongar claimant group in Western Australia.
But the purchase was referred to the WA Ombudsman after concerns were raised by community members.
These included that the property was acquired without independent market valuation, evidence of a credible business plan or assessment of the ongoing operational funding requirements.
The purchase at the time represented around 50 per cent of the trust's value.
According to the ombudsman's investigation, headed up by WA's Charitable Trusts Commissioner Bevan Warner, a "scoping" report on the El Caballo site valued the property at $32 million, but it was unclear how this figure was obtained.
A retrospective valuation undertaken found it was worth just $5.9 million at the time of purchase, leaving a shortfall of more than $6 million on the $12 million purchase price.
ASX-listed Equity Trustees (EQT) was responsible for distributing the funds on behalf of the Noongar trust.
In a report tabled in WA's parliament yesterday, Mr Warner found EQT "breached its duties as trustee" in authorising the purchase, and has ordered the firm to pay restoration.
Mr Warner found EQT relied too heavily on the representations of a former chief executive officer of the SWALSC who proposed the plan, and did not "independently and impartially" consider the viability of the project.
"The trustees owed to the Noongar people the obligation of examining the proposal in some depth," Mr Warner wrote.
The investigation came about after the national charity regulator, the Australian Charities Not-for-Profits Commission (ACNC), found governance needed to be improved at EQT, but did not take further action.
The WA attorney-general then referred the matter to the ombudsman.
Concerns were raised by EQT about the proposed purchase at the time, including querying why the property had remained on the market for so long.
The organisation also questioned whether an independent valuation should have been obtained.
But according to Mr Warner's investigation, these concerns were addressed by a consultant possibly arranged by the then SWALSC chief executive Wayne Nannup, writing to EQT that "we believe that this purchase price represents excellent value of the site" and it was "better off saving the cost of obtaining an independent valuation".
The investigation found EQT did not carry through with seeking further assessment of the property's value, choosing to rely on valuations provided by consultants arranged by the SWALSC.
"The Commission considers the suggestion that the trustee forgo obtaining an independent valuation in relation to the purchase of an asset purportedly worth in excess of $12 million and requiring an application of half of the corpus of the trust fund, to avoid the cost of those valuations, which are likely to be modest compared to the purchase price, is unreasonable in the circumstances," Mr Warner wrote.
EQT has always maintained it undertook sufficient due diligence.
It told Mr Warner's office that the uniqueness of the El Caballo property meant a standard property valuation could not be obtained, and that it relied on experts put forward by the SWALSC.
"We carefully considered the housing project put forward by the [SWALSC] and notably the social value it would bring to the Noongar people in the years to come," EQT said.
In a statement to the ABC, a spokesperson for Equity Trustees said they remained committed to the intent of the Noongar trust, to support projects directly benefiting the Noongar community.
"At its heart, these funds were always intended to enable and support a community-driven social housing strategy to contribute to the alleviation of homelessness, support domestic violence victims, and provide rehabilitation and aged care facilities for the Noongar community," the statement said.
EQT has until mid-September to respond to the commission's decision that they owe reparations.
The commission has also referred matters relating to the SWALSC to the federal regulator of Indigenous organisations.
"Throughout the Commission's investigation various concerns have been raised by community members and on the information at hand about the conduct of current and former office-holders of [SWALSC]," the report states.
"The Commission has determined that information obtained during its investigation warrants a proactive referral to ORIC (the Office of the Registrar of Indigenous Corporations), and this will be undertaken once this report is provided to the Attorney-General."
The ABC has approached the SWALSC for comment.