The Northern Territory government will "cripple the racing industry" if it reduces funding to the Darwin Turf Club in response to a damning anti-corruption report into the awarding of a $12 million grandstand grant, the club says.
Shortly after the Office of the Independent Commissioner Against Corruption (ICAC) handed down the report last August, Chief Minister Michael Gunner vowed to recover the multi-million-dollar grant.
Since then, the club's board has been spilt and a new one has been elected in its place.
In a statement, club chairman Richard O'Sullivan said Mr Gunner's calls for the money to be paid back would place the NT racing industry in a "perilous position" and threaten the future of the Darwin Cup Carnival.
"Over $122 million is injected into the Northern Territory economy thanks to the racing industry," Mr O'Sullivan said.
Mr O'Sullivan said the club was "extremely disappointed" by the government's stance given the club had adopted the ICAC's recommendations, which did not include repaying the money.
"The grant for an infrastructure project was provided by government, the grandstand was built as per the grant agreement and the monies were fully acquitted and accounted for," he said.
"Nowhere in the ICAC report does it recommend or make findings that the $12 million be returned."
In line with the ICAC's recommendations, he said the new board members had undertaken special training about governance and conflicts of interest.
He also said a government-appointed auditor had conducted a thorough corporate governance framework review, and the findings had been of a "minor nature".
In a statement, a spokesman for Mr Gunner said: "Taxpayers' money will be returned to taxpayers."
"We're not going to set a precedent that the ends justify the means," he said.
"It'll be done over a period to make sure racing stays strong and the carnival remains strong.
Opposition Leader Lia Finocchiaro said asking for the turf club to repay the money was unfair when the NT government had approved the grant and the club "had complied with their end of the bargain".
"The only person who should be paying back that $12 million is Michael Gunner and his cabinet, because they are the very people who controlled the payment of the $12 million of taxpayers' funds for the construction of that grandstand," she said.
