The potential misuse of Indigenous royalties on Groote Eylandt has prompted renewed calls for an urgent inquiry into land councils by Independent Senator Lidia Thorpe.
An Australian National Audit Office report found 50 per cent of the 2021/22 mining royalties paid to Anindlyakwa Land Council were invested into Winchelsea Mining.
The audit found risks of conflict of interest were "high" as Winchelsea is co-directed by Mark Hewitt, the chief executive and chair of the land council Tony Wurramarrba.
Senator Thorpe said communities had been calling for an urgent inquiry for some time.
"There are lots of mismanaged funds but there are also questions around governance and free prior informed consent," she said on Monday.
"A land council board ... is meant to represent the people whose land it is, and they're not doing that, they're doing the opposite by excluding traditional owners and cutting them out."
Coalition senator Jacinta Nampijinpa Price has also previously urged for an inquiry into land councils.
Senator Thorpe said Labor and the Greens were blocking any inquiry.
The 2023 audit also found the council finance committee approved 99 per cent of the funding requests from Mr Hewitt, compared with 53 per cent of other requests.
"The (audit) observed disproportionate benefit to the entities with which the CEO is associated," the report reads.
The finance committee meetings, designed to decide where royalties are directed, are held in Darwin or Cairns and are all attended by Mr Hewitt.
Groote-based Aboriginal corporations do not have the opportunity to present funding applications in person, the report found.
Mr Hewitt and other land council members fronted Senate Estimates on Friday, defending the decisions of the council.
When asked by Senator Thorpe what 50 per cent of Indigenous royalties invested into Winchelsea Mining was being used for, Mr Hewitt said the money was necessary for the development of the mining project.
"We have in the process of developing Winchelsea many steps to go through," he said.
"We had to spend a large amount of money in studies ... our final bankable feasibility study was 1149 pages, and that involved hundreds of consultants."
Mr Hewitt said since the audit the council had adopted 10 of the 15 recommendations.
He clarified that he was not the owner of the Winchelsea Mine, though is listed as director, secretary and chief executive, while shareholding is split between Anindilyakwa Advancement Aboriginal Corporation and a Chinese mining company.
The ALC chief executive was not asked about the conflicts of interest findings in the report or whether new management plans are in place.
The land council's own internal audit committee, responsible for overseeing the implementation of the recommendations, was also found to have conflicts of interest.
Mr Hewitt said the council was working to ensure the council audit committee chair was independent and undertaking all mandatory functions.
Council audit committee chair Mark O'Shea is the founder of Enmark consulting, to which the council paid $896,056 in consultancy fees between 2014/15 and 2021/22.
The committee charter requires each member to provide annual declarations of "any material or personal interests that would preclude them from being members".
The chair and other members have never made a declaration.
Mr O'Shea remains the council audit committee chair and the ALC was not asked about his position during estimates.
