Equity Trustees defends actions as Indigenous council demands $21m in compensation
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The news: Equity Trustees said it disagrees with a report by the Western Australian Charitable Trusts Commission, tabled in the WA parliament on Tuesday, which found the company "breached its duties as trustee" in authorising the purchase of the Spanish equine theme park El Caballo Blanco by the Noongar Charitable Trust in 2020.
The numbers: El Caballo was purchased for $12 million to provide a "proof of concept" of a social housing model to tackle homelessness for members of WA's Noongar community. An additional $1.5 million was then spent on repairs, trying to turn it into liveable social housing.
Three years later, the accommodation portion of the site was sold for $4 million, at a loss of $4.5 million.
The initial purchase was funded by the Noongar Charitable Trust, established in 2011 by the South West Aboriginal Land and Sea Council (SWALSC).
Following an investigation by the WA ombudsman, a retrospective valuation found the property to be worth $5.9 million at the time of the purchase, less than half the price paid by the charitable trust.
The context: The report by WA's charitable trusts commissioner Bevan Warner found that the property was acquired without independent market valuation, evidence of a credible business plan or assessment of the ongoing operational funding requirements. ASX-listed Equity Trustees was responsible for distributing the funds on behalf of the Noongar trust.
The report said Equity Trustees breached its duties as trustee in authorising the purchase, and did not "independently and impartially" consider the viability of the project. The commissioner ordered the firm to pay restoration.
In an ASX release today, Equity Trustees said it "disagrees with the findings of the report and considers that it has fulfilled its responsibilities". It said it remains "deeply committed to the purpose and intent of the Noongar Charitable Trust" and committed to working in partnership through the SWALSC to support their efforts.
EQT shares were down 0.73% to $31.14 and over the past 12 months has tumbled 8.11%.
In a statement this morning, the SWALSC welcomed the ombudsman's findings and demanded $21 million in compensation.
The SWALSC said the remaining portion of the El Caballo property is "probably worthless" and estimates it lost $13 million on the purchase and resale, plus associated consultant and lawyers' fees. It said that if the funds had remained in the trust's investment pool, it would have grown by $8 million, so it is now due a total of $21 million from Equity Trustees.
New SWALSC chief executive Vanessa Kickett said the "imprudent purchase" was an "injustice for our Noongar people".
Equity Trustees has until mid-September to respond to the commission's decision that they owe reparations.
