A company founded and run by a man the prime minister, Scott Morrison, describes as “a very dear friend” has received more than $43m in government contracts since 2015, mostly from defence, while being a registered charity helping Indigenous businesses with advice.
The company, ServeGate Australia, has as its founding CEO Leigh Coleman, who Morrison mentioned in his maiden speech as a key influence on his life. Its nominated charitable purposes are to increase Aboriginal employment and reduce welfare dependency.
The unconventional ServeGate model – described by Coleman as “unique” – involves contracting with the commonwealth government then subcontracting the work to conventional – almost all non-Indigenous – small and medium professional services companies.
Profits from the government work subsidise Coleman and other staff members’ salaries while they provide advice to a small number of selected Indigenous businesses.
The company’s website makes no mention of its charity status, and some companies that received subcontracted work through ServeGate have told Guardian Australia they were not aware it was a charity.
ServeGate responded that the website was out of date – it reflected the time before the company was a charity – and would soon be updated and rebranded.
Four Indigenous businesses that have received help from ServeGate give Coleman and the company good reports – but the unconventional business model has attracted attention from others in the defence procurement industry.
ServeGate Australia was founded as a conventional proprietary company in 2015 by three non-Indigenous men: Coleman, chief operating officer Roehl Oringo and former public relations consultant Bob Nattey, who is now the chair.
It became a registered charity, therefore exempt from income tax and GST, in February 2019. Shortly before then, two Indigenous businessmen became shareholders, which means ServeGate qualifies for preferential treatment under government procurement policies that set targets for contracts awarded to Indigenous businesses and mandate preferential treatment for small contracts and those in remote areas.
ServeGate Australia’s annual report, lodged with the Australian Charities and Not for Profit Commission, states that ServeGate “engages large end customers in supply chains such as the Commonwealth Government, Glencore Mines Rio Tinto etc … to access work coming from these large customers to provide them to start up and small Indigenous and non-Indigenous businesses”.
But nearly all the contracts ServeGate Australia has received from government have been subcontracted to conventional consultants and IT companies, with no Indigenous involvement or employment. The Guardian understands there are no contracts with Glencore or Rio Tinto.
Details available from Austender show ServeGate has won about 90 federal government contracts since March 2016. While not all subcontractor details are available, the only Indigenous-owned company shown as gaining work is Muru Consulting.
ServeGate confirmed that almost all of the company’s contracts were with the commonwealth government, with a few from state governments. Coleman said the “sole purpose” of the company was to benefit Indigenous small business and communities. He said he earned $39,000 for his work and no dividends were paid to shareholders.
Those who work with Coleman and his fellow ServeGate founders say they are motivated by strong Pentecostal Christian values. Coleman, they say, is a “relationships driven person … well motivated.”
Roehl Oringo said the company had “nothing to hide … I think you should look into the heart of the people that are actually running this organisation.
“You might consider us silly, but there are people like us. Our focus is different. It is not for pecuniary reasons that we set this up.”
He said the ServeGate model complemented government efforts to encourage Indigenous business, which often involved grants, but inadequate business training, mentoring and support. ServeGate had worked closely with Indigenous Business Australia and the National Indigenous Australians Agency to identify businesses that would benefit from help.
A spokesperson for the NIAA said that it worked “no more closely with ServeGate than it does with any other funded organisation”. The spokesperson said the NIAA had “provided preliminary advice” to ServeGate on a funding application, but there were no agreements or applications in place.
Coleman has a long history in Christian microfinance charities, including with the welfare arm of the mega-church Hillsong and the organisation Many Rivers, which he founded. Many Rivers provides business mentorship and microfinance loans to disadvantaged people, including Indigenous startup businesses. Microfinance involves lending small amounts of money to disadvantaged people with the aim of encouraging them to start businesses and escape welfare dependency.
ServeGate nominated four Indigenous businesses as having received help since the company was formed in 2015. Two of these are run by ServeGate’s Indigenous shareholders, Hunter Valley-based Victor Perry and West Australian Quinton Tucker.
Coleman said the businesses receiving ServeGate’s help were chosen “organically and on a needs basis” but that the company had begun to get referrals from state and federal government procurement staff.
Oringo said ServeGate’s limited resources meant that it could only work with one or two Indigenous businesses at a time, but that it “walked with them” providing intensive help and mentorship.
The West Australian goldfields-based Burnna Yurrul Aboriginal Corporation (BYAC) is owned and run by Tucker and his family, and is also a not for profit, with a history of providing labour hire to the mining industry with the profits funding training and social housing for Indigenous mine workers.
BYAC is currently being monitored by the Office of the Registrar of Indigenous Corporations following a 2016 compliance report and two critical auditors’ reports that identified inadequate financial records, including payments made but not supported by documentation, and a lack of evidence that subsidiary companies had been set up with proper board certification.
One BYAC subsidiary, BYAC Contracting, has since gone into liquidation after a waste management contract with Glencore’s Murrin Murrin nickel mine was not renewed in 2016. Glencore said the non-renewal was “by mutual agreement”.
Oringo said that the federal government’s NIAA (then part of the department of prime minister and cabinet) and Coleman had introduced ServeGate to BYAC, and together with the Western Australian state government had asked it to help the organisation.
A spokesperson for the NIAA contradicted this, saying it was “aware Burnna Yurrul Aboriginal Corporation has a relationship with ServeGate Australia, however [we] did not play a role in that relationship forming nor has NIAA made any request for ServeGate to assist BYAC”.
Meanwhile, Coleman said ServeGate was helping BYAC with “rebuilding of their governance practices and with scoping for work, access to markets and business planning … We pick those that are most in need to help … not the easiest ones,” he said.
Tucker said that ServeGate did “fantastic work … for Aboriginal businesses and the wider small and medium enterprise business sector in general”, but he did not respond to detailed questions before deadline.
Another company nominated as having received mentorship under the ServeGate model is Yunaga, based in Singleton, New South Wales, which provides civil and earthmoving services to the Hunter Valley mining industry. It is directed by Victor Perry, who is also a director and shareholder of ServeGate.
Perry said he had known Coleman for years, and that ServeGate had provided valuable general advice on gaining work in the industry and good business practices.
Of the other two companies that Oringo said had received help, Muru Management Consulting was the only Indigenous-owned subcontractor shown as receiving work through ServeGate’s commercial business with the commonwealth.
The founder of Muru, Wiradjuri woman Donna Cowey, said she connected with ServeGate at an industry fair when she was trying to get her first defence contract. She succeeded in this by partnering with ServeGate, and then went on to get contracts in her own right.
The fourth Indigenous business to receive help through the model is the Sydney-based plant hire company Koori Cartage. Its public officer Daniel Browne said ServeGate had helped the organisation “mediate” a contract with Lendlease.
Browne said Coleman had put hours of work into helping the business with “spiritual and practical advice”, and had not charged a fee, after being introduced to them by Indigenous Business Australia, the government agency created to help economic development opportunities for Aboriginal and Torres Strait Islander businesses.
Browne said: “It’s a good relationship. I love Leigh and the team. I love ServeGate to death.”
Before they joined forces with Coleman to form ServeGate, Nattey and Oringo were chairman and CEO of another company, SME Gateway, that had a similar business model of aggregating small and medium enterprise “members” and helping them bid for government work. However, SME Gateway was not a charity.
Coleman said that ServeGate won its work from the commonwealth thanks to relationships built up over years by Oringo when working with SME Gateway.
Nattey and Oringo resigned from SME Gateway at the same time in a dispute that has left lasting bad blood over what SME Gateway claims is a copying of its business model.
A spokesman for SME Gateway said that the parting of ways came after Oringo proposed “a change of strategy … that the board was not supportive of”. This was done in coordination with Coleman, who was then a board member of Many Rivers, and another Many Rivers board member, Terry Winters.
“Mr Nattey was asked to resign from the board of SME Gateway. He did so approximately four weeks after that request. Mr Oringo coordinated his departure with Mr Nattey as a consequence of the discussions with Mr Coleman and Mr Winters and the broader intention to form ServeGate,” the spokesman said.
“SME Gateway considered the attempt to copy the business of SME Gateway as unprofessional and ethically questionable. However, the board of SME Gateway decided at the time that it was in the best interests of its members and the company to focus on salvaging its business rather than undertaking costly litigation.”
Meanwhile, Nattey and Oringo said the dispute was over their view that SME Gateway should run along not-for-profit lines for the benefit of its small and medium business members, rather than paying dividends to its owners.
Nattey did not respond specifically to SME Gateway’s allegations, but said: “I am aware that others appear to be seeking to undermine our business motives and successes but in the simplest of terms … we have nothing to hide and our principal aim is to assist others.”
Coleman left the board of Many Rivers at about the same time as Nattey and Oringo left SME Gateway. Guardian Australia understands this was partly because the board of Many Rivers was also reluctant to get involved in the ServeGate project.
Coleman said: “Once Many Rivers was up and running well I felt my job had been done … I was attracted to the ServeGate model as I came to meet Roehl and his team when I was with Many Rivers and I felt their procurement model was unique and relevant especially to Aboriginal small and medium enterprises.”
The Australian Charities and Not-for-profits Commission declined to comment on the specifics of ServeGate’s operations, but said that charities were allowed to make profits, so long as they were used for the declared charitable purposes and not to provide private benefits to individuals.
The company has lodged only one set of financial statements with the ACNC since it became a charity, covering the 2019 financial year.
They show the company running on a close to break-even basis, with revenue of $4.3m. “Subcontractor costs” accounted for $3.89m in outgoings, and there was another $486,000 in “management fees”.
Oringo said these were used to pay salaries and to service debt.
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