Consultants cashed in on Rock resort sale

There are concerns about the due diligence process for the Indigenous Land Corporation's controversial purchase of the Ayers Rock Resort.

The consultants who carried out a due diligence for the Indigenous Land Corporation's controversial purchase of the Ayers Rock Resort received a $3 million commission from the $317 million sale.

But the Abbott government has dismissed the need for a public inquiry into the purchase.

The corporation's new chief executive officer Michael Dillon said the previous board paid between $50 million and $100 million too much.

McGrath Nicol was commissioned to review the assumptions underpinning the sale.

Mr Dillon told the hearing the review found the corporation's board was relying on a property valuation that was 17 months old when it made the acquisition.

The due diligence, which cost more than $6 million, was on a "success-fee basis".

The consultants and Grant Samuel, a corporate advisory group, received one per cent of the purchase price which equated to $3 million.

"That's extraordinary," Liberal senator Zed Seselja told a Senate estimates hearing in Canberra on Friday.

"There's effectively an incentive for the individual or company to value it at a higher rate because they get more of a success fee."

The review also found that capital expenditure projections had been miscalculated and occupancy rate projections had been "overly optimistic" in light of a tourism downturn in the Northern Territory.

Resort manager Voyages Indigenous Tourism Australia, a subsidiary of the corporation, has reported losses of more than $100 million.

As well there has been a $62 million write down of the asset.

"We are doing a further valuation at the moment which could lead to a further write down," Mr Dillon said.

The corporation borrowed close to $200 million and is now facing an interest bill of $11 million a year.


2 min read

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Updated

Source: AAP


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