Fraud charges are expected to be laid against one of Queensland’s biggest cotton irrigators, John Norman, within a matter of weeks.
If the trial of the owner-operator of Norman Farming, and former “cotton farmer of the year goes ahead, it is likely to draw attention to the links between the irrigator’s family and that of the federal minister for agriculture and water resources, David Littleproud.
If the charges are laid, they will also throw the spotlight on the Queensland government’s failure in administering a key plank of the $13bn Murray-Darling basin plan, how it withheld critical information about the alleged crimes, and how it raises queries as to whether it lied about its own investigation.
For the past 18 months, an expanding team of undercover detectives, cybercrime experts and forensic accountants have been investigating Norman’s business on the Queensland/New South Wales border, an irrigated cotton aggregate stretching 45km north from the McIntyre river.
The investigation has focused on whether Norman Farming misused upwards of $25m in Murray-Darling basin infrastructure funds that were supposed to make the irrigator more efficient and deliver water back to the ailing river system downstream.
The plan for the basin is funded by the commonwealth and administered by state governments. But allegations that the $150m Healthy Headwaters Water Use Efficiency projects in Queensland, part of the MDB plan, lacked any genuinely independent checks on projects, means it may have been left open to corruption.
“It’s been a loosey-goosey slush fund helping irrigators get richer,” according to Chris Lamey, a dry-land farmer who’s seeking compensation from Norman, his neighbour. “It’s achieved the opposite of what was intended. There’s a lot of water not getting into NSW now and it’s backed up in dams next door to me.”
Queensland’s covert police investigation into Norman Farming went public in October 2017, when dozens of major crime squad detectives holding multiple subpoenas fanned out from Goondiwindi in early-morning high-speed convoys, heading across the floodplain to the irrigator’s properties and several of its contractors in and around the border river town.
The first person police met at Norman’s main Kalanga property, according to a source close to the investigation, was a teenage office worker who, when asked where the financial records were kept, explained they had been cleared out only days before by backpackers hired by her boss through a local publican. She took police to a locked shipping container where they had been moved.
But according to the source, the major crime squad already had plenty of evidence. As Detective superintendent Michael Dowie said on the day of the raids, analysis of existing material showed “possible significant fraud against the Healthy Headwaters program”.
Queensland’s department of natural resources and mines is believed to have received that evidence as early as April 2016, after a former senior employee of Norman Farming turned whistleblower. He handed over detailed accounting books that allegedly showed the systematic use of falsified Healthy Headwaters invoices.
The Queensland minister for natural resources, mines and energy, Anthony Lynham, declined to answer questions about when his department had handed the whistleblower’s evidence to police; why major works continued on Norman Farming properties until 2018; or why it delayed telling the federal government about the investigation.
The federal department of agriculture was kept in the dark for months. Local employees and contractors report being questioned by police by August 2016, but, according to Paul Morris, a senior official in the department of agriculture, Canberra only knew about the investigation in November 2016.
A month later, in response to questioning, the Queensland government wrote to the department saying there was “no evidence [John Norman] had misappropriated funds” or undertaken “non-compliant activities”.
For the rural town of Goondiwindi, the Healthy Headwaters grants, which began in 2012, were a windfall. Money flowed for at least eight separate multimillion-dollar government-approved and funded projects. “It’s given a lot of local contractors a load of work,” says Lamey, Norman’s neighbour. “Surveying, earthmoving, mechanics, fuel provision. Everyone’s been happy.”
But if the money didn’t pay for the intended water-efficiency projects, how was it spent?
Many people downstream want to know.
Over the past six years Norman sought funding for 15 Healthy Headwaters projects and received approval for 10. He was awarded more commonwealth funds than any other Queensland irrigator, approximately a sixth of the program’s expenditure. Put up for sale a month before last year’s police raids, the his “$100m-plus” operation boasts that “no expense has been spared on development” in its marketing pitch.
Several of Norman’s direct neighbours say they’ve witnessed extraordinary activity from the time the grants began. A 75-year-old grazier, Richard Donovan, says Norman Farming had “three, four, five big scrapers and laser buckets, working continuously for months on end, making dams, building banks and changing whatever they wanted”.
“Now the water is not getting down the river system,” he says.
But it was another neighbour – Lamey – who sought answers. Since August 2016, he has been asking local, state and federal governments whether commonwealth money was being diverted by John Norman to build what he describes as “a system of earthworks – banks and roads – built all across the floodplain, directly across creeks, across waterways”.
When a 2016 flood that should have drained away banked up on his property for eight weeks, he hired a helicopter to see what was going on.
That’s when the penny dropped.
He realised his property, with its $1.5m in drowned crops, was part of a large water-catching operation.
“John Norman had turned my property into a dam – or a ‘surge’, as irrigators call it – taking the banked-up flood waters off slowly and channelling them to big dams on inland properties far from the McIntyre river. It’s a lie that the projects have saved any water for the river system.”
Lamey says he contacted his then-newly elected federal member, David Littleproud, in 2017, urging him to stop the commonwealth grants to Norman Farming and find out how the money was being spent. He says he didn’t hear back from him.
Littleproud is now the minister for agriculture and water resources. His office says the grants were a state responsibility and Lamey needed to take it up with the Queensland department. And despite the fact that Littleproud’s wife, Sarah, is a cousin of both John Norman and his wife, Virginia, the minister dismisses any family connection.
His spokesperson said: “The minister has no idea and no interest in whether the Normans are somehow related. “Norman is his wife’s second cousin whom he hasn’t seen for years. There are zero business links between the minister and Norman Farming.”
Norman Farming earthworks are massive in scale – at least 52.3km in one application to the Goondiwindi regional council – but according to Norman, only 700 metres had been built since he took over the properties between 2006 and 2012. The council has already approved at least 5km of earthworks for one of them, which has been a hive of Healthy Headwaters activity, according to Lamey and other neighbours.
Initially the council was responsive to Lamey’s complaints. Its engineer wrote to him, saying Norman Farming had been given a deadline to remove “illegal” structures, which Norman appealed.
After the appeal from John Norman to the Goondiwindi mayor, Graeme Scheu, to change the word “illegal” to “unapproved”, the council obliged. It was of significant advantage to the irrigator, allowing the mayor to begin a process to “retrospectively approve all the unapproved” banks and levees built on Norman’s properties.
During 2017, some of the country’s highest political figures, including the former deputy prime minister Barnaby Joyce and Queensland’s Anthony Lynham, along with top federal and state bureaucrats, reassured Lamey that nothing was amiss with the Healthy Headwaters program.
Yet, behind the scenes, alarm was growing in Canberra, reaching as high as Joyce’s office.
A senior adviser to Joyce, who was then minister for water, wrote to the department of agriculture in November 2016, saying: “I have copies of satellite maps which show extensive diversion of floodwaters … Could you please get in touch with Queensland’s department of natural resources, mines and energy (DNRME) and ask what investigations are underway? Do we have an audit process in place to ensure that this funding goes to the intended purpose? I think the allegation here is that funding has been used to direct more water onto the farm.”
Yet when the federaldepartment of agriculture’s assistant secretary, Amy Fox, asked about John Norman’s use of grants, she appeared unaware of a police investigation. Queensland’s natural resources department avoided any mention when it wrote back in December 2016, saying: “There is no evidence the subject proponent has misappropriated funds nor are we aware of their undertaking non-compliant activities.”
The following year the Queensland government continued its deception, reassuring the department of agriculture about the integrity of the scheme’s administration. Lynham also falsely claimed the scheme had been externally audited, writing to Lamey to assure him the department “was serious about ensuring correct application of grant funds” and that a “recent external audit of the Healthy Headwaters payment claim procedures had found no material concerns”.
But the audit was not external. “Barr Group Consulting does not and never has undertaken [an] external public audit,” says Rex Klein, who runs a small Brisbane company hired by Lynham’s department in 2017 to undertake a limited review of procedures and decisions.
Barr Group isn’t a registered auditor or a member of a professional accounting body, according to Klein. Its consultant, employed for one week, didn’t set foot on a Norman Farming property to see first-hand how the money had been spent. Instead he looked at paperwork for three Healthy Headwater projects, including one early grant to Norman Farming worth nearly $4m.
“The word audit has been used very loosely,” according to Maryanne Slattery, a former financial auditor and former director in the Murray-Darling basin authority who is now the senior water researcher for the Australia Institute. She left her job at the authority in 2017 because of her concerns about the way the plan had been administered.
“There wasn’t a site visit. There was no interest in testing the allegations.”
Despite this, the “audit” concluded the state government had a “commendable” and “robust set of procedures” that had been “diligently applied over the course of the scheme”.
The Healthy Headwaters program has been “a sitting duck for corruption”, according to Slattery. She questions why the federal government allowed Queensland to outsource much of the administration of multimillion-dollar works. Irrigators can calculate for themselves the value of projects “assessed under self-assessable codes”, while other projects require only the signature of an independent expert, paid for by the irrigator, as verification of the works and water savings.
“This appears to be the wrong way to run a water-saving program. There’s no real checking of projects and no one seems willing or able to understand what the Healthy Headwater monies are spent on or how much water is actually being saved – if any.”
John Norman didn’t respond to Guardian Australia’s request for an interview. The department of natural resources and mines declined to comment, citing the police investigation. Only through what may be a long, complex criminal prosecution will it become clear what role the Queensland government has played in preventing the alleged fraud.