Black Cladding: Are Indigenous Businesses Using Culture to Win Government Contracts?

In recent weeks, a well known Indigenous author Burce Pascoe, was accused that he was not Indigenous, he has made money from pretending to be something he is not.

The accusation came from another Indigenous person in the community, the motivation was unclear. Cases like this have happened in the past, such as Mudrooroo, with no real distinct conclusion. The concluding factor usually is confusion, frustration and hurt reputations. 

On that note, we’ve decided to address the growing trend of Black Cladding. In order to establish a long sustainable legacy, of capable and ethical Indigenous businesses.

What is Black Cladding?

Black - Denotes Indigenous peoples of Australia, this includes Aboriginal and Torres Strait Islander Australians that make up some 300+ Clan groups

Cladding - A covering or coating on a structure or material.

In a sentence - “They said they are an Indigenous business, but there were no Indigenous employees on site. Looks like Black Cladding to me.”

You might not even know that there was such a thing as an Indigenous Business or a black business, let alone Black Cladding. Bare with us, for the sake of the integrity of this emerging and booming sector, we wish to equip our readers and partners with insight to make better business decisions when it comes to this sensitive topic.

Put simply Black Cladding is an Non-Indigenous Business that has cladded or marketed that they are Indigenous, with fancy cultural graphics, cliche images poor blacks kids from the bush, one or two token board members, or even in some cases Indigenous Directors that have no involvement in the business day today and receive a dividend or salary.

Now there are a few avenues in which an organisation is or becomes Black Cladded, we will explore this later in the article. Firstly let me give you a brief rundown on the extreme growth of Indigenous business and why it is important for all Australians.

In July 2015, the Federal Government released the Indigenous Procurement Policy, The policy has become general knowledge for those working in Procurement departments across the Federal Government sector and Corporate Australia who win large Government Contracts. 

Procurement is the department that goes out and procures(purchases) goods and services from vendors. In the large organisations of Australia, there are teams of full time purchasing employees. In the SME(small to medium enterprises) world our purchasing is done by the bookkeeper, accountant or the spouse of the business owner. 

For example, if the Prime Minister and Cabinet needed Suit Jackets for all their executive staff, someone from the procurement team would go to the market(shopping) for the best product. The product must be PM&C standard and value for money(within budget), with the Indigenous Procurement Policy added. 

It put a weighting on a social incentive to push those purchases towards an Indigenous Business, 3% to be exact for Government Departments and an embedded minimum Indigenous participation(procurement or employment) on contracts bidded on by big corporates, this can vary. State Governments have followed suit, they also vary.

The Government's aim in this policy is to close the gap by creating long-lasting equity for Aboriginal and Torres Strait Islander people as opposed to short term “handouts” in the form of community health services or grants. 

So what on Earth defines an Indigenous Business?

Applications for membership as a “Certified Kinaway Membership” is increasing, we have had 15% increase in membership since December, which is great, however 10% of the new membership applications received since December have been declined because they don’t fit the Kinaway Chamber of Commerce strict membership qualification.

At Kinaway, the Victorian Indigenous Chamber of Commerce, the criteria is very clear using the following criteria:

1. Verify that Aboriginal and / or Torres Strait Islander people own at least 51% of the business by checking the provided Confirmation of Aboriginality documents against share structures registered with ASIC and / or other documentation (such as partnership documents or trust deeds)
2. The business is based in Victoria and is creating employment opportunities for Aboriginal people living in Victoria
3. Verify that the business is managed and controlled by Aboriginal and / or Torres Strait Islander people by:

• Reviewing information provided in the application form
• Reviewing governance documents

If it looks like a duck, swims like a duck and quacks like a duck, then it’s a duck?

Not quite, you see these little black ducks have quacked all the way into some 2.7 Billion of Federal contracts since its inception in 2015. 

However, a recent report by the Auditor General and Deloitte highlight the shortcomings of the policy and indicate that many of those contracts had no direct impact in closing the gap between Aboriginal and Torres Strait Islander and Australian Peoples.

You see the benefits of a growing and successful Indigenous business are very encouraging,

So whatever the community, creating Indigenous businesses and business leaders represents a tangible impact for all Australians. 

To sum up the above report by the Auditor General, the existing Indigenous Procurement Policy lacks accountability. With no systemised and effective reporting mechanism. We really don’t know the entire flow down effect of the policy. 

Leaving us to measure success in a more experiential manner, such as,

• Indigenous Business Sectors overall growth,
• Individuals involved i.e successful Aboriginal and Torres Strait Islander Entrepreneurs 
• Internal reports from Supply Nation, Indigenous Chambers of Commerce or Gov/Corporate Entities
• First-hand accounts with Indigenous Business during trade shows, workshops, contracts negotiation, project delivery and aftersales.

Why Does it Happen?

Now that we have explored what Black Cladding is and where it happens, let’s explore the Why. 

Like any other race on the planet, Indigenous people have their own set of challenges, in this case, severe genocide and dispossession. 

Since Cook arrived in 1788, there has been a constant tug-o-war with the “powers that be”. 

First, it was King George then we got rid of that bloke and we had the Federation in 1901, things were looking up. 

However, in some cases Aboriginal and Torres Strait Islander people went directly to the Crown, see William Cooper’s petition to King George, bypassing and showing a distaste for the newly formed Federal Government. 

Who would blame them? Indigenous peoples were not even counted, read here.

We don’t have time to conduct a history lesson, year to date. The basic gist of it is, Aboriginal and Torres Islander people were under the care of the State Governments. The state governments adopted a “hand out” mentality rather than a “hand up” and partnership approach. 

That “hand out” in the form of grants and funding is to the tune of 30 Billion AUD annually, which we learned from First Nations Capital’s Adrain Appo at a presentation in Darwin.  

So “the gap” becomes an industry, an industry has experts, those experts compete for funding. If the gap closes, people are out of a job. Which is good right? 

Where am I going with this? 

Well you see according to Australian Bureau of Statistics Indigenous people have a median age of 23(ABS 2016), Non-Indigenous have a median age of 38(ABS 2016). So those older heads in the Indigenous community have more or less been involved in a community organisation that aims at closing the gap through a community services model. 

This means when you have an Indigenous person from the community sector, who hears of Indigenous Procurement Policy and comes across to the cutthroat business world. There is a possibility that they will have a “hand out” mentality towards the winning of Government Contracts. 

1. Set up as an Indigenous Organisation
2. Have a board of people you have worked within the past, preferably small so there are no hurdles
3. Develop a niche within the Indigenous community, health, aged care, youth at risk etc
4. Partner with bigger Non For Profits or Non-Government Organisations for Capability
5. Win grants
6. Pay overheads
7. Help target market
8. Record data
9. Rinse and Repeat

Now when it comes to the business world, in particular the Indigenous Business Sector. There is huge weighing when bidding for work that you are value for money and capable. 

Due to the mass migration of Indigenous professionals coming into the space, the nature of the contracts, some being complex defence projects or big infrastructure. The indigenous business will find they bring one thing into the picture, social value. 

Even our most established business operating over a decade need guidance when coming into this space.  

For the Indigenous Business to be successful “on paper” it needs to find itself the following,

1. Capable Partner
2. With Track record, preferably in the Gov/Corp space
3. That is value for money 
4. Has a passion for social impact, Indigenous training, employment or asset creation which the Indigenous person or entity will bring(JV). This is outlined with a clear internal employment policy or procurement guideline with real outcomes that are measured and reported.

There are more factors that could be included but these are the core materials. To find an ethical and well-suited partner, like all good things in life, this can take time and time is something we are all short of. 

In many cases, the businesses are lacking one of these key components and sooner or later it is exposed, causing embarrassment for the procurement teams and genuine Indigenous and Non-Indigenous people involved. 

We find here at the Chamber of Commerce there are 3 main types of Black Cladding we see on a daily basis,

1. The Indigenous Community Executive with no business experience at all, let alone the industry they are representing. Look, many people are looking for a fresh start or to take that leap but you need the basic tools to forecast, budget, hire and fire staff, manage accounts and make sales. If those skills aren’t evident during the first couple of interactions, red flags are raised on the control of the business, even if it is majority Indigenous-owned. It is very hard to recommend the business if there is no confidence in its ability. 
2. The Non-Indigenous partner, they will say that “their partner is Indigenous” and “she or he can’t make it”, which is fine, but if it continues, which it mostly does. Serious red flags are raised around this mysterious Indigenous operator and it becomes clear that this is just an Indigenous sales front. There have been some reported cases to us, that some businesses just swap their logo magnets on their cars in front of potential customers when representing their Indigenous partner. Not on!
3. The Juggler, we find these guys are the worst of the lot. More often than not, they are an Indigenous person, they have about six or seven, maybe even more businesses, that they “control and manage”. 

From our experience here at Kinaway, it's uncommon that our businesses, which are managed by one person will see their third or fourth fiscal year. 

So, after a due diligence check on the person and brief conversation on their track record and partnerships, we find major red flags go up.

For our partners and existing members, it’s all about relationships. We need to ensure that those partners and other members can be cared for. What makes these Jugglers so destructive is their businesses are simple sales fronts for partners and it is centred around highly transactional relationships. These leave a bad taste in everyone's mouth and a wake of broken relationships in their path. 

At Kinaway Chamber of Commerce we are taking active steps with State, Federal, Local Government and with our Corporate Partners to ensure that genuine businesses are verified and accepted into the Victorian Indigenous Business Community, that they are indeed based in Victoria and that there strong internal targets for Indigenous employment and procurement. 

We have had enough of the Black Cladding and for the sake of our future generations, we will be putting in tougher new criteria and educating our stakeholders on doing transactions the right way through partnerships with purpose, that strengthen relationships and create long-lasting opportunities for our most disadvantaged people in Australia.

If anyone has concerns about our existing members being a legitimate Indigenous business, please reach out directly to our CEO Scott McCartney at [email protected] or phone us on 03 9146 2304.