Glad Indigenous: The Rise and Fall of a Majority Indigenous-Owned Venture
The story of Glad Indigenous, a cleaning and security company founded in 2021, highlights the complexities and pitfalls of the federal Indigenous Procurement Policy (IPP). The business, a joint venture between Glad Holdings and Wonnarua man Scott Franks, was established to secure government contracts while prioritizing Indigenous employment.
Scott Franks, a Wonnarua man, held 51% ownership of Glad Indigenous, meeting the IPP’s key threshold for preferential government spending.
Under the IPP, government departments must allocate 2.5% of their annual procurement budget to businesses that are at least 50% First Nations-owned. Glad Indigenous fit this criterion, making it an ideal candidate for government work. However, disputes between shareholders quickly undermined the venture.
Legal Disputes and the Winding-Up Application
In 2023, Glad Holdings applied to wind up Glad Indigenous in the Supreme Court of New South Wales. The court heard evidence of significant shareholder tensions, including:
- Concerns over tender compliance and profitability.
- Staffing disagreements between the partners.
- A contested $130,000 transfer from the business account by the minority shareholder, the nature of which was disputed.
The winding-up application was ultimately dismissed with costs, but the damage to the business relationship was done.
The Business Closure
Scott Franks later revealed that profit margins on government contracts were razor-thin—approximately 1.6%—and that overheads were unexpectedly high. Following a separate legal challenge over an unpaid accounting bill, Franks decided to close the business due to insolvency.
"The company could not pay its debts and had to cease operations," Franks stated, resulting in the termination of 40 employees.
Accusations of "Black Cladding"
Scott Franks has since described the experience as an example of "black cladding," a term used to describe situations where a minority partner effectively exerts control over the majority Indigenous shareholder, despite formal ownership thresholds being met.
Franks argued that the Indigenous Procurement Policy is "not fit for purpose" and called for stronger enforcement. The Glad Group declined to comment on the matter.
Policy Changes and Broader Context
The federal government has announced changes to the IPP, effective July 1, requiring businesses to be 51% Indigenous owned and controlled. This aims to address concerns about genuine Indigenous control.
- Research from the Australian National University found that less than one-third of IPP contracts over nearly a decade were awarded to majority Indigenous-owned businesses.
- The extent of black cladding is not officially tracked.
- Supply Nation, which certifies Indigenous businesses, stated that all complaints are investigated and businesses are audited annually for compliance.