Mal Brough may be uncertain about the extent of his Indigenous heritage, but his family ties to Western Australia's Aboriginal community could still cause him a few headaches – if not provide a direct conflict of interest – in his new role as Indigenous Affairs Minister.

Brough's sister, Carol Stubbs, currently sits on three boards registered with the Registrar of Aboriginal Corporations, which is overseen by Brough's new Department of Indigenous Affairs. And his brother-in-law is CEO of an Aboriginal corporation that has been the subject of three separate investigations over alleged financial irregularities.

Crikey has learned that the new Indigenous Affairs Minister's brother-in-law, Greg Stubbs, and the company he heads, the Kalgoorlie Bega Garnbirringu Health Service, was last year investigated by the Western Australian fraud squad over claims the company was misappropriating funds in 2004 and 2005.

The investigation was launched after a separate probe by the Department of Health and Aging (DHA) over suspect audit figures. “Their (Bega health centre's) auditors at some stage threw up some concerns… (so) we sent in a review team,” the DHA's Kay McNiece told Crikey yesterday.

Meanwhile The Australianreports today that the health service was also the subject of an investigation by the Registrar of Aboriginal Corporations in 2002 over alleged auditing breaches.

The fraud squad investigation concluded without charges being laid, but questions were raised about Bega's corporate management. Brough's brother-in-law is Bega's CEO, Brough's sister, Carol, also sits on the health centre's nine person board. According to ministerial code of conduct Brough should have declared this interest to Cabinet and the Prime Minister:
The nature of their duties is such that they may need to have regard to the interests of members of their immediate families (to the extent that ministers know their interests) as well as their own when ensuring that no conflict or apparent conflict between interests and duties arises.
Stubbs has announced he may step down in April – under pressure from the Health Department. This morning he told Crikey that he didn't think his roles would create a conflict for his brother-in-law in his new portfolio and he didn't think Brough would be much different from past ministers. "I don't think it will be a problem at all (because) the bureaucracy runs this land," Stubbs said.

Don Heise, an officer from the Western Australian fraud squad who was involved in last year's investigation told Crikey that the investigation into Bega's books began in about Sept 2004 and went into 2005. “Some things sprung to light which caught the Health Department's attention… (so) we put a search warrant through the place,” Heise said. Heise said investigators took documents and evidence from the health centre and then presented the evidence to the centre's board, who refused to cooperate further and stopped the investigation in its tracks. “We had very little cooperation with them,” said Heise.

Crikey today asked the minister if he knew about his brother-in-law and sister's various roles before his appointment and whether he thinks his new position creates a potential conflict of interest. We're waiting to hear back.