The Northern Australia Infrastructure Facility (NAIF) allegedly disregarded its lending guidelines in a barramundi investment.

Documents filed with the Fair Work Commission as part of an unfair dismissal claim shed light on the alleged issues.

A credit committee member filing the complaint stated that loans worth $31.4 million provided to the Humpty Doo Barramundi Farm in the Northern Territory had “deep credit issues” and were non-compliant with the fund's investment mandate. 

During this period of credit risk assessment, the NAIF was simultaneously seeking additional funding from the government.

Established in 2016, the NAIF was tasked with providing affordable financing for projects that conventional banks typically avoid due to their illiquidity or high risk. 

Eligible projects should contribute to infrastructure development, benefit northern Australia, and engage with Indigenous communities. 

The NAIF has previously invested in projects such as NRL team North Queensland Cowboys' training facilities and a solar power facility at Fortescue Metals' Chichester hub.

While the NAIF has deployed approximately $3.9 billion of its initial $5 billion allocation, it has faced criticism for slow investment during its early stages. 

Consequently, the government expanded the NAIF's investment mandate in 2018, granting it greater flexibility in capital deployment.

Concerns about the NAIF's loans to Humpty Doo Barramundi Farm and potash producer Kalium Lakes have emerged, with internal warnings indicating the need for amendments to accommodate weaker revenue projections. 

Kalium Lakes' shares were recently suspended from trading, and the company is seeking additional sources of capital.

Amid discussions about securing further funding, the NAIF allegedly concealed issues related to Humpty Doo's creditworthiness to avoid disrupting negotiations. 

The company's existing NAIF loans lacked covenants for liquidity and debt servicing. 

Suggestions were allegedly made to revise the debt structure, but Humpty Doo's forecasted losses and growing debt servicing obligations raised concerns about its ability to repay the NAIF.

The NAIF has denied any impairment or trouble with Humpty Doo's project, stating that loan performance has remained unchanged. Nevertheless, it is now implementing more rigorous diligence in future investments.