Blakwashing: The Dark Side of Government & Corporate Virtue Signaling

How Blakwashing is Undermining the Closing the Gap targets and outcomes

In recent years, we have seen a growing trend towards governments and companies promoting their social and environmental responsibility.

And in order to counteract deceptive and inaccurate marketing in the realm of environmentalism, a term known as "greenwashing" was coined, which pertains to companies making false or inflated assertions regarding their environmental practices to enhance their image.

A similar phenomenon is now emerging in the area of Indigenous procurement policies, with some companies engaging in what is known as "blakwashing" (like greenwashing) or “black cladding”.

Blakwashing refers to the practice of using shell companies and middlemen that have been labelled as "Indigenous businesses" to enable government and corporate organisations to tick a diversity supply box and promote potentially misleading statements, such as having given X billion dollars to Indigenous businesses.

The Indigenous Procurement Policies (IPP) were introduced by the Australian Government in 2015 to increase procurement opportunities for Indigenous businesses and to help close the disparity gaps. Under the policy, government departments and agencies are required to award a certain percentage of their contracts to Indigenous businesses.

However, in some cases, non-Indigenous companies have set up shell companies or partnered with Indigenous middlemen to access these contracts, without any real benefit flowing to Indigenous communities. In other cases, Indigenous businesses have been used as a front to access contracts, with little or no involvement from Indigenous people in the actual delivery of the goods or services.

This exploitation of Indigenous procurement policies is not only unethical but also undermines the original purpose of the policy.

The IPP was originally designed to aid Indigenous businesses that were extensively promoted and supported for their capacity to hire other Indigenous individuals, thereby contributing to the reduction of disparities. However, the current situation has resulted in non-Indigenous people and their partners profiting from these contracts, instead of having a positive ripple effect in Indigenous communities through business procurements.

The issue of blakwashing highlights the need for greater transparency and accountability in the procurement process. It is essential that the government and corporate organisations take a more active role in ensuring that the policy is being used as intended. This can be achieved through measures such as auditing, reporting, and public disclosure of procurement contracts awarded to Indigenous businesses.

Furthermore, the government and corporate organisations must work with Indigenous communities to ensure that Indigenous people are at the forefront of these businesses and are receiving genuine economic and social benefits. This will require investment in training and capacity-building programs for Indigenous businesses, as well as the establishment of strong partnerships between Indigenous communities and the private sector.

The first time I learned about the exploitation of social procurement contracts for purposes other than their intended use was from a South African Afrikaner. They relayed an anecdote about an African individual who had established themselves as the go-to person for contracts meant to assist black Africans. This individual purportedly owned dozens of companies (shell companies) and formed partnerships with other entities in order to obtain social procurement contracts.

At first, I dismissed the notion as being hyperbolic and unlikely to occur in Australia, but after leaving the Royal Australian Air Force and immersing myself in the Indigenous business realm, I can attest that it is indeed transpiring here.

Although the extent of this deceptive practice and the proportion of contracts it accounts for remains unclear due to a lack of transparency (which facilitates this issue in the first place), I would not be surprised if it comprised the majority of the X billion dollars of contracts designated for genuine Indigenous businesses.

While governments and corporations appear to be cognizant of this problem, they seem content to use it as a checkbox exercise and leverage it as a means to publicise their reconciliation initiatives, rather than address the issue at hand.

The impetus behind this post in the Barayamal Newsletter was a recent video I viewed featuring Neil Patel (marketing expert), who discussed this very "issue" in the United States (viewed by some as a means to make a profit rather than a genuine issue).

This underscores the fact that this phenomenon is pervasive, and governments and corporations are primarily focused on merely fulfilling a checkbox requirement.

“And the moment someone ended up telling me how Magic Johnson generates a lot of his revenue because he's a minority, and gets a lot of contracts, partners with other businesses, white-labels it and uses his name, becomes a, quote, unquote, owner of that business, and then outsources it…. I don't know if this is true, this was just what someone in the minority space ending up telling me.

And they were saying, let's say, if someone has a food company, and they have the contracts with a lot of the hospitals that are run by the government, like the VA. They're looking for minorities to provide it.

But there's already a lot of big corporations that provide the food. So Magic Johnson may go create a business, that's in that space, partner with the big supplier who already provides the food to these hospitals, he'll go get the contracts, and then work with them to actually fulfil it.” - Neil Patel.

“…Because the government is like very hardcore about hitting their quotas for racial minorities. And so around here, like I actually know a couple of guys, and basically what they do is the people I know are all African American.

They get the contract, they put their name on the contract, they then outsource the entire thing to like Deloitte or KPMG or whatever and they take like, you know, 15% of the revenue or whatever.”

“They create a consulting firm, that's like the Minority Inc, and then Minority Inc goes against the contracts that farms it out to like Deloitte or whoever.”

In conclusion, blakwashing is a disturbing trend that undermines the original purpose of Indigenous and social procurement policies in general. It is essential that the government and corporate organizations take action to address this issue and ensure that the policy is being used as intended. This will require greater transparency, accountability, and investment in Indigenous businesses and communities to ensure that the benefits of these policies are felt where they are needed most.

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