The Abbott government faces another conflict of interest scandal after it was discovered that an adviser to the Indigenous Affairs Minister, Nigel Scullion, held a majority financial stake in a business that operated within the minister's portfolio.

Only months after the conflict of interest controversy that forced the resignation of Assistant Health Minister Fiona Nash's chief of staff, Alastair Furnival, Senator Scullion faces a similar problem in his office.

Under the government's strict rules, ministerial advisers – who have influence over government policies – must not be involved in businesses that could profit from ministerial decisions. 

The minister's adviser, William "Smiley" Johnstone, is the majority shareholder of Indigenous Development Corporation (IDC), a property development business that is on two of the government's "standing offer" lists of favoured suppliers. Both lists relate to Senator Scullion's portfolio responsibilities.Advertisement

Mr Johnstone is also the founder and leading executive of Indigenous Corporate Partners (ICP), which helps clients lobby and negotiate with government.

When Senator Scullion was alerted to these conflicts of interest, a spokesman replied: "All staff are required to comply with the Statement of Standards for Ministerial Staff.

"The minister will work with the staff member to ensure compliance with the code."

The government's ministerial standards require staff to "divest themselves, or relinquish control, of interests in any private company or business … involved in the area of their ministers' portfolio responsibilities".

Mr Johnstone did not respond to questions asking whether Australian Investments and Securities Commission (ASIC) records that showed he owned 70 per cent of IDC meant he was in breach of the standards.

He also did not respond to questions about possible breaches of other ministerial standards that require staffers to disclose and take reasonable steps to avoid conflicts of interest, and to "have no involvement in outside employment or in the daily work of any business".

While working as an adviser to the minister, Mr Johnstone also promotes himself as the founder and leading executive of ICP, a company that describes itself as "independent of government".

The company, which promises to "act in the best interests of its clients" by helping them lobby and procure funding from government, does not publicly disclose that its founder works for the minister.

"Indigenous Corporate Partners can assist your organisation to identify grants and funding available through both government and private enterprise," the company's website says.

ICP boasts of its "extensive experience in advocating for Aboriginal organisations in both small and large-scale negotiations with government". The company does not reveal its client list, but says its clients include "health organisations, prescribed bodies corporate, local Aboriginal land councils and private corporations".

Since joining Senator Scullion's office in late 2013, Mr Johnstone retained his majority stake in IDC, described on the ICP website as "a self-funded property development company that assists Aboriginal land owners and communities".

It could not be established how much money – if any – IDC has made from work for the government.

Mr Johnstone holds his stake in IDC behind a company called Kimaka, ASIC records confirm.

He is a well-known figure in indigenous affairs. He was the inaugural chairman of the Australian Rugby League Indigenous Council, a former director of the Indigenous Business Council of Australia and former deputy chief executive of the Indigenous Land Corporation.

The conflict in Senator Scullion's office comes less than three months after a similar scandal damaged the office of Senator Nash.

She was censured by the Senate – the most serious action available to the upper house – after she employed Mr Furnival, a lobbyist for the junk food and alcohol industries, as her chief of staff.

As Senator Nash's chief of staff, Mr Furnival met health representatives on his own and took actions – including ordering the removal of a government healthy food rating website and stripping funding from the Alcohol and Other Drugs Council of Australia – that appeared to favour his company's clients at the expense of public health.

Prime Minister Tony Abbott resisted calls to demote Senator Nash.

Abbott government faces another conflict of interest scandal