The auditor-general is considering investigating the Turnbull government’s controversial $444 million grant to the Great Barrier Reef Foundation.

The Australian National Audit Office has listed it as a potential inquiry in its 2018/19 work program but has yet to commit to a full audit.

Any audit would include “examining governance arrangements to support the effective implementation of programs covered by the partnership”, the ANAO said.

The federal funding is expected to deliver water quality improvements, crown of thorns starfish control, science for reef restoration, increased community engagement and improved monitoring of the reef.

In a submission to the Senate inquiry examining the grant, lawyers from Environmental Justice Australia have argued it should have been characterised as a procurement – meaning a tender process was required.

The submission claims the grant contravened the government’s own guidelines for allocating such funds.

Governance expert Professor Thomas Clarke from the University of Technology Sydney agreed, saying the process was “deeply concerning”.

EJA pointed to a 2014 document on the Department of Finance website that describes a “grant” as when, “the recipient receives financial assistance from the Commonwealth to help achieve its own goals (consistent with Commonwealth goals)”.

“Whereas in a procurement, the Commonwealth is usually purchasing goods and/or services that assist the Commonwealth in achieving its own goals,” the document reads.

More-recently published documents use different wording, saying a procurement is used to “assist the Commonwealth or a third party”.

The Department of Finance told the ABC the new wording was more complete, and the document quoted by EJA was meant to be considered together with others, also published by the department.

The federal government has described the grant as supporting the Reef 2050 Plan.

“It has been established to build on and support delivery of the joint Australian and Queensland government Reef 2050 Long-Term Sustainability Plan [Reef 2050 Plan],” it noted.

Because of this, EJA said, the funding should have been a procurement rather than a grant, and put out to public tender.

Professor Clarke added: “I think the government has been caught out on this and is in a dilemma. It has done it and now has to try to defend it.”

Opposition Leader Bill Shorten said the money should be returned, given concerns about a lack of proper process.

“I can only hope that the Prime Minister makes a proper and detailed explanation of this whole process, and it’s certainly the case that when parliament resumes next week Labor will endeavour to get a full and proper explanation of this process,” he said.

The $444 million barrier reef handout was not properly administered, even if it is technically a grant, environmental lawyers say. Photo: Queensland Museum

The foundation has previously revealed it did not suggest or apply for the funding, and no environment department officials were involved in a meeting to discuss the plan that led to the unsolicited grant.

The managing director of the Great Barrier Reef Foundation, Anna Marsden, told the ABC’s 7.30 program the grant was a “complete surprise” when first suggested by Prime MInister Malcolm Turnbull and Environment Minister Josh Frydenberg.

The Great Barrier Reef Foundation is a small charity with a board that includes representatives of Australian business, science and philanthropy. It is supported by companies including BHP, Qantas, Rio Tinto, Google and Orica and headed by former Commonwealth Bank chairman John M Schubert.

Mr Turnbull has defended the grant process, describing it as the, “single biggest contribution and investment in the health of the Great Barrier Reef ever”.

“The Great Barrier Reef Foundation is an outstanding organisation, this has been done completely transparently,” he said last week.

But Professor Clarke agreed with EJA’s analysis that due procedures had been “entirely absent”.

“As a merchant banker, the Prime Minister may be used to large amounts of money, but not this large, and not with this lightness of touch,” he said.

“It doesn’t pass the pub test one little bit.”

University of Tasmania corporate governance expert Tom Baxter said the grant raised a number of concerns.

“Outsourcing $444 million of scarce public spending, without a tender process, for one private player to administer, should raise questions in any context,” he said.

“All the more so for the Great Barrier Reef, where multiple organisations have long track records, including of public administration, contract management and research.”

Dr Baxter, who was previously a legal officer for the Great Barrier Reef Marine Park Authority, said it was strange the government approached the foundation to establish the grant.

“Why didn’t the government use standard Australian public sector processes? And if outsourcing, why did it deny other organisations the opportunity to bid for the work, such as by tender?” Dr Baxter said.

-with agencies