The Great Barrier Reef Foundation was chosen to receive half a billion dollars of taxpayer money to protect the reef without being asked if they wanted it or how they'd spend it.
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The independent foundation was granted $444 million, the largest ever allocation of federal funds to the reef, in this month's budget.
Environment department officials revealed on Monday the foundation was selected ahead of the Great Barrier Reef Marine Park Authority and the Australian Institute of Marine Science without a tender process.
Authority chief executive Russell Reichelt revealed he first heard about the funding windfall as a member of the foundation's board when approached for a meeting to discuss the government's decision to grant the funds.
He told a Senate estimates hearing on Monday he withdrew from those discussions over a conflict of interest given his voluntary board position, which pre-dates his job heading the authority.
Officials faced criticism for the decision to give money to the foundation which only has a small number of full-time and part-time staff.
It's considering seconding further staff with additional expertise from the government-run marine park authority.
"You've forked out $450 million to this group that have 10 staff," Labor senator Anthony Chisholm said, demanding accountability from government officials.
Greens senator Richard Di Natale questioned why the money wasn't given straight to the authority.
He also took aim at the foundation's board which includes the heads of some of Australia's largest carbon emitters.
Environment department secretary Finn Pratt said the authority and AIMS were considered, but the grant was for on-the-ground project delivery, which matched the foundation's experience.
Government minister Simon Birmingham backed the allocation, saying the foundation had the expertise to handle large sums, but after a record contribution it would be expected there would be some expansion of its resources to do so.
Mr Pratt also denied a characterisation by Labor senator Kristina Keneally that the grant was the result of an "unsolicited tender" from the foundation.
But the department took questions on notice, unable to say whether there was any open invitation or opportunities for other organisations to put forward plans, or whether the government investigated the foundation's capacity to spend the money effectively.
"It does appear the department cannot answer basic questions how this massive allocation of money came to go to one foundation," Senator Keneally said.
Earlier, Mr Pratt said the Great Barrier Reef Foundation was in talks with the department about its plans to spend the money over six years.
A grant agreement is being drawn up which will include a contingency for recouping funds if the foundation collapses.
Australian Associated Press
