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Nick Feik

A $532m security contract and the NACC’s corrosive secrecy

This article is part one in a series. For the full series, go here.

The National Anti-Corruption Commission (NACC), founded in July 2023, has not had an auspicious beginning. Legislated by the Albanese government in 2022, the NACC’s investigations have been mired in secrecy ever since. Communications have been sparse, and against the advice of most transparency experts and advocates, Labor legislated a NACC (with Coalition support) that wouldn’t hold public hearings unless in exceptional circumstances.

So far there have been no such circumstances, and the public has been left to guess what the NACC has been investigating. The NACC has received more than 3,000 referrals as of June, has so far spent more than $100 million, and has announced no significant corruption findings. 

It was hoped an investigation report released earlier this month by the NACC, titled “Operation Bannister”, would expose a scandal that had been festering for some time: the awarding in 2017 of massive Home Affairs contracts, for Manus Island detention services, to Paladin — a security group with few staff or assets, an opaque company structure, and no track record of delivering contracts on anything like this scale.

Paladin’s Australian “office” was a beach shack on Kangaroo Island, its Singapore parent company ran out of a PO Box, and its Papua New Guinea offshoot hadn’t filed any financial returns in its first six years of operation in 2010-16.

The report, signed by NACC commissioner Paul Brereton, promised to look into “whether a Home Affairs employee had been involved in corrupt conduct through familial links with a contracted service provider, Paladin Holdings”. It was provided to the Attorney-General Mark Dreyfus in January. 

The reason for its delay, or indeed for the timing of its release last week, is unclear, but it was implicitly acknowledged thus: “Home Affairs’ engagement of Paladin Holdings has been the subject of media attention and this public report will assist in ‘clearing the air’ in relation to this aspect of the engagement.”

Readers, it did not clear the air. In fact, this case study points to how fundamentally damaging the lack of transparency around these reports can be, both for the public and potentially the people investigated.

The investigation regarded large undeclared payments by Paladin to a former Home Affairs executive, Anne Brown (a pseudonym), who was “a close relative” of one of Paladin’s directors, Craig Thrupp. Palidin made these payments, initially totalling $215,368.50, between May and July 2017, while Brown was employed by Home Affairs and a month before Paladin became the sole bidder in a closed tender process. The contracts that Paladin won, after preparing its bid in a single week, were worth $229.5 million, and would eventually be extended to be worth $532 million. 

The NACC report concludes that it did not uncover evidence of corrupt conduct. 

Insofar as Brown is concerned, the NACC investigation found she did not abuse her office as a Home Affairs employee to dishonestly obtain a benefit for herself or to assist Paladin in securing the garrison services contracts. The report noted there was no evidence that Brown had any knowledge that would assist Paladin in the tender, was in any position to influence decision-making, or had any involvement whatsoever in it.

But here it is salient to mention something that the NACC report avoids: “Anne Brown” is Craig Thrupp’s mum. As the Nine papers reported in July last year, “The majority owner of the company that ran Manus Island’s immigration detention centre insists he was only trying to help his mother, who works in the Home Affairs Department, when he transferred more than $1.2 million to her in a series of payments.”

Asked by Nine how much he or Paladin had paid, Thrupp said: “I did not ‘pay’ my mother anything — I did transfer her some amounts as an individual — I am her son and I was supporting my mother.”

The NACC investigation looked at this one small aspect, one of many troubling issues raised by the Paladin contracts, and declared this particular allegation unsubstantiated. We have no reason to dispute this finding.

But if this report is anything to go by, the public should be prepared for disappointment about the functioning of the NACC: the fundamental lack of transparency built into the reporting of this investigation raises more questions than it answers. 

Of the Paladin payments made to Anne Brown via PayPal, $191,800 were invoiced for “management and consulting services”. However, these invoices were not generated by her, nor were there records of services ostensibly provided. Anne Brown’s partner, “Carl Delaney” (also a pseudonym), with whom she was living at the time, was a former Home Affairs executive (retired in 2013) who “guided Paladin through the tender and procurement process”, according to the NACC report. Delaney was paid a performance bonus for his services and joined Paladin’s board in May 2019. 

In May 2018, Thrupp also “funded the purchase” of a three-bedroom unit for $920,000 in the names of Brown and Delaney. Soon they were renting it back to Paladin for $1,000 a week, and when they sold it in 2020, they kept the proceeds.

As a Home Affairs executive with a security clearance, Brown was subject to a range of reporting requirements in relation to changes in personal circumstances. She had undertaken security training, and her last position was in a “governance and policy” area. 

However, the NACC investigation “did not find any record of Ms Brown having made a conflict of interest declaration in writing” relating to Thrupp or Paladin, the payments she received, the unit, or her partner’s involvement.  

Brown’s defence was that she had verbally told her supervisor that Thrupp was undergoing a contract negotiation, but didn’t detail it. Nor did she mention the payments, the property purchase, or the rental agreement. She could not recall making any declaration in writing as required, stating, “probably I was just too busy…” or that “she didn’t think about it”, according to the NACC report.

Her explanation of the payments is not provided. This surely should have raised alarm bells: if she wasn’t providing services, why was a small, relatively unknown company seeking (and landing) a large new government contract and paying large sums out in gifts against fraudulent invoices? Proper auditing would have caught this. (More on KPMG’s role in part two of this series.) Even so, who generates invoices when they’re giving gifts to their mum?

Thrupp told the Nine papers that his mother’s “status as a Home Affairs employee has no connection whatsoever to the payments”.

Thrupp agreed the description of the payments as “consultation” was inaccurate, but denied the invoices had been falsified: “The invoices incorrectly state ‘consulting services’. They should have stated gift or similar,” he said in a statement. “This is an error as she never worked for or provided consulting services to Paladin.”

Thrupp said he was transparent with his company about the payments to his mother: “All payments were reconciled as director/shareholder payments on the PNG company account statement, audited … and applicable taxes paid in PNG.”

Crikey has attempted to make contact with Thrupp, but the Paladin Group no longer exists and no current contact details are publicly available.

Brown had failed to declare the conflicts of interest, the report concedes, and “while there was evidence that Ms Brown had in the past worked in areas which dealt with reviews relating to detention centres and immigration”, there was “no evidence that she had any knowledge that would assist Paladin in the tender, was in any position to influence decision-making about it, or had any involvement whatsoever in it. Nor was there any evidence that she had provided any information to Paladin relevant to the tender.”

Indeed, the report added, “the timeline and the nature of her duties at the time renders it practically impossible that she did so”. 

Public confirmation that Broadspectrum (the previous contractor) wouldn’t be pursuing the Manus tender was published in the AFR two weeks before “Anne Brown” received her first payment for “management and consulting services”.

She wasn’t responsible for decision-making over tenders, and wasn’t working in that area at the time, but to conclude there’s no evidence she provided any information to Paladin relevant to the tender — when she was living with the man who was “guiding” Paladin through the tender and procurement process — seems like an insufficient, or incomplete, summary of the facts. Again, we don’t dispute the finding, only make the point that the lack of detail by the NACC is unhelpful and lacking in transparency.

Here is a selection of questions we put to the NACC to illustrate what we don’t know about this case: 

  1. If the Operation Bannister investigation report was completed in January, why was it only released last week?
  2. Operation Bannister was described as “an Australian Commission for Law Enforcement Integrity [ACLEI] corruption investigation” and “a joint investigation with the Department of Home Affairs”. What were the investigative duties carried out alternately by a) ACLEI and b) Home Affairs? 
  3. How were these investigative duties allocated?
  4. Did the NACC do any additional/further investigation to confirm or clarify anything before reporting?
  5. Did any Operation Bannister investigators examine whether “Anne Brown” had made any unexplained payments out or large cash withdrawals in this period? 
  6. Did they investigate her phone and communications records? 
  7. Did they investigate the financial and communications records of her partner?

The NACC responded that “the commission will not provide details of the investigations undertaken beyond what is contained in its report”.

Crikey is not alleging any wrongdoing by any individual. The investigators may well have done all of this, but the point is we simply don’t know, and can’t know, because the NACC doesn’t hold public hearings, doesn’t disclose key details about its investigations and processes, and because it just released a report under its own banner whose investigation into the affairs of Home Affairs was a joint investigation with… Home Affairs.

The report was labelled “an Australian Commission for Law Enforcement Integrity corruption investigation” (ACLEI was an existing government integrity body subsumed into the NACC in 2023) and also “a joint investigation with the Department of Home Affairs”. 

The fact remains that the NACC completed and owned the investigation in which neither ACLEI nor Home Affairs investigators were able to substantiate any (of their own) allegations. 

Maybe we don’t need to wonder why the NACC sat on this particular report for so many months.

The NACC also stated: “In response to your query whether the NACC will be looking into or reporting on any other Paladin-related matters, the commission will generally not comment on whether or not it is investigating a matter, as to do so may prejudice investigations and operational activities and unfairly damage reputations.”

“The commission will not confirm or deny the identity of persons to whom pseudonyms have been given in its report.”

What we do know is that the Australian government spent hundreds of millions of taxpayer dollars keeping asylum seekers and refugees in the hellscape of indefinite detention and legal purgatory. And someone made a lot of money out of it.

The Paladin affair is far from over, and it’s possible the NACC is currently investigating broader issues related to the Manus contracts (as will be explained in parts two and three of this series, these contracts are deep and rotten, and involve Home Affairs, KPMG and alleged corruption payments to PNG officials by Paladin). But who would know? 

“There’s no transparency,” comments Greens Senator Barbara Pocock. “They simply want us to take their ruling on face value. Well, I’m sorry, but that is not transparency in my book.”

The evidence from this report suggests that if the NACC was constraining itself to one simple case it posed itself, it is unlikely to try unravelling and prosecuting a far bigger one. The establishment of the NACC was in part a bid to restore public confidence — these kinds of opaque reports achieve the very opposite of that.

“Having the NACC operate in secrecy works against integrity in government,” says Pocock. “I’ll be taking these issues up with ministers and department heads when Parliament resumes in November. Something needs to change here.”

How should the NACC improve transparency? Let us know your thoughts by writing to letters@crikey.com.au. Please include your full name to be considered for publication. We reserve the right to edit for length and clarity.

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