February 17, 2024
The Department of Home Affairs is still unable to assure federal parliament the reported $80 million paid to Papua New Guinea for the welfare and support of people formerly held in off shore detention is being properly spent and has not been siphoned off in corrupt or fraudulent payments.
Departmental secretary Stephanie Foster has told a Senate estimates committee hearing she cannot guarantee the money paid as part of a 2021agreement between the then Morrison government and the government of PNG was reaching the refugees and asylum seekers it was meant to help.
“The way in which the arrangement was constructed gave that responsibility to the PNG government and I’m afraid I am not able to give you that assurance,” Foster told independent senator David Pocock under questioning on Monday night.
The Morrison government agreed to pay PNG what is believed to be a total of$80 million in three tranches, the last of which was transferred in mid-2022,after Labor took office.
The funding was part of an agreement to transfer financial and legal responsibility for the ongoing welfare of 57 former detainees and their families – believed to total about 130 people – to PNG, where they have been forced to remain.
Both the Coalition and Labor governments have refused to confirm the dollar amount or provide any details of the agreement, citing confidentiality. The funds were to cover support until 2025 but the agreement did not oblige PNG to prove they were going where they should.
The Saturday Paper has been told that when media reports emerged late last year suggesting the money was being corruptly misused, Department of Home Affairs officials travelled to PNG to raise concerns. Members of the PNG government are believed to have demanded more money to continue to provide the services, which was denied.
Refugee advocates say the money transferred to PNG for ex-detainee support has disappeared, with service providers complaining last month that the PNG government has not paid their invoices, leaving at least one company facing eviction for unpaid rent. An Iranian former detainee was allegedly beaten by security guards this week after they caught him stealing food.
Refugee Action Coalition spokesman Ian Rintoul says the man told PNG officials the company responsible for distributing living allowances to the former detainees had stopped payments five months ago and he was stealing to feed his family. He was unable to undertake paid work because he had not been confirmed as a refugee.
“They’ve definitely got no money,” Rintoul says. “There are no services. There’s no hospital treatment for them. It’s a very, very bad situation.”
Rintoul says the “desperation is very high”. “It’s become quite clear that the money’s gone.” The issue emerged as the Albanese government sought to exploit the findings of a newly published review, which found that while the Coalition was in office the Home Affairs Department mishandled contracts worth hundreds of millions of dollars to manage the detention centres on PNG’s Manus Island and on Nauru.
Stephanie Foster assured the estimates committee processes had been overhauled and she was focused on “going forward” not looking back.
This week, Home Affairs Minister Clare O’Neil blamed the then minister and now opposition leader, Peter Dutton, for contracts going to companies accused of corruption and criminal activity.
“This is a tough guy who doesn’t want to answer the tough questions,” she told parliament on Wednesday. “There is one question that matters more than all: when he cannot run a government department, why does he think he should run our country?”
The review found Dutton played no role in the procurements and it did not hold him, or then secretary Michael Pezzullo, or anyone else, responsible.
“We did not come across any matter of deliberate wrong-doing or criminality,” the review says.
Dutton and his colleagues deflected the government’s attacks by mounting their own, seizing on new information detailing the criminal histories of 149former immigration detainees released into the community following the High Court ruling late last year that found indefinite detention was unlawful.
Dutton tried unsuccessfully to have parliament formally condemn the government for putting Australians at risk, deriding O’Neil and Immigration Minister Andrew Giles as “weak” and Giles as also “inept”.
“Eighteen of these criminals have been arrested and charged by state and territory police for reoffending,” Dutton said on Wednesday. “So we know that there are further Australian citizens who have fallen victim to these criminals. These criminals should not be on the streets. They should be in immigration detention awaiting deportation.”
Giles was criticised further when he confirmed the government had not yet made any legal applications to re-detain any of the 149 under the specially designed preventive detention regime legislated at the end of last year.
“We are making sure … that we are putting in place the resources and the processes to get it right, because it is in no one’s interest to have a half-baked application that doesn’t succeed,” Giles told parliament. “Our focus is on doing the things that keep people safe.”
As the major parties condemned each other’s records on immigration detention, David Pocock and Greens senator Nick McKim raised the issue of the missing PNG support funding.
“So, the things that the previous government did in secrecy are bad, and the things that the current government is doing in secrecy are just part of government being government,” Pocock said in the legal and constitutional affairs estimates committee hearing on Monday night, challenging the refusal to disclose details. “I’m interested in what fraud and corruption prevention controls were applied to this funding agreement.”
Pocock noted news reports suggesting misappropriation and asked if the Home Affairs officials could at least assure taxpayers this was not the case.
“We are in discussions with the PNG Immigration and Citizenship Service Authority,” acting immigration deputy secretary Michael Willard responded, “but, similarly to the secretary, I can’t be confident of that myself because we don’t have visibility over how PNG is handling the money that was provided to them.”
PNG’s deputy prime minister, John Rosso, has announced an investigation into the allegations, revealing two weeks ago the country’s chief migration officer, Stanis Hulahau, had resigned. Hulahau oversaw the distribution of the Australian funds to companies contracted to provide welfare, accommodation and health services to the former detainees and their families.
PNG Prime Minister James Marape was in Canberra last week to address parliament and for talks with Prime Minister Anthony Albanese. The communiqué they issued afterwards did not mention the funding agreement.
The review of integrity and governance in regional processing contracts, conducted by Dennis Richardson, did not examine the agreement because it was outside its remit. However, it did note the extra complexities involved when contracts involve foreign governments, sovereign-owned companies or individuals who worked for either.
A former head of both the Defence and Foreign Affairs departments, and a former director-general of the Australian Security Intelligence Organisation, or ASIO, Richardson told The Saturday Paper it was both possible and reasonable to insert accountability clauses into agreements with foreign governments to ensure the money reached its destination.
“You could do that,” Richardson said. “You would have to do it, obviously, in agreement with the foreign government, but that is not beyond the realms of possibility if it’s something you wanted to do.”
Richardson’s scathing review of the contracts for managing the PNG and Nauru detention centres, which are no longer operating, found there had been little to no due diligence nor active oversight in engaging companies with sketchy records, some of which had been linked to allegations of serious criminal activity and corrupt conduct.
The review found major contracts were let to relatively small companies with limited or no public profile. They included a company whose owners were suspected of circumventing United States sanctions against Iran and whose activities suggested possible money laundering and other criminality. Another company involved had as its chief executive a man being investigated by the Australian Federal Police for possible drugs and arms smuggling offences.
Richardson said information flows from the AFP to Home Affairs were “not always adequate”. Alternative contractors had not been considered and officials did not appear to grasp the integrity risks associated with these kinds of contracts.
Richardson’s review did not make any specific referrals to the National Anti-Corruption Commission, which has investigative powers he did not, but the review revealed that, with their consent, it had forwarded details of two individuals to the NACC and one to the AFP, who “might have information relevant to their inquiries”.
Richardson also observed the creation of the mega-department of Home Affairs in 2017 “does not appear to have had any positive impact on working arrangements” and had not encouraged a cooperative culture.
In evidence to the estimates committee, Stephanie Foster quoted a private conversation with Richardson in which he told her it would require “the wisdom of two Solomons” to disentangle responsibility for years of such failures in relation to the contracts and to apportion blame to individuals.
“It would have required a lot, lot more time and at the end of it, I’m not quite sure what would have been achieved because I think the breakdown of accountability would be such that it would be difficult to apportion, ”Richardson explained to The Saturday Paper He said such findings may have led to code-of-conduct investigations and legal challenges and would have likely been “a waste of time”.
Richardson noted Pezzullo was no longer in his job, forced out last year over leaked private message exchanges with a Liberal operative, and that standards of ministerial accountability had changed in recent decades.
“Increasingly, your expectations of it move around depending upon whether you’re in government or whether you’re in opposition,” Richardson said.
However, his review strongly criticised the lack of curiosity among officials in a culture that did not encourage it, and the failure to implement common sense preventive measures in dealing with high-value contracts in environments where there was a high risk of integrity issues.
Richardson found the AFP had uncovered significant evidence of serious misconduct by two executives involved in companies that held contracts with Home Affairs, but this was not communicated to the overseers, even though all were operating within the one department.
In the committee hearing, Labor senator Deborah O’Neill asked Foster to respond to what she called the “massive failure” in maintaining contracts with companies whose executives were under AFP investigation.
“I think the report makes it clear that the department had not done sufficient due diligence to be aware of all of the circumstances of the companies with which it was entering into contracts,” Foster said.
Among his four recommendations – the fourth of which is classified and redacted, along with sections of the report itself – Dennis Richardson has urged the Department of Finance to establish a protocol so the AFP and intelligence agencies can lawfully share relevant information with other Commonwealth agencies to inform procurement decisions in high-risk environments.
The government is yet to fully embrace the proposal.
Richardson believes it is essential. “If that recommendation is not implemented, I can be dogmatic that similar mistakes will be made down the track at some point,” he said.
“Clearly, the AFP must protect its investigations and needs to exercise care about the timing of any advice to departments. However, you cannot defend a situation where they arrest someone, they put out a press release, and the relevant department isn’t even aware about it until they read it in the media the next day.”
Equally, he said, once they had become aware of that, the procurement officers should have acted.
“Rather than ask the lawyers, ‘How can we continue the contract?’, they should have been asking themselves, ‘Should we be continuing the contract and aren’t there other options?’ … The priority is to keep the thing going, not to risk derailing it. I think that was more the mindset.”
Richardson criticised the Home Affairs Department’s regular reliance on an out-clause in the Commonwealth Procurement Rules, clause 2.6, that allows agencies to go straight to a preferred contractor and bypass strict processes supposed to ensure accountability, value for money and rigorous checking, on a range of broad grounds including the protection of “essential security”.
Department officials confirmed they had used the clause in letting the garrison services contracts. A separate Australian National Audit Office examination of the department’s maritime surveillance contract found it had also been used in that case. The findings in that audit were so scathing the parliamentary Joint Committee of Public Accounts and Audit is now requiring the department to provide six-monthly updates on its processes a head of letting a new contract in 2027.
Richardson told The Saturday Paper he believed clause 2.6 was used too frequently to justify procurement shortcuts, to save time or minimise red tape. However, he also said making rules too complex – as he believes they are – and too prescriptive can be detrimental.
“Too many people in the world think you can regulate your way to perfection– that every time you come across a problem, you add another rule…”Richardson said. “Every time there’s a problem, people come up with a dozen different rules, which, if applied and followed, would avoid the problem, forgetting that they’re just making systems and processes infinitely more complex and confusing, maximising the risk of future error rather than minimising it.”
The government released the Richardson review findings on the same morning Home Affairs had provided the criminal histories of the 149 former immigration detainees.
In response to a request from Coalition home affairs spokesperson Senator James Paterson, the department revealed the cohort released from indefinite detention since November included seven murderers, 37 sex off enders, 72people convicted of violent assault, robbery or kidnapping, and 16 people found guilty of domestic violence or stalking. Other offences included serious drug crimes and people smuggling, with a handful either convicted of low-grade offences or who had committed no offences at all but were being detained on other character grounds and unable to be deported.
In parliament on Thursday, Minister Clare O’Neil accused Dutton of having presided over a department that “paid hundreds of millions of dollars to companies and individuals who are suspected of arms dealing, drug smuggling, undermining international sanctions on Iran, money laundering, bribery and human trafficking”.
She noted the department had commissioned an audit in 2019 into a contract with one company, Paladin Holdings PTE Ltd, which she said “we learnt later... was headquartered in a beach shack on Kangaroo Island” and had received “half a billion dollars”.
The audit report, tabled in the estimates hearing, criticised the department’s failure to run a proper tender process and to consider the high risk of “fraud and corruption”. It also found professional services company KPMG, appointed to undertake a previous audit with a limited scope, had failed to declare it had a business relationship with one of the Paladin subsidiary companies and had audited the wrong Paladin company – a PNG off shoot and not the Singapore-based parent company with which the contract had been signed.
KPMG is also the company appointed by the PNG government to audit the program involving the missing $80 million.
Clare O’Neil also referred to a separate tabled document, which recorded that the audit results had been sent to Dutton in 2019 and that he had marked them as “noted”.
“He sent back a one-word response – ‘noted’,” Clare O’Neil said in Question Time. “No follow-up, no questions, no investigation and no integrity.”
Senator Paterson told The Saturday Paper it was the current government’s handling of immigration that was absent of “ministerial leadership”.
“When Home Affairs told their ministers in November that it would take months to draft and legislate a preventive detention regime, they accepted that at face value instead of pushing back,” Paterson said. “Political pressure eventually forced them to get it done in three weeks.”
He said the government should similarly be moving faster to apply for preventive detention orders for those among the released cohort who posed a threat to the community.
“It shouldn’t take a political crisis to get ministerial leadership,” he said. “If we had it from the beginning we wouldn’t be in this mess.”
The Labor government is pointing at its opponents and saying much the same, while the cross bench points at both.
Greens senator Nick McKim condemned the whole detention regime. “It’s shameful,” he said.
ENDS
