Paladin Group’s Craig Thrupp, is estimated to have personally made more than $150 million from Home Affairs contracts ultimately worth more than $500 million to run offshore processing on PNG Manus Island
A report released today shows that under Peter Dutton, contracts by Home Affairs funnelled millions into companies that were allegedly to be involved in serious criminal wrongdoing.2What did Peter Dutton know and why didn’t he do anything to stop this from happening?
It also revealed that the department’s financial strength assessment of Paladin, conducted by KPMG, had been into the wrong company: Paladin Solutions, not Paladin Holdings. These assessments are routinely carried out to know if the department is taking a financial risk by appointing a contractor. However, in Paladin’s case, the assessment was into the firm’s PNG construction arm and not its Singapore-based offshore-processing arm. The review was then never finalised.
“Therefore, the Draft Financial Strength Assessment report obtained by the department is not relevant,” the audit said.
Oh what a coincidence. The same happened on the Nauru billions. Home Affairs had KPMG do due diligence on Canstruct Pty Ltd instead of #Canstruct International.
Brisbane company worth just $8 when awarded $385m Nauru offshore processing contract
Dutton ignored warnings as offshore processing show ‘rolls on’, says Labor
A damning internal Home Affairs audit shows Paladin, the contractor paid $532 million to run the Manus Island detention centre, was never properly assessed for its ability to run the centre, and the department failed to consider the corruption and fraud risks of working in Papua New Guinea.
Documents tabled in parliament on Monday show that when then-minister Peter Dutton was sent a briefing note about the audit, he simply indicated he had “noted” the report without having a discussion about it with his department.
The revelation comes as Home Affairs secretary Stephanie Foster said bureaucrats in her department would not face consequences arising from a probe into Home Affairs by former ASIO director-general Dennis Richardson, which found offshore detention contracts had gone to companies linked to suspected arms and drug smuggling, busting sanctions on Iran, corruption and bribery.
Questioned in a Senate estimates committee on Monday about her department’s failings, Foster also blamed the department’s previous bosses for the failings in letting the Paladin contract, saying “the processes were not adequate” and “we have absolutely learned from the past”. Foster replaced former Home Affairs secretary Michael Pezzullo last November after an independent inquiry found he had breached the government’s code of conduct by texting a Liberal Party operative.
The 2019 internal audit into the Paladin contract, which was tabled on Monday, found the department had been given just 29 days in late 2017 to find a new contractor to run Manus Island after the previous contractor pulled out and PNG public servants were belatedly told not to take over the running of the centre.
The audit found some aspects of the contracting process were up to standard, but that the department had never outlined the reasons for selecting Paladin – a small company with no previous experience in providing what are known as “garrison” services – to run the sensitive, multimillion-dollar PNG offshore-processing system.
“The nature of the procurement and operating environment in PNG heightens the potential for fraud and corruption,” the audit noted, adding “these risks should have been identified and documented with appropriate management actions also considered and documented”.
“Risks …, such as collusion, bribery and deliberate misinformation by a tenderer, have not been specifically identified and there are no documented strategies established to manage such risks,” the audit found.
It also revealed that the department’s financial strength assessment of Paladin, conducted by KPMG, had been into the wrong company: Paladin Solutions, not Paladin Holdings. These assessments are routinely carried out to know if the department is taking a financial risk by appointing a contractor. However, in Paladin’s case, the assessment was into the firm’s PNG construction arm and not its Singapore-based offshore-processing arm. The review was then never finalised.
“Therefore, the Draft Financial Strength Assessment report obtained by the department is not relevant,” the audit said.
Investigations by The Age and The Sydney Morning Herald have previously found that KPMG also audited the wrong company when assessing the contractor for Australia’s other offshore detention centre, on Nauru. The investigations have found credible allegations of corruption in both the Nauru and Manus contracts, and the Australian Federal Police has launched foreign bribery investigations into aspects of both contracts.
Labor senator Deborah O’Neill, who led the questioning of the department on the issue on Monday, said Dutton should have shown more interest than simply circling “noted” on a briefing document, saying: “His response was to note it … and the show rolled on and half-a-billion got spent”.
Dutton did not respond to questions about whether he should have done more to engage in the issue, but told reporters last year he had no involvement with contract negotiations or the execution of agreements.
Richardson’s report said the inquiry did not find any evidence of ministerial involvement in the regional processing contract or procurement decisions, “and the [former] secretary of Home Affairs said he never discussed such decisions with the minister of home affairs”. Dutton’s office referred to that excerpt when approached for comment.
Richardson’s report blamed senior officials for failing to use intelligence to prevent taxpayers from paying multiple companies linked to alleged serious crimes through contracts over 10 years to late 2022.
His findings, which were described as “extraordinary” by Home Affairs Minister Clare O’Neil, followed an investigation by this masthead and 60 Minutes about millions of dollars in suspect payments to allegedly corrupt firms and foreign officials as part of the Pacific Solution.
But Foster told a Senate estimates hearing on Monday that Richardson had said there was no “unfinished business” in the department she needed to address.
“I don’t think he would mind me quoting him when he said it would take the wisdom of two Solomons to identify, in the complex arrangements and over the length of time, which individual officers, and at what level, accountability should rest,” Foster said.
“I asked him explicitly, did he feel from his review – because he was the one who looked in detail at all other arrangements – that there was unfinished business, which as a new secretary, I needed to prosecute, and his response was: No.”
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Foster relayed to the parliamentary committee that Richardson said there were many areas of the department involved, including procurement, intelligence and the regional processing team.
“So you know, identifying exactly which point of the process, or was it all of them, was challenging. I think the other thing on his mind was, at what level do you assign accountability? Is it the deputy secretaries who should have arguably been overseeing and joining those dots? Is it the individual officers prosecuting each piece?” she said.
“I don’t want to verbal him, but my understanding is that he did not feel that it was productive to go back in time and seek to unravel that.”
Greens immigration spokesman Nick McKim said it was an “egregious failure of process” inside Home Affairs if no one could find out who was responsible.
“What I’m getting today is no one’s going to be held accountable, people are going to skate,” he said.
But Coalition home affairs spokesperson James Paterson said during a press conference that Richardson’s and Foster’s comments merely reflected the complexity of the issue.
“It’s a challenging thing to maintain offshore processing, but it’s a very important part of our successful strategy, Operation Sovereign Borders, to prevent significant deaths at sea and significant arrivals on our shores,” he said.
Members of the Senate committee asked for details of investigations flowing from the revelations, including suggestions of criminal activity relating to a contract holder trying to circumvent United States sanctions against Iran, and another company with suspected links to drugs and arms smuggling.
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Bureaucrats declined to disclose details, saying to do so could jeopardise investigations.
However, O’Neil said there were still questions for Dutton about what he knew of the rorting of the system.
“This is an extraordinary report that should have been commissioned years ago, under the former government,” she said.
An inquiry into Home Affairs has found the department awarded contracts in the offshore detention program to companies with links to drug trafficking, the illegal arms trade and other offences for over a decade,
The probe was led by former ASIO director general and defence chief Dennis Richardson and reportedly shows a lack of scrutiny by Home Affairs officials, which linked the department to corporations that had allegedly caused a breach of sanctions against Iran.
As reported by Channel 9’s 60 Minutes, the inquiry found evidence of corruption and bribery in many of the corporations that had built and run the country’s contentious offshore detention facilities.
“Intelligence and other information, which was readily available, was not accessed. As a consequence, integrity risks were not identified,” the report, also provided to Channel 9, reads.
Mr Richardson cited time pressures in the failure to appropriately vet candidates for contracts that ran up until the end of 2022.
“Co-ordination, communication and information flows within Home Affairs were inadequate,” he said.
“With proper due diligence, Home Affairs could have considered alternative suppliers, and, if this was not possible, the implementation of mitigating measures. But this was not done.
“Over time I don’t think proper scrutiny was put on the contracts and I think it was a case of a lack of communication between different parts of the Department of Home Affairs, and between other parts of government and Home Affairs.”
Mr Richardson’s report tied the failures to “senior people within Home Affairs”, but did not lay any blame on opposition leader Peter Dutton, who served as the Minister for Home Affairs when the particular contracts were awarded.
Channel 9 reported that one of the firms named in the confidential report by Mr Richardson belonged to Nauru contractor Mozammil Bhojani who was under the investigation of the AFP for allegedly bribing Nauran officials.
Founder of the security company Paladin Group Craig Thrupp was reported to have earned $150 million from the Manus Island contract, and went on to face an AFP investigation for the bribery of Papua New Guinea officials.
“(The Paladin Group) got contracts in areas in respect of which it had no particular expertise,” Mr Richardson said.
“Those contracts were consistently renewed over a period of time without ever being rechecked, and it was the failure to do the proper due diligence which led to Paladin getting contracts worth hundreds of millions of dollars.”
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Companies linked to suspected arms and drug smuggling, busting sanctions on Iran, corruption and bribery won massive government contracts amid systemic failures to adequately vet the businesses being paid to run the nation’s multibillion-dollar asylum seeker offshore processing regime.
An inquiry into the Home Affairs department conducted by former ASIO director general and Defence chief Dennis Richardson also blamed senior public servants for the failure to use intelligence that could have prevented taxpayers from paying multiple companies linked to alleged serious crimes through often rushed contracts over a decade up to late 2022.
“Intelligence and other information, which was readily available, was not accessed,” Richardson concluded in his report. “As a consequence, integrity risks were not identified.”
The inquiry was launched last year after revelations by this masthead and 60 Minutes about millions of dollars in suspect Home Affairs payments to allegedly corrupt firms and foreign officials as part of the Pacific Solution policy.
In an exclusive interview to detail his findings, Richardson said time pressures during contracting led to “shortcuts”. He detailed departmental and agency failures to share vital information about contractors’ involvement in alleged serious crime.
Richardson characterised this failure as the “left arm not knowing what the right arm’s doing” and “simply a breakdown” and said it enabled an environment in which Home Affairs awarded contracts to allegedly crooked companies as it spent billions of dollars on the program.
“Over time I don’t think proper scrutiny was put on the contracts and I think it was a case of a lack of communication between different parts of the Department of Home Affairs, and between other parts of government and Home Affairs.”
Richardson produced a classified report as well as a declassified and redacted version. The latter was obtained as part of an investigation by this masthead and 60 Minutes.
This investigation also uncovered new information about the profits of some of the companies Richardson scrutinised.
Internal corporate files show Paladin Group’s founding director and major shareholder, Craig Thrupp, is estimated to have personally made more than $150 million after the company won Home Affairs contracts ultimately worth more than $500 million over four years to run offshore processing on Papua New Guinea’s Manus Island up to 2019.
Via another of his companies, Thrupp has since purchased a $33 million luxury yacht and multiple properties, including an exclusive clifftop property off the coast of Bali.
Paladin is facing an Australian Federal Police investigation into allegations, revealed by this masthead, that the firm paid bribes totalling $3 million in 2018 and 2019 to secure the backing of high-ranking PNG officials to enable it to run offshore processing on Manus Island.
There is no suggestion Thrupp is involved in or had knowledge of any alleged crime, only that Paladin is one of at least three companies contracted by Home Affairs and suspected of paying bribes to Pacific Island officials. Thrupp was contacted for comment and did not respond but has previously denied all wrongdoing.
In his interview, Richardson raised serious concerns about Home Affairs’ dealings with Paladin.
“It got contracts in areas in respect of which it had no particular expertise. Those contracts were consistently renewed over a period of time without ever being rechecked. And it was the failure to do the proper due diligence which led to Paladin getting contracts worth hundreds of millions of dollars.”
Of Paladin’s profit margins, Richardson said: “Even taking into account the risks, it was still quite exceptional.”
He also revealed his inquiry had separately uncovered allegations Paladin had paid bribes to foreign officials to maintain its rolling contract.
“We passed on relevant information to the AFP and to the National Anti-Corruption Commission,” he said.
Asked if Home Affairs should have acted on warning signs that Paladin may be engaged in alleged criminal wrongdoing, Richardson said: “I think they should have pursued greater due diligence than what they did.”
Richardson confirmed that former Home Affairs contractor Canstruct, which managed a $1.8 billion rolling contract on Nauru between 2017 and late 2022, faces a separate federal police financial crime and bribery probe.
Canstruct’s margins, like Paladin’s, were healthy, with corporate files suggesting Canstruct pocketed more than $100 million in annual profit from its Home Affairs contracts.
The police investigation is probing Canstruct’s decision to give lucrative Home Affairs-funded and approved contracts to companies linked to Nauruan officials including then-president Lionel Aingimea. Canstruct has previously denied any wrongdoing and said the subcontracting of firms closely linked to senior Nauruan politicians was approved by Home Affairs.
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While Richardson declined to comment on the individuals, he said: “In many countries around the world political figures, do have an engagement with the private sector that would be considered unacceptable in Australia.”
Richardson’s criticism of Home Affairs’ failure to safeguard taxpayer funds from allegedly dubious companies raises serious questions for both the opposition and government, although the ex-spy chief refused to be drawn on the question of political accountability.
Much of the questionable contracting happened when now Opposition Leader Peter Dutton was responsible for the Department of Home Affairs, although Richardson laid blame with senior public servants and said he found no evidence of ministerial involvement in suspect contracting.
Richardson said blame for the failures he uncovered lay with “senior people within Home Affairs” who were “responsible [for ensuring] proper communication across the department”.
While the Albanese government commissioned Richardson to carry out his inquiry and has backed his proposed reforms, such as increased due diligence and intelligence sharing, not a single company, person or public servant has as yet been held accountable for practices that may have led to significant public money being squandered or used to fund serious graft corruption in Nauru and PNG.
‘Proper due diligence was lacking when it came to contracts with relatively small companies with limited or no public profile.’Dennis Richardson
If the federal police probes of Paladin and Canstruct follow the path of other AFP foreign bribery matters, they are likely to be hamstrung by a range of legal and evidence-gathering challenges and delays. Richardson has also referred two offshore processing insiders to the National Anti-Corruption Commission, but it may also struggle to act given the offshore nature of the alleged wrongdoing and the suspected involvement of foreign politicians.
Former AFP and Victorian corruption watchdog senior investigator, Tam McLaughlin, who is now a partner at boutique anti-corporate fraud company Duxton Hill, said Richardson’s findings deserved further investigation and public scrutiny.
He said Australians should be “rightly concerned about the millions of taxpayer dollars” that ended up in the pockets of suspect firms or overseas officials and said Richardson’s report should lead to negligent public servants or alleged bribe payers being held accountable.
“It’s just the scale of it, and it seems to have been a wilful blindness [by Home Affairs], in many cases, as to not wanting to uncover the truth or ask the hard questions,” he said.
Failure of due diligence
Richardson’s inquiry involved a comprehensive sweep of information held by “the National Intelligence Community” and analysis of cabinet submissions and minutes and discovered the failure to conduct proper due diligence was long-standing.
“Home Affairs continued to vary or extend the contracts without undertaking due diligence appropriate to the situation, which would have given it pause for thought at each decision point,” Richardson found in his report.
“Over the years, Home Affairs (and therefore the Commonwealth) has had contractual relationships with” companies, including those “under investigation by the AFP” and a “company whose owners were suspected, through the ownership of another company, of seeking to circumvent US sanctions against Iran, and with extensive suspicious money movements suggesting money laundering, bribery and other criminal activity”.
Home Affairs also used taxpayer funds to pay “an enterprise suspected of corruption” and a company whose CEO was being investigated for possible drugs and arms smuggling into Australia.
While Richardson concludes that in the case of the alleged drug and weapons smuggler, it would have been “at the time … unrealistic” for procurement officials to have known of the grave allegations, they should have known that other contractors were involved in suspected bribery, corruption and other crimes.
“With proper due diligence, Home Affairs could have considered alternative suppliers, and, if this was not possible, the implementation of mitigating measures. But this was not done,” Richardson said.
“Coordination, communication and information flows within Home Affairs were inadequate.”
The former ASIO boss notes the intense pressure on Home Affairs to implement and sustain offshore processing – a border security policy backed by both major parties – describing “an environment of high pressure where time was often of the essence.” In his interview, Richardson said the contracting environment had involved “shortcuts”.
He also highlights in his report the difficulty finding companies prepared to carry out work in remote locations that made Australia an international human rights pariah, stating it is “possible that, even with access to the information available within government agencies, Home Affairs may have had no option but to enter into contracts with these companies”.
Richardson said this did not excuse the failure to carry out due diligence that extended to sharing and accessing information held by Home Affairs and its agencies, a failure he said, “rested with senior SES [senior executive] managers” rather than their more junior underlings.
“Proper due diligence was lacking when it came to contracts with relatively small companies with limited or no public profile, and where operations were to be in high-risk environments.”
Richardson is also highly critical of the federal police, finding that “information flows from the AFP to Home Affairs were not always adequate”.
His declassified report does not identify the companies with alleged links to suspected corruption, arms and drug smuggling or sanctions busting.
However, after this masthead and 60 Minutes obtained a version of his report prepared for potential public release, sources aware of the classified findings – but not permitted to discuss them publicly – revealed some of the companies named by Richardson in his still-confidential report.
They include a firm owned by Mozammil Bhojani, a Home Affairs contractor on Nauru who earned millions of Australian taxpayer dollars while the federal police was investigating him for bribing Nauruan officials.
“The AFP itself had been investigating a particular individual for foreign bribery offences, was aware that that person was in a contractual relationship with the Department of Home Affairs, but at no stage did they advise Home Affairs. In fact, Home Affairs became aware of the AFP investigation through a media release,” Richardson said in his interview.
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“It’s a breakdown in communication, and the irony of it is that this was happening after the Department of Home Affairs had been created, and the very purpose of the creation of the Department of Home Affairs was to break down barriers and to ensure better communication. And that didn’t happen.”
Richardson was also critical of Home Affairs’ decision to keep paying a company closely associated with Bhojani after he was convicted of bribery, although noted they had done so after seeking legal advice.
“I think it was questionable … a bit of common sense might’ve led to more questioning,” he said during his interview.
A series of investigations by this masthead into Home Affairs’ scandals and failures have, in addition to the Richardson Inquiry, led to two other significant inquiries.
The Nixon Inquiry found Home Affairs was failing to deal with rampant visa fraud and human trafficking, which sparked major policy reforms and the creation of a new multi-agency taskforce. The Briggs Inquiry led to the sacking of ex-Home Affairs secretary Michael Pezzullo for breaching the public service code of conduct.
The Albanese government has restructured Home Affairs returning the AFP and Austrac to the portfolio of the Attorney-General.
In his interview, Richardson defended his decision not to name individuals in his report because “many people have moved on”.
“I believe the important thing to do in a review of this kind is to see what can be learnt and what can be changed, rather than publicly humiliate individuals. But having said that, we did not have the investigative powers to pursue those kind of inquiries to a point where you could personally hold a gun to someone’s head,” he said.
“There are some people who are no longer in government. And you would need a much deeper inquiry if you are going to go to the point of identifying precise individuals in respect of precise contracts.”
Richardson’s inquiry determined the public could have faith in the three-year $420 million contract Home Affairs signed in 2023 with the Australian arm of US private prison operator MTC Australia to run offshore processing on Nauru.
But he said the government departments needed to reform their procurement processes to ensure adequate due diligence and vetting when “dealing with small entities of unknown background taking on large-scale contracts”.
