This article is part three in a series. For the full series, go here.
The Home Affairs contracts for Manus Island garrison and security services between 2017-19 were hugely profitable for the Paladin Group. It was making over a million dollars in profit per week.
“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,” reported Nine (meanwhile, for what it’s worth, workers on the ground in PNG were being paid $1.50 per hour).
Departmental records also showed that from the start of its contract, Paladin entered into financial arrangements with companies closely associated with PNG officials, which a former Paladin director alleges amounted to bribes.
Former Paladin director turned whistleblower Ian Stewart told Nine that shortly after Paladin won the contract, he reported bribe attempts to Home Affairs. He said a Home Affairs official then pressured Paladin to use a subcontractor that was known to be a front for corrupt PNG officials. Stewart further alleged that Home Affairs urged Paladin executives to pass on their concerns only via phone calls, in order to avoid putting them on the record. (The ANAO later confirmed that Paladin had made such reports, although not the details.)
In January 2018, Paladin entered into an agreement with local subcontractor Peren Investment, a company controlled by the brothers of a senior PNG MP, and key ally of then prime minister Peter O’Neill. The dollar value of this arrangement has never been revealed.
On another occasion, Stewart claimed Paladin made payments of more than $3 million to an account in Singapore of a businessman with close ties to senior PNG officials. (Stewart wasn’t the only ex-director claiming Paladin had made “ex-gratia payments” either.)
Nothing happened in relation to these reports, however, and Home Affairs secretary Mike Pezzullo told a parliamentary committee in April 2019: “We’re not aware of … any demonstrable instances of likely, possible or reasonably suspected corruption”.
The contract between Home Affairs and Paladin states that “the Service Provider must not enter into a major subcontract without prior written approval of the Department”, with a major subcontract defined as having a total value of greater than $250,000. So if Home Affairs was doing its job properly, it must have known about these payments and these allegations. (Its own 2019 audit acknowledged it couldn’t account for the services Paladin was subcontracting, because the department wasn’t able to provide supporting documentation.) Home Affairs should surely have been more careful with Australian taxpayer money.
If this alleged corruption is true, the only possible conclusions are that Home Affairs either turned a blind eye to it or actively encouraged it. Or both.
This same internal audit nevertheless found, on the contrary, that Home Affairs’ procurement, tendering and subsequent contract management, “overall”, had “achieved value for money, encouraged competition, [and] maintained sufficient and appropriate evidence to demonstrate compliance with its contract management policies, procedures and frameworks”. This is self-evidently absurd. Its contractor Paladin was making over a million dollars a week in profits, on contracts won in a closed tender. Home Affairs was denying it had even been informed about any alleged corruption, let alone showing any sign of investigating it. Evidently, none of these matters were passed onto the Australian Federal Police (AFP) or Department of Foreign Affairs and Trade (DFAT) either.
Nor did anyone from Home Affairs seemingly tell fellow government agencies that in May 2018 Paladin founder and owner Craig Thrupp was himself removed from the Home Affairs/Manus contract after Paladin admitted “non-compliance” with a Home Affairs direction. Or that in February 2019, Thrupp’s visa to PNG was cancelled “because of the company not adhering to the government’s position on recruitment of local labour”. Crikey is not alleging that Thrupp acted improperly at any time, or was aware of any alleged corruption attempts. He has denied any wrongdoing or awareness of any alleged or attempted corruption.
Nevertheless, Paladin’s contracts continued until November 2019. Black Swan, a PNG security company taken over by Paladin in early 2019, continued to land large Australian government contracts — from the AFP and DFAT no less — that ran up until 2024. Paladin no longer operates.
According to a recent report in Nine, the AFP has launched “an investigation into suspected corruption involving Australian businesses and high-ranking PNG officials”.
The federal police “are also investigating Paladin for dishonestly obtaining millions of dollars from Australian taxpayers via the Home Affairs offshore detention budget to fund suspected bribery”. Nobody has yet been charged, and there’s no indication Home Affairs itself is under investigation.
It’s hard to know what to make of the bewildering failures of process overseen by Home Affairs in relation to the Paladin contracts. One thing would seem obvious, though: given the complexity and scale of the problems, and the taxpayer money involved, it’s exactly the kind of issue the National Anti-Corruption Commission (NACC) should properly investigate. But will it?
So far, the NACC has put its name to the one report — a joint investigation by the Australian Commission for Law Enforcement Integrity (ACLEI) with Home Affairs itself — relating to one small corner of the Paladin story. Operation Bannister found no corrupt conduct. Frankly, for the NACC to leave it there seems unreasonable, even to those involved in that investigation — who as a result have become the sole focus of attention.
The NACC will neither confirm nor deny whether it “will be looking into or reporting on any other Paladin-related matters”, as it “will generally not comment on whether or not it is investigating a matter”.
Given that Operation Bannister was “an Australian Commission for Law Enforcement Integrity corruption investigation” and “a joint investigation with the Department of Home Affairs”, we asked the NACC: what were the investigative duties carried out alternately by ACLEI and Home Affairs? And how were these investigative duties allocated? Did the NACC do additional investigating itself?
The commission replied that it would “not provide details of the investigations undertaken beyond what is contained in its report”. We contacted Home Affairs, but the department referred our questions about the investigation back to the NACC. And the ACLEI? It no longer exists as an entity.
If Operation Bannister is an example of how the NACC will operate, the public must prepare itself for disappointment. In this particular case, the NACC cast a judgment following a limited investigation but failed to create any sense of broader accountability or transparency. On the contrary, it has become a black hole for any further queries or concerns we might have about the Paladin affair, past, present or future. And not just this affair. The NACC has become the place into which all corruption investigations disappear. As yet, the NACC has made no significant corruption findings, despite thousands of referrals.
Former Manus Island detainee Behrouz Boochani captured what’s at stake in Guardian Australia, writing, “The bigger picture has yet to be exposed … What needs to be investigated is not only the financial agreements with companies and the manner of spending taxpayers’ dollars, but also the many obvious human rights violations.”
These aren’t theoretical or abstract concerns. And they go way beyond Home Affairs contracts. They go to the heart of governance and political responsibility in Australia.
For the nation’s sake, the NACC needs to lift its performance, seriously and soon — or risk destroying its reputation permanently.
