Who profits from our foreign aid? Snapshots of a multimillion dollar industry

Earlier in the week, we began our Who Profits from our foreign aid? series with an in-depth case study of GRM International that grew from a cattle company to a global aid player with almost no media scrutiny.

We are still waiting for answers from AusAID  about whether or not it knew GRM was owned until the end of 2009 by a holding company for the Packer secret family trusts, and what financial checks AusAID carried out on GRM’s new ownership structure.

Meanwhile, Crikey now moves on to some snapshots of other for-profit aid companies.

No one is suggesting that ‘for-profit’ companies cannot play a role in aid delivery, particularly with large infrastructure projects. But Australia’s aid industry was mostly privatised during the Howard years without public debate and we are raising questions about the accountability and transparency of our program.

As Public Interest Advocacy Centre’s CEO Robin Banks put it last week:

“Transparency and accountability are critical to the effective operation of any government program, whether it is delivered by government, by for-profit services or by non-profit services. This is equally important in the aid and development area, perhaps even more so as many of the programs or services are delivered outside Australia and are, therefore, less able to be directly observed in operation by the general public and by funding bodies.”

Today we begin our corporate aid snapshots with GHD International — a giant engineering company operating in water, energy and resources, environment, property development, and transportation markets in more than 15 countries.

2009 was a good year for GHD despite the slowing global economy. According to their website, GHD’s income grew to $1.1 billion, up 18% on 2008.

GHD received more than $163 million in AusAID contracts between 2007 and 2010. This, however, represents only half of more than $230 million overall from a number of government departments with over $85 million from Defence, for which GHD is a preferred supplier.

Nearly $60 million of the AusAID contracts are for a water and sanitation project aimed at bringing clean water to the people of the Mekong Delta. In a partnership with the Vietnamese government, the project won an Engineering Victoria award earlier this year. More than $50 million is to develop partnerships with the Chinese government.

Until 2008, most of GHD’s development focus was on its core business of engineering, at which time they took over Canberra’s biggest service delivery company Hassall and Associates, which received over $51 million in aid contracts between 2007 and 2010.

Whereas most of GHD’s contracts were in infrastructure, Hassall has a major focus on technical assistance in the Pacific with contracts in Tonga for fisheries, in Vanuatu for land reform, policing in East Timor as well as community development in the Philippines and governance in China.

Finances

GHD has 6500 employees, with operations in 15 countries including the United States, China, India, Vietnam and many subsidiaries. Its last group accounts filed with the Australian Investment and Security Commission (ASIC) are its 2009 half yearly ones which declared $35.9 profit up from $33.9 million for the 2008 half year. GRM’s billion dollar income is rapidly increasing and was up 18% in 2009.

The group accounts do not reveal where the profits come from and how much the aid sector contributes. When asked if the company would agree to transparency of contracts and finances, Sonia Adams, GHD’s corporate manager of marketing and business development, said:

“If that was part of the conditions of the terms of the tender and we agreed with those conditions and we wanted to bid for the work then we would do it with the understanding that that would be the case”.

China

GHD took a strategic move into China in the late 1990s and, as their business there expanded since 2004, the aid work followed: “Doing aid work does mean that build close relationships with both private sector and government and of course it gives you visibility because the projects are exceedingly important to the infrastructure to that country, but it is just part of the offering we would take into any new region that we entered,” said Adams.

The five-year $50 million Australian Government, AusAID initiative Australia China Environment Development Program is designed to improve environmental protection and natural resource management, focusing particularly on water and policy development.

The AusAID China program began in 2007 and what followed was a trickle down effect with an expanding presence and a slew of private contracts. Projects such as lake developments and urban planning for new towns, giving them added financial benefit.

One of GHD’s customers in China is a Chinese coal company, which with their help has taken its 50 million-tonne production to 100 million tonnes and has plans to take it to 200 million.

GHD’s ties to China continued to grow with an AusAID contract for $19 million for an vocational education and training project a month after they took over Hassalls.

Other GRM  Energy Projects

• GHD have a long term involvement in feasibility studies, development and finance raising for a controversial open cut mine in Bangladesh which involves the relocation of thousands of people
• Coal and gas developments in Queensland
• Off-shore gas developments in West Papua
• Expanding coal exploration in NSW’s Hunter region with Shenua Watermark a major Chinese coal and electricity company

Other business

• GHD are hoping to expand their Defence building to the Middle-East Malaysia and New Zealand
• GHD prepared the Gunns Pulp Mill social impact statement which was criticised by the Tasmanian Council for Social Services

Wendy Bacon is the Director of the Australian Centre for Independent Journalism and Michelle Stephenson is completing a Master in Arts ( Journalism) at UTS.