In Crikey’s experience, it’s harder to get a straight answer out of the Department of Defence than the Catholic Church. And that’s saying something.
Mind you, the mix of multibillion-dollar contracts, secrecy and national security is a potent one — surely up there with the great religions when it comes to matters that must remain out of public scrutiny.
How then will the Albanese government’s much-anticipated national anti-corruption commission (NACC) go when it comes to prising open the golden kingdom of defence contracts, the area considered by many to be ripe for corruption?
The question has gained some urgency following a recent Washington Post investigation — detailed by Crikey last week — which revealed the extent to which the Australian government has relied on the well-paid advice of retired US Navy officials in attempts to acquire a submarine fleet.
The Post’s investigation alleged that some former US Navy leaders have played “critical but secretive roles” during negotiations to acquire nuclear submarine technology from the United States and Britain and have profited from “overlapping interests”.
Much of the debate about the NACC has been in terms of how its powers compare with the various state corruption commissions. Yet defence acquisition occurs on a scale mind-bogglingly more expensive — and more sophisticated — than the usual fare examined by anti-corruption commissions.
How do you compare, say, an investigation into dodgy invoicing by a local council official with one into a transnational, multibillion-dollar defence contractor with intricate financial systems of its own, often tied in with other countries’ security services?
It is to compare apples and oranges. Or more to the point, it risks bringing a knife to a gunfight if we imagine the same investigative techniques can work.
A complex target
Former Australian Federal Police investigator and now anti-corruption consultant Chris Douglas has compiled a list of capabilities that a major defence manufacturer might have at its disposal to thwart corruption investigations.
They include:
- Secure means of communication equal to or better than Australian agencies’ capabilities of penetrating — many defence companies are manufacturers of highly complex secure communication equipment
- Communication via multiple SIM cards and offshore phones under false names and using encryption technology
- Ability to arrange meetings offshore in secure locations
- Access to bank accounts and payment systems located in major financial centres and offshore jurisdictions
- Ability to acquire and use complex corporate structures to hide the movement of funds, as well as the true identities of those involved, including the ultimate beneficiaries
- Technology to detect listening and tracking devices.
Douglas quotes, too, the track record of some of the world’s biggest defence manufacturers, which also have huge contracts with Australia’s defence department.
One of the best known is the case of BAE Systems’ “Al-Yamamah deal”, Britain’s biggest ever arms deal, which involved the sale of £43 billion worth of fighter jets and other equipment to Saudi Arabia. BAE set up a front company with the help of Swiss bankers to conceal payments to Saudi royals and intermediaries. BAE also set up front companies in the British Virgin Islands to funnel payments to agents in several countries.
DCNS, which changed its name to (French) Naval Group, was investigated over the sale of submarines to Malaysia. It followed allegations of corruption that included the payment of €30 million for “technical assistance” to an associate of the former Malaysian defence minister (and later prime minister). Payments were made through a series of shell companies, including one based in Hong Kong.
Siemens was found to have paid US$1.4 billion in bribes to government officials and civil servants in Asia, Africa, Europe, the Middle East and the Americas.
So what’s the answer?
Former Victorian Appeal Court judge Stephen Charles, who is a board member of the Centre for Public Integrity, told Crikey that the NACC would likely have the powers to investigate an Australian government official who took a bribe, though not a “corrupt” third-party actor who might mislead an “honest” Australian public servant “on the characteristics and abilities of, let’s say, aeroplanes that they’re offering”.
“And it’s quite deliberate,” he said. “The purpose is to cut down the enormous amount of work that the commission would be able to administer.”
Charles argues though that the focus of the NACC should be on investigating the scope for corruption prior to entering into a multibillion-dollar contract — a due diligence approach also advocated by consultant Chris Douglas.
The sheer scale of the potential complexity of defence acquisitions, though, was “an indication of the size of the budget” the NACC would require to prevent corruption.
“In something like the submarine case (involving the French Naval Group) if you are doing proper investigation before the contract was made, you would want to send investigators out to Taiwan, to Saudi Arabia, to India, to the other places where they had been dealing with the French Naval Group, and talk with them about both the negotiations with them and the extent to which they are satisfied with the product, if they would be prepared to talk with you.”
Oh, and…
Just over a week ago, Crikey promised to update you on the defence department’s response to our question on what action, if any, had taken place following claims made by a whistleblower in 2019 about irregularities in spending by a defence contractor.
We are still waiting for an answer.
The “list of capabilities that a major defence manufacturer might have at its disposal to thwart corruption investigations” is impressive, and that’s without adding in the powerful influence and advantages of the strong ties such organisations have with officials and politicians in the highest level of government and with senior military officers, as all these personnel swap with ease between the various bodies.
It’s all the law-dodging capabilities of the most powerful organised crime cartels, on steroids, and then some more. Lucky for us they are on our side, isn’t it?
Best thing to do is scale back hard all defence spending. Cancel AUKUS. Buy off the shelf subs and all other hardware.
Let the rest of the world go to hell as it chooses and focus on our own defence – not attack fantasies.
Fortress OZ- FOWF kinda thing?
Let’s put it another way.
Spend all the money on:
Highways and roadways so we can get out mothballed armoured vehicles quickley around the country.
A comprehensive broadband so that they can communicate with each other around the country whilst defending it.
A better education system so we have smart military employees.
A national electricity grid so we can quickly build bases where needed.
Green inputs to the energy grid so we have multiple suppliers as opposed to large power stations.
A national network of hospitals to look after the wounded in the event of war.
Then suck up to our neighbors so they are our mates and allies.
Agree except for the last sentence but you left out ship building which Gertrude sur Maris might suggest is fairly important for an island nation.
I’d add eradicating Ovis & Bovis over the majority of the landmass and rebuilding the original inland fish traps.
These fed a huge population on fish omelettes for tens of thousands of year when euroids were still hitting each other with auroch bones.
A few could be kept east of the Sandstone Curtain for those who like hard cheese.
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Drones are the future , not big targets like a few expensive capital ships
Keating stuffed this up when he got rid of the Department of Administrative services in the mid 90’s.
DAS included a group called Ausbuy who had a team of professional purchasing people who arranged purchases for government contracts, they also helped all government departments with purchasing guidelines and issues.
They were very professional and distanced from the individual departments.
Governments have since either outsourced this function or moved to small groups within the departments, especially defence, who are very closely connected to the arms suppliers.
This is a lesson about how easily corruption happens.
Just one of many things – banking, media, N/G etc etc – that the E$tablishment wanted and the so easily Duchessed & duped PJK gave in, thinking that at last he could join the BigBoyz table.
DAS/Ausbuy would have been no guarantee against corruption. Just payments to different pockets.
Who were the Australians that received big dollars when the French contract was initially signed? Will Crikey name them?