Ruling means submarine designers Naval Group can stop Chinese, Russians from getting work

THE winners of the $50 billion Future Submarines project have been granted the freedom to discriminate against certain nationalities to protect top-secret information from spies.

• Spies attacking Future Submarine bidders
• Cyber spies stole fighter jet info
• Chinese spies targeting ‘every area’ of defence

THE winners of the $50 billion Future Submarines project have been granted freedom to discriminate against certain nationalities to protect top-secret information from spies.

The exemption from discrimination laws means French designers Naval Group will be able to reject job applicants from countries including China and Russia, stopping them from getting on to the Osborne site.

The Advertiser has previously revealed that Chinese spies were trying to hack into all three original bidders for the project, and experts say almost all defence companies face espionage attacks.

Now, the South Australian Employment Tribunal has granted Naval Group immunity from the Equal Opportunity Act, which usually stops companies discriminating on the basis of nationality.

The tribunal found it was in the public interest to grant the exemption because without it, SA might lose some work on the 12 submarines being built for the Royal Australian Navy.

Naval Group interim chief executive Brent Clarke said the company had an obligation to protect classified information.

“You’re talking about people who will handle potentially classified data, whether that be engineering or performance specifications or anything that might give away information,” he said.

Illustration of the Shortfin Barracuda submarine the French company, DCNS, wants to provide to Australia.

“Naval Group understands completely the significance of ensuring the integrity of all classified information — whether it’s Australian, French or American. We’re putting in measures to ensure there’s no chance of that information going to parties we don’t want.

“It shouldn’t surprise anyone who’s on the list.”

It was “very likely” spies would be trying to get work on the project, the head of the Australian Strategic Policy Institute, Peter Jennings, said.

“There’s a vast international history of precisely this type of industrial espionage that goes on,” he said.

“Frankly, few large defence companies are immune from it. It’s very likely that spies would be trying to do this.”

Mr Jennings said there would be “an even greater level of international interest in trying to steal that intellectual property” because of the United States’ involvement.

The French-designed, Australian-built submarine will use combat systems from the US. The US has a list of banned countries within its International Traffic in Arms Regulations.

That list includes Russia and China, as well as North Korea and a range of Middle Eastern nations.

Judge Leonie Farrell said she granted the three-year exemption because it was in the “wider public interest”.

“I take into account the benefit to the SA economy, the employment opportunities that are likely to arise within SA if the exemption is granted and the potential detriment to SA if the contract work was lost,” she wrote.

“If Naval Group Australia was unable to undertake the work because it could not meet the US requirements there is a potential for Australia’s national interest being affected and projects might need to be undertaken in the US at an increased cost.”

According to the judgment, Naval Group employees “must have access to certain defence-related security sensitive information, security classified information, technical data, equipment, goods and services and export-controlled defence articles, defence services and technical data”.

“Only Australian citizens, and the citizens of some other countries in limited circumstances, can obtain the clearances,” it says.

The company will now be legally able to ask for existing and potential employees’ nationality and place of birth and take that into account when they are deciding who to hire.

They can also “request details from employees or contractors of regular travel to restricted or prohibited countries listed in ITAR 126.1, recent or continuing contact with agents, brokers, and nationals of such countries.

“(Also) continued demonstrated allegiance to such countries, maintenance of business relationships with persons from such countries, maintenance of a residence in such countries, receiving salary, or acts otherwise indicating a risk of diversion.”