Drugs, guns, corruption: Australia paid suspect companies to run offshore detention

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.

Former ASIO director general and Defence chief Dennis Richardson.Credit: 60 Minutes

“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.

Craig Thrupp’s yacht.

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.

Paladin founding director and major shareholder Craig Thrupp.

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.

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.

Mozammil Bhojani.

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.

“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”.

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