What is the Paladin affair?
The Paladin affair refers to the investigation by the Australian Financial Review of a lucrative government contract to security firm Paladin to provide security services to the three refugee centres on Manus Island.
The investigation of that contract raised key concerns, including:
- a closed tender for contracts worth $423m
- the organisational conduct of Paladin
- the professional history of its founder Craig Thrupp, and
- the financial interests of the family of the current Deputy Leader of the People’s National Congress of Papua New Guinea.
There has been significant media coverage of this story, and these concerns have been also raised and discussed during Senate Estimates. The Labor Party wrote to the Auditor-General, requesting an urgent review of the contract procurement process.
On April 1, the Auditor-General announced that it will be auditing the Department of Home Affairs’ management of the procurement of garrison support and welfare services for immigration processing centres. It is expected to be finished in January 2020.
What do we know?
In April 2016, a new owner took over the previous operator of the three centres on Manus Island, Broadspectrum (formerly known as Transfield). They were then instructed to end the Manus Island contract when it expired on 31 October 2017. However, the government had not found a new provider 12 weeks before the Broadspectrum contract was due to end.
The government then chose to run a closed tender for the new contract. A closed tender often indicates that only one party was invited to bid. Such contracts are typically used for advanced technology where there is only one specific supplier, for amounts under $80,000, or when the timeframe is very short.
The Australian Government justified the limited tender because of the short timeframe, even though they knew 18 months before the contract expired that they would need a new provier.
According to the Department, PNG had committed to taking over operations of the centre until July 2017. However, PNG then reneged. This left the Department with little time to find a new provider.
When questioned in Parliament, Ministers deflected responsiblity to KPMG, which had run the procurement process. KPMG stated that it ‘did not comment on client work’.
Who is Paladin?
Paladin was first known as High Risk Security and then High Risk Security Asia Pacific. Craig Thrupp was the sole shareholder of High Risk Security Asia Pacific, was associated with High Risk Security, and is the founder of Paladin.
The Financial Review has published serious allegations concenrning companies related to Mr Thrupp. These include allegations of financial mismanagement, deception, questionable payments, and large debts.
In 2010, High Risk Security collapsed with over $170,000 in debt. At the time of the initial closed tender between the Department and Paladin, the company had just $50,000 in capital. The day after the initial letter of intent was signed, Paladin had been paid $5.4m to cover transition costs.
The Department had written before to Mr Thrupp asking him to resign and end his involvement with providing services to refugees in PNG. Four months later, Paladin was paid another $109m for its security services.
The investigation also revealed that Paladin‘s previous address had been for as a remote property on Kangaroo Island. Apparently, Paladin now operates out of an unmarked building in Canberra.
Another concern is that 60% of a company subcontracted by Paladin is owned by three brothers of the Deputy Leader of the People’s National Congress of Papua New Guinea.The Deputy Leader, Job Pomat, is the local member for Manus, and a key ally of the Prime Minister.
Former Paladin Chief Executive, Craig Coleman, has suggested in court documents that Paladin made ex gratia payments to local factions. Coleman also suggested that Paladin was not adequately prepared to provide the services in the contract with the Department.
Paladin has rejected accusations of potential corruption, stating that it ‘reject[s] the notion in the media that any contract with a PNG entity is tainted by corruption’ and that it found ‘this notion offensive’.
Contracts and costings
The total amount paid to Paladin across all contracts stands at $423m. The main contract was worth $333.5m. The contracts provide $1600 per person per night on Manus. A retired logistics manager who contacted the Financial Review put the costings at $108 per person per night. Refugees on Manus Island still cook their own food and wash their own clothes. The 500 guards in the 3 locations on Manus are paid $450 per month.
A male Paladin employee has been arrested for sexually harassing a local female Paladin employee on Manus Island. The man was reported to have been sacked by a previous employer for mistreatment of people seeking asylum on Manus Island.