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‘Sensitive’ police investigation into Nauru contractor
By Nick McKenzie and Michael Bachelard
An Australian Federal Police panel that authorises its most politically sensitive investigations approved last year a secret probe into Queensland-based company Canstruct over allegations of corporate wrongdoing, bribery or the misuse of Commonwealth funds on the $1.82 billion Nauru offshore processing contract.
Canstruct managed the taxpayer-funded offshore processing regime on the Pacific island between 2017 and late 2022. Labor has attacked the company in parliament for alleged price gouging and its donations to the Liberal National Party.
The AFP’s Sensitive Investigation Oversight Board approved Operation Bernie, an ongoing investigation into allegations surrounding Canstruct’s subcontracting of Nauruan companies.
Confidential sources, who cannot be identified because they are not authorised to speak to the media, confirmed to this masthead last week that the investigation had been approved about March 2022.
Canstruct has repeatedly denied any wrongdoing, and insisted its management of the contracts was approved by Home Affairs.
“Canstruct has not only acted properly in dealings with subcontractors and suppliers in Nauru, but we have always been transparent with our client (the Australian government) and have records to back up all transactions,” it said in a statement. “Any accusation to the contrary ... is false.”
The Sensitive Investigations Oversight Board oversees federal police probes that may affect Australia’s reputation, the operation of an Australian or foreign government or that may influence “political or public policy through increased, prolonged or ongoing public or political discourse”.
The AFP says the board’s oversight of “particularly sensitive” investigations is to ensure the federal police’s senior executive has “direct awareness” of key inquiries. The AFP declined to comment on whether it was investigating Canstruct.
This masthead is not suggesting that Canstruct or any of its staff has engaged in criminal conduct, only that the federal police’s oversight board approved the launching of Operation Bernie after assessing information about the suspected misuse of Australian taxpayer funds connected to offshore processing on Nauru.
The news comes after Labor this week announced it had commissioned an inquiry by former spy chief and Defence Department secretary Dennis Richardson to examine if maladministration or alleged corruption has infected Australia’s controversial and long-running offshore processing regime.
Also this week, Opposition Leader Peter Dutton said he had no recollection of a meeting in which the AFP said it verbally briefed him about Nauru contractor Mozammil Bhojani, who was about to be arrested for bribery offences on Nauru. Dutton said that if any notes had been taken at the meeting, he was happy to make them public.
Last week, The Age, The Sydney Morning Herald and 60 Minutes revealed how Australia’s Home Affairs Department oversaw the payment of millions of taxpayer dollars to powerful Pacific Island politicians through a chain of suspect contracts as it sought to maintain controversial offshore asylum seeker processing centres.
Financial data, internal emails and whistleblower testimony implicate all three of Home Affairs’ lead contractors – Broadspectrum, Canstruct and Paladin – in suspected systemic misuse of taxpayer dollars in Nauru and Papua New Guinea.
The AFP probe was launched after financial analysis revealed the suspected misuse of millions of dollars involving Nauru subcontracts. The money was paid for offshore processing services, including subcontracts involving trucking, security and other services between Canstruct and certain Nauruan officials with the approval of Home Affairs.
Banking records seen by this masthead show that in 2020, certain Nauruan subcontractors hired by Canstruct were moving money in a manner that suggested Australian taxpayer funds earmarked for offshore processing were being misused. Some of these funds ended up in the bank account of a senior Nauruan politician who for years has wielded significant influence over offshore processing on Nauru.
Sources who are also not authorised to speak publicly have confirmed that the AFP is separately investigating Paladin’s alleged bribery of PNG politicians in order to secure work permits and visas as it managed offshore processing for Home Affairs on Manus Island.
There is no connection between the AFP’s Operation Bernie and Canstruct’s political donations. But the ALP has repeatedly drawn a nexus in federal parliament between the donations and the Home Affairs contract that Canstruct secured in a sole-source tender process.
Canstruct has been linked via company executives or closely tied corporate entities in parliament to 11 political contributions to the Liberal National Party in Queensland totalling $47,500.
The donations were made between October 2017 and July 2020, and company executives attended Liberal National Party fundraisers with Peter Dutton once in 2018 and twice in 2019 when he was home affairs minister. Dutton was the minister responsible for offshore processing between late 2014 and March 2021.
A spokesperson for Dutton said he had not solicited any donations from Canstruct or its executives. Canstruct has previously dismissed any link between donations and its contracts.
There is no suggestion the donations linked to Canstruct were made to influence contractual dealings with the federal government.
In 2021, senior Labor politician Mark Dreyfus – who has been attorney-general since the federal election last year – told parliament when he was in opposition that the “amount of private profit that ... [these] Liberal and National parties donors ... made from public funds is scarcely believable”.
“Canstruct International made almost $52 million in profit from the Nauru contract in 2017-18,” Dreyfus said at the time. “In 2018-19, it made a $91.5 million profit. In 2019-20, its profit was $130 million. It looks like yet another example of the Liberal and National parties using public money like it is Liberal Party money and helping out their mates.”
The private company took home profits of $100 million-plus in each of the following two years. Labor did not extend Canstruct’s Nauru contract.
In a previous statement, the Department of Home Affairs said it “considers value for money has been achieved under the ... Canstruct contracts, noting price is not the only factor when assessing value for money”.
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