An Aston Martin, fine art and a yacht: Police probe millions spent protecting detention company luxury

Sydney Morning Herald

6 hours ago

The latest allegations about the AFP's targeting of Canstruct – the Australian government's biggest South Pacific contractor – pose a fresh political challenge for the Albanese government after it campaigned hard on integrity and sought to position Australia as an honest broker in the face of China's use of financial inducements and suspected corruption to seed influence.
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This masthead's previous reporting prompted the 2024 Richardson Inquiry, which found that Canstruct – along with several other firms, including those with links to suspected arms and drug smuggling, Iranian sanctions busting or corruption – had secured massive offshore processing contracts in PNG and Nauru due to systemic failures of vetting and due diligence by Home Affairs.
The witness statements – along with accounts of two sources with knowledge of Canstruct's operations who cannot speak publicly – allege that the company obtained multimillion-dollar payments from Home Affairs to pay insurance premiums ostensibly related to its work as a government contractor.
But Canstruct is suspected by police of diverting up to $12 million in taxpayer funds to instead insure luxury items and properties allegedly belonging to the firm's owners, members of the rich-lister Murphy family.
A spokesman for the Murphy family said they 'haven't responded' to questions posed by this masthead on Monday about the allegations, while the AFP declined to comment on an ongoing investigation.
There is no suggestion by this masthead that any member of the Murphy family has broken any laws, or that each member of the family had knowledge of the transactions.
But police have told witnesses they are seeking advice from the Commonwealth Director of Public Prosecutions on whether Canstruct or any individuals could be charged for defrauding the Commonwealth.
In detailed sworn witness statements obtained by the AFP, Home Affairs assistant secretary Derek Elias, who oversaw Australia's offshore contracting regime, describes how the department agreed to allow Canstruct to seek reimbursement for insurance costs above $3.5 million as long as it was 'supported by substantiated evidence (including market soundings)'.
But Elias told police he could 'not recall sighting any market sounding documents' and that after he had raised concerns about Canstruct's repeated overcharging of Home Affairs, and sought to push the company to 'make savings' of taxpayer funds, he 'developed an impression that the insurances were an area that Canstruct would not negotiate on'.
Elias is on leave from Home Affairs, having accused the department in an ongoing legal stoush of causing him ill health because of what he alleges is his role in overseeing the government's corruption-prone, dysfunctional and wasteful management of offshore processing.
According to what Elias told federal agents, Canstruct was among the beneficiaries of Home Affairs' failings.
His witness statement alleges that 'from around March 2021 … my team had calculated that Canstruct was being paid too much and had been overpaid for services which had not been delivered or required over an extended period of time'.
Elias claims Canstruct's rolling contracts each generated huge windfalls that should never have been paid to the firm, and that he was 'gobsmacked' when he learned of Canstruct's alleged profiteering, including by being paid for services that were never delivered or not needed.
'By the time we finished negotiations in June 2021, we concluded that the Department of Home Affairs had been paying Canstruct excessively, possibly more than $16 million more per [contract] extension,' he said, adding the department was then not getting value for money as required by government procurement rules.
'It was an enabling environment for Canstruct to make as much money as they wanted and the department had little negotiating power. These $16 million effectively belonged to the people of Australia. I found this morally objectionable.'
Home Affairs has previously denied Elias' claims that it wasted millions of dollars on services that were never delivered or that should never have been performed. It declined to comment on Tuesday, saying the 'matters may be subject of an investigation'.
The statement reveals the AFP also grilled Elias about his knowledge of Canstruct's decision to sub-contract firms controlled by powerful Nauruan politicians to provide goods and services on Nauru.
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'Specifically, federal agent[s]... asked me if money was being paid to a government official in Nauru by Canstruct, what would the Department of Home Affairs' view be in relation to prominent people receiving money from Canstruct. That, in my opinion, would be alarming.'
This masthead has previously revealed how firms overseen by high-ranking Nauruan politicians, including then president of Nauru, now Foreign Affairs Minister Lionel Aingimea, were paid millions of dollars by Canstruct and Home Affairs to help service Australia's offshore detention regime.
At the same time some of these payments were made, the Australian government and Canstruct were seeking these same politicians' support to ensure Nauru kept hosting the offshore processing of asylum seekers.
Nauru recently agreed to keep accepting asylum seekers bound for Australia, although a new service provider, MTC, has replaced Canstruct.
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Elias also told federal agents that Home Affairs misused taxpayer funds to maintain ongoing Nauruan government support, including in circumstances in which asylum seekers' health and safety were compromised.
'I believed the department was paying several unnecessary fees and maintaining services no longer operationally required (such as the crane at port) and of significant dollar value to the government of Nauru,' his police statement alleges.
'Nauru was holding Australia to ransom and the department's role was to make sure that no one [seeking asylum] came off Nauru. I was increasingly concerned. The department was effectively paying Nauru whatever they wanted to ensure that refugees would not come off the island.'
'It was so obvious that the Australian government did not want anyone to come off Nauru and it was the department's job to ensure that.'
'Pressure was applied from the government to the department, who would apply pressure to Canstruct to deliver services in Nauru, some of which were not operationally required. This pressure manifested itself through what I perceived as over-payments, inability to verify services, incorrect and undocumented processes regarding staffing.'
'I perceived that there was a failure to obtain value for money and ongoing breaches of APS [Australian Public Service] ethical standards and code of conduct, Commonwealth Procurement Rules, and maintenance of appropriate government records and probity breaches.'
Among the examples provided to detectives by Elias is a February 2021 case involving an asylum seeker who 'had been beaten up severely by a group of Nauruan nationals' and required urgent medical care in Australia.
The man's 'life was in the balance', but while Home Affairs was 'trying to get a plane to land in Nauru to have the transferee transferred to Australia for urgent treatment … a Nauru government official apparently stated he would not turn the landing lights on for the plane at night unless he was paid $5000. I found this shocking.'
Another example cited by Elias involves allegations of Canstruct getting paid to train then-president Aingimea's guard dog.
'The Department of Home Affairs had to state repeatedly in internal minutes and Commonwealth records that to support contract extensions that we were getting value for money,' he said.
'I state that the department was not getting value for money at all. I was complicit in this deceptive process during my role at the department during 2020 and 2021.'