The former SAS soldier was not alone.
Over the past decade, Thrupp hasleft a trail of aggrieved business partners and disgruntled former employeesacross South-East Asia.
It’s a track record which reached federal Parliament this week,with explanations demanded in question time and heated debate in Senate EstimatesafterThe Australian Financial Reviewrevealed the little-known Paladin had been awarded contracts worth $423 million to provide refugee services on Manus Island.
The Federal opposition and cross-bench sought an explanation for both the closed tender process that had resulting in Paladin picking up the work and the sheer amount of money being spent – $1600 a day for each refugee, when comparable mining camps provide better services for little more than $100 a day.
But the Home Affairs Department dug in, insisting Paladin was a “global” company, operating since 2007, and there had never been any probity concerns raised with the Department.
A different story
Those working in the tight-knit security community across the region tell a very different story, and it’s one that usually has Thrupp at its centre.
One person who worked with him said there was never a “global business” and in around 2009 when “things were going pretty well”, Paladin was turning over around $US600,000 a year.
He said there were a dozen staff in Jakarta and a couple of people each in Dili and Port Moresby.
But by 2012, the Jakarta business had stalled and there was “not much happening elsewhere”.
Over the next three years, business started to pick up for Paladin in PNG and particularly on Manus Island. Former Toll Holdings executive Ian Stewart came on board as a director and shareholder and Paladin began working on projects for Decmil, Wilson Security and Broadspectrum – the company formerly known as Transfield, which at the time had the main contract with the government for the offshore processing centre on Manus Island.
“Craig’s greatest attribute is he looks good in a suit,” says one security consultant who asked not to be named.
“He talks well.”
But looking the part and speaking convincingly has not always been enough.
Thrupp has allegedly fallen out with at least five former business partners and senior staff.
Thrupp did not respond to questions fromAFR Weekend, while Paladin said on Thursday it had a “history of providing discrete services to our clients” in an apparent explanation for why many people had not heard of the company until two weeks ago.
Now it has its own hashtag on Twitter and the so-called “Paladin Affair” is threatening to expose a money trail running from Canberra to Port Moresby, with stops in Singapore and Hong Kong.
The lack of accountability has added to a troublesome week for the Morrison government, as the public’s faith in the new mega department of Home Affairs wavers and activists struggling to highlight the conditions on Manus Island are galvanised.
And it’s not just the Morrison government taking fire. PNG Prime Minister Peter O’Neill has been forced to deny suggestions his administration is connected with the awarding of the contract to Paladin and may even be benefiting from it.
Adding fuel to an already combustible cocktail are geopolitical concerns: Australia’s policy of processing refugees offshore in places like Manus Island has tipped the balance of power in the bilateral relationship firmly in the favour of Port Moresby at a time when Canberra is also trying to push back against China’s ambitions to exert greater influence in the Pacific.
The question of money has long hung over the Paladin contracts. At $20 million a month, or $1600 a night for each person housed on Manus, the sheer cost of the exercise has stunned many.
When pushed on this point, Home Affairs Minister Peter Dutton has argued it is expensive to provide services in such a remote location and there are few companies willing to do it.
Those in the industry dispute this.
One retired logistics manager who contactedAFR Weekendsaid PNG was full of companies able to provide high-quality services in remote locations, given its long history as an oil and gas jurisdiction.
He put the daily price at $108 per resident.
This would cover, he says, the cost of “expert catering contractors, maintenance, gardening, laundry, security, transport and recreation services” and still provide a healthy margin for the contractor.
Paladin is earning 16 times this figure and the refugees of Manus cook for themselves and wash their own clothes.
Even accounting for the reputation risk associated with the Manus contract, Paladin is receiving a hefty premium.
Those living under its care are dismissive of the services provided.
Behrouz Boochani,the Iranian-Kurdish author and film producer living on Manus, says: “When something happens inside the camp, an argument or something like that, they [Paladin] call the police.
“So it is the police protecting the refugees, not Paladin.”
He says the guards distribute food, check identification and occasionally accompany refugees to Port Moresby, but mostly sit around playing cards and laugh about how little they do.
For their time, the 500 guards are each paid around $450 a month, or $2 an hour.
“What is Paladin doing on Manus Island? They are doing nothing,” says Boochani, whose bookNo Friend But the Mountainswon the Victorian Prize for Literature.
In addition to providing security, some IT services, local transport and maintenance, Paladin has forged a relationship with local Manusian businessman Rodney Pokapin. Through Pokapin,Paladin signed a memorandum of understanding with another PNG firm, Peren Investments, last January.
Peren has been contracted to “identify and make available personnel” to Paladin for its services.
That deal has come under scrutiny as Peren’s directors include the three brothers of PNG Speaker Job Pomat, deputy leader of the ruling People’s National Congress and a key ally of Prime Minister Peter O’Neill.
“We reject the notion in the media that any contract with a PNG entity is tainted by corruption, we find this notion offensive,” Paladin said in a statement.
“We respect the Speaker [Mr Pomat] as a man of absolute integrity.”
It all started with a letter. On the 19th of February 2014, Luca Belgiorno-Nettis received a demand from 32 artists that his firm cease sponsorship of the Sydney Biennale, a festival he helped establish in 1973.
The issue was Transfield’s winning of a lucrative contract to oversee the security and welfare of refugees and asylum seekers on Manus Island in PNG and Nauru.
It was not a well-received piece of new business and, under mounting pressure from activists, the firm pulled its sponsorship from the globally acclaimed arts event.
Transfield continued to work in the provision of refugee-related services under its new name. Then, in April 2016, Broadspectrum was acquired by Spanish firm Ferrovial. The immediate message from its new owners was to exit the unpopular contract.
So when the contract ended at midnight on October 31, 2017,Broadspectrum was out.
Just one option – Paladin
The Spanish firm gave the federal government 18 months’ notice about its exit, but as the hard deadline approached the Department of Immigration and Border Protection (now Home Affairs) found itself with just one option – Paladin.
In his testimony during Senate Estimates on Monday, theSecretary of Home Affairs Michael Pezzullo asked the rhetorical question; what other options did I have?
How it came to pass that, despite 18 months of prior warning, the Department’s only choice was to appoint Paladin, a company with just $50,000 in paid-up capital and patchy experience, has beenreferred to the Auditor-General.
He is considering the request.
In the meantime, Home Affairs has attempted to fit its own narrative to the set of events which saw Paladin emerge with contracts worth $423 million over 22 months – more than the PNG government spends each year on policing and law enforcement.
Senior officials told the Senate estimates hearing that, early in 2017, the PNG government advised it would take over control of the contracts to manage the Manus Island centres.
However, the PNG Solicitor-General advised the government it was in caretaker mode and therefore could not continue the contract negotiations, which put Australia back in charge of the process.
The Department was now scrambling.
With just 12 weeks remaining until Broadspectrum would depart, the Department enacted a special measures provision which allowed fast-tracking of the tender process.
Paladin was the only company invited to tender.
“They understood the environment. They understood the cohort,”David Nockels, the assistant secretary of property and major contracts told Senate Estimates, noting Paladin was a subcontractor at the time of Broadspectrum.
But Paladin had to move quickly and was in urgent need of assistance to jump through the many bureaucratic hoops.
In late August, Thrupp and his business partner, Ian Stewart, approached Craig Coleman, a decorated army officer, who found the organisation ill-equipped to take on a contract of that size.
He also alleged, in court documents, the company had submitted incorrect and misleading information as part of the bid process.
Paladin also sought help from David Mayo, a former defence contractor, who set up a Canberra consulting company on July 6, 2017 the day after PNG pulled out of the Manus deal.
Paladin Singapore would later be given shares in Mayo’s company, Dreamtime Indigenous Solutions.
Then on September 21, 2017, just three months after Paladin was invited to tender, it signed a letter of intent with the Department to provide security and other services on Manus Island. Within 24 hours, $5.4 million was paid into its account to finance transition costs. Just nine days after beginning the contract, Paladin had been paid more than $39 million, and after six weeks the figure topped $72 million.
And that’s all before negotiations begun on a formal contract. In total, the company received $89 million before signing a contract that is now worth $333 million and runs from last February to this June.
Michael Pezzullo waited for his opening. It was late Monday afternoon and the Home Affairs secretary – known as the Pez within the Department – was ready for the grilling on Paladin. For a week, his team had been batting off questions about the contract and his staff had worked through the weekend to come up with their response.
Pezzullo was squarely in the frame. His minister, Peter Dutton, said in the lead-up to Estimates such contracts were the responsibility of the Department and he himself had no oversight.
While Pezzullo was ready, like Dutton, he was going to pass this one down the line – create a safe space between him and the details.
“What is reported in the media is in some parts not consistent with the reality of our records and what we understand to be our relationship with Paladin as a global group,” he started, before looking to the woman in a navy jacket on his left, assistant secretary Cheryl-anne Moy.
“Ms Moy can detail that history.”
‘Global’ would be a word Moy used repeatedly in reference to Paladin, only to be pulled up by cross-benchers for overstating the company’s level of work prior to the Manus Island contract and citing clients of its recently acquired PNG security firm Black Swan Group as if they had been with the group for years.
The Greens’ Nick McKim pointed out Black Swan’s clients were now part of the group “because you [Home Affairs] gave them so much money”.
With an important caveat – “according to the checks undertaken at the time” – Pezzullo said he was satisfied the Commonwealth’s interests were protected in the awarding of the contract.
Indeed, Home Affairs was “satisfied” with their performance, Pezzullo said after first checking to his left.
“Have they been satisfactory, Ms Moy?” To which she replied “They have been satisfactory.”
This arm’s length treatment of the contract went all the way to the Prime Minister’s office.
“PM&C was not consulted on the decision to engage Paladin,” officials told a separate estimates hearing on Monday. “That was very much a Home Affairs procurement process.”
Finance Minister Mathias Cormann added: “The first the Prime Minister heard about this contract was from his staff at [Monday’s] question time briefing.”
The government’s strategy on the Paladin contract appeared to be to call Labor out for its weak position on national security, insist the most senior people didn’t know about it while also playing down any concerns about the company’s size, track record or the hasty tender process.
A different story
However, as officials testified they were satisfied with Paladin’s performance,documents lodged with the Federal court last year told a different story.
According to Paladin’s cross-claim – made in an effort to fend off a claim from a former executive over breach of contract – the Department had actually sought to remove Thrupp from any involvement last September.
This followed Thrupp’s difficulties in entering PNG after his APEC business card was cancelled.
Paladin’s connections and standing within PNG are hard to determine. On the one hand, the company has been criticised by the PNG government for not abiding by its rules around recruitment of local labour, which resulted in Thrupp’s visa cancellation.
On the other hand, it has hired at least 500 local guards and is working with Peren. Its purchase of Black Swan was also seen as a further step to cement its local ties.
As more details on the Paladin Affair come to light, Australian taxpayers are questioning where their money is ending up.
They are also asking whether public servants can capably outsource the Commonwealth’s collective responsibilities.
At the same time, Australia is under pressure to demonstrate it can protect its borders competently and humanely, while proving to the region open democracy and good governance are the best path to prosperity. For that job, Australia hired Craig Thrupp.