Home » The Path From MP to Big Business is Well Trodden — And Defence and AUKUS are in Their Sights
Australia Business Global News News The United States United Kingdom

The Path From MP to Big Business is Well Trodden — And Defence and AUKUS are in Their Sights

In Australia there has long been disquiet about the revolving door between high political office and big business.

survey published two years ago by a major public health journal found two-thirds of people believe public officials — including politicians — should either be banned from lobbying altogether, or subject to a cooling-off period of as long as five years.

Last January, a report by the Human Rights Law Centre found former officials were more often granted meetings with government as well as a “sympathetic audience”. The shift of bureaucrats and politicians into corporate roles was creating an “elite class of the politically powerful and the incredibly rich”, while alienating the parliament from “the values and interests of voters”.

The research focused on tobacco, gambling and mining. But there’s another area of public policy where the path from politics to the corporate world has been so well-trodden, for so long, it’s worn to a shine: Australia’s sprawling defence portfolio, where billions of dollars in contracts are showered on arms peddlers every year.

War is big business. Look no further than Ukraine, an atrocity prompting cartwheels in the boardrooms of companies like Lockheed Martin, Raytheon, BAE Systems, Northrop Grumman and General Dynamics. Hundreds of thousands dead perhaps, but the world’s top arms dealers outperformed the NASDAQ by an average of almost 24 per cent in the year following the Kremlin’s invasion.

Of course, there are real-world justifications for piping public money into multinationals that manufacture weapons. They just don’t make the business any less fraught. Now, the $400 billion AUKUS program has military contractors searching for angles, and to their aid has come a generation of revolving-door salesmen and lobbyists.

There is Joel Fitzgibbon, a former defence minister turned lobbyist for a firm whose clients include French weapons maker Dassault, Spanish shipbuilder Navantia and arms company Raytheon. And Brendan Nelson, also a former defence minister, who is now a senior executive at aerospace company Boeing.

Joe Hockey, treasurer in the Abbott government, and Christopher Pyne, yet another former defence minister, also make fascinating case studies.

Switching sides

There’s no suggestion any of these former cabinet ministers have broken the law or engaged in misconduct. But there is something discomforting about the concept of cabinet ministers in particular who switch from protecting the Commonwealth to protecting a balance sheet.  

In 2018, Pyne’s adviser, Adam Howard, established GC Advisory Pty Ltd one month after quitting the minister’s office. In 2019, just weeks after Pyne farewelled the defence portfolio, Howard restructured the company and handed him half of it. I asked the pair whether Pyne paid anything for these shares, but both declined to answer, saying the transfer was “commercial in confidence”.

Pyne had actually begun talks about a defence-related corporate role while still in cabinet, and soon after leaving government had to be reminded of his obligations under the government’s code of conduct for lobbyists.

Pyne told me that at all times he has “complied with the requirements of the Ministerial Code of Conduct”. It’s likely he came to the attention of the Attorney-General’s Department only by dint of his high profile because otherwise management of the government’s code of conduct for lobbyists has been, to put it delicately, a farce.

The code stipulates cooling-off periods for senior officials, ministers and advisers — they must not lobby for a period of 12 to 18 months on behalf of companies with which they had dealings while in office.

But an audit in 2020 found the regulation of the code was often done by just two civil servants in the Attorney-General’s Department who had the benefit of no system whatsoever for checking whether former officials were properly outing themselves as lobbyists. Indeed, a year earlier, the department failed to identify exactly how many lobbyists it had itself registered, overstating that number to the parliament by 40 per cent.

The department had not been checking the end dates of government employees, had never conducted a “compliance risk assessment” and had “no method” to determine if lobbyists were abiding by the rules, or even declaring “whose interests they are representing”. The department says it has now fixed these issues, and several months ago the audit office signed off on the reforms it has implemented.

What has not changed, however, is that enforcement of the rules does not go much beyond the seeking of solemn assurances that such rules won’t be broken. The regulation of lobbyists, you will be unsurprised to read, was always designed to be “light touch”.

A new company

Hockey’s slipstream from ambassador to corporate adviser — as head of a US-Australian firm called Bondi Partners — was just as eye-watering.

Bondi Partners LLC was registered in DC on November 22, 2019. The paperwork records a “commencement date” of November 7, 2019.

The former US Ambassador’s final day in the public service was not until January 31, the following year. Joe Hockey’s DFAT-employed American adviser, Alex Tureman, filed the papers in DC while both men were still being paid by Australian taxpayers.

Later, when Bondi Partners’ Australian entity was finally registered with Hockey its sole shareholder, he was still two days shy of handing back the keys to the embassy; indeed, his 100 shares were listed against 3120 Cleveland Avenue, Washington, the official residence of the Australian Ambassador.

Tureman told me that “as a sole proprietor” he registered Bondi Partners LLC, along with two other companies in 2019, “with no immediate intent to utilise them”, and that the company which was eventually used, Bondi Partners International LLC, was not incorporated until March 26, 2020.

He said he abided at all times by the DFAT code of conduct and that he “did not conduct any business until I had concluded my employment with the Embassy”.

A spokeswoman for Hockey said he was “not involved in any US business registrations prior to March 2020”, and that he complies with “all relevant codes of conduct and legislation in Australia, the US and the UK”.

DFAT has strict policies requiring the declaration of both “real” and “apparent” potential conflicts of interest; officials are required to seek permission for secondary employment and to acknowledge any potential conflicts of interest in an online form. As a head of mission, Mr Hockey had an additional obligation to provide an “annual written declaration”.

Neither man answered questions about whether they filed declarations or sought permissions concerning their planned venture, and DFAT did not answer queries about the issue either.

It seems clear, though, that by at least the beginning of November 2019, the men had developed a plan to launch Bondi Partners, a US-Australia firm which now boasts of “navigating the critical intersection of policy, politics and the private sector”, and that timing raises an obvious quandary.

During meetings that Hockey and Tureman held at the end of 2019 and the beginning of 2020, how should taxpayers discern — beyond both mens’ assurances — whose interests were being served? Those of the Commonwealth, which was paying their salaries, or those of their yet-to-be-announced private venture?

Hockey’s spokeswoman assured me that “for the entirety of his diplomatic posting, [he] was 100 per cent dedicated to advancing Australia’s national interest”.

Aiming at defence

Since leaving the embassy, however, the former ambassador has not been shy about spruiking his “government … and political experience” to those willing to buy it. 

And he has aimed his firm, in particular, at the sluice of defence spending coming down the pipeline, principally by recruiting military and security officials from both Australia and the US, including Donald Trump’s pick for secretary of the Navy, Richard Spencer. He even tapped the Australian defence attaché with whom he worked at the DC embassy.

He and his wife, investment banker Melissa Babbage, have persuaded the Packer-backed Ellerston Capital to let them take a cut of any “national security” investments they can send its way. They’ve called this arrangement the 1941 Fund, and Ellerston’s Ashok Jacob has said it’s about getting aboard the “government-induced gale force tailwind” of national security spending.

One intriguing aspect of Joe Hockey’s corporate transformation is his reluctance to work as a lobbyist. Unlike Pyne, his name is absent from the federal government’s lobbyist register and he pitches himself, rather, as a provider of executive counsel. 

(Bondi Partners does appear on the lobbyist register, but only as the owner of a lobby shop named Pacific Partners Strategic Advocacy — which the register says has not ever had a client.)

By contrast, the same register suggests Pyne, a famously gregarious personality, is minting it.

Among the many clients of his other firm Pyne & Partners are Saber Astronautics, Droneshield Limited and Electro Optic Systems, which flogs remote-controlled guns to the Persian Gulf. Even the UAE Embassy is a customer, which takes quite some getting your head around; a foreign diplomatic service pouring petrodollars into the wallet of a former Australian defence minister.

Some will say that our former hard-working ministers deserve the chance to enjoy an income after politics. It’s just that, well, they already do. Both Hockey and Pyne enjoy taxpayer-funded pensions in excess of $200,000 — for life. 

Source : ABC