The failure by senior federal public servants to check the background of companies contracted to run Australia’s asylum seeker offshore program opened the door to firms suspected of arms and drug smuggling, bribery and corruption.

The Pacific Solution shambles has been revealed by former ASIO director-general and Defence chief Dennis Richardson, who found bureaucrats had not sought the help of intelligence agencies. The Department of Home Affairs and agencies had not shared vital information about contractors’ involvement in alleged serious crime.

Former ASIO director general and Defence chief Dennis Richardson.Credit: 60 Minutes

“Home affairs continued to vary or extend the contracts without undertaking due diligence appropriate to the situation, which would have given it pause for thought at each decision point,” Richardson found in his report.

The ramifications go far beyond our borders. The exposure of suspect payments and allegations of bribery in the offshore detention program imperils Australia’s position as a trusted influence among island nations in the face of China’s expansion into the Pacific.

Richardson’s appointment to lead the inquiry followed Home Truths, an investigative series by The Sydney Morning Herald, The Age and 60 Minutes, last July that found Australia’s Home Affairs Department had overseen the payment of millions of taxpayer dollars to Pacific island politicians through a chain of suspect contracts as it sought to maintain controversial offshore asylum seeker processing centres

Now Richardson’s investigation has disclosed the eye-watering profits furnished by Pacific Solution contracts. Internal corporate files show Paladin’s founding director and major shareholder, Craig Thrupp, made an estimated personal windfall of more than $150 million after the company won Home Affairs contracts in 2017-19 ultimately worth more $500 million to run offshore processing on PNG’s Manus Island. Paladin is facing an Australian Federal Police investigation into allegations that the firm paid bribes totalling $3 million in 2018 and 2019 to secure the backing of high-ranking PNG officials to run offshore processing on Manus Island.

A former Home Affairs’ contractor Canstruct, which managed a $1.8 billion rolling contract on Nauru between 2017 and late 2022, is facing a separate AFP probe. Canstruct pocketed more than $100 million a year from Home Affairs’ contracts.

Richardson’s conclusion that Home Affairs had abjectly failed to safeguard taxpayer funds from allegedly dubious conduct by contractors raises serious questions for the opposition and government alike. Richardson laid the blame with senior public servants. Michael Pezzullo was removed as secretary of the Department of Home Affairs in November for breaching the code of conduct on another matter.