A high-ranking Home Affairs Department official has blown the whistle on what he says was corruption infecting the federal government’s offshore detention regime, alleging he was pressured to cover up suspected rorting and graft so Australia could keep using Nauru as a border security outpost.
Home Affairs acting assistant secretary Dr Derek Elias has alleged, in an interview with this masthead and 60 Minutes, that Australian taxpayers paid millions of dollars for nonexistent or unnecessary offshore asylum seeker services as part of a system that “enabled” corruption by Nauruan politicians and Australian companies.
Elias alleges Home Affairs – through negligence, mismanagement and renewal of corruption-prone contracts to provide offshore immigration services on the tiny pacific island – had likely facilitated the bribery of Nauruan officials and encouraged systemic rorting by the department’s former major contractor Canstruct.
“We created an enabling environment for corruption,” Elias said. “We were renewing contracts which were no longer fit for purpose. We were overpaying for services that were no longer required or delivered.”
Elias oversaw offshore procurement for Home Affairs between 2019 and 2021 and is still technically employed by the federal government, albeit on extended leave after claiming his departmental role severely impacted his health. He risks dismissal or other serious sanctions by speaking publicly.
Elias alleges Home Affairs – through negligence, mismanagement and renewal of corruption-prone contracts to provide offshore immigration services on the tiny pacific island – had likely facilitated the bribery of Nauruan officials and encouraged systemic rorting by the department’s former major contractor Canstruct.
He said department officials had no way of holding Nauruans to account.
“Money was handed over to them,” he said. “How that money was spent, where it ended up, we had no visibility of, certainly my team didn’t. We just pushed the money into the contracts.
“That was the environment that we were enabling by pouring money into a trough, basically, of broken contracts and services … I had a moral problem with that, and I still do.”
In a contract renewal he oversaw in mid-2021, Elias claims he identified up to $16 million in taxpayer dollars paid to Canstruct for nonexistent or unnecessary services. He suspected the firm’s overcharging ran into the tens of millions of dollars.
The public servant said he recently gave crucial evidence to an ongoing federal police corruption probe into Canstruct.
The inquiry, codenamed Operation Bernie-Beveridge, is examining how Canstruct had charged Home Affairs millions of dollars to pay for insurance premiums now suspected to have been used to insure fast cars, mansions, expensive art and a yacht.
Elias alleged Canstruct had pressured Home Affairs to pay the multimillion-dollar insurance premiums during contract negotiations and concealed the firm’s decision to use taxpayer funds to insure personal items.
“I do remember at the last negotiation that Canstruct made it very clear … to me personally in the corridor ... they were happy to negotiate on a variety of things, but not the insurances.”
“I found it very confronting,” he said of the suspected abuse of funds, while also claiming he was encouraged to cover up suspected wrongdoing.
“There was a very strong culture within that Home Affairs regime at the time where questioning the decisions to keep things going in Nauru would not be conducive to your employment.
“You’re expected to stay quiet about your concerns. Absolutely.”
While Elias’ visibility over suspected Home Affairs contract dealings ceased in 2021, his decision to go public comes with the Albanese government facing growing scrutiny around a separate immigration deal with Nauru.
Arthur Boyd’s The Old Mine is another of the allegedly insured artworks.
The tiny country recently agreed to take hundreds of former immigration detainees deemed too dangerous to stay in Australia. Nauru is granting visas to the so-called NZYQ cohort in return for up to $2.5 billion in Australian taxpayer funds over 30 years.
On Saturday, another whistleblower, former Australian soldier Oisin Donohoe, revealed how the Finks bikie gang had infiltrated this deal via a Nauruan security company in an attempt to make millions of dollars from this pool of funds.
“It was pretty confronting to know that an outlaw motorcycle group was running a company that had got a government contract [on Nauru],” said Donohoe, who previously served almost five years as a rifleman in the Australian Army.
He described it as “mind-boggling” that bikies could be part a “contract to oversee quite a significant national security item”.
Editor's pick
Exclusive
A 2024 inquiry by former spy chief Dennis Richardson raised similar concerns to those of Elias about Home Affairs’ failure to safeguard government funds on Nauru in respect to the offshore processing regime.
The Albanese government regards its offshore processing arrangement on Nauru as entirely separate from the NZYQ deal, despite both involving huge sums of public money spent on the notoriously corrupt island.
The Richardson inquiry led to departmental reforms meant to improve due diligence surrounding offshore immigration contracts.
In a statement, Home Affairs insisted that improved controls had been embedded in its ongoing offshore processing regime, which comprises about 100 asylum seekers on Nauru.
But documents provided to this masthead suggest unlawful activity, including the artificial inflation of subcontracts, continues to occur under the watch of the company hired by Home Affairs to replace Canstruct to run offshore processing on Nauru, MTC.
MTC referred queries from this masthead to the department.
Elias said he believed the rorting of Australian funds continued apace on Nauru.
“There’s no doubt in my mind that that happened and it continues to happen,” he said.
Elias said he had wrestled for years with the idea of becoming a public whistleblower.
“It’s been on my mind for a very long time but ultimately, I think it’s almost a duty,” he said. “I think it’s very important for the public to know how their money has been misspent.
An Aston Martin Superleggera, similar to that alleged to have been insured.
“We were propping up a system that was unaccountable. We were paying for things that didn’t happen.”
Elias also hit back at what he described as attempts by Home Affairs to cast a cloud over his honesty and motivations, saying he stood to gain nothing by airing his claims and had been unjustly attacked by his employer for accusing it of wrongdoing.
“I’m really, really sick of it,” he said. “I don’t think I’ve done anything wrong. Why would I have to apologise or feel guilty about pointing out that we have spent money that we shouldn’t have, and it’s gone to people who have put it in their own pockets?”
Canstruct has previously faced allegations it paid subcontractors owned by or connected to suspected corrupt Nauruan politicians, who then pocketed excessive profits.
One of those accused of improperly benefiting from these kickbacks is President David Adeang, who signed the recent NZYQ immigration deportation deal with the Albanese government.
In his interview, Elias claimed it was an open secret in Home Affairs that suspected corrupt Nauruan officials would seek to profit from Australian taxpayer-funded offshore immigration deals.
“Canstruct had a very cosy relationship, I would say, with the government of Nauru providing additional services and favours, sweeteners, if you will, that they paid to the government of Nauru, which I found quite shocking,” he said.
Adeang has a sordid history of suspected corruption. Australian security agencies previously warned the federal government he might have pocketed alleged kickbacks paid by firms subcontracted to run Australia’s offshore processing regime on Nauru in 2020.
Adeang has also been suspected of using Australian banks to money launder funds meant to be used to run offshore processing, according to intelligence briefings shared with federal government agencies and senior ministers.
Home Affairs Minister Tony Burke declined an interview request, but the Home Affairs Department said in a statement that its offshore processing regime was carefully managed and included “robust” due diligence.
“Suppliers must meet ethical, performance and diligence standards expected of them as suppliers to the Commonwealth, and they must have the capability and capacity to deliver and perform in accordance with the agreed contract terms and conditions,” the statement said.
Canstruct did not respond to a request for comment but has previously declined to comment on the allegations being probed by the AFP.
n