‘Black sites’ supply-chain company, Transfield: risks to shareholders if Govt prosecuted

Transfield CEO Graeme Hunt

Today it was announced by the Australian Department of Immigration & Border Protection that Transfield, the company that manages the Manus Island and Nauru asylum-seekers detention facilities – recently dubbed ‘black sites’ – is the preferred tenderer to bid for the contract to manage the sites for a further term of five years. It has also been recommended that welfare services provided by Save the Children should be handled directly by Transfield. During Transfield’s current contract period there have been 300 cases of children committing or threatening self-harm, 67 cases of child abuse, 33 cases of rape or sexual assault of asylum seekers, 200 cases of assault and 30 cases of abuse against Australian staff – and that’s just on Nauru. Transfield’s sub-contractor – Wilson Security – have additionally been accused of handcuffing children and assaulting asylum seekers and much, much more. The announcement re the tender came only hours before the release of the Senate report into abuse at the Nauru asylum-seeker detention centre. While most of the recommendations of this report are predictably conservative, the allegations of abuse detailed in the report’s main sections make grim reading, providing evidence that could still see one or more parties involved in this gulag supply-chain being prosecuted…

Below, in section A, we provide a risk assessement for Transfield; divestment opportunities in section B; and a summary of its main shareholders in section C. We also suggest in Appendix A how transparency regarding the centres can be solved; and provide in Appendix B a listing of those senior people in Transfield directly accountable for the welfare or otherwise of the asylum-seekers detained

A. Risks: laws/conventions breached

In pure business terms, these detention centres are the end ‘product’ in a supply-chain of what some may argue is illegal activity that begins with the Australian Navy & Customs highjacking boats on the open seas, kidnapping their passengers, then imprisoning them on the gulag. As such, Transfield bears a shared responsibility for what happens via their role in this supply chain and has already admitted that scores of cases of abuse have occurred.

Internal Transfield report on attempted hanging

Should the Australian Government be prosecuted for its role in this supply chain, then that will impact upon all other parties involved, including Transfield (and its shareholders), Wilson Security and IHMS.

It has also been reported that legal firm Maurice Blackburn are considering representing victims of alleged abuse at Manus Island in a class action to seek damages. If this litigation proceeds and succeeds, that would undoubtedly encourage scores, if not hundreds of other claims regarding abuse, illegal detention, etc

Let’s also examine some of the international protocols and conventions that this supply chain allegedly contravenes…

Firstly – and significantly – the Senate Committee that conducted the Inquiry into abuse at Nauru detention centre found that Australia – not Nauru – is legally responsible for the abuses in Nauru detention centre, because it has “effective control” of it. “Australia created the regional processing centre in Nauru. It is Australia’s responsibility and in its present form, it is insupportable.”

While asylum seekers and refugees are in Australian territory or under Australian jurisdiction, the Australian Government has obligations regarding several international treaties to ensure human rights are respected and protected. These treaties include the International Covenant on Civil and Political Rights (ICCPR), the International Covenant on Economic, Social and Cultural Rights (ICESCR), the Convention against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment (CAT) and the Convention on the Rights of the Child (CRC).

These rights include the right not to be arbitrarily detained. As a party to the Refugee Convention, Australia also agreed to ensure that asylum seekers who meet the definition of a refugee are not sent back to a country where their life or freedom would be threatened. This is known as the principle of non-refoulement. Australia also has obligations not to return people who face a real risk of violation of certain human rights under the ICCPR, the CAT and the CRC, and not to send people to third countries where they would face a real risk of violation of their human rights under these instruments. These obligations also apply to people who have not been found to be refugees.

Under the International Covenant on Civil and Political Rights (ICCPR) articles 6 & 7, Australia also has an obligation not to send someone to a place where their life may be in danger or where they may be subject to cruelty or inhumane treatment. If it is shown that asylum-seekers are subjected to cruelty or inhumane treatment at Nauru or Manus Island then the Australian Government would be in breach of the convention and that would have an impact on the supply chain (Transfield etc).

A lawyer with the Melbourne-based Human Rights Law Centre, Daniel Webb, commented that aggrieved asylum-seekers have every right to complain to the UN Human Rights Committee, which administers the ICCPR and that a case could be made at the UN against indefinite detention on Nauru and Manus Islands in Australian-run centres.

In March of this year the United Nations Special Rapportuer on Torture found that various aspects of Australia’s asylum seeker policies violated the Convention Against Torture and Other Cruel, Inhuman or Degrading Treatment or Punishment. The findings from the Special Rapporteur, Juan Mendez, were formally submitted to the UN Human Rights Council. Daniel Webb, said that the report’s findings made it clear that the Australian Government’s actions breach international law. “The Government always assures the Australian people that it complies with its international human rights obligations. But here we have the United Nations once again, in very clear terms , telling the Government that Australia’s asylum seeker policies are in breach of international law”.

The UN report found that Australia’s indefinite detention of asylum seekers on Manus Island, the harsh conditions, the frequent unrest and violence inside the centre and the failure to protect certain vulnerable individuals all amount to breaches of the Convention.

The report also found that the recent amendments to the Maritime Powers Act, which give the Government unprecedented powers to detain and return asylum seekers intercepted at sea, violates the Convention. “Under international law, Australia can’t lock people up incommunicado on a boat somewhere in the middle of the ocean. Nor can we return people to a place where they face the risk of being tortured. Yet these are precisely the powers the Government has sought to give itself through recent amendments to its maritime law,” said Mr Webb.

If follow-up action is taken against the Australian Government by the UN, such action will undoubtedly impact upon Transfield, Wilson Security, IHMS and any other contractors involved in the management of the detention centres at Nauru and Manus Island.

Rachel Ball, director of advocacy at the Human Rights Law Centre, said Transfield also had obligations under the United Nations’ Guiding Principles on Business and Human Rights to respect international human rights standards. She said: “The company cannot evade responsibility simply because the violations are sanctioned by the Australian Government”.

B. Divestment

Earlier this month one of Australia’s largest superannuation funds – Hesta – divested from Transfield because of the bad publicity Transfield has had over its management of the detention facilities. Hesta sold its 3% stake in the company and released a statement saying that there was a “significant quantum of evidence” of physical and sexual assaults in detention centres operated by Transfield and citing evidence of human rights violations inside those centres.

The $32 billion super fund said the risks associated with Transfield were too high, claiming the social governance issues associated with its detention centre contracts could hurt the company’s business and share price and lead to legal action. This divestment by Hesta inevitably affected Transfield’s shares.

Also, the Australian Financial Review reported that NGS Super, which provides superannuation for private school teachers, had agreed to sell its shares in Transfield on “moral grounds”.

C. Transfield’s main shareholders

Allan Gray is Transfield Service’s largest shareholder (with a current stake of around $100 million in the company) and is the second-largest shareholder of Fairfax Media (which owns the Financial Review, the Age and Sydney Morning Herald). Allan Gray is also contracted to manage the investments of a range of superannuation funds, including UniSuper.

Ian Martin is the Chair of Argo and is also the Chair of UniSuper’s Investment Committee. Argo also has investments in Toll Holdings, another recipient of millions of dollars of detention contracts.

Graham Hunt owns more than 4 million shares in Transfield.

Appendix A. Challenge to Transfield

Recommendation 5 of the Senate report into abuses at Nauru detention centre states that greater transparency is needed re the operations of the centre. Recommendation 4 states that asylum-seekers should have access to relevant international organisations to make complaints.

Transfield’s only response on transparency demands to date has been to invite senior representatives from shareholder companies to go to the Manus Island and Nauru detention centres to see for themselves what conditions are like. The offer has yet to be taken up.

In the meantime we issue this counter-invitation… If Transfield genuinely has nothing to hide (we don’t believe this for one moment) then it should invite the following persons to visit both Manus and Nauru detention centres, unaccompanied, unannounced and without any observation or interference from Wilson security guards:

1. The United Nations Rapporteur for Refugees
2. A senior figure from Amnesty International
3. Representatives from Doctors Without Borders (MSF)
4. Senior figures from the International Red Cross
5. Senior figures from Doctors For Refugees
6. Senior figures from all Australian refugee and asylum-seekers organisations
7. Any Australian lawyers who wish to visit the centres
8. Any Australian journalists who wish to visit the centres
9. Senior figures from the Australian Medical Association
10. All those who have made submissions to the International Criminal Court, alleging the Australian Government has committed crimes against humanity in pursuit of its asylum-seekers policy

Of course, Transfield will not agree to such requests because if it did the results from any such visits would be damning, with the likely recommendation that the detention centres be closed and the entire offshore processing program ended.

Appendix B: Transfield’s main players

Chris Burubu

General Counsel

Burubu is an experienced corporate lawyer and management executive who joined Transfield Holdings in 2013 as the Company’s General Counsel. He is responsible for leading Transfield’s legal team, which provides legal, strategic and corporate support services across the Transfield portfolio. Burubu has over a decade’s legal experience, specialising in private M&A, capital markets, financial services and general commercial law.

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Chris Cook

Manager, Investment and Development

Cook joined Transfield Holdings in 2010 as an Investment and Development Manager where he has focused on renewable investment management activities.  Cook has a Bachelor of Science with Honours from the University of Sydney and a Master of Business Administration from Macquarie Graduate School of Management.

 

Fintan Neville

Group General Manager

Neville is the Group General Manager of Transfield Holdings and is responsible for the management of the portfolio of investments and operations of the business. This includes the management of the Group’s treasury operations, property portfolio, company sectretarial and corporate compliance matters along with business and investment analysis. Neville has a first class honours degree in Accounting from University College Cork in Ireland. He also holds a Higher Diploma in Corporate Finance.

Transfield Board of Directors

	DIANE SMITH-GANDER Chairman Master of Business Administration Bachelor of Economics Smith-Ganger was appointed a Director on 22 October 2010 and Chairman on 25 October 2013.
	GRAEME HUNT Managing Director and Chief Executive Officer Master of Business Administration Bachelor of Metallurgical Engineering Graduate of London Business School’s Senior Executive Program Hunt was appointed a Director on 7 May 2012 and announced as the Managing Director and Chief Executive Officer of Transfield Services on 1 November 2012. He is a member of the Health, Safety, Environment and Community Committee.
	DEAN PRITCHARD Independent Director Bachelor of Engineering (Civil) Pritchard was appointed a Director on 28 October 2013. He is Chair of the Health, Safety, Environment and Community Committee and a member of the Risk, Audit and Compliance Committee.
	DOUGLAS SNEDDEN Independent Director Bachelor of Economics and Accounting Snedden was appointed a Director on 21 December 2009 and is Chair of the Human Resources Committee and a member of the Risk, Audit and Compliance Committee and the Health, Safety, Environment and Community Committee.
	KATHY HIRSCHFELD Independent Director  Bachelor of Engineering (Chemical) Hirschfeld was appointed a Director on 28 October 2013 and is a member of the Human Resources Committee and the Health, Safety, Environment and Community Committee.
	ROY MCKELVIE Independent Director Master of Business Administration Bachelor of Science (Production Engineering) McKelvie was appointed a Director on 31 August 2012 and is a member of the Risk, Audit and Compliance Committee and the Human Resources Committee. He was formerly Chief Executive Officer of Transfield Holdings.
	GEOFFREY KLEEMANN Independent Director  Kleemann was appointed a Director on 19 September 2014. He is a member of the Risk Audit and Compliance Committee and the Human Resources Committee.

	Vincent Nicoletti Chief Financial Officer Bachelor of Business Master of Science in Mineral Economics Fellow of CPA Australia  Nocoletti commenced his current role in September 2013.
	Kate Munnings Chief Executive Operations  Logistics, Consulting and Construction, Australia and New Zealand Bachelor of Laws Bachelor of Health Science Munnings is focused on improving health, safety, environmental and community engagement outcomes, enhancing workforce engagement and productivity, and developing and improving our operational intellectual property. She joined the Company in January 2006 and has held a number of leadership roles during that time.
	Stephen Phillips Chief Executive, Business Services Bachelor of Commerce Phillips joined Transfield Services as the Chief Information Officer in March 2011. During the year he took on additional responsibility for creating and leading the Business Services portfolio (which encompasses IT, Shared Services, HR/IR, Procurement, major projects, plant and equipment) and leading the operating model change across the organisation. The key focus areas for the year were continued outsourcing and offshoring activities, leading operating model change, continued roll-out of technology platform change and uplift in capability.
	Ian Maxted Chief Development Officer and Chief Executive Defence, Social and Property Sectors, Australia and New Zealand Bachelor of Engineering (Hons) Maxted is Chairman of Transfield Services project management subsidiary, APP Corporation. He was appointed in March 2013 as Chief Development Officer with the role of Chief Executive Defence, Social and Property added in April this year. A key part of his focus is future growth planned for this significant market segment.
	Sandra Dodds Chief Executive, Infrastructure, Australia and New Zealand Bachelor of Commerce FCA New Zealand Institute of Accountants Dodds was appointed to her current role in May 2014. Sandra leads the Infrastructure sector team, which includes the utilities, telecommunications and transport sub-sectors. She oversees the development of strategy and value added solutions for these teams and will also focus on building and strengthening client relationships, with the ultimate aim of winning work and growing our Infrastructure business.
	Joe Sofra Chief Executive, Resources and Industrial, Australia and New Zealand Doctor of Philosophy (PhD) in Engineering Bachelor of Metallurgical Engineering (Honours) Sofra has more than 20 years’ experience and was appointed to his current role in July 2014. He is responsible for leading the acceleration of growth in the company’s Resources and Industrial business and ongoing service delivery improvement. He is also leading the continued strategic shift towards providing high value services in these sectors.
	Philip Wratt President, Americas Wratt has more than 34 years’ experience and was appointed to his current role on 2 August 2012. He works closely with the teams in the United States, Canada and Chile, managing the strategic direction, relationships and providing leadership for the business.
	Stuart Nevison Chief Executive Operations, Maintenance and Well Servicing, Australia and New Zealand Bachelor of Engineering Master of Engineering (Hons) Master of Business Administration Nevison is responsible for the operational delivery of services to Transfield’s industrial, process and utilities, oil and gas, and mining clients.