The $80 million “watergate” water buy backs scandal was central to the creation of the NACC. Now the Federal water department has spent tens of thousands on a secretive “NACC” contract – the only agency to do so. Anthony Klan investigates…
INVESTIGATION
The Department of Climate Change and Water has handed disgraced consultancy KPMG an opaque $62,800 contract in connection to the National Anti-Corruption Commission.
Investigations by The Klaxon reveal a string of irregularities around the deal, including the department inexplicably quietly changing the description of the contract in recent days.
Like fellow “Big Four” consultancy giant PwC, KPMG has been mired in string of major controversies, including charging taxpayers for non-existent work and its CEO Andrew Yates giving false information to a Senate inquiry.
Two weeks ago, on July 8, the Department of Climate Change, Energy, the Environment and Water (DCCEEW) disclosed to Federal tender registry Austender it had awarded the contract, which was for “consultancy”.
It was titled “National Anti-Corruption Commission” and the reason for the contract stated as “need for independent research or assessment”.
Last Thursday The Klaxon contacted both the department and the National Anti-Corruption Commission (NACC) asking about the deal.
Searches the following day showed the contract name and description had been changed in the official database, which the department and its boss, Secretary David Fredericks, refused to explain.
The NACC told The Klaxon it knew nothing of the contract.
“The Commission is not involved with and has no knowledge of the tender,” it said in a statement.
“The Commission is not involved with and has no knowledge of the tender” — NACC
Investigations show that other than the NACC itself, no other Federal Government agency or department has disclosed a contract in connection to the NACC.
“No other department has disclosed a NACC contract”
The department is at the heart of the “watergate” scandal involving now shadow treasurer Angus Taylor, where $80 million for water buybacks was given to a private company founded by Taylor, at an allegedly vastly inflated price.
The company almost immediately booked a $52m profit on the deal, with much of the money sent to an affiliate company in the Cayman Islands.
The $80m payment was made by the Department of Agriculture and Water Resources, which is now the Department of Climate Change, Energy, the Environment and Water (DCCEEW).
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The original Austender disclosure. Source: Austender
The department’s $62,800 contract with KPMG, which runs from June 26 to September 30, originally carried the title and description “National Anti-Corruption Commission”.
Both are now stated as: “Internal Audit Services for department obligations arising from the National Anti-Corruption Commission”.
The altered Austender disclosure. Source: Austender
It is the first mention of “internal audit services”.
In response to questions put to Fredericks Thursday, the department echoed the newly stated “internal audit services” purpose.
“The contract is for internal audit services assessing compliance with the department’s obligations arising from the newly formed National Anti-Corruption Commission,” it said.
Responses provided by Fredericks’ department have only raised more questions — such as what “obligations” the department has regarding the NACC; why its “compliance” associated with “newly formed” NACC was required a year after the NACC was formed; what is meant by “internal audit”; and why an external party has been appointed to conduct it.
The NACC was formed a year ago, which was over a year after the ALP won office, in May 2022.
Searches show the Department of Climate Change already has its own paid, internal audit team of four people, headed by former national Auditor-General Ian McPhee.
“The department already has its own four-person internal audit team”
Further, the Climate Change and Water department’s annual report for the year to June 30 last year — a year before the $62,800 KPMG contact — specifically cites the department’s work “preparing the department” for the NACC.
Department “preparing” for “establishment and commencement” of NACC over a year ago. Source: DCCEEW 2022-23 Annual Report
“Since the department’s commencement in July 2022, the following activities are under way…preparing the department for the establishment and commencement of the National Anti-Corruption Commission in July 2023,” it states.
Department of Climate Change and Water:
- Only non-NACC agency to award “NACC” contract
- Already has a four-person “internal audit” team
- No “compliance requirements” imposed by NACC
- Contract one year after NACC was fully operational
- Conducted NACC compliance work over a year ago
When asked whether there were any requirements for departments or agencies to undertake “compliance” or other work — noting that at $60,000 a department it would represent a substantial taxpayer impost — NACC said there wasn’t.
“The way in which a Commonwealth entity monitors its compliance with legislative requirements is a matter for the relevant accountable authority,” the NACC said.
“The NACC Act does not impose compliance requirements”.
“The NACC Act does not impose compliance requirements” — NACC
The Klaxon asked the Department of Climate Change whether its stated “obligations” in connection to the NACC regarded a specific NACC investigation.
We received no response.
The Australia Institute’s Polly Hemming identifies the contract on July 12. Source: Twitter/X
Watergate
“Watergate” was the biggest political scandal in the lead up to the 2019 Federal election and a driving force behind the creation of the NACC.
“These so-called ‘Watergate’ allegations of misuse of public funds clearly demonstrate the need for the urgent adoption of a comprehensive national integrity commission with retrospective powers,” 12 independent candidates said in a joint media release at the time.
The ALP — then in opposition — called for a national anti-corruption body to be created to investigate.
Shadow treasurer Angus Taylor. Source: Wiki
In 2017, without a tender, the Coalition Federal Government paid $80 million for a water entitlement from a company called Eastern Australia Agriculture (EAA) which was a Liberal Party donor and of which Taylor had been a director.
Then Agriculture Minister and Deputy Prime Minister Barnaby Joyce — who was responsible for the Department of Agriculture and Water Resources — claimed he played no part in the negotiations with the company.
It was later revealed Joyce had approved the negotiations to be conducted via “closed tender”; had put specific conditions on the department’s work — and personally signed off on the $80m figure. Joyce remains in parliament as a Coalition MP.
Taylor was a director of EAA in 2008 and 2009 as well as a co-founder and director of its Cayman Islands affiliate, Eastern Australia Irrigation (EAI).
He has said he cut ties with “EAA and associated companies before I entered parliament in 2013” and that he received no benefit from the deal.
Fredericks and the Department of Climate Change and Water refused to comment when asked whether the KPMG contract was related to the Taylor watergate scandal.
Taylor and his spokesman, Harnsle Joo, both refused to comment Friday when asked whether Taylor had been contacted by the NACC in connection with the water-licenses issue.
“Taylor won’t say if he has been approached by the NACC”
The Watergate saga is seen as a central test for the NACC, which has seen widespread criticism over its refusal last month to investigate the Robodebt false debts scandal, one year after it was given official referrals over the affair.
The NACC was created by the Albanese ALP Government in a key election pledge to create a national anti-corruption body “with teeth”.
Yet months after winning power it announced the NACC would be conducted almost entirely in secret, except in undefined “exceptional circumstances”. As previously reported, Attorney-General Mark Dreyfus used fudged figures to justify doing so.
The Department of Climate Change and Environment’s vague explanation of the $62,800 KPMG contract — for “internal audit services” assessing “compliance with the department’s obligations rising from” the NACC — sheds almost no light on what the contact is for.
It could be to review the department’s cooperation — or its failure to cooperate — with the NACC over its investigations.
There is no way for the public to know, underscoring what governance experts see as deep problems with having an integrity commission that operates almost entirely in secret.
There is also no way for the public to know if the NACC has even launched an investigation into the watergate scandal, despite it being a driving force of the NACC’s creation.
The Department of Climate Change and Water and its Secretary Fredericks refused to respond when asked whether the KPMG contract was connected to the watergate matter, or whether it had been contacted by the NACC in connection to the matter.
In the 12 months to June last year, the most recent annual report, Fredericks received a taxpayer salary of $864,085.
Why KPMG?
That the department has contracted KPMG at all also raises serious questions.
The accounting and consulting giant has been mired in rolling controversies.
In December it was revealed a $100m Department of Defence contract with KPMG had been “rife with governance failures”, including a “six-figure payment” authorised to KPMG for work “the government knew had not been delivered”.
The Department of Climate Change and Water has its own internal audit committee, headed by former Attorney-General Ian McPhee. Source: DCCEEW
At the recent Senate inquiry into consultancies, Greens Senator Barbara Pocock asked KPMG Australia CEO Andrew Yates whether the company engaged in “power mapping” — the calculated profiling of individual public servants, in pursuit of new contracts.
Yates said it did not, however Pocock produced a KPMG power map (image top left) proving the opposite. Yates remains as CEO.
Department head David Fredericks. Source: DCCEEW
When asked why it had engaged KPMG despite the major governance failings and scandals, the Department of Climate Change and Water said it “ran a competitive process” under “the whole of government management advisory services panel” and “selected the supplier, representing best value for money”.
The $63,800 KPMG contract was awarded via “open tender”, the Austender note shows.
We asked the department to provide a copy of the tender offer.
It refused to do so.
Do you know more? anthonyklan@protonmail.com
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