Former Defence Minister Brendan Nelson’s troubling hook-up with Boeing Defence.
The relationship between Nelson and Boeing goes way back. They probably went to school together! When Defence Minister, “Biggles” made the surprise announcement to spend $6 billion with Boeing on 24 Super Hornet fighter aircraft for the Australian Air Force. Reports are that this decision was made by Nelson outside the normal procurement processes. In fact, one report says the purchase order did not even come from the RAAF, it came from Nelson himself. If these reports are correct, then in “Biggles” we find a man comfortable with the capricious exercise of power.
Five years after quitting the defence portfolio, Nelson surfaced as the Director of the Australian War Memorial. This hallowed site was well on its way to being contaminated by international armaments makers loitering with intent around the solemn precincts. These money changers began appearing in the temple around 15 years ago. Tenix Defence was one of the first. Recall in the first article in this series that Peter Reith went from Defence Minister to Tenix in 2001. In 2005 it gave the Memorial over a quarter of a million dollars. With a cavalier attitude to the majesty of the English language, both Tenix and the AWM called this a “donation”. Over time, other arms dealers like BAE Systems, Northrup Grumman, Lockheed Martin, and Thales started turning up.
When Nelson came to the AWM in 2012 he brought with him a string of high-level friendships cultivated over many. These corporate connections are governed by like-mindedness, genuine friendships and, where the payload is, mutual self-interest and reciprocity. Notable amongst these relationships were the ones cultivated between “Biggles” and the arms dealers, who vied for association with the most hallowed historical site in Australia. The dealers get enormous reputational flow on, which money cannot buy, and the AWM gets extra cash to splash around on collecting more and more war toys.
Boeing Defence Australia, a corporate partner of the Australian War Memorial since 2011, provided $500,000 and a ScanEagle unmanned aerial vehicle towards the now widely discredited propaganda exhibition Afghanistan. The Australian Story. Boeing told me it “remains a proud supporter of the Australian War Memorial.”
While he was still AWM director, yes, while he was still AWM director, Nelson took a fee-paying job advising Thales, the arms manufacturer quarter owned by the French Government. Ethically minded people only need to take one step back from this to see this for what it is: a morally unconscionable act. In any other statutory authority this would be blocked by the conflict-of-interest provision in the Australian Public Sector Code of Conduct. But then, the Australian War Memorial is no ordinary statutory authority and Brendan Nelson was no ordinary public servant.
Nelson said he donated all the money to the AWM. That is not the point is it? The point is that Nelson moonlighted with an arms manufacturer whose ethos was the very opposite of the other place where Nelson worked. What is the difference between this and the chair of a lung cancer research institute being on an advisory board of an asbestos manufacturer?
Internal documents obtained by Guardian Australia through freedom of information show Nelson wrote to the Minister for Veterans Affairs in February 2015, seeking approval for a second job. Nelson explained that the Thales advisory board role would give him no responsibility for the company’s governance, performance, regulatory compliance, or compliance with contracts with the defence department. “Instead, the advisory board considers strategic matters such as programs, workforce development and overall future direction within Australia,” Nelson wrote. Again, the obvious question that no one on the AWM Council, nor the Minister for Veterans Affairs wanted to ask; what is a director of the Australian War Memorial doing giving strategic advice to an arms manufacturer? Nelson went on. “Indeed, my participation in this will complement much of what I do at the AWM where Thales is also a corporate partner.” What does that mean?
The documents obtained by Guardian Australia show Nelson obtained the required approvals of the then veterans affairs minister, Michael Ronaldson, the then chair of the War Memorial Council, Ken Doolan, the Department of Veterans’ Affairs secretary, Simon Lewis and the then public service commissioner, John Lloyd, in early 2015. Nelson covered all the legal bases. That does not mean what he did was right. And it does not mean that these men carried out any significant due diligence into Nelson’s request.
The Guardian documents however do reveal a sense that the Minister felt Nelson was skating on very thin ice. Ronaldson said he was comfortable that “there does not appear to be a conflict” but said: “However, where the two roles could potentially be in conflict, I ask that you take the necessary steps to avoid these circumstances”.
How was this engagement not a conflict of interest and a threat to national security? So significant is the embargo about paid employment outside the duties of his office without the approval of the Minister that if he had not done so he could have been terminated.
Nelson went onto the Thales advisory board in 2015, the same year that the Defence Department changed its mind about the purchase of new protected mobility vehicles for the Army. Defence originally decided in 2006 and again in 2008 to purchase Lockheed Martin’s Joint Light Tactical Vehicle. Then something happened. Defence cancelled with Lockheed Martin and entered a new $2.2 billion contacted with Thales in 2015 to acquire and support 1100 Hawkei vehicles and 1058 trailers.
I asked Thales whether its senior management prevailed on Brendan Nelson, while on the Thales Advisory Board, to lobby the Defence Department to change its procurement of a light tactical vehicle from Lockheed Martin JLTV to Thales’s Hawkei. Thales refused to answer my question.
When the Auditor-General put his eye over the Hawkei purchase deal he smelt a rat. He was concerned about Defence’s sole-source procurement strategy. The risk was that Thales was only capable of manufacturing a relatively small run of vehicles when Lockheed Martin was beginning a similar but much larger program, the Joint Light Tactical Vehicle. The Auditor-General was also concerned, as he always is, as to whether the Australian taxpayer was getting value for money on the Hawkei deal.
Then an extraordinary intervention occurred. The Attorney-General, Christian Porter, issued a certificate on 28 June 2018 that in his opinion the disclosure of certain information in the Thales audit would be contrary to the public interest. By that he meant disclosure would be contrary to the commercial interest of Thales. Not for the first time, the Commonwealth Government put commercial interests before the public interest.
After intense lobbying from Thales, the Attorney-General used his unprecedented powers to redact six paragraphs from the Auditor’s report that showed the Thales vehicle was twice as expensive as the Lockheed Martin was. Obviously, the Auditor-General’s conclusion was that the Defence-Thales contract did not provide for an effective use of taxpayer’s money, and, by consequence, a huge waste of money.
His redacted report also found the government had not been made aware of a Monash University study commissioned by Defence, which found the local benefits of the Hawkei were limited. The study found Thales would send most of its profits offshore in the long term, the job multiplier effect was relatively small, and that the government faced a $452m premium for building the vehicles in Australia.
The seriousness of this unwarranted intervention by the Attorney-General (the second time since 1987) is brought home when the Audit-General comments that he “has not been able to prepare a report that expresses a clear conclusion on the audit objective in accordance with the ANAO Auditing Standards. Accordingly, I am unable to express a conclusion on whether the Department of Defence’s acquisition of light protected vehicles under Defence project Land 121 Phase 4 was effective and achieved value for money.” So we will never know.
I asked Thales whether senior management had prevailed on Nelson lobby the Attorney-General to redact sections of the Auditor-Generals report on the procurement of the Hawkei. Once again Thales refused to answer me.
Thales, which Brendan Nelson once referred to as a “remarkable company” had big plans to introduce a semi-automatic rifle (banned in Australia) into the American market from its factory at Lithgow, NSW. At the US SHOT Show in Las Vegas in 2016 it said that it planned to sell a civilian version of the Australian Army’s semi-automatic rifle based on the F90 version of the Steyr.
The USA has the highest gun death and ownership rates in the developed world. American research shows that shootings in which at least one perpetrator uses a semi-automatic rifle left an average of 4.25 people dead and 5.48 people wounded. The last thing it wants is the Thales’s F90, which has a cyclic rate of fire of 650 rounds per minute.
It took Thales three years to understand these statistics. In 2019 it apparently had a moral epiphany and said it was abandoning the venture on “ethical grounds.” This does not have any ring of truth to it. “Arms manufacturers” and “ethics” are not viable partnerships. It is more likely that Thales underestimate the market strength of Smith and Wesson, Springfield, Ruger, Colt and Beretta. I asked Thales whether the decision to reverse its 2016 commitment to enter the American market was based less on “ethics’ and more on a glut on the American market. I got no reply.
Nelson retired from the Australian War memorial on 23 December 2019. One month later he was appointed president of Boeing Australia, New Zealand and South Pacific. In announcing the appointment Sir Michael Arthur, president of Boeing International said:
Boeing is proud to have Brendan join our team after his many years of outstanding public and private sector service. His proven ability to understand and manage complex situations – first as a medical doctor [?], later as a government leader and diplomat – will be put to good use as he leads Boeing Australia, the company’s largest presence outside the US and home to a large engineering and technical staff.
Yes, “Biggles” is going to be “put to good use”. Can we say the same for the Australian national interest?
This ends the three-part tracking of the post-politics careers of Christopher Pyne, Julie Bishop, and Brendan Nelson. The conclusion? These and other well-connected power figures will continue to do what they please. There is no binding law to stop them, only hollow conventions and shallow standards. Nothing will happen until the Australian people realise the nature of the scam occurring before their eyes.