Nauru’s Case Study in Corruption

nauru IIIn the Fawlty Towers episode featuring the German guests, Sybil warns Basil, “Don’t mention the war”. Similarly,  all parties in Australia’s federal election campaign whisper, “Don’t mention the corrupt and vicious governance of Nauru”. Focusing on how corruptly Nauruans govern Nauru  would detract from the Coalition’s success story of stopping the boats.

Labor’s Bill Shorten, meanwhile, is trying to persuade Australians that he would continue stopping the boats, likewise by quarantining the boat people on Nauru (and, if legally permitted, PNG’s Manus Island).

The Greens, along with starry-eyed clerics and do-gooders, hate the Pacific Solution. They want us to welcome boat people regardless of numbers, whether 50,000 or five million. Their arguments focus not on the Nauru regime but on the cruelty of Australia’s offshore internment camps. (The occupants nonetheless seem to enjoy high-standard education, medicine, internet access, diet, leisure activities etc., all at vast cost per head to Australian taxpayers).

Personally, I agree that the Pacific Solution  stops the boats and related drownings. I just don’t like the unintended side-effect of bankrolling Nauru’s local elite.

This essay covers Nauru, not Manus. But for the record, 466 detainees (including about 50 children) were on Nauru last May 31, and  847 were on Manus.  Combined costs for the two centres are about $1b this year.  Assuming the next Australian government continues to stop the boats, the detention costs will fall to a projected $400m over the next few years.

The history of Nauru’s roller-coaster to 2012 of rags, riches, rags and riches again is covered in my book That’s Debatable (May 2016)[1]. Further inspection of the past four years’ Nauruan politics doesn’t suggest the appearance of any broad sunlit uplands. For example, Nauru’s Minister for Justice, Border Control and Finance is Mr David Adeang. In April, 2013, in the garden of their home, Adeang’s wife Madelyn burnt to death.   A brief police statement said she was carrying a bucket of petrol that ignited. But there has never been a coronial inquiry. The island’s resident magistrate and coroner, nicely-named Australian expat Peter Law, considered the police statement “woefully inadequate” [2]  and began preparing a coronial inquiry.  Adeang in January, 2014, ordered Law’s arrest and deportation.  Law told the ABC that there were no crime scene photographs or witness statements. Local police investigating the death were “scared of Mr Adeang”, Law said, and unwilling to interview the powerful politician.

Nauru’s chief justice was another Australian expat, Geoffrey Eames QC. “I was proposing to fly to Nauru and the government simply told the airline company not to give me a ticket as my visa had been cancelled,” Mr Eames said, naming Adeang as the visa canceller. Eames then resigned his post, telling the media:  “The police obviously did not have the enthusiasm to conduct an inquiry. That’s a pretty alarming state of affairs.”

Adeang’s PR agent, Lyall Mercer, threw a hissy-fit when asked by the ABC for comment, and Adeang himself failed to respond.[3]

How Adeang and his cronies came to power is a story in itself. The island nation’s president to 2010 was Marcus Stephen. But the hidden force in Nauru politics has long been Gold Coast-based conglomerate Getax Australia, the main purchaser of Nauru’s remaining phosphate. Like any business, it prefers to buy cheap and sell dear. In 2008, when then world phosphate price was near $400 a tonne, Getax was paying as little as $43 a tonne. In its early years with Nauru phosphate, it was reportedly turning over $150-200m year trading the phosphate to India for fertiliser.

Marcus Stephen would not play ball with Getax. The company’s response was to dangle an $25 million loan to the semi-broke government at 15% interest, allegedly in the expectation of a default on some onerous clauses. Default would enable Getax to take over the phosphate industry, putting it commercially in what you might call a dream scenario. President Stephen rejected the loan offer.

The leaked emails show Getax in January, 2010, financed a lavish 14-day overseas junket for half the members of Parliament. Three of Stephen’s MPs from the junket then voted against him, creating a 9-9 Parliamentary tie and crises involving new elections. Quite a few MPs on pay of $150 a week somehow managed to buy upmarket boats and cars and roll out handsome sums to heads of voting families, according to  Stephen.  Adeang’s forces finally brought down the Stephen government in mid-2013.

New President Baron Waqa was fingered in the leaked emails  as getting $60,000 in Getax cash in 2010, with various other MPs accepting $30,000, allegedly as campaigning assistance for the impending elections.[4] Adeang, according to the alleged email trail, was getting $10,000 a month from Getax in 2009 and 2010. Adeang complained in a July, 2010, email that those who received the payments were “not focused enough on the work at hand”, being more interested in “shopping, horse-betting, the national airline refusing to transport all their cargo to Nauru, and other rubbish.”

The ABC claimed that the emails show Mr Adeang soliciting an additional $665,000 in Getax payments for himself and other Nauruan politicians.

The emails also reveal a plot to overthrow the Nauru government in 2010. Adeang, in the opposition in 2009, allegedly told former Getax director Ashok Gupta[5]: “We can create a new business relationship that can take this country to a higher level of development and, of course, taking also your business to even more success”. He continued that he had the support of a number of other MPs prepared to desert the government.

“We give you full authority to mobilise or lubricate the MPs to secure the vote and win the battle,” Ashok Gupta allegedly replied.

Adeang also allegedly suggested Getax could take over the island’s phosphate business entirely: “It will not be easy. But as a business in the long term it may be ideal.”

Getax director Gupta[6], asked Mr Adeang to prepare a “full business proposal” but was stymied by the Nauru government.

Former president Sprent Dabwido – recently locked up for a month — views any selling out of the island’s only national asset as “close to treason”. It  would cripple the island, merely so that Adeang could get $60,000 or so for campaigning, he charged.

Nauru’s police commissioner at the time was expat and  former Australian Federal Police officer Richard Britten. He began an investigation into the alleged bribes and was promptly dismissed by the Waqa government. Both the NZ and the Rudd Australian governments expressed concerns about the alleged bribery.

Waqa, Adeang and Getax have denied they did anything wrong, describing the bribe allegations variously as a slur, ridiculous and offensive.  The allegations involved Nauruan domestic affairs and were of no interest to the people of Australia, a Nauru spokesman said. The Justice Minister does not like the Australian press. He said last year, “The Australian media approaches us with great arrogance and an air of racial superiority, which is highly offensive to us. They do not show us the respect of a sovereign nation and, in return, we have little respect for them.”

Expats – mostly Australasian – have filled most of the difficult official positions on Nauru. If they annoy the politicians, they get sacked and deported. It’s happened to dozens of them.

The Waqa government has now Soviet-style laws involving  seven years goal for ‘stirring up political hatred’. Five opposition MPs are banned from attending the previously 19-member Parliament (because they had “criticized the government”). The Waqa government now enjoys quasi-dictatorial power.

All this was too much for New Zealand, which had been providing $NZ1.1 million a year for the Nauru justice sector, largely to support independent expat investigators and judiciary. Last September, with unanimous Parliamentary support, it stopped its funding because it didn’t want to be tainted by association with Nauru’s disregard for human and political rights. In contrast, Australia’s foreign minister Julie Bishop, mindful of our detention centre’s needs, issued only mild criticism.[7]

So far, the Waqa government has

  • Arrested   former Nauru president and current MP Sprent Dabwido at a rally[8] and held him and another opposition member in custody for a month. Dabwido was released after suffering a heart attack.
  • Cancelled the passport of opposition MP Roland Kun, who is already banned from Parliament. The passport ban means he can’t see his family in NZ, where he is the breadwinner. Nor can his family return from NZ to Nauru (Kun’s wife Katy Le Roy, was legal counsel to the Parliament).
  • Raised the fees for election candidates by 2000%, deterring   low-income people from standing.
  • Imposed a prohibitive $8000 non-refundable Visa application fee for journalists, effectively keeping them off the island. The Australian’s Chris Kenny did get to the island last October, the first journalist to be accredited to visit since 18 months previously, and achieved some good scoops. [9] In February this year the Nauruan government claimed an ABC  journalist had  misdescribed himself as eligible for a tourist visa. It then booted tourist-visa passengers off a Nauru Airlines flight from Brisbane but refunded their fares. The ABC denied it had ever sent a journalist in tourist-mufti to Nauru.
  • Raised business visa fees to $8000,   deterring Nauruans wanting expat legal help. Some visa applications from lawyers have been rejected outright.
  • Appointed three new judges whom Waqa claims will vigilantly investigate past corruption.
  • Told its internet provider, Digicel, a year ago  to shut off access to Facebook and prevented Digicel’s general manager returning to  the country. The US protested but Australia didn’t. The Nauru government claimed to be combating Facebook pornography but the ban also stifles political comments.

The New Zealand Law Society’s rule of law committee president Austin Forbes QC described the Nauru situation as totally unsatisfactory:  “MPs being held in prison, not allowed to leave the country, chief justice sacked, not allowed to have a lawyer come into the country to defend anyone charged with an offence — you have to do something.”

Just how much detention-centre cash Nauru politicians are now acquiring for themselves and their country is hard to say. Joanna Olsson, the Nauru Information Office director, emailed Quadrant yesterday (16/6/16) that she doesn’t yet have e-copies of the Nauru budget papers “and will take a while to get (them) from parliament. Will let you know when we have them.” Australia’s Foreign Affairs Department has disclosed that total Nauruan revenue this fiscal year is about $115m, including detention centre windfalls.

Nauru has supposedly set up, or plans to set up, a trust fund to “bank” profits from the centre to spend in future lean  years. I’ll believe that when I see it. (Nauru once had a trust fund of phosphate profits that, strangely, simply disappeared).[10]

Our billion-a-year on detention centres is nearly all “boomerang money”, going back to Australian suppliers – e.g. Transfield, contractors and staff, and well-remunerated public servants.    (All costs per capita of detainees  are rising because we’re trying to give them comparable medical and education as in Australia).[11]

Last year our big-ticket  items on Nauru were garrison and welfare, $320m; charters, $25m; escorts $9m; healthcare $25m; family and child support $26m; and visas $15m. Plus $35m for departmental staff and supplies. Australia also pays for  side deals involving Nauruan administration, police and infrastructure. Nauru charges Australia extortionate visa fees  of  $1000 a month per detainee.  That would be $6m collected this year and a higher amount in previous years. The business visas at $8000 a pop are another nice earner.[12]

Nauruans have about 600 jobs thanks to the centre.  That’s more than one job per detainee. Until last October, Nauruans paid no income tax, but now top earners pay (or are supposed to pay) a flat 10% rate. On the other hand, the Australian cash bonanza is causing inflation and  eroding welfare and fixed incomes.

Nauru’s debt  from the squander-era has become a surprisingly low figure, largely because a lot of debt from the failed Bank of Nauru has been written off. An official study recently put debt at under $30 million, and it could be fully paid off in a year or two. However, there is also more than $50m in Yen debt that is subject to litigation. So worst case is debt in the range $50-100 million.

Nauru does not have political parties. Instead, the population of 11,000 is governed by “elders” of the dozen clans represented by the 12 points of the star on the Nauru flag.  Traditional culture involves unlimited respect and obedience to these elders. Not one has ever been held to account for the waste and corruption of the island’s previous multi-billion-dollar windfall.[13] The elders’ concern for clan welfare is suggested by the fact that a decade ago, a quarter of kids were stunted from malnutrition and half the kids under five were anaemic. Next to nothing had been spent on local health, education, infrastructure, and development. Social conditions continue to be appalling, with low education levels and  health, heavy smoking, obesity (80% of Nauruans – possibly a world top proportion), diabetes (40% of adults) and booze-fuelled wife-bashing. At election time, poor families are suddenly given wads of cash, so I suppose that’s trickle-down welfare.

It’s significant that Australia’s aid program even now is targeted to what DFAT calls “poverty reduction” and training of Nauruans for proper jobs  still being done by expats.

The Nauruans are cavalier about their high birth rates (3.70 children per mother, one of the highest in Oceania[14], despite living on a micro-island where even drinking water has to be shipped in. Their best asset is their ridiculous status as an independent republic, ninth smallest by population (11,000, one-tenth the number of my Mooney Valley shire here in suburban Melbourne) and sixth-smallest  by area (a Rottnest-sized 21 squ km). This enables them to trade their vote in the corrupt United Nations and international agencies such as AOSIS — 43 small island states acquiring First World guilt funds by pretending they are drowning from climate change.[15]

Our official aid to Nauru runs at about $25m a year, equal to nearly a quarter of the Nauru government budget. That aid for infrastructure and services is supposed to be quarantined from Australian spending on detainees.

The aid comes with a warning that programs will stop if it’s mismanaged, with DFAT insisting that “the Governments of Nauru and Australia will maintain a zero-tolerance approach to fraudulent and corrupt actions against Australia’s development program with Nauru.”

Good luck with that!

[1] “The Naughty Nation of Nauru”, pp229-238

[2]  Law said of the petrol-bucket theory, “It was about three or four paragraphs of a description about what they [police] say had happened, and what they say had happened was dependant on what they had been told by people they’d spoken to.

ABC reporter: Which was the Justice Minister?

Law: That was the Minister for Justice, yes.”

[3] The ABC, including ABC Fact Check, deserves full marks for its sustained and aggressive coverage of Nauruan internal affairs.

[4] “Documents obtained under freedom-of-information laws by Fairfax Media reveal that in 2013, AFP investigators running an Operation codenamed Zurzach uncovered strong evidence that senior Nauruan politicians had been bribed by a Gold Coast mining company, Getax.” SMH 8/6/15

[5] Ashok Gupta is listed by ASIC as director of Getax Australia Pty Ltd , registered at Bundall Qld., from 1997 to 2001.

[6] Amit Gupta is listed by ASIC as current director and secretary of Getax Australia Pty Ltd. He became director in 1997 and secretary in 2001.

[7] Incredibly, a federal government agency issued a report a year ago on outcomes of financing the  training of lawyers and court administrators on Nauru. It did at least admit that one course never finished because of “in-country circumstances”.

[8] According to the Nauru government, it was an illegal ‘riot’.

[9] Kenny this week told the ABC “(Nauruans) are offended when people criticize their island. I understand that. They love their island…they are very proud of it, they  choose to live their lives there. We should be fair to the Nauruans and not run down their country” [at 23.30mins].

[10] A big waster of the original Nauru fortune was Air Nauru, that used to lose $40-80m a year. It was relaunched as Nauru Airlines, now with five Boeing 737-300s and nine destinations – Brisbane plus Fiji and seven tiny islands.  This is becoming comparable with the old Air Nauru, which at its peak had seven planes and 19 destinations.

[11] Note the brouhaha by demonstrators and staff at Brisbane Children’s Hospital last February when a detainee’s toddler with burns was taken there.

[12] There is some poetic justice in Nauru screwing Australia. We administered Nauru from 1920 as part of a “sacred trust” handed down by the League of Nations. The “sacred trust” in practice involved creating a British Phosphate Commission (BPC) to sell phosphate to Australia, Britain and New Zealand at a third of the world price, with royalties to Nauruans at a halfpenny a ton.

[13] For example, a police chief bought himself a yellow Lamborghini to traverse the island’s 24 kilometres of paved road, but he was too fat to get into the car.

[14] The Nauru Bureau of Statistics estimates the population will increase to 20,000 in 2038

[15] Her Excellency UN Ambassador Marlene Moses of Nauru was previous AOSIS chair to 2014, current chair is   the  disreputable state of Maldives.

3 thoughts on “Nauru’s Case Study in Corruption

  • en passant says:

    It is many years since I had dealings with Nauru through Air Nauru, and it was a difficult relationship. What you are exposing is nothing new, but let me add: in the 1980’s the Oz government (as well as the UK) paid $m’s in compensation for the environmental damage that had resulted from the ‘guano’ phosphate mining. I believe that part of this money was used to buy Nauru House in Collins St in Melbourne, the rest was appropriated by deserving souls or squandered. So, on a regular basis since then the Nauran government has thrown insults at Oz and demanded endless compensation for what is apparently (from your expose) the result of political malfeasance and a purely commercial transaction.

  • Tony Thomas says:

    From my book That’s Debatable:
    “In 1993 Australia settled for the formidable sum of $57 million upfront and $50 million in instalments. [In 2015 dollars, about $190m]. In fact, rehabilitation of the porous coral uplands is virtually impossible, so heaven knows where that money went. AusAid and the politicians did design a five-year rehab program in 2007 to be run by the Nauru Rehabilitation Program. AusAid now says, without a blush, ‘The corporation’s focus has been on mining operations’, and concedes that mining revenue is more valuable to the islanders than land rehabilitation.”

  • en passant says:

    How time flies! I thought it was about 1989-90, but you have the details I had forgotten

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