Paper trail of Serco’s detention centre millions raises accountability questions

My following article, with journalist Paul Farrell, appears in today’s Crikey:

The recent suicide at Villawood Detention Centre in Sydney again confirmed that the situation in Australia’s immigration detention centres has become critical. But what has remained largely unquestioned is the role of Serco, the British multinational that holds the $367 million contract to run detention facilities across the country (alongside a few prisons and a just won contract for a hospital in Western Australia).

The company said it was “preparing a report” on the suicide for the Department of Immigration and Citizenship just after the event and most journalists left it at that. But Crikey has taken a closer look at the extent that Serco outsources to other companies.

The paper trail shows how the tender process allows private companies to further outsource, limiting the abilities of the Department of Immigration and Citizenship to scrutinise the fulfilment of their contracts.

The Department of Immigration and Citizenship says Serco employs two major subcontractors: MSS Security and Resolve FM.

Resolve FM is owned by the Norfolk Group and is a “facilities management” organisation that provides services across a wide range of areas.

The Norfolk Group was established in 2004, when it was bought from Tyco International by Hauraki Private Equity No.2, managed by the private equity firm JBWere (NZ). JBWere has given almost $1 million in donations to both the Liberal and Labor parties since 2000.

JBWere is also a subsidiary of Goldman Sachs, which according to ASIX is the majority shareholder of the Norfolk group.

MSS Security provides security services in several detention centres and their guards have been involved in several notable incidents, including an officer allegedly caught in bed with an asylum seeker. Furthermore, foreign workers are working for MSS to guard asylum seekers and illegal fisherman at the Darwin detention centre. The Northern Territory News reported in early October that “the asylum seekers and illegal fishermen under detention in Darwin are being guarded by foreign students and “guest” workers”:

“A company payslip obtained by the NT News reveals MSS security pays its foreign staff $16 an hour plus penalties. One employee worked 66 hours during a 14-day period and took home $1554.00 after tax.”

MSS Security is actually owned by an Indian multinational security company, Security Intelligence Services (SIS) India Ltd, which also owns Chubb Security Personnel. It is one of the biggest security providers in India.

The paper trail doesn’t stop there. In January 2008 the global private equity fund DE Shaw bought a 14% stake in SIS. While this name may mean very little, the company that bought a 20% stake in DE Shaw in 2007 is more infamous; they trade by the name Lehmann Brothers.

This is the very same Lehmann Brothers that filed for bankruptcy in the US.

Mainstream media coverage, if it happens, rarely questions the ideological underpinnings of privatising asylum seekers, merely the effectiveness or otherwise of the services for them. At least some in Britain are questioning the morality and effectiveness of outsourcing the management of vulnerable people to unaccountable multinationals.

When Crikey requested the names of the subcontractors that Serco employs, a DIAC spokesperson said that not all the names of subcontractors were available. Serco employs more subcontractors, but they’re not reported to DIAC due to the size or duration of the contracts.

When asked about the specific guidelines for when a contractor had to be reported to the immigration department, a spokesperson said:

“The detention services provider has met its obligations to the department regarding the reporting of subcontractors. It would be inappropriate for the department to discuss in further detail the names of each individual contractor engaged, as it is a matter for that company ”¦ if it is a major subcontract (that being, total value greater than $1 million), IHMS (Serco) must seek prior written approval from the department ”¦ if it is a minor subcontract, IHMS (Serco) does not need to seek prior written approval from the department. … IHMS (Serco) must provide a copy of the subcontract to the department within 10 business days from the department’s request.”

*Paul Farrell is a Sydney-based freelance journalist. Antony Loewenstein is an independent journalist and author.