Liberal party donor’s revenue from uncontested contracts for offshore processing rises to $1.5bn

Canstruct International, the Brisbane company and Liberal party donor running Australia’s offshore processing regime on Nauru, has won another uncontested contract extension – $180m over six months – bringing its total revenue from island contracts over the past five years to more than $1.5bn.

There are 108 people held on Nauru under Australia’s offshore processing regime. It costs Australian taxpayers more than $8,800 every day for each person held on the island, or $3.2m a person each year.

While no new asylum seeker arrivals have been sent to Nauru since 2014, the regime there will cost Australia more than $400m this year.

​​The original contract for “provision of garrison and welfare services on Nauru” awarded to Canstruct was worth just $8m in October 2017 but this was amended almost immediately – increased by 4,500% to $385m just a month after being signed.

Since then, government figures show, seven further amendments have escalated the cost to taxpayers to $1,598,230,689, a total increase of more than 19,300%.

The latest – the eighth – amendment to the contract was published this month: for another $179,291,900, to continue to operate on the island until the end of 2021.

The contract was awarded under limited tender, with “no submissions or value for money submissions received”, government tender documents show.

Canstruct had helped build the Nauru “regional processing centre”, and took over the running of the centre from Broadspectrum, which had endured years of negative publicity over its management of the centres.

Canstruct, a Brisbane-based private company and Liberal party donor, won the contract by limited tender, meaning there was no open and competitive process to secure the initial contract. The auditor general criticised the process, saying “it is not clear why the department could not have secured a replacement supplier using a more competitive procurement method”.

Anthony Whealy, a former NSW supreme court judge and chair of the Centre for Public Integrity, said the initial lack of an open tender was “dubious to say the least”.

But his chief concern lay with the repeated adjustments to the contract, which have awarded Canstruct increasing sums without any further tender process.

“When the contract price multiplies over years to billions of dollars without a proper tender process, the outcome is deeply disturbing,” he said.

“Add to this the fact that the recipient is a political donor, then the outcome is an outright scandal.”

Canstruct told the Guardian it was not able to comment on government contractual matters, but said that any suggestion that links to political parties had influenced contractual matters was “absurd”. The department of home affairs said procurement rules were followed and that the auditor general had found the management of the procurement process “was largely appropriate”.

The Nauru processing centre has been plagued by controversy, including violence against asylum seekers and refugees, systemic sexual abuse of children, inadequate medical and psychiatric care, and a spate of suicides.

The Nauru files, a cache of leaked internal working documents written by staff, detailed sexual violence against children as young as six, assaults, and systemic neglect. Separate statements from senior United Nations officials said the Nauru camp was “cruel and inhuman” and a violation of the convention against torture. Medicin Sans Frontiers said the mental health suffering on Nauru was “among the most severe MSF has ever seen”.

There are currently 108 people held by Australia on the island: 78 have been formally recognised as refugees, 14 have had their claims for protection rejected, while 16 remain – after more than seven years – still waiting for a “refugee status determination” decision.

Nauru is one element of Australia’s offshore processing regime. In total, reports estimate offshoring processing cost Australian taxpayers $18.6bn between 2013 and 2020.

Paladin – a company headquartered in an island shack and with no experience with major contracts – received more than $500m of government money to provide garrison services at Australia’s processing centre on PNG’s Manus Island without the contract going to open tender. In a scathing report, the auditor general found the taxpayer did not get “value for money”.

The Manus centre was ruled illegal by the PNG supreme court, and the Australian government agreed to pay $70m in compensation to those held within it.

Rory Murphy, the chief executive of Canstruct, told the Guardian the company’s “small payments” to political parties “are not donations, but were for dinners that provide companies with the opportunity to hear from senior MPs about policy”.

These are regular functions, Murphy said, “used for fundraising by all political parties, and are attended by many business people from across the corporate sector”.

“We follow all commonwealth procurement guidelines and the suggestion that attendance at a function has any bearing on a contract with a government department is absurd. We note we have done similar with the Australian Labor party.”

A spokesperson for the department of home affairs said the Australian government “remains committed to regional processing as a key pillar of Operation Sovereign Borders”.

“Australia is working with Nauru to establish an enduring regional processing capability in Nauru. Continuity of services until the enduring capability is established is essential.”

The spokesperson said the department followed commonwealth rules when procuring garrison and welfare services on Nauru. “Government did not have any role in the procurement process or the awarding of the contracts.”