Probes on deal to fly troops

Richard Baker September 13, 2010 - 3:00AM

MULTIPLE official investigations have been launched into Defence Department contracts to fly Australian troops to the Middle East that have cost taxpayers more than $100 million.

The Inspector-General of Defence is investigating why two officers from an Australian Defence Force unit overseeing a 2005 tender process for the flights, David Charlton and John Davies, gave inside information to the winning company, which soon after employed them.

In addition, Defence Department secretary Ian Watt has asked an accounting firm to conduct a ''full probity investigation'' of this year's tender process for the Middle East troop and equipment flights contract, following further allegations of information being leaked to the winning firm.

The 2010 tender also involves Mr Charlton, who was back working inside Defence's Joint Movements Group following the $93 million collapse of his private airline last year. Mr Charlton has also been working as a consultant for 2010 contract winner Adagold Aviation.

Defence is set to face further parliamentary scrutiny, with opposition defence spokesman David Johnston yesterday telling The Age he would push for a ''full-scale inquiry into what is an emerging scandal'' once Parliament resumed.

Senator Johnston has written to Mr Watt to raise his concerns about this year's Middle East flight contract and urge that it not be signed.

''Under no circumstances whatsoever would I [want] to be seen to be acquiescing in the acceptance or execution of this contract,'' he wrote.

The Greens also have called for an inquiry into the 2005 and 2010 Defence contracts and outgoing Defence Minister John Faulkner promised further action.

Defence Inspector-General Ray Bromwich's probe of the 2005 Middle East Area Operations aviation tender comes after The Age obtained confidential emails that showed winning company Strategic Aviation believed it was being ''fed'' inside information about the tender by two Defence officers, Mr Charlton and Mr Davies.

The Age has been told Mr Charlton, an Army Reserve captain, was second in command of the Joint Movements Group, the unit overseeing the 2005 tender, and was responsible for collating information from bidders.

Mr Davies, an army warrant officer, was a logistics expert in the Joint Movements Group with access to tender information.

While Mr Davies was still working at Defence, he sent a Strategic Aviation director emails titled ''007'' and addressed to ''Mr Bond'' before the tender process had closed.

Mr Charlton and Mr Davies took senior management jobs with Strategic Aviation later in 2005 after the company, which was established at the start of that year, won the contract.

The Age can reveal further email exchanges between Mr Charlton, Mr Davies and Strategic Aviation chiefs Michael James and Shaun Aisen that indicate the company had an expectation of winning the tender before it closed, as well as knowledge of Defence's preferences and details of rival bids.

The emails show:

■ On March 1, 2005, three weeks before the tender closed, Strategic founder Michael James, wrote that rival firm Adagold Aviation, for which he was then working as a consultant, would not realise it had put up the wrong aircraft ''until the tender has been awarded and they find out who won it''.

■ Also on March 1, Strategic Aviation tied up an exclusive agreement with a British firm to lease an Airbus A-330 aircraft for 12 months, despite the tender not being awarded until several weeks later. Other emails show Strategic directors discussing how the A-330 was Defence's preferred option.

■ A plan by Strategic Aviation managers to become members of the Liberal Party to gain access to ''key players''.

■ A December 2005 email shows rival firms had complained to Howard government ministers about Strategic Aviation being awarded the Middle East contract earlier that year.

Mr Watt's terms of reference for the external review of the 2010 Middle East contract include an examination of whether the decision to award the tender to Adagold Aviation was influenced by ''vested interests'', ''conflicts of interest'' or ''outside influences''.

Strategic Aviation has denied wrongdoing and says it told Defence of its intention to hire Mr Charlton and Mr Davies.

Adagold has declined comment. Mr Davies said he played no role in the 2005 tender. Mr Charlton could not be contacted.

This story was found at: http://www.theage.com.au/national/probes-on-deal-to-fly-troops-20100912-15701.html