Political/diplomatic issues tend to get a mite convoluted, so let’s keep this simple.

Australia had a contract to have some diesel submarines manufactured by France.

 

If Australia backed out of the contract they had to pay a penalty of between $330,000,000 and $404,000,000 to France. (Dependent on your sources)

Australia did back out – ergo Australia must pay France approximately $400,000,000.

 


 
 

 

Instead we’re told…

The questions that have been asked about this $5,000,000,000 discrepancy have been about as useful as the answers.

The ABC’s defence correspondent – Andrew Greene didn’t seem to know about the $400,000,000 penalty clause, nor even Labor’s own submarine expert Penny Wong. They certainly didn’t mention it.

“Under questioning from Labor’s Penny Wong, Defence Department deputy secretary Tony Dalton confirmed the final cost of the aborted program could exceed $5 billion.

“We now have a situation where the taxpayer will pay up to $5.5b for non-existent submarines?” Senator Wong asked.

Mr Dalton responded that: “The final negotiated settlement will be within that price, senator.”

I’ve no doubt Penny engaged in a furious bout of eyebrow arching, but her inability to cut to the crux of the matter, with perhaps a simple, “Why are we paying $5,000,000,000 on top of the agreed contractual penalty for backing out of the submarine deal?”, is difficult to comprehend.

It’s almost as though Labor were giving this very dodgy, massive waste of public monies a pass.

 

It all smells like a submarine sandwich left for far too long in the sun

 

 

Now I don’t pretend to be a contract lawyer, nor even a good mathematician, but has anyone else an inkling that something is very wrong here?

Let me lay this out in mathematical terms $5500,000,000 > $400,000,000.

 

 

 

Referring to his article of 15th May, 2019, so it seems the ABC’s defence correspondent – Andrew Greene did know about the $400,000,000 cancellation fee.

“The “break payments” are outlined in the confidential Strategic Partnering Agreement (SPA) that guides the $50 billion project, which was signed in February by France and Australia’s defence ministers.”

According to the future submarine SPA, Naval Group would receive a 90 million euro (about $140 million) break payment if the company completed the basic design, but the Defence Department then decided not to proceed further.

Similarly, a break payment of 250 million euros (about $404 million) would apply if the French delivered a detailed submarine design and Australia then chose to go no further.

In the event Australia accepted its first completed submarine but decided to cancel all future orders, the Commonwealth would have to pay the French company 220 million euros (about $355 million).”

Not accusing Andrew of anything, just perplexed that such a salient point would be omitted in his later piece.
 

Bogus bonuses


Let’s assume we’re somewhere between the detailed submarine design and the first completed submarine part of the contract, anyone seeing the justification for that $5000,000,000 bonus cancellation fee?

It’s reminiscent of the bonus paid by Australian taxpayers to Naval Group despite them being nine months behind schedule.

“It is not known what proportion of Naval Group’s future submarine workforce received pay rises and bonuses, and the company has declined to reveal what the increases were worth.

Defence has refused to reveal who in the department approved the remuneration changes and referred all questions on Naval Group’s employment conditions and pay to the company.”

Handing out bonuses to a foreign company is generally done because they have exceeded expectations, not because they’re nine months behind schedule and certainly not while your own people are beset by Covid economic woes.

 

Naval Group corruption existed before Australian deal

 
Much more could be said about this submarine saga…

“The arms company at the centre of a deadly criminal saga and numerous global corruption scandals, Naval Group, was selected by the Australian government to build our new fleet of submarines – a deal heralded as one of the world’s most lucrative defence contracts‘.”

A car packed with explosives drove into a bus of engineers in Karachi, Pakistan, in 2002, apparently in revenge for unpaid bribes, killing 15 people, including 11 employees of French shipbuilder DCN, now Naval Group.

The signing took place despite the emergence of two more investigations into Naval, including alleged corruption on a 2009 submarine deal with Brazil and a significant security breach where complete plans of the new Scorpène submarines Naval had provided to India were apparently leaked from within Naval.

Why would anyone trust an organisation with such a dodgy record to undertake a multi-billion dollar defence project involving National Security in the first place?

Unless you too were dodgy and knew access to a huge slush fund with little oversight made such an association very attractive?

There are many questions to be asked of yet another disastrous defence (near) acquisition, but let’s ask this one before potential hospitals and schools disappear into foreign coffers – for naught – save the incompetency and corruption of this government, the usual lacklustre opposition from Labor and maybe a tad of geopolitical face-saving brokered by the Yanks.

“Why are we paying $5,000,000,000 on top of the agreed contractual penalty for backing out of the submarine deal?”

 

 

 

References

 

Australia’s Submarine Program: A Failure in Anti-Corruption Due Diligence? 5 March 2018 – PDF

 

 

 

 

 

 

 

 

 

https://thediplomat.com/2016/08/india-and-the-scorpene-leak-untangling-the-knots/

https://www.reuters.com/world/asia-pacific/australian-documents-showed-french-submarine-project-was-risk-years-2021-09-21/

https://www.abc.net.au/news/2019-05-15/australia-to-pay-hundreds-of-millions-if-french-sub-deal-sinks/11112952

https://www.defenceconnect.com.au/maritime-antisub/4061-contract-cancellation-fee-and-questions-about-the-future-of-sea-1000

https://www.abc.net.au/news/2022-04-01/cancelled-french-submarine-program-cost-billions/100959082

https://thediplomat.com/2019/02/australia-france-sign-35-5-billion-submarine-contract/

https://www.abc.net.au/news/2019-02-20/navy-chief-collins-class-submarine-upgrades-future-subs/10829580

https://www.abc.net.au/news/2021-05-10/taxpayers-paying-french-submarine-naval-group-legal-fees/100127510

https://www.news.com.au/national/politics/investigation-finds-parliament-rent-boys-claim-false/news-story/2cca40b48bccb6059d9ff3d59299c88a

https://www.theguardian.com/australia-news/2021/nov/10/throwing-toothpicks-at-the-mountain-paul-keating-says-aukus-submarines-plan-will-have-no-impact-on-china

https://independentaustralia.net/politics/politics-display/submarine-fiasco-the-latest-in-a-long-list-of-coalition-military-failures,15536

https://www.dailymail.co.uk/news/article-10294425/Australian-Defence-Force-Procurement-blunders-exposed-unreliable-Taipans-dumped.html

https://www.finance.gov.au/about-us/news/2022/further-statement-referral-workplace-allegations

https://www.abc.net.au/news/2020-05-06/french-submarine-builders-get-taxpayer-bonuses-despite-delays/12217534

https://www.abc.net.au/lateline/thousands-of-jobs-promised-in-a-$50b-billion/7361284

https://www.smh.com.au/politics/federal/sex-act-on-female-mp-s-desk-images-shared-among-liberal-staffers-20210322-p57d0v.html

https://www.abc.net.au/news/2019-02-20/navy-chief-collins-class-submarine-upgrades-future-subs/10829580

https://www.abc.net.au/news/2021-04-12/christopher-pyne-potential-conflict-china-politics/100064226

https://www.reuters.com/article/us-australia-submarines-idUSKCN0XM2F5

https://www.malkaraconsulting.com/articles/2018/4/22/australias-submarine-program-a-failure-in-anti-corruption-due-diligence

Australia tries to reign in corruption on A$50 billion submarine purchase

Brazil’s DCNS Submarine Contract

France had Scott Morrison’s mate David Gazard on their payroll for the $90 billion Submarine scam. Has Morrison pulled off one of the biggest stings ever?

 

Future Subs Strategic Partnership Agreement signed