Defence did not realise a firm it struck a $25,000 deal with was blacklisted in the United States for bribing American air force officials.
Guardian Australia revealed on Tuesday that the defence department purchased specialist aircraft ladders from Lock N Climb, a United States firm that was found to have paid cash bribes to help secure sales at an Oklahoma airbase.
The bribery prompted charges against Lock N Climb’s president in 2016 and caused the firm to be barred from US government work until August 2019.
In a statement on Tuesday, the defence department said it had not been aware that Lock N Climb had been blacklisted for bribery.
The lack of knowledge of the US debarment is likely to raise more questions about defence’s procurement processes. The contract was tiny by the department’s standards, and wouldn’t have undergone the same level of scrutiny as major tenders.
But news of the bribery charges against Lock N Climb was easily accessible. It was announced publicly online by the US attorney in 2016. The US attorney’s media release appears on the third page of Google search results for “Lock N Climb LLC”, the name of the entity awarded the contract.
Lock N Climb also appeared on the US government’s publicly available list of blacklisted companies.
Defence awarded the contract to Lock N Climb in a limited tender, which restricted other firms from competing. A defence spokeswoman said the department had identified Lock N Climb as a potential supplier “following market research” that determined no Australian company could provide the same ladders within the required timeframe.
“The company successfully completed the contract on time and on schedule,” the spokeswoman said.
“This procurement was conducted in accordance with the commonwealth procurement rules. As the procurement was for a low risk, commercial off the shelf product, it was determined that a limited tender represented the appropriate procurement method.”
There is no suggestion Lock N Climb wasn’t suitably qualified to do the work or that the US blacklisting had any legal force in Australia. But Australia claims to adopt zero tolerance to bribery and is a signatory, along with the US, to the OECD’s anti-bribery convention.
The defence spokeswoman said the department took “the due diligence of suppliers very seriously”, but that “on this occasion, defence was not aware that the company had been blacklisted”.
“Defence regularly reviews its procurement processes to ensure that appropriate controls regarding selection of contractors are in place,” she said.
The US district court heard evidence that Lock N Climb provided good quality products. Air force officials said they would have purchased the ladders even without the bribes. One said he had believed Lock N Climb had been naive, and hadn’t realised the money they were paying would constitute bribery.
The firm was simply transferring practices it employed in the private sphere – paying commissions for introductions to work opportunities – without realising the illegality of such conduct when dealing with government. Lock N Climb was approached for comment.
Australian departments have been found awarding work to firms accused of corruption in the past. Last year, it was revealed that hundreds of millions of dollars worth of foreign aid contracts had been given to Sinclair Knight Merz, a company found by the World Bank to have engaged in widespread bribery.
The company first self-reported evidence of its corruption to the World Bank in 2012.
The World Bank holds an information-sharing agreement covering integrity cases with the Australian government, making it likely that information on SKM’s actions would have been shared.
Despite this, SKM continued to be awarded contracts with the Australian government, including through the foreign aid program, until the end of 2013.