The private contract security industry does many things well, including providing armed guards and other security services in war zones like Iraq and Afghanistan. But when the industry moves into running detention facilities, controversy often follows.

The most egregious example for many years running now is in Australia, which has relied largely on private contractors to implement its policy of holding asylum seekers, refugees and migrants on offshore facilities in Narau, Christmas Island and, most notoriously, Manus Island.

Manus Island’s facility is a sort of mashup of France’s Devil Island and the United States’ Alcatraz Island, a combined unescapable penal colony for non-criminal immigrants who have often traveled great and dangerous distances to seek refuge in Australia.

Australia’s history of offshore processing dates back to the 1960s, when Manus Island was first set up to take refugees from West Papua. But it was then prime minister Paul Keating who first introduced the concept of mandatory detention for those deemed as “unlawful arrivals” in 1992.

Although the policy started and stopped for many years thereafter, in 2012 then prime minister Julia Gillard announced the government would resume offshore processing. Over the years, the system has produced a long list of human rights abuses, ranging from arbitrary arrests and imprisonment, physical and sexual assault, systematic neglect, inadequate medical care and even child abuse.

Manus Island has arguably been the most notorious facility in that system. The so-called Manus Regional Processing Center, situated on Los Negros Island in Manus Province, Papua New Guinea, opened in October 2001 and officially closed on October 31, 2017, although hundreds of detainees who claimed to fear for their safety refused to leave.

Protesters chant at a Liberal Party fundraiser in Sydney on November 10, 2017, as they call on the ruling Liberal coalition government to bring back 600 refugees from an Australian detention centre in Papua New Guinea. Photo: AFP/William West
Protesters call on the government to bring back 600 refugees from an Australian detention centre in Papua New Guinea. Photo: AFP/William West

In November 2017 all detainees were moved, hundreds by force, to new accommodation at the same island’s East Lorengau Refugee Transit Center after basic services including water and electricity were shut down at Manus.

Problems at Manus have been so longstanding and pervasive that just about every company that won a contract to run the facility has been visited by scandal.

The most recent contractor is Australian-based company Paladin, which became the subject of intense public scrutiny beginning in February this year thanks to a series of expose articles in the Australian Financial Review (AFR) newspaper.

The investigative articles’ bottom line was that the Australian government awarded an A$109 million (US$77.5 million) contract extension to the then virtually unknown Paladin to provide security for refugees at Manus Island, despite allegations of suspicious payments, a corrupt tender process and deceptive conduct highlighted in the AFR’s reporting. Paladin, however, issued a statement on Feb. 21 contesting the claims made by the AFR.

In the latest abusive turn, one of Paladin’s workers was arrested and charged on April 5 with sexual assault against one of his co-workers on Manus Island, according to news reports. The provincial police commander, David Yapu, says Paladin management took no action when the employee first reported the assault. Paladin disputes this and says it has been in contact with Yapu and is cooperating with the investigation.

The accused was sacked by the Australia-run detention center’s former contractor, G4S, in 2014 for mistreating asylum seekers.

As management contracts have been passed from one contractor to another over the years, the persistent corruption and abuses have illustrated the flaws of pro-outsourcing arguments, often based on supposed private sector cost-effectiveness and efficiencies. The examples of private contractor abuse are myriad.

In 2014, the Sydney Morning Herald found that the detention center’s then operator G4S could put an asylum seeker up at Sydney’s Sheraton on the Park for less than it charged the government for an evening at Manus Island.

Later, in November 2015, it was reported that Australia’s Department of Immigration and Border Protection suffered a A$100 million ($71 million) blowout in the cost of detaining asylum seekers offshore.

Asylum-seekers look through a fence at the Manus Island detention center in Papua New Guinea. Faces have been pixellated at source. Photo: Eoin Blackwell/AAP via Reuters
Asylum seekers look through a fence at the Manus Island detention center in Papua New Guinea. Faces have been pixellated at source. Photo: Eoin Blackwell/AAP via Reuters

Detention on Nauru and Manus Island cost taxpayers more than A$1 billion ($711 million) in the 2014-15 financial year, the sixth consecutive year that spending on the facilities’ had run over budget.

Private contractors often talk about the high ethical standards to which they hold their employees. That hasn’t always been the case at Australia’s off-shore detention centers. In February 2014, when British security multinational G4S was running the center, a spasm of violence led to the death of Iranian asylum seeker Reza Barati.

G4S failed to maintain basic human rights standards and protect asylum seekers from harm in the incident, according to a complaint lodged by Australian and British NGOs with the Organization for Economic Co-Operation and Development (OECD).

In April 2016, it was reported that a former G4S guard, Louie Efi, was one of two men convicted of murdering asylum-seeker Barati. The Australian government’s report into the incident said up to 15 guards were involved in stomping on the prone Barati’s head before he died.

The Guardian Australia reported in 2015 that a local Papua New Guinean woman who was working for Transfield, the Australian company then running the Manus detention center, alleged she was gang-raped by three of her co-workers from Wilson Security, which was then the subcontractor hired by Transfield to run security at the center.

The men accused of assaulting her were allowed to leave for Australia the next day without even being questioned, according to reports at the time.

When Transfield was running the center, two of Australia’s biggest investment funds dumped their shares in the company citing concerns about the human rights situation inside the offshore asylum seeker camps the company was then running for the Australian government.

Map depicting Papua New Guinea's Manus Island. Photo: Facebook
Map depicting Papua New Guinea’s Manus Island. Photo: Facebook

In the fall of 2015, the Guardian reported that Wilson Security faced questions about its fitness as a security contractor in light of its corporate links to a tax haven, a corruption scandal that has embroiled its Hong Kong owners and sparked allegations that hundreds of staff had been underpaid.

Thomas Kwok, a Hong Kong billionaire and the former joint chairman and managing director of Sun Hung Kai Properties, was sentenced to five years for conspiracy to commit misconduct in public office in 2014 for giving HK$5 million ($637,000) in bribes to a Hong Kong government official in return for favorable treatment of the Kwok family-controlled Sun Hung Kai Properties.

His brother Raymond, a founding director of Wilson’s Australian parent company, was also charged but found not guilty. Wilson Security was privately owned by the Kwok family through a complex corporate structure that includes companies in the British Virgin Islands, a recognized tax haven, the reports said.

In 2016, the Spanish company Ferrovial, the latest private contractor to take responsibility for the Nauru and Manus Island detention contract after acquiring more than 90% of Broadspectrum, the company then managing the camps, was warned by international law experts that its employees could be liable for crimes against humanity.

The UN Guiding Principles on Business and Human Rights state that all companies, regardless of size, are expected to respect internationally recognized human rights, while the OECD Guidelines for Multinational Enterprises, of which Spain is a member, give recommendations for responsible business conduct.

Human rights group No Business in Abuse (NBIA) contends in a report that Ferrovial’s failure to conduct adequate human rights due diligence when acquiring Broadspectrum, its provision of material support to the offshore detention centers, and its failure to remedy the “adverse impact” on human rights render Ferrovial responsible for corporate involvement in abuses in Nauru and Manus Island.

A detainee looks into shipping container accommodations inside the Manus Island detention centre in Papua New Guinea, February 11, 2017. Behrouz Boochani/Handout via REUTERS
A detainee looks into shipping container accommodations inside the Manus Island detention centre in Papua New Guinea, February 11, 2017. Behrouz Boochani/Handout via Reuters

NBIA also points towards a large number of North American and European companies for providing financial backing to Ferrovial, including big banks such as JP Morgan, Deutsche Bank, Goldman Sachs, Societe Generale and HSBC. No known legal action has been brought against Ferrovial or its financial backers.

Ferrovial, meanwhile, has stood firm by its policy of protecting human rights. In a March 16, 2018 information memorandum, the company said: “The markets in which [Ferrovial] competes may be exposed, in some of its activities, to risks of an ethical nature. Ferrovial is governed by principles of honesty, integrity and respect for legality in all its activities.”

The company acknowledged in the statement that “ongoing commentary and publicity in Australia or in the other countries in which [Ferrovial] operates with respect to [its] involvement in Nauru and Manus Island in the past … may adversely affect the Issuer’s reputation and brand,” but fell short of accepting any legal liability for Broadspectrum’s operations.

Nor is the government taking responsibility for the refugees’ treatment. In June 2017, in a class action settled out of court, the Australian government agreed to pay A$70 million ($49.8 million) in compensation to 1,950 men for their illegal detention and treatment. The compensation, which stopped the presentation of a six-month trial’s worth of evidence, came with an explicit denial of liability by the government.

The latest scandal involving Paladin is thus only the latest in a string of abuses that critics say will likely continue as long as the facilities are maintained off-shore and run by what many see as unaccountable private contractors.