Thursday, August 5, 2010

Foreign Aid - Feeding starving kids in Ethiopia? Or the Packer kids?

A month or so ago I signed up for the independent online newspaper Crikey Daily Mail. Almost straight away, they ran a series of articles investigating into where exactly our foreign aid goes to. Now I would have thought most of our $4.3 billion worth of tax dollars for foreign aid funnels through companies such as Oxfam or World Vision to help poor countries. Is that what you would have thought too?

A lot of Australians would be surprised to know that for nearly a decade one of Australia's most successful, although little known, aid companies and it's biggest casino operator were owned by the same company.

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40 to 50% of this aid budget is spent on "Technical assistance". This is quite clearly a billion-dollar business funded by tax payers, and a small number of Australian firms have done very well from this:
  • Coffey International, the Chatswood, Sydney-based "global professional services consultancy", took more than $300 million in contracts in 2009 alone (from AusAid records)
  • Cardno ACIL secured at least $270 million, as did GRM, "a leading international development management company"
  • Queensland companies GHD and JTA international, both reaped over $100 million.
The idea that most (over 60%) of our "foreign aid" ends up back in Australian's pockets is called "Boomerang Aid", and has long been a basis of criticism of AusAID. But one thing I found quite interesting is the company GRM International Pty Ltd

Until December last year, GRM was fully owned by the Bahamas-based company Consolidated Press International Holdings (CPIH)- a key company in the private empire of one of Australia's richest families, the Packers. Many large companies are set up in a similar way to how GRM is linked in with CPIH for tax reasons, but the question is whether this is acceptable for major recipients of Australian government contracts. There are a number of main points Crikey journalists found in their investigations:
  • GRM international handles hundreds of millions of dollars worth of government contracts each year, yet according to its most recent financial statements, GRM International pty Ltd doesn't make a profit (it hasn't reported a single cent in over a decade) and hasn't had any employees since 2005.
  • These accounts are surprising because according to government records, GRM secured more than a billion dollars worth of AusAID contracts between 2001 and 2010, as well as income from its agribusiness actuvities.
  • The contracts are for "technical assistance" in the form of short-term contracts for expert advisers. This form of aid is more common in Australia than in other OECD countries and has been criticised by a recent review of Australian aid to PNG as often ineffective, wasteful and lacking in accountability.
  • All these contracts are published on the 'federal government's tender data base' but details are often vague, such as over $350,000 over two years to "strengthen accountability" and another million for "governance and related activity"
Decide for yourself, but this sounds quite sus to me. Stay tuned, I'll let you know what I find out...

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