No history of defaults, says Australian firm in asylum centre dispute

By Colin Packham

By Colin Packham

SYDNEY (Reuters) - A little known security provider at the centre of a political storm over why Australia gave it a lucrative contract for a remote Pacific detention centre denied on Thursday media reports of a history of improper payments and contract defaults.

Less than three months ahead of an election, the controversy has put the spotlight on immigration policy, helping to shore up support for the conservative government in the face of efforts by the opposition Labor Party to ease the law.

In January, the government agreed to pay A$423 million ($303.16 million) to the company, Paladin Group, for security services at a detention centre in Papua New Guinea (PNG) where Australia detains hundreds of asylum seekers. But the contract has drawn scrutiny after media said Paladin left a string of bad debts and failed operations across Asia.

In its first public comments on the issue, Paladin said the Australian media had erroneously linked it to a company with a name similar to a sister firm.

"We reject the notion in the media that any contract with a Papua New Guinea entity is tainted by corruption – we find this notion offensive," a company director, Ian Stewart, said in a statement posted on Paladin's website.

"We do not have any bad debts or failed contracts."

However, the statement has not defused mounting opposition pressure for the government to explain why it invited only Paladin to bid for the contract renewal.

"I have asked the Australian National Audit Office to launch an urgent investigation into the circumstances surrounding the Department of Home Affairs’ procurement of garrison support and welfare services in Papua New Guinea," said Shayne Neuman, an opposition lawmaker.

Australia has previously used corporate heavyweights with a long history of providing similar services in remote spots.

Paladin, which earlier provided some limited security and cleaning services on PNG, won the Australian tender after Broadspectum, owned by a Spanish conglomerate, Ferrovial, decided not to seek renewal of a contract.

The Department of Home Affairs, which oversees the Pacific detention centres, said it was forced to limit the contract tender after PNG reneged on plans to take over camp operation.

A spokesman for PNG Prime Minister Peter O'Neil did not immediately respond to requests for comment, though he told the domestic Post-Courier newspaper he would seek a briefing from Australia.

Under Canberra's controversial asylum seeker policy, more than 1,000 asylum seekers have been held on the Pacific islands of Papua New Guinea (PNG) and Nauru for six years after they were intercepted trying to get to Australia by boat.

The laws have been widely condemned internationally but remain popular domestically.

($1=1.3953 Australian dollars)

(Reporting by Colin Packham; Editing by Clarence Fernandez)