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Finance and Public Administration References Committee
05/09/2019
Compliance by former ministers with the Statement of Ministerial Standards

HIRST, Mr Christopher, Chief Executive Officer, Palladium

Evidence was taken via teleconference—

[16:02]

CHAIR: Welcome. For your information, Senator Waters is appearing via teleconference also. Information on parliamentary privilege and the protection of witnesses in giving evidence to Senate committees has been provided to you as part of your invitation to appear. I note that you are speaking to us from overseas. You should be aware that the protection of parliamentary privilege applies within Australia, and a person outside of Australia is not protected by parliamentary privilege. You've lodged submission 8 and a supplementary submission with the committee. Would you like to make any amendments or additions to those submissions?

Mr Hirst : No, thank you.

CHAIR: Would you like to make a short opening statement?

Mr Hirst : Thank you for the opportunity to speak today. Firstly, I just wanted to briefly apologise to the committee for what was, in hindsight, an inadequate response to the invitation to lodge a submission initially. Thank you for inviting Palladium to make a further submission and thanks for the invitation to appear today. We see the work of the Senate committees as important to the parliamentary process. We also understand the importance of this inquiry and the compliance by former ministers of state with the requirements of the Prime Minister's Statement of Ministerial Standards. If it suits the committee, I would like to highlight some key points from our supplementary submission, and I'm happy to answer any questions senators wish to ask.

Firstly, Ms Bishop has been appointed to the role of an independent, non-executive director of the board of Palladium. Her role and terms and conditions are in line with those of other non-executive directors of Palladium. Ms Bishop was selected as part of a broader board renewal program that we have been running through. It looked at identifying candidates who complement the other directors and ensuring a broad diversity of skills and experience. Ms Bishop briefed us immediately, in our initial discussions with her, on her obligations under the ministerial standards, and it was agreed the role would not put her in a position to breach these obligations. While Palladium is a supplier to the Department of Foreign Affairs and Trade, amongst other federal government organisations, there were no direct dealings with Ms Bishop when she was a minister. On a personal level, the first time I had any communication with Ms Bishop was in June this year.

Finally, Palladium works in many challenging jurisdictions around the world, and transparency is the key to the successful delivery of our services, as is compliance with local legal and regulatory regimes. We have to operate systems and procedures to ensure integrity throughout the organisation, and this includes our directors. These are all reflected in our code of conduct and other policies which form part of the contract for directors and employees. Thank you again for the opportunity. I'm happy to answer any questions.

CHAIR: Thanks, Mr Hirst. I might kick off. Dr Parkinson wrote a letter, which is now public, which explains his understanding about Ms Bishop's employment and some of the constraints on that employment. He said Palladium does not expect her to engage on any Australian based projects. Is that statement accurate?

Mr Hirst : My interpretation of the Corporations Act is that Ms Bishop is not actually an employee of Palladium; she's a non-executive director, so it's an appointment. But, in terms of her role, that statement is accurate. She will not be involved in any operational aspects of the business. It is a governance role around the governance of the company.

CHAIR: Do you expect that, as a member of the board, Ms Bishop will be involved in strategy?

Mr Hirst : Yes.

CHAIR: Do you expect that Ms Bishop will recuse herself from board-level discussions in relation to Australian based projects?

Mr Hirst : I would expect her to recuse herself from any requirements that have conflict of interest, like we expect all board members to. Whether that relates to Australian projects or whether that relates to other conflicts of interest, I would expect that to happen.

CHAIR: A blanket statement that Palladium does not expect her to engage on any Australian based projects doesn't seem consistent with the description you've given about the role she'll be playing on the board. Your formulation is a little narrower, which is that you don't expect her to engage on any Australian based projects where she has a conflict of interest?

Mr Hirst : As a director of the board, I don't see her engaging in delivery of projects really at all. That's not the role of the board member. She—

CHAIR: Of course, and delivery of projects is certainly not the role of the board member, but strategising about which projects you are going to pursue, and how you will pursue them and the constellation of projects you will pursue, is a core part of a board strategy, is it not?

Mr Hirst : At our scale of operation, generally, specific projects we're pursuing would not be getting up to a board level.

Senator KITCHING: Mr Hirst, is that because the quantum is small? Why aren't those Pacific projects coming to a board level?

Mr Hirst : The board delegates the management and operation of the company to the executive—myself and my executive team. So the policies and procedures we're operating and the decision-making around which projects to pursue et cetera is done on an operational level on a daily basis. Anything that's going to the board is broadly much higher level around the strategy, not of what's a project level but of where the company wants to pursue, what clients do we potentially want to pursue—a much more holistic strategic perspective than the more tactical operational decision-making.

Senator KITCHING: The client might be, for example, the Department of Foreign Affairs and Trade. So the board would make a decision around pursuing that department as a potential client—well, it is a client.

Mr Hirst : The Department of Foreign Affairs and Trade has been a client for 20 or 30 years.

Senator KITCHING: I'll come back to that. Mr Hirst, are you paying Ms Bishop her remuneration in her own person or are you paying through an entity—so, 'Julie Bishop and Co'?

Mr Hirst : It's to herself as an individual.

Senator KITCHING: Did you discuss either of your submissions with Ms Bishop?

Mr Hirst : I discussed the first submission with Ms Bishop but not the second submission.

Senator KITCHING: When did you make a decision to expand on the four-line first submission?

Mr Hirst : We received a letter from the committee on Friday, if my memory is correct, asking us if we wanted to submit further. I flew to the UK over the weekend and we drafted and submitted on Monday, I think it was.

Senator KITCHING: In relation to the evidence you've just given concerning conflicts of interest, do you, as a board, keep a register of conflicts of interest—when a director may remove himself or herself from a meeting because of a conflict?

Mr Hirst : Yes, we do. At every meeting, at the beginning, the question of whether anyone has any conflicts of interest around any agenda items coming up that day is asked.

Senator KITCHING: Ms Bishop said earlier that she would see her role concerning accountability and governance, and some strategy as well. Have you had to improve your governance and accountability due to problems you've had, such as those that were highlighted by the UK parliamentary inquiry?

Mr Hirst : I don't know of any problems in our governance that were highlighted by the UK parliamentary inquiry.

Senator KITCHING: That was around the skimming of foreign aid money by your company to the tune of many millions of dollars—13 million pounds, I think it might have been. So you haven't sought to improve any of your governance or accountability standards post that inquiry?

Mr Hirst : I have no knowledge of any inquiry into us around skimming.

Senator KITCHING: Really? It seems that Palladium and its directors are either wilfully blind or—

Senator SCARR: You might give him a reference—

Senator KITCHING: I actually have.

Senator SCARR: to GRM.

Senator KITCHING: If you look at the company extract, you will see that GRM became Palladium.

Senator SCARR: Perhaps it might be worthwhile to ask—

Senator KITCHING: I'm sure Mr Hirst will be aware—I certainly hope Mr Hirst is aware—of his own company's history. Certainly it was some evidence given in Australia at various parliamentary inquiries that ran for at least two years.

Mr Hirst : What I can say is, if you are insinuating that we have had governance issues with UK clients, the fact is that we are one of the most trusted and most regular suppliers to the UK government in the development space.

Senator KITCHING: I think the former prime minister, David Cameron, had some issues which were highlighted by that inquiry.

Mr Hirst : I am happy to take it on notice and come back to you.

Senator KITCHING: If you could, that would be very helpful.

Senator PATERSON: Mr Hirst, are you aware of the obligations imposed on Ms Bishop as a former minister under the Statement of Ministerial Standards?

Mr Hirst : I'm aware to the point that Ms Bishop explained it to me when we first spoke, and I have read the documentation to look into it.

Senator PATERSON: So you understand the obligations imposed upon her?

Mr Hirst : I believe to the best of my ability I do; yes.

Senator PATERSON: Would you or Palladium ever seek to obtain from Ms Bishop advice or input that would require her to contravene those standards?

Mr Hirst : I don't believe so.

Senator SCARR: I want to give you an opportunity, in the context of this committee, to deal with the matter which had been raised in relation to this inquiry in the UK. As I understand it, the matter related to an entity which is referred to as GRM International. There's some thought that perhaps there's some sort of relationship between Palladium and GRM International. Do you have any knowledge of that matter in particular?

Mr Hirst : GRM changed its name to Palladium, so I'm fully aware of who GRM is. I have no knowledge around any impropriety in the UK. I'm wondering what the relevance is to the terms of reference of this inquiry.

Senator SCARR: I just wanted to give you an opportunity to talk about what background you knew of, if any. One sentence in Dr Parkinson's letter read:

Ms Bishop has indicated that Palladium does not expect her to engage on any Australian based projects.

With respect to Ms Bishop discharging her obligations as a non-executive director, do you see her as specifically engaging on any Australian based projects?

Mr Hirst : No, I don't expect her to engage in any Australian based projects and I would expect her to recuse herself from any discussion or any request to do that if it were conflicting with her obligations.

Senator SCARR: The second sentence in that paragraph states:

Further, Ms Bishop advised that her position as a normal Non-Executive Director on the Board would not extend to Palladium's tendering processes for projects, lobbying or other activities beyond the role of a Non-Executive Director.

Is that your understanding?

Mr Hirst : Correct.

Senator KITCHING: Ms Bishop made a speech called 'the new aid paradigm' when AusAID was rolled back into the Department of Foreign Affairs and Trade, which I presume you were very aware of, given your evidence just previously of your 20- to 30-year relationship with DFAT. You were aware that there was a change in the way that foreign aid was done by the department?

Mr Hirst : Yes, I was aware of the rolling of AusAID into DFAT.

Senator KITCHING: I'm looking at a speech that Ms Bishop gave in June 2014, which related to what was called 'the new aid paradigm'. At that point you must have thought to yourself, 'This is good. AusAID is rolled back into the department. There might be more opportunity for Palladium.' Is that correct?

Mr Hirst : No, I don't think that's correct—

Senator KITCHING: Just for my colleagues' edification: GRM changed its name to Palladium in 2015. Did you then target DFAT? Because, obviously, the foreign aid was now no longer being done by AusAID, did you then target DFAT at that point, to increase—

Mr Hirst : From my recollection, when it was announced that AusAID was being rolled into DFAT our broad perception was of disappointment, because we have a very strong focus on creating development and we had concerns that the focus on development might reduce. So it was not what you're suggesting—

Senator KITCHING: But the quantum of the money you received in DFAT increased. Is that correct?

Mr Hirst : I had a look at this the other day, and I don't have the figures to hand, but—

Senator KITCHING: Could you take it on notice? If you could take that on notice, Mr Hirst, that would be very helpful.

Mr Hirst : I can tell you that the trend was an immaterial increase in our revenue from DFAT, since—

Senator KITCHING: But there is an increase?

Mr Hirst : In single digits.

Senator KITCHING: Single digits—okay. We'll see.

Senator ROBERTS: Thank you, Mr Hirst, for giving evidence today. I'm sure you are aware of paragraph 2.25 of the Statement of Ministerial Standards. I think I'm the only one to have raised paragraph 2.26. Just in case you are not aware of that, it says, concerning postministerial employment:

Ministers shall ensure that their personal conduct is consistent with the dignity, reputation and integrity of the Parliament.

I'd like to ask a few questions about reputation. I went to your company's website, and it says:

Palladium is in the business of making the world a better place, and we believe that collaborative models and systemic approaches are the way to achieve progress and success.

What is the role of trust in this?

Mr Hirst : What is the role in trust? I mean—

Senator ROBERTS: The role of trust—in your company's operations.

Mr Hirst : As I mentioned in my brief introduction, trust and compliance is a key fundamental of everything we do with business. What we are employed by our clients to do is manage difficult implementation environments in a clean, clear way. Integrity is fundamental to everything we do.

Senator ROBERTS: You said in your second submission that multiyear contracts have been awarded through open tender. I don't see very much openness in the way we're discussing this at the moment, neither from Ms Bishop nor Mr Pyne nor from your own submission. We don't know Ms Bishop's remuneration and we don't know the components. Perhaps you could tell us how many days per year she'll be required to work for your company.

Mr Hirst : To be clear, she's not working for the company. With her role on the board, we have quarterly board meetings and then we have other ad hoc board meetings as and when required, based around specific issues.

Senator ROBERTS: So four meetings, plus maybe a couple more?

Mr Hirst : Generally speaking, we would have a quarterly board meeting. We will have, probably, a call every four to six weeks around a particular issue, on average. And then, starting on Monday, we have a broader board meeting once a year, which is a two-day input.

Senator ROBERTS: Going back to paragraph 2.26 and its discussion of ministers' personal conduct being consistent with the reputation of the parliament, I wonder what the people will be thinking about the reputation of parliament. There are so many connections here that they can make and then draw the worst of conclusions from because of the lack of openness—especially when Dr Parkinson last week admitted to me that he had no investigative powers and Ms Bishop said she gave no undertaking because she never had a conversation with then Prime Minister Turnbull about ministerial standards. So I'm wondering how the public can have any faith in parliament and what damage this will do to parliament's reputation. Plus I'm wondering what damage it could possibly do to your company.

Mr Hirst : I can't speak for Ms Bishop but, from our perspective at Palladium, we are being fully open with any information request that's being made.

Senator ROBERTS: The lack of knowledge about her salary—or her fee, being a director—raises many questions. I know you've said already that you will not disclose the terms and conditions of her employment, but that raises questions in itself. Can you see that?

Mr Hirst : My reticence to share her fees in a format that will be made public is more around the commercial-in-confidence element for the other directors who sit parallel with her and who are not party to this inquiry.

Senator ROBERTS: Yes, I understand that, but it still comes back, in my view, to a matter of reputation, because the public will likely think the worst, because there is so little disclosure here. Our Statement of Ministerial Standards is so loose. No undertaking has to be given formally. There's no investigation power for the Secretary of the Department of the Prime Minister and Cabinet. Everything is just so loose and vague. That could impact on your business, could it not?

Mr Hirst : I agree it possibly could.

Senator ROBERTS: Thank you. Those are all my questions.

CHAIR: Senator Waters.

Senator WATERS: Thanks, Chair. I don't have any questions for this witness.

CHAIR: Are there any further questions for Mr Hirst?

Senator ROBERTS: Mr Hirst, would it be possible to get a copy of the systems and standards from your code of conduct—not the broad principles that are implicit in the code of conduct but the specific systems and standards that make it rigorous and enforceable?

Mr Hirst : I can have a look at what we can do. I'm just thinking of how it can work, because a lot of it's IT-based platforms. So I can take it on notice, and I'm happy to look at what we have.

Senator ROBERTS: Thank you, Mr Hirst.

Senator KITCHING: Could I just clarify two issues. I think Ms Bishop said she thought there were six board meetings a year, but you're saying they're quarterly—is that correct?

Mr Hirst : I think the schedule is quarterly, but, as I said, there are other meetings in between based on a variety of different aspects.

Senator KITCHING: Would those meetings be standing committees, for example, of your board?

Mr Hirst : We also have standing committees. It could be full board meetings in between, or it could be standing committees in between, or both.

Senator KITCHING: Are your standing committees around, for example, audit?

Mr Hirst : We have one around audit and risk, and we have one around people and remuneration.

Senator KITCHING: I think in your second submission you say that Ms Bishop was given an induction pack.

Mr Hirst : Correct.

Senator KITCHING: Does that contain any minutes of previous board meetings, either draft or passed?

Mr Hirst : I'll have to take that on notice. I'm 99 per cent sure it's not in the induction pack, but I'm pretty sure she's given access to board minutes through the online minutes portal we use.

Senator KITCHING: So Ms Bishop may well have availed herself of previous board minutes once she became a director—is that correct?

Mr Hirst : I think so. I'll have to confirm.

Senator KITCHING: Thank you.

CHAIR: If there are no further questions for Mr Hirst, I thank you for appearing and indicate that, if there are any further follow-up questions from senators, the secretariat will be in contact with you. I think at least two questions from Senator Kitching have been taken on notice, and the secretariat will be in touch.