Asked to explain the letter, Paladin said due to the terms of its contract it was "not in a position to comment on any matters relating to our work on behalf of the Australian government in Papua New Guinea".

"We are committed to delivering all of our projects to the highest professional and ethical standards as we have demonstrated throughout our work in PNG," it said in an emailed response.

The Home Affairs department had not responded to questions at the time of publication.

'Litany of failures'

Documents released to the Senate this week revealed Paladin was fined more than 1000 times for "performance failures" by Home Affairs, and catalogued incidents of drink driving and unprofessional behaviour by Paladin employees.

They also showed there was chronic understaffing on Manus in the early months of the contract and an overall lack of transparency in the department's selection of the little-known security firm.

As the Manus Island facility prepares to close in November, the revelations have put further pressure on Home Affairs Minister Peter Dutton to explain why Paladin's contract was renewed twice in the past year, most recently in June for an extra $109 million.

Labor's Home Affairs spokeswoman Kristina Keneally said Mr Dutton "needs to come clean over the references to corruption and bribery revealed in these documents, and publicly confirm that the Australian taxpayer has not been exposed to corruption".


Senator Keneally, who pushed for the documents to be released to the Senate, said they "paint a much different picture of Paladin than the government has tried to claim".

"Peter Dutton’s incompetence and mismanagement knows no bounds – he has willingly handed over half a billion of taxpayers' dollars to Paladin despite the litany of failures being revealed in these documents".

Home Affairs officials told Senate Estimates in February they were "quite happy" and "satisfied" with Paladin's performance.

Among the documents released this week was an internal audit by Ernst & Young, which found it was "difficult to determine" why Paladin was initially awarded the contract by the government.

EY said in the report "risks relating to such a high-value procurement, such as collusion, bribery, deliberate misinformation by the tenderer, have not been specifically identified nor strategies defined to manage such risks".

It recommended that for similar procurements in the future, a "risk and assurance officer" be appointed.

The EY report included responses from the department, which said during the Paladin procurement process "no issues were identified in relation to fraud, corruption or collusion".

Paladin has been awarded contracts totalling $532 million by Home Affairs.

For the department, the refugee services contracts with Canstruct and Paladin are the largest it has ever entered into and account for one in every four dollars the department has contracted since early 2017.

Yet the EY report said the value-for-money assessment for the Paladin contract, which was detailed and approved by relevant officials, was “undertaken in a very short timeframe with significant time pressures”.

Read more of our investigation of The Paladin Affair.