When Richard O'Brien and Rod White took over a Walgett meat company in 2000, they had no idea it would end in a secretive million-dollar government payout almost a decade later.

Key points: Department of Human services paid out $12.5 million over three years, Department of Defence paid $8.5 million over 10 years in compensation for bureaucratic mistakes

Department of Human services paid out $12.5 million over three years, Department of Defence paid $8.5 million over 10 years in compensation for bureaucratic mistakes Many Federal Departments include confidentiality agreements in their payouts

Many Federal Departments include confidentiality agreements in their payouts Critics of the compensation scheme say it is too secretive

The Department of Agriculture made the payment after the NSW business claimed it was driven into receivership by some poorly trained and incompetent staff at the now-defunct Australian Quarantine Inspection Service (AQIS).

There was a catch — the payment included a non-disclosure agreement and a legal mechanism that waived the possibility of any future legal action.

The Walgett case is one of hundreds of little-known payments made by government departments each year, costing taxpayers millions of dollars in compensation to victims of bureaucratic bungles, such as bad advice given by public servants.

The Department of Finance, which manages the Scheme for Compensation for Detriment caused by Defective Administration (CDDA), said it did not keep a tally of how much money it had paid out in compensation for bureaucratic mistakes.

However, over the past decade the Department of Defence has paid $8.5 million, while the Department of Veterans' Affairs paid out $2.4 million in compensation.

The Department of Human Services paid out $12.5 million over three years, while the Department of Agriculture revealed it paid a mere $12,400 due to errors it made over the past four years.

The Department of Health did not respond to the ABC's request for information.

Mistake cost meat business

The former Walgett meat company alleged that some Australian quarantine staff incorrectly ordered tonnes of lower-quality meat to be destroyed when it could have been sold. ( ABC News: Jessie Davies )

Mr O'Brien and Mr White, former owners of Walgett Game Meats Processing Works Pty Ltd, said government errors cost them $10 million.

The pair exported their meat to Europe, requiring clearance by quarantine, and they allege some AQIS staff incorrectly ordered tonnes of lower-quality product to be destroyed when it could still have been sold.

In 2008 the Department of Agriculture agreed to pay the company $1 million in a confidential settlement under the scheme.

The payout has been secret until now.

"They admitted that they had treated us badly and the million dollars, even though it was nothing like we expected, it's still a fair amount of money," Mr O'Brien said.

In response to one of his many letters to various Agriculture Ministers about Walgett Game Meat over the years, one minister mentioned the amount of compensation paid under the CDDA, and the reason for it.

Mr O'Brien believes that disclosure now allows him to publicly reveal the confidential settlement for the first time.

"There was no 'private and confidential' or anything like that on the letter, I can show it to anyone in the world," he said.

The Department of Agriculture declined to respond to specific questions, saying it was inappropriate to discuss individual cases.

Payout scheme needs transparency

When contacted by the ABC, multiple departments confirmed that CDDA payouts could include confidentiality agreements, as well as a requirement for recipients to waive the right to take any legal action.

No department would provide an indication of how often confidentiality agreements were used, but the Department of Human Services said it did not use them at all.

Former Commonwealth Ombudsman John McMillan said the CDDA scheme was well-intentioned but too secretive.

"A person who has had a dispute with a government agency should be able to talk about it publicly, equally there's a strong public interest in knowing how government resolves disputes," he said.

Mr McMillan examined the scheme almost a decade ago and was concerned back then.

"A strong criticism I made back in 2009 of the scheme was there wasn't sufficient visibility and transparency of how CDDA operates, I don't think that's changed at all," he said.

