Luxottica had its contract terminated last year, a fact both Defence and its principal healthcare contractor, Medibank Health Solutions, announced in statements, admitting that records had been sent offshore. However, neither of those statements acknowledged that China was a destination for the data.

The revelations raised particular concern within the Defence establishment because of China's extensive involvement in state-sponsored hacking and cyber-espionage, with Beijing showing a particular interest in accessing personal records of government workers in the US.

Furious Defence Department officials demanded a "please explain" from Medibank Health Solutions, the principal contractor that handles healthcare referrals for Defence personnel.

MHS took immediate steps to cancel Luxottica's contract. It is understood Luxottica sent records to other countries as well, but China is the country of particular concern. Under the subcontracts between MHS and health providers, records must be kept within Australia.

Concern has skyrocketed over Beijing's use of hacking recently. At the weekend, US presidential hopeful Hillary Clinton accused China of "trying to hack into everything that doesn't move in America".