DEFENSE MINISTER ANGERED BY REPORTS OF PROBE

C O N F I D E N T I A L CANBERRA 000312 SIPDIS NOFORN E.O. 12958: DECL: 03/25/2019 TAGS: PGOV MARR AS SUBJECT: DEFENSE MINISTER ANGERED BY REPORTS OF PROBE REF: A) CANBERRA 213 B) SYDNEY 60 Classified By: Political Counselor James F. Cole for reasons 1.4 (b) an d (d). ¶1. (C/NF) SUMMARY: Defense Minister Joel Fitzgibbon reportedly has reacted angrily to press reports that Australian Defense Department (ADOD) officials have conducted a secret investigation into Fitzgibbon's relationship with a Chinese-born, Sydney-based businesswoman, Helen Liu. According to March 26 Australian press articles, DOD officials apparently leaked the details of the investigation, which revealed that Fitzgibbon stays in a Canberra residence he sublets from Liu, who has been a generous supporter of the New South Wales (NSW) Australian Labor Party (ALP) over the past decade. Allegedly, ADOD security personnel advised senior defense officials of their concern about Fitzgibbon's relationship with Liu. Fitzgibbon's office categorically denied that any security concerns had been raised with him, and it asserted that his 16-year friendship with the Liu family is well-known. The media has interpreted the leak of this investigation to be the result of Fitzgibbon's harsh criticism of ADOD in the wake of an SAS payroll snafu (reftel A). The growing acrimony between ADOD and its Minister lends further weight to suggestions that Mr. Fitzgibbon could be relieved of this portfolio in the next cabinet reshuffle. END SUMMARY DEFENSE LEAKS PROBE OF DEFENSE MINISTER ¶2. (U) The Sydney Morning Herald reported March 26 that officials in ADOD had leaked details of a secret investigation into their own minister's 16-year friendship with wealthy Chinese-born businesswoman, Helen Liu. Liu first met Fitzgibbon's father, Labor MP Eric Fitzgibbon, when the MP visited China on behalf of then Prime Minister Paul Keating. The ADOD investigation, which accessed Fitzgibbon's personal computer records, discovered that Fitzgibbon rents his Canberra residence from Liu and her family and there were allegations that Fitzgibbon had received expensive gifts from Liu. Liu's companies have been generous supporters of the NSW ALP over the past decade, contributing about $90,000 AUD. FITZGIBBON DENIES RELATIONSHIP QUESTIONED BY ADOD ¶3. (U) Fitzgibbon has fired back, intimating that the leaks reflected resistance from entrenched interests in the Defense Department to accept broad reforms contained in Fitzgibbon's forthcoming Defense White Paper. He categorically denied that ADOD had raised any security concerns over his relationship with Liu. A spokesman for Fitzgibbon said he and his family had known Liu and her family since 1992 or 1993 and regarded them as personal friends. The Minister stated he had exchanged only "small" gifts with the Liu family and had received no gifts that required public declaration under parliamentary disclosure laws. A source close to Fitzgibbon said it appeared he was "at war" with his department after the bruising battle over responsibility for bungled payments to SAS soldiers. PRIME MINISTER "UNIMPRESSED" BY REPORTS ¶4. (U) Responding to reporters' questions during his visit to Washington, Prime Minister Rudd said that he was "unimpressed" with the covert inquiries into Fitzgibbon's relationship, and would await the findings of a Defense investigation into claims departmental officials conducted covert inquiries into their minister. He said neither the Department of Defense secretary nor the Chief of Defense QDepartment of Defense secretary nor the Chief of Defense Force staff had received any reports of covert investigations by the department. "I'm further advised," he stated, "that the secretary of the Defense Department is conducting a further investigation into this matter. Therefore, I'll await the outcome of that investigation." ¶5. (C/NF) COMMENT: The source and veracity of the reports aside, what is apparent is continued tension between Mr. Fitzgibbon and elements within the ADOD. As we have noted in earlier reporting (ref B),some observers here have expressed misgivings with Fitzgibbon's performance as defense minister and speculate that the outspoken Fitzgibbon's days in this post may be numbered. Fitzgibbon, an early supporter of Kevin Rudd while in opposition, has enjoyed the Prime Minister's support in his defense role. While Rudd is withholding judgment until the inquiry into the leak of the probe is concluded, Fitzgibbon's image as a competent manager of his large and complex portfolio has not been helped by this latest indication of a bad relationship between the Defense Minister and the military. RICHE