DEFENSE MINISTER LIKELY TO SURVIVE - FOR NOW

C O N F I D E N T I A L CANBERRA 000335


NOFORN
SIPDIS

E.O. 12958: DECL: 04/01/2019
TAGS: PGOV MARR AS
SUBJECT: DEFENSE MINISTER LIKELY TO SURVIVE - FOR NOW

REF: CANBERRA 312

Classified By: Political Counselor James F. Cole, for reasons 1.4 (b)
and (d).


1. (C/NF) SUMMARY: Defense Minister Joel Fitzgibbon appears
safe in his portfolio in the short-term, as the media hype
surrounding his link with Chinese-born businesswoman, Helen
Liu, subsides (reftel). Prime Minister Rudd has publicly
backed him, an independent audit of a payroll bungle
affecting the Special Air Services Regiment (SAS) has
apparently absolved him of responsibility, and the media is
not calling for his removal. Those still out for
Fitzgibbon's scalp are the Opposition Liberal Party desperate
for a political victory, and, according to Fitzgibbon, some
disgruntled members of the military and defense bureaucracy
who are unhappy with Fitzgibbon's reform agenda. An internal
inquiry by the Australian Department of Defence (ADOD) has
found no evidence so far of any officially sanctioned
investigation targeting Fitzgibbon or his relationship with
Liu, and Australia's counter-espionage agency declared that
it has no security concerns regarding the Chinese
businesswoman. With the release of the Defense White Paper
still pending, Fitzgibbon's short-term future is likely
secure, assuming no other shoe drops. However, it is
difficult to see how a minister with a poisoned relationship
with his department, and who has not distinguished himself in
Parliament, will survive a cabinet reshuffle, which is likely
before the end of the year. END SUMMARY

NO EVIDENCE ADOD SPIED ON FITZGIBBON


2. (U) ADOD's Defence Security Authority's initial
assessment, provided March 27, was that contrary to
information in the original media story, no element of
Defence had investigated Fitzgibbon's relationship with Liu,
no Defence investigative authority had been aware of the
Chinese-Australian businesswoman, and no part of Defence
accessed personal information in Fitzgibbon's office. The
same day, the Attorney-General announced that the Australian
Security Intelligence Organization (ASIO) had no information
relating to Liu which would have given rise to any security
concern.


3. (C/NF) Australian Deputy Secretary of Defense for
Intelligence and Security, Steve Merchant, told us on March
31 that the Australian Department of Defense (ADoD) has
"turned the place upside down" since the press reported
unauthorized defense signals directorate (DSD) spying against
Fitzgibbon. Mr. Merchant said it was important for the
United States to know unequivocally that there was nothing to
the allegations, and that DSD had not used any of its
capabilities to spy on the Minister (see septel.)

FITZGIBBON BACKED BY POPULAR SYDNEY PAPER - AND RUDD


4. (SBU) The Murdoch-owned tabloid, "The Daily Telegraph",
Sydney's largest selling newspaper (and often an accurate
gauge of what Labor's core working-class voters are
thinking),strongly backed Fitzgibbon in an editorial,
asserting that Fitzgibbon had been betrayed by ADOD as a
result of his "tough minded" approach to cleaning up a
"massive funding black hole." The Telegraph urged Prime
Minister Rudd to "back his minister and put the generals and
bureaucrats back in their box." On April 2, the respected
foreign editor of The Australian, Greg Sheridan, also came
out in Fitzgibbon's defense. After Fitzgibbon disclosed the
China trips, Rudd said he "expected better" of his Defence
QChina trips, Rudd said he "expected better" of his Defence
Minister but added that he "is doing a good job." There has
been no media push for Fitzgibbon's ouster, and the story,
while still appearing in the press, is no longer dominating
the political debate, notwithstanding the Opposition's
continued calls for Fitzgibbon's head.

FITZGIBBON COULD GO IN NEXT RE-SHUFFLE


5. (C/NF)) COMMENT: Fitzgibbon's determination to clean up
Defence, his unwillingness to defer to sacred cows in the
Defence establishment, and his public admonishment of his
department, have created enemies in ADOD and the military.
Fitzgibbon's indiscretions do not seem to warrant dismissal,
and Rudd and Deputy Prime Minister Julia Gillard (who is
close to Fitzgibbon) continue to show confidence in his
performance. Provided there are no further controversies,
Rudd is unlikely to fire Fitzgibbon in the short term. Doing
so could damage the credibility of the defense white paper,
which we are hearing could be delayed until the end of May,
and could be interpreted as a win for his detractors. It is
more likely that Fitzgibbon will be permitted a more
dignified exit in the next ministerial re-shuffle, which
could occur at the end of the year as the Government prepares
for the 2010 election. A minister cannot be effective if he
is constantly at war with his department, and there are
several talented alternatives waiting in the wings. We
cannot rule out the possibility that PM Rudd will retain
Fitzgibbon remaining in the post beyond the next re-shuffle,
given the loyalty between the two. After Rudd won the
election, he kept Fitzgibbon on in the Defence portfolio,
despite the predictions of most experts that the portfolio
would go to a more substantial political figure.

RICHE