AUSTRALIAN DEFENCE MINISTER FITZGIBBON RESIGNS

C O N F I D E N T I A L SECTION 01 OF 02 CANBERRA 000524 NOFORN SIPDIS E.O. 12958: DECL: 06/04/2019 TAGS: PREL PINS PINR AS SUBJECT: AUSTRALIAN DEFENCE MINISTER FITZGIBBON RESIGNS CANBERRA 00000524 001.4 OF 002 Classified By: Charge d'Affaires Daniel A. Clune. Reasons: 1.4 (b)(c). SUMMARY -------------- ¶1. (C/NF) Defence Minister Joel Fitzgibbon resigned June 4 over an apparent conflict of interest involving his brother's private health insurance company. The embattled minister had been under pressure following earlier revelations of undeclared gifts from a Chinese businesswoman and free accommodation provided by his brother's company. PM Rudd accepted the resignation, noting the importance of maintaining the highest standards of government accountability, and pledged to have a new defense minister in place quickly. Depending on who might be tapped to take up the complex portfolio, a larger cabinet reshuffle may be in the offing. End summary. ¶2. (SBU) Prime Minister Rudd called a news conference just before Parliamentary question time June 4 to announce he had accepted the resignation of Defence Minister Joel Fitzgibbon. In a written letter to the PM, Fitzgibbon acknowledged he may have violated the Rudd government's Code of Conduct for ministers following the disclosure by the Shadow Defence Minister David Johnston in Parliament the previous evening that Fitzgibbon had permitted his brother, Mark Fitzgibbon, who heads private health insurance company NIB, along with a representative of the U.S. health company Humana, to meet Minister for Veterans' Affairs Alan Griffin and Minister for Defence Science and Personnel Warren Snowden in Fitzgibbon's ministerial office with Fitzgibbon's staff members to pursue an Australian Department of Defence contract. Fitzgibbon had initially denied the claim. ¶3. (SBU) In his press remarks, Rudd praised Fitzgibbon as a "first-class defense minister," citing his accomplishments in withdrawing combat forces from Iraq, addressing the new strategic challenges in the Afghanistan-Pakistan theater, and overseeing the Defence White Paper. At the same time, however, Rudd stressed that his government expected the highest standards of conduct and accountability. He promised to name a new defense minister before the next Afghanistan Regional Command - South (RC-South) meeting, but gave no hint when an announcement could be expected. ¶4. (SBU) Fitzgibbon had been under pressure, not only from the Opposition bench but also from the Prime Minister himself, over earlier conduct involving undeclared gifts. On June 2, just two days earlier, for example, Fitzgibbon had been forced to issue a public apology over having failed to declare free accommodation provided by his brother's company. In March, he was forced to acknowledge having received free air tickets to China and other gifts from Sydney-based businesswoman Helen Liu. The latter incident, involving media claims -- emphatically denied by the GOA -- that Qmedia claims -- emphatically denied by the GOA -- that Fitzgibbon's relationship with Liu was the subject of a secret internal ADOD probe, had continued to fuel controversy over Fitzgibbon's ethics and judgement. COMMENT -------------- ¶5. (C/NF) While PM Rudd insisted that the decision to resign was Fitzgibbon's alone, it is telling that he dispatched his chief aide, Alistair Jordan, and Senator Faulker, Special Minister of State and Cabinet Secretary, to meet with Fitzgibbon early on the morning of June 4, prior to production of the resignation letter. ¶6. (C/NF) Given the complexity and size of the Defence portfolio, and the critical importance of managing its transformation along the lines set out in the recent Defence White Paper, PM Rudd may well call on an experienced front bencher to fill the Defence Minister role. This would inevitably lead to a reshuffle, giving Rudd a chance to CANBERRA 00000524 002.6 OF 002 replace some of the weaker performers and reward promising up-and-comers, possibly including perhaps Assistant Treasurer Chris Bowen or back-bencher Mark Arbib. Possible candidates to succeed Fitzgibbon include Greg Combet, who was Parliamentary Secretary for Defence Procurement until recently when he was moved to the Water portfolio; Mike Kelly, currently Parliamentary Secretary for Defence Support; Robert McClelland, currently Attorney-General but previously Shadow Defence Minister; and Senator John Faulkner. We do not expect to see any diminution of the close mil-mil relationship or impact on the alliance as a result of the Defence Minister's resignation. CLUNE