Red alert: Warning as China eyes SA’s Flinders Port deal

A CHINESE corporation Landbridge that sparked a global diplomatic incident expressed interest in securing a stake in SA’s Flinders Ports, which controls a crucial Port Adelaide site near where the $50 billion future submarines will be built.

The Advertiser can reveal retiring Trade and Investment Minister Martin Hamilton-Smith and SA Government bureaucrats met senior managers of the Chinese company, Landbridge, last Sep­tember, for a meeting that included representatives from the Chinese consulate-general.

Landbridge was at the ­centre of an international incident in 2015 when it acquired Darwin Port from the Northern Territory government.

The sale led the then US president Barack Obama to chide Prime Minister Malcolm Turnbull for permitting the deal and sparked a major Federal Government review into the oversight of critical infrastructure.

At the meeting in a restaurant in Adelaide’s Chinatown, Landbridge raised its strong interest in making an investment in Flinders Ports.

Landbridge’s billionaire owner and president Ye Cheng, a national committee member of the Chinese People’s Political Consultative Conference, was also present, along with Darwin Port operators.

On Friday, Treasurer Tom Koutsantonis said he was aware Mr Hamilton-Smith had arranged a meeting with “a potential investor in South Australia”, but not that it was specifically about ports.

Mr Koutsantonis said “of course” it was appropriate for Mr Hamilton-Smith to hold the meeting.

“We often meet with Chinese investors and they ask a range of questions, sometimes about investment in mines… in infrastructure,” he said.

“There’s no national security ramifications here because ultimately the decision is made by the Commonwealth, not by the state.”

Chinese company Landbridge at centre of Darwin Port security scare meets SA Minister Martin Hamilton-Smith in a play for SA’s Flinders Ports

Mr Koutsantonis said the State Government would “not support” a sale if it was considered by the Foreign Investment Review Board.

Flinders Ports has seven operations in SA, of which Port Adelaide’s inner harbour is its biggest.

The meeting has sparked a warning from one of the country’s top security experts that the State Government could compromise SA’s future bids for defence construction contracts by adopting a naive attitude about the operation and ambition of Chinese-backed companies.

Both the State Government and Flinders Ports say no formal “proposal” for an investment in the company has been made, but remain tight-lipped about details of the meeting.

Australian Strategic Policy Institute executive director Peter Jennings, formerly a senior defence department official and prime ministerial adviser, said the Port Adelaide site was one of Australia’s most sensitive and of “extremely high interest to Chinese intelligence”.

Mr Jennings said the Darwin Port sale to Landbridge was a “stuff-up of Keystone Kops proportions” that should have put other governments on red alert. Any Chinese attempt to take an interest in SA infrastructure would attract close Federal Government scrutiny, he said.

“With regard to the submarine construction (nearby), we really are talking about the jewel in the crown of sensitive technology,” Mr Jennings said.

“The port would also be of extremely high interest to Chinese intelligence, because they are actively out there looking for any advantage they can have in terms of intellectual property theft, to get it for themselves.

“If you have got something that is within visual range, that also means it is an area from which you can have a wide array of electronic eavesdropping technology used to gather data from the Osborne construction site. That would automatically put up a major red flag.”

In 2015, Mr Hamilton-Smith and Premier Jay Weatherill publicly declared their intention to work more closely with Chinese Communist Party officials in SA’s sister state of Shandong.

In what they heralded as a “landmark agreement” between SA and Shandong’s Communist Party Secretary Jiang Yikang, the pair signed a “Friendly Co-operation Action Plan”.

Mr Weatherill said that “Shandong is our window into China and equally we are encouraging Shandong to see SA as their window into Australia”.

Mr Hamilton-Smith said “the Shandong Landbridge Group will be investigating opportunities in port infrastructure and wine”.

In 2013, Mr Ye was reportedly cited by the Shandong Communist Party committee as one of 10 outstanding individuals in the province concerned with national defence construction.

Landbridge recently acquired the Rymill Coonawarra winery for $13.2 million.

The deal came under scrutiny from SA Ombudsman Wayne Lines, who cleared Mt Gambier Mayor Andrew Lee but said he “walked a very fine ethical line” in helping broker the deal.

That inquiry received evidence that Mr Lee met Landbridge’s Mr Ye in China in 2015 and was told of his plans to “build high-class accommodation and also a port” in SA.

He also visited Adelaide in 2015 to scope investments, before the NT deal went public.

Mr Jennings said SA could lose defence contracts if seen to be compromised by China.

“For any large-scale Chinese company to prosper, it needs the closest possible relations with the Communist Party at both provincial and national levels and, of course, Landbridge does,” he said.

“The SA Government should think about this very carefully from the point of view of how they want to position the state as a leading defence manufacturer in the country.”

Flinders Ports Outer Harbor facilities.

PORTS KEY TO STATE’S ECONOMIC HEARTBEAT

FLINDERS Ports was formed after the privatisation of state-owned SA facilities in 2001.

It has five major shareholders, which each holds parcels of between 14 per cent and 29 per cent.

A State Government spokesman said it had “not been presented with any proposal for Chinese investment in any of South Australia’s ports”, which were “a key economic artery”.

Mr Hamilton-Smith rebuffed repeated requests for comment this week.

A Flinders Ports spokeswoman said the company was “not aware of any proposal by Landbridge, or anyone else, to invest” in its SA operations. Flinders Ports also controls assets at Port Pirie, Port Lincoln, Port Giles, Klein Point, Thevenard and Wallaroo.

Nick Xenophon Team Senator Rex Patrick, a former submariner, said any move to offload SA Ports to foreign-backed entities must be made with the full involvement of defence officials.

“Noting the proximity of Flinders Port to Techport, Australia’s premium naval shipbuilding precinct and the location of the RAN’s future submarine and frigate build, I would have considerable reservations about the sale of the port to a foreign entity,” he said. “I would hope that the SA Government has not sought to broker any sale or lease … without first discussing this with the Department of Defence.”

Mr Xenophon said the privatisation of SA’s ports had been a “dog of a deal” which short-changed taxpayers.

Federal Treasurer Scott Morrison last year launched a critical infrastructure centre, warning privatisation and outsourcing had increased risks of “sabotage, espionage and coercion”.

A spokeswoman on Thursday said the Federal Government does not comment on prospective applications to the Foreign Investment Review Board, or any which are currently under way.

Source: http://www.adelaidenow.com.au/news/south-australia/chinese-company-landbridge-at-centre-of-darwin-port-security-scare-meets-sa-minister-martin-hamiltonsmith-in-a-play-for-sas-flinders-ports/news-story/9e4728162a9cef35f77753e903653f6e

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