Foreign ownership and cut corners: hotel quarantine debacle leaves security firms with big questions to answer
This story is part two in a series. Read part one here.
The failure of Victoria’s hotel quarantine effort has come at a high price. Citing genomic testing data, Victorian Premier Daniel Andrews has said the impact is substantial, though the full story of the spread of COVID-19 through security guards is yet to be told and may yet be linked to infections in Melbourne’s high rise towers.
And as Inq has discovered, one company at the centre of the debacle provides security services for Metro Trains Melbourne. .
With a judicial inquiry headed by Justice Jennifer Coate underway, the spotlight is set to fall on the major security contractors and why they were chosen to be at the frontline of Melbourne’s containment efforts.
MSS Security is a big name in Australian security, with some 20% of the market. It is also influential in the industry’s professional and lobbying body, ASIAL, whose president is an MSS executive.
Pull back the corporate veil and you discover that MSS Security’s ultimate owner is the SIS Group, a giant conglomerate listed on India’s National Stock Exchange and owned by a billionaire businessman-turned-politician, Ravindra Kishore (RK) Sinha. SIS Group includes a maze of 43 subsidiary companies spanning India, Singapore, New Zealand and Australia.
A group subsidiary, SIS Asia-Pacific Holdings Ltd, was revealed in the 2017 Paradise Papers document leak as being registered in Malta — a jurisdiction which offers corporate secrecy. According to analysis by the International Consortium of Journalists, RK Sinha owns a single share in SIS Asia Pacific via a holding company in the British Virgin Islands, an international tax haven.
Sinha is one of India’s wealthiest individuals. He was elected in 2014 to the Indian parliament representing the socially conservative, nationalist BJP party. In Australia he is connected to conservative politicians — federal MP Alex Hawke and NSW MP David Elliott — as a board member of the Australia-India Business Trade Foundation.
SIS Group’s annual report for 2019 shows that its Australian security operations contributed a substantial $765 million in revenue, representing 11.7% growth on the previous year. At the same time the company has kept a tight rein on labour costs, reporting that “efficiency gains in labour costs and overheads” helped increase its margins.
Earlier this year the company paid five security guards in Bendigo $52,000 in backpay after a protracted dispute heard by the Fair Work Commission. The commission earlier ruled that the guards had been wrongly graded for the level of their work.
SIS has also informed the Indian share market that it expected a “subdued” result from a Fair Work Commission decision this year on wages. The award rate for a security guard varies from $21.90 to $24.05 an hour, with loadings for night work and weekend work — on a par with rates for aged-care workers.
The Coate inquiry may examine media claims that in providing security at the Stamford Plaza Hotel — the heart of the COVID-19 hotel outbreak — MSS used subcontractors who might also have done guard work at Melbourne’s high rise public housing towers.
MSS declined to answer our requests for comment.
At the other end of the spectrum is Unified Security, which has its head office in Sydney with NSW-based company directors.
Unified promotes itself as the “largest wholly Australian and Indigenous owned” security company in Australia. Unitfied has federal government certification as a Supply Nation by virtue of being at least 50% Indigenous owned and managed. It is also listed as a member of the Kinaway Chamber of Commerce, a Victorian organisation which promotes the interests of Indigenous-owned businesses in the state.
While clearly smaller than MSS, Unified’s credentials include a role on a NSW police and security industry consultative group.
In August last year Unified was selected to provide security for Metro Trains Melbourne, a major contract covering more than 200 railway stations and thousands of staff. Unified described the contract as “a defining moment for our company”. Its other Victorian experience is unclear.
Unified faces untested allegations that it subcontracted out quarantine guarding work at the Crown Promenade Hotel in Melbourne, and that one of its employees had offered cash payments of $22 per hour to a prospective guard.
According to Metro Trains, Unified provides security services at sidings, where trains are kept overnight, and depot gatehouses where they have no contact with passengers. Unified Security had confirmed to Metro Trains that none of its staff working in hotel quarantine were working on Metro Trains sites.
A Metro Trains spokesperson told Inq: “We have strict protocols in place to reduce any risk of coronavirus transmission and are following the expert health advice to keep all passengers and employees safe.”
Victoria’s judicial inquiry may well be interested to know why Unified was appointed given that the company was not one of the five pre-approved security suppliers listed on the site of the Victorian government’s procurement agency, Buying for Victoria.
The procurement list includes MSS Security as well as high profile Wilson Security which was also appointed to guard hotels (though there are no allegations arising from Wilson’s work.)
Unified also declined to answer our requests for comment.
Broken employment chains
Beyond the detail of the contracts, the Coate inquiry might care to examine the impact on safety and quality when companies use labour hire firms to supply staff.
Labour hire has emerged as a common link between the hotel quarantine failure and the earlier Cedar Meats cluster which peaked at 111 cases, made up of 67 staff members and 44 close contacts. According to The Age, Cedar Meats management ignored reports of workers who believed they may have had coronavirus in mid-April as “rumour and innuendo”, weeks before health officials eventually shut down the abattoir.
More than half the Cedar Meat workforce is supplied by the labour hire firm Labour Solutions Australia, which itself is foreign owned — by a large South African conglomerate listed on the Johannesburg Stock Exchange.
Dr Katie Hepworth, director of workers’ rights at the Australasian Centre for Corporate Responsibility, said the Cedar Meats and hotel quarantine cases highlighted the risks of complex contracting and subcontracting arrangements.
“Subcontracting often results in a lack of transparency and accountability for a workforce, with lead contractors eschewing responsibility for training, failing to provide adequate personal protective equipment (PPE), and even failing to provide minimum wages and conditions,” she said. “Lines of responsibility are often unclear, and critical information is easily miscommunicated. This short-term profiteering is a public health issue. Not only does it jeopardise the health and safety of workers, but it increases risks for the whole community, and has major implications for the whole economy.”
Hepworth pointed to statements from Victoria’s chief health officer that there were miscommunication problems among staff involved in the hotel quarantine cases and that there wasn’t “as robust an understanding” of the distance that was required between contracted staff.
“These issues highlight the hollowing out of wages and conditions that has occurred in the security industry over a number of years,” she said.
NOTE: This article has been updated to include a response from Metro Trains received after deadline.