Two senior ministers stand accused of sitting on their hands as China seeks to swoop in and buy a major South American missile manufacturer that could still come to Australia if the federal government acts swiftly.
The move by Norinco – the main supplier of Chinese weapons – to attempt to buy cash strapped Brazilian manufacturer Avibras has turned what could have been an unprecedented defence acquisition by an entirely sovereign owned Australian company, into a potential national security threat.
Should China be successful, insiders believe it would equip the People’s Liberation Army with the intellectual property needed to modernize its soviet era guidance systems and manufacture long range coastal strike weapons deemed ideal for a strike on Taiwan.
“It is deeply concerning that my warnings and requests seem to be falling on deaf ears,” said Travis Reddy, CEO of Australian company DefendTex whose exclusivity period to buy Avibras expires at the end of the month, unless he can get urgent Commonwealth support.
For 18 months he has been asking the Government through Export Finance Australia to loan DefendTex the additional $70m it needs to close the roughly $200m deal, pledging to repay the money plus interest with contracts already signed within 12 months.
The fears of the CEO, who is also a defence veteran, seem well founded. Sky News has seen a secret letter between the Chinese State-owned company, Norinco and the Brazillian defence Minister, José Múcio Monteiro Filho.
Translated from Portuguese, Norinco’s Vice President suggests “a government-to-government agreement … financed through the government of China”, making clear Chinese Communist Party’s ambitions to purchase the distressed asset.
Appearing to sweeten the deal, Beijing also offers to manufacture Chinese weapons in Brazil, promising “the full integration of Chinese products with the Brazilian Army systems.”
“We can act decisively in order to prevent a future problem or we can suffer from inaction and let the world change around us,” Mr Reddy told Sky News, admitting he was taken back by China’s power play.
He believes it now alters the purchase of Avibras from a strategic ambition to a matter unambiguously in Australia’s national interest.
Despite repeated efforts, however, the CEO’s attempts to meet with senior members of government continue to be rebuffed.
The Commonwealth has made clear its intention to develop a guide weapons program in alliance with the American defence industry to the tune of more than four-billion-dollars.
“I’ve attempted multiple times to make contract at the ministerial level and so far, I’ve still been unable to get a face-to-face meeting,” Mr Reddy said.
Last week the frustrated CEO even emailed the Defence Minister, Richard Marles and Defence Industry Minister, Pat Conroy to request a meeting, but was told by staff who worked for the later, that the minister’s diary was full.
“The question is if China can see the value in the acquisition, with all of its industrial capacity, why can’t Australia see it?”
DefendTex while small by international standards, is no novice. It currently designs and manufactures loitering munitions that are sold to the United Kingdom and the United States. Its weapons are also used extensively in Ukraine.
It had hoped to continue manufacturing Avibras hardware in Brazil, while also setting up a parallel manufacturing line in regional Victoria, where it could potentially supply advanced rockets and ballistic missiles to the Australian Defence Force, expand its foreign sales and create what it estimates to be five-hundred local jobs.
The CEO spoke to Sky News having landed in Singapore on route to France where he now intends to seek financial backing from a European nation, fearing the consequences if a “potential” adversary acquired Avibras.
“(I’m going) cap in hand to Europe to see if of the other nations will step up and do what we should be doing.”
Former Senator Rex Patrick – who has become an outspoken voice on defiance acquisitions, described the government’s inaction as a loss for Australia and feared that it continued to leave us over reliant on the United States.
“It just doesn’t make any sense,” the former senator said.
“This was a contingency saver for us in the event that something goes wrong with the US program.
“We could have obtained a capability. Now, we’re in a situation where it might be that a potential future enemy gains this capability,” he said.