Inside Story

A strange tale of two diplomats

The contrasting treatment of Trent Smith and Matthew Hyndes raises troubling questions about the Department of Foreign Affairs and Trade, writes Geoffrey Barker

Geoffrey Barker 12 February 2009 2707 words

The original allegations against Trent Smith related to a leaked conversation between the then foreign minister Alexander Downer (above) and the New Zealand high commissioner. Rolex Dela Pena/EPA

IT WAS ONE of the nastiest witch-hunts conducted by a federal government department in recent years and it has cast a long shadow over the integrity and judgement of Australia’s Department of Foreign Affairs and Trade, DFAT. The case was, of course, the $1.5 million three-year pursuit of diplomat Trent Smith following an unsubstantiated accusation by another diplomat, Matthew Hyndes, whose private and professional credibility was compromised and who was described by an arbitration commissioner as having “a lack of regard for the truth.”

While some of the issues are still murky or unresolved, enough is now known to argue that DFAT’s actions were driven by a self-serving and secretive institutional mindset that saw it pursue alleged information leaks with a remorselessness that bordered on the obsessive.

Smith and Hyndes are now back at work in DFAT, and they and the department appear anxious to put the episode behind them. Although the affair occurred while the Howard government was in office, the Rudd government has shown little public inclination to continue the pursuit of the issues that it raised in opposition. It is still unclear whether Labor will compensate Smith for the substantial legal costs of clearing his name and gaining reinstatement after being sacked by DFAT. A blanket of silence has come down over the affair.

Yet unease remains. Smith has been cleared of leaking sensitive information but is reportedly heavily in debt. Hyndes has been demoted and fined by DFAT. It has been confirmed he was involved in Thailand with a business partner now missing and presumed murdered. It has also been confirmed that $46 million passed through his bank accounts before he was declared bankrupt (the bankruptcy was annulled in 2001). And it has been confirmed that Hyndes’s DFAT security clearance, which was downgraded for five years, was restored after he sent an email to the head of DFAT’s security branch saying that he would leak information.

These lurid aspects of the affair made headlines. Yet the heart of the matter arguably is not what was and was not done by and to Smith and Hyndes. It is rather why the two officers were treated so differently by DFAT throughout the affair. Smith was referred to police and other external investigators and treated as a pariah who was to be investigated until some offence could be pinned on him. Hyndes was treated as a decent chap who had made mistakes, repented, and been forgiven and rewarded after being punished through internal DFAT processes.

It is these extraordinary differences that raise questions about the fairness, critical judgement and moral courage of DFAT’s senior officers. It might or might not be relevant that Smith was reported to have worked as a Labor Party staffer while Hyndes had links to the Liberal Party and had campaigned for the Nationals. Whether Smith was pursued as a result of Coalition government political pressure is a question that has not, and is unlikely to be, answered by DFAT.

TRENT SMITH’S ORDEAL started in February 2003 when he was suspended from work on full pay on suspicion of having leaked the minutes of a politically embarrassing conversation between the then foreign minister Alexander Downer and the New Zealand High Commissioner Kate Lackey. Downer had told Lackey that with or without United Nations approval Australian troops would participate in the US-led invasion of Iraq. At the time the public position of the government was that no decision had been made to commit Australian troops.

It subsequently emerged that Matthew Hyndes was the informant who told DFAT investigators that Smith had possibly leaked details of Downer’s conversation with Lackey. Hyndes also told investigators that he was “convinced on some level” that Smith had passed information to the Labor opposition and that he had helped the opposition to prepare questions for Senate estimates hearings. A subsequent inquiry by the Australian Federal Police cleared Smith of leaking Downer’s conversation.

Notwithstanding the AFP’s finding, DFAT continued to investigate Smith, hiring external consultants and eventually spending more than $1.3 million. Smith was eventually sacked in July 2006 after an investigation conducted by Peter Kennedy, a former public service commissioner and former staffer of retired Liberal minister Peter Reith, found that he had breached the apolitical requirements of the Australian Public Service code of conduct.

A search through more than 8000 of Smith’s emails had found that in September 2002 he replied to a message from Ashley Wells, a former DFAT colleague who was an adviser to Kevin Rudd, the opposition foreign affairs spokesman. Wells had asked Smith where he would find a list of people consulted in the preparation of a government white paper. Smith replied that the list of individuals consulted could form the basis of a question at Senate estimates hearings. In effect Smith referred Wells to information available on the public record. That appeared to be the alleged offence that led to his sacking.

In December 2006 Smith applied for reinstatement and, vigorously opposed by DFAT, mounted a case in the Australian Industrial Relations Commission before Commissioner Barbara Deegan. It was during the AIRC hearings and at Senate estimates hearings in 2006 and 2007 that lurid details of Hyndes’s professional and personal life, and the institutional attitudes of DFAT, emerged as factors in the ongoing saga.

In September 2007 Commissioner Deegan ordered Smith’s immediate reinstatement. In a major embarrassment for DFAT and the government she described his sacking as “harsh, unjust and unreasonable” and said there was a myriad of reasons why she could not accept that any evidence given by Hyndes, DFAT’s main witness, was credible. She found that Hyndes had a “lack of regard for the truth.” Hyndes, then deputy Australian High Commissioner to Sri Lanka, was flown to Australia to give evidence at the AIRC hearing.

During the AIRC and Senate estimates hearings it emerged that Hyndes was found to have breached the public service code of conduct while on leave without pay in Thailand working for a private firm, Asset Risk Management, during 1996. When he returned to DFAT in Canberra in 1997 his security clearance was downgraded. In 1999 he was demoted, had two “three-figure” internal fines imposed on him, and was required to undergo counselling.

Hyndes’s top-secret security clearance was restored in August 2002 only days after he sent an email to the head of the DFAT security branch saying that he would go to the media with allegations damaging to Australia–Thailand relations unless his clearance was immediately restored. Hyndes also said he would reveal information about the death of Merv Jenkins, the Defence Intelligence Organisation officer who had committed suicide in Washington in 1999 after being interviewed as part of a DFAT/Defence investigation into document handling. It also emerged that in September 1997, heavily disguised, Hyndes appeared without departmental authorisation on Four Corners.

There were also disclosures about Hyndes’s work with Asset Risk Management in Thailand. The company principal, Tim Gatland, Hyndes’s business partner, has been missing in Thailand since 1996 and is presumed murdered. Australia’s National Personal Insolvency Index showed Hyndes was declared bankrupt in 1999; the bankruptcy was annulled in 2001.

Perhaps understandably, newspapers at the time devoted significant space to these issues, to reports of $46 million passing through Hyndes’s bank accounts and to suggestions that Asset Risk Management had sought to bribe Thai politicians and that Hyndes was “a person of interest” to the Thai police.

During the AIRC hearings several expert witnesses said Smith had not breached the Public Service code of conduct by directing Ashley Wells to information that was on the public record. Commissioner Deegan criticised Kennedy’s investigation of Smith, saying she was unable to accept his reasoning or many of his conclusions or findings as to alleged breaches by Smith. “Mr Kennedy reached his conclusion… on the basis of evidence that was unsafe, untested and unsustainable on the facts,” she said.

While press reporting repeatedly stressed that Smith had been subjected to a long and financially damaging witch-hunt by DFAT it paid little attention to the difference in the department’s treatment of Smith and Hyndes. Yet this is arguably the most intriguing and disturbing aspect of the matter.

Smith, a trade economist and DFAT officer of good standing since 1991, had received two departmental citations for his work. He had worked as an adviser to the Labor opposition between 1997 and 1999. The career and professional behaviour of Hyndes, who was reported to have had Liberal Party ties and to have campaigned for the National Party, had been far more troubled.

Yet on information supplied by Hyndes, Smith was stood down, sacked and subjected to three years of searching investigation by the department, police and other consultants including Peter Kennedy. Hyndes, by contrast, was taken back into the department after his troubled interlude with Asset Risk Management and was subsequently posted to Sri Lanka as deputy high commissioner. Departmental penalties imposed on him seem insignificant compared with Smith’s protracted ordeal. Commissioner Deegan’s findings were doubtless embarrassing to him, but Hyndes is still with the department and is currently understood to be working on the plum United States desk at DFAT’s Canberra headquarters.

It certainly appeared that Hyndes was treated with kid gloves compared with Smith. In Senate estimates hearings on 27 May 2007 Labor Senator John Faulkner sought to pursue the issue as he questioned DFAT deputy secretary Doug Chester. Faulkner’s examination of Chester, which received little media coverage, proved a rare and troubling insight into DFAT processes and the department’s mindset.

Throughout, Chester repeatedly sought to avoid answering questions which he said were matters being contested at Commissioner Deegan’s AIRC hearing, which was running at the same time. He refused, for example, to comment when Faulkner asked him whether Hyndes’s email to the head of the DFAT security branch was “just a blatant threat.” “I think we are again straying into areas that are before the commission… and I would prefer not to go down that path,” he said.

Chester also refused to say whether, as reported, he had told Hyndes, in relation to his intention to destroy certain documents, that he could “do what he liked” with them. “Again I would like to answer,” Chester said, “but it goes to the issue of credibility of witnesses before the commission.”

But Faulkner did extract an answer from Chester when he asked why Smith’s case had been passed to external investigators while Hyndes had been dealt with internally. Here is the crucial part of Chester’s reply: “[I]t was clear that the issues surrounding Mr Smith were going to be politicised and the best way for the department to protect itself from dangers of politicisation was to have an independent umpire look at it.” In Hyndes’s case, Chester said, “there is no element of politicisation. The allegations in relation to Hyndes were things like misleading the department as to when he was going to take leave without pay; the allegations against Smith were ones of providing assistance to the opposition in the preparation of Senate estimates questions.”

Under Faulkner’s questioning Chester said: “I do not think there is any doubt that Mr Hyndes will forever be dogged by those six months leave he took from the department when he worked in Thailand. I think it is quite clear that it has had a significant impact on him, his family, his health and his career in the department. He has been subject to a code of conduct investigation. He has been demoted. He has been subject to a number of security clearance reviews… He has made a decision that he wants to get on with his career in the department. At least for the last three years or so his work in the department has been very good. It is on that basis that he was posted to Sri Lanka. As I said earlier he is doing a very good job in Sri Lanka.” Mr Chester was clearly not reluctant during the contested AIRC hearings to provide Hyndes with this character reference.

Towards the end of the questioning Faulkner asked Chester whether it was the department’s intention to have “the appropriate authority” examine Hyndes’s remarks about the Merv Jenkins case. While again saying “it would be best for us to allow the commission to reach a conclusion,” Chester finally conceded: “I can assure you that if at the conclusion of these proceedings there is any information that is relevant to that case, then the department obviously will be forthcoming with it.”

But since Smith’s reinstatement DFAT has not been forthcoming about any aspect of the case. It refuses to answer questions about Smith and Hyndes and it does not yet appear to have offered to reimburse legal costs incurred by Smith in clearing his name and getting back his job. Labor, now in government, seems reluctant to act. One possible reason is that Labor does not want to put DFAT offside by further pursuing the differences in its handling of Smith and Hyndes.

YET THE IMPLICATIONS of Doug Chester’s evidence are deeply disturbing. The evidence betrays an institutional mindset of ducking for cover when under pressure. Chester sought refuge behind the AIRC hearing to avoid answering questions about contested issues, although he was clearly well placed to offer credible judgements and he did not shrink from giving Hyndes a character reference.

The evidence also suggested DFAT was more concerned to protect itself from “politicisation” (a notion not defined by Chester) than it was to protect the employment and legal rights of Trent Smith. It was disingenuous of Chester to suggest that the allegations relating to Hyndes were merely “things like misleading the department as to when he was going to take take leave without pay.” The evidence showed contentious behaviour by Hyndes went far beyond that essentially administrative infraction.

DFAT’s willingness to rely on an officer with damaged credibility suggests that its desire to pursue Smith overcame its judgement and sense of justice. It is not clear why this was so. There were even suggestions that the department might have been complicit in moves to destroy documents relating to the death of Merv Jenkins.

Chester’s warm endorsement of Hyndes as a man who had repented his past behaviour and was now doing a good job contrasted dramatically with his silence on Smith. One conclusion might be that the department prefers to encourage flawed and repentant sinners rather than to support virtuous officers who have managed to clear themselves of groundless allegations. Indeed in Smith’s case the department acted with great energy to find a new if equally dubious reason to sack him after the police cleared him of leaking the Downer–Lackey conversation.

Perhaps the last word should go to the Labor lion Senator Robert Ray. In Senate estimates he noted the difference between the government’s performance in the AWB Iraqi wheat sales scandal and its pursuit of Mr Smith. Ray contrasted DFAT’s failure to note and investigate correspondence in the AWB affair with its obsessive hunt for anything that might nail Smith. He also noted what he called Hyndes’s “pretty bad track record.”

It is unlikely that DFAT will ever come completely clean about its pursuit of Smith. It appears to be hoping now that Smith and Hyndes have been sufficiently intimidated to simply want to get on with their lives and careers. It remains to be seen whether Smith will be compensated in any way and how far Hyndes will progress in the department. At least the affair should alert those considering a diplomatic career to what they might face if they fall foul of the DFAT hierarchy’s instinct for self-preservation. •