Australia told French submarine firm it didn’t have green light to proceed hours before deal cancelled

Letter, sent to Naval Group on 15 September, is at the heart of diplomatic rift between France and Australia

Australia cautioned the French contractor – hours before the $90bn submarine deal was cancelled – that its achievement of a key contractual milestone did “not provide any authorisation to continue work”.

The letter, sent to Naval Group on 15 September, is at the heart of an extraordinary diplomatic rift between France and Australia, with the French foreign minister telling a parliamentary hearing this week that “someone lied”.

The Guardian can now publish the full letter, having obtained it under Australia’s freedom of information (FOI) laws. The defence department released the requested document to the Guardian on Saturday morning, several hours after the Australian newspaper published an article quoting portions of the letter.

The letter – which appears to be carefully worded with a focus on contractual matters – said the Australian government “has provided guidance to Naval Group regarding the continuation of work and reimbursement of work”.

But the director general of the Future Submarine Program – Royal Australian Navy Commodore Craig Bourke – added a caveat about the government not yet granting authorisation to proceed.

He told Naval Group: “The matters addressed in this correspondence do not provide any authorisation to continue work or for the reimbursement of that work under CWS1 [Core Work Scope 1], other than in accordance with References A, B and C.”

Reference B means the submarine design contract, but references A and C were blacked out by the FOI decision maker, apparently to protect “trade secrets or commercially valuable information”.

In the letter, Bourke also wrote: “I confirm the exit of the Functional Ship System Functional Review (SFR) has been achieved as required under the Submarine Design Contract (SDC) at Reference B.”

He said the Australian government “reminds Naval Group that this exit does not remove the obligations” outlined in a different letter sent a week earlier.

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The 15 September letter was addressed to Guillaume Jampy of Naval Group in Paris, and appears to have been copied to John Davis, the chief executive of Naval Group Australia.

In the FOI request, the Guardian also sought the exact time the letter was sent to Naval Group. Internal defence records indicate the document was created on 15 September at 12.05pm, Canberra time, and modified at 4.34pm, Canberra time, (8.34am, Paris time).

The Australian prime minister, Scott Morrison, has said he informed the French president, Emmanuel Macron, of the decision to terminate the contract a few hours later – about 8.35pm Canberra time (12.35pm, Paris time).

Morrison said he had been unable to secure a call “and so I directly messaged him Australia’s decision in a personal correspondence”. French officials have suggested that Morrison’s office made only half-hearted efforts to inform Macron of its decision beforehand.

Australia’s decision to dump the contract in order to pursue nuclear-propelled submarines in partnership with the US and the UK has infuriated France, which said it had been “stabbed in the back” and recalled its ambassadors from Canberra and Washington.

But the newly released letter appears to contradict some of the claims from the French government about assurances provided hours before the contract was scrapped.

Hervé Grandjean, the French ministry of defence spokesperson, told French television last week that the letter indicated the Australian official overseeing the project “was extremely satisfied that performance of the French submarine was excellent, which clearly means that we were to move to the next phase of the contract”.

This week the French foreign minister, Jean-Yves Le Drian, told a parliamentary hearing that the letter indicated Australia was “satisfied” with the review of the submarines and was ready for the “rapid signature for the second phase of the programme”.

“Everything I have told you is confirmed by the letter I received on 15 September from the Australian ministry of defence that said everything is OK let’s continue,” Le Drian told a Foreign Affairs, Defence and Armed Forces Committee of the upper house, the Sénat.

Le Drian said this suggested “someone lied”. He added: “Something doesn’t add up and we don’t know what.”

Naval Group said this week that Australia’s scrapping of the $90bn submarine deal was not because of any failures on the part of the contractor.

“The Australian authorities have terminated the contract for convenience thus acknowledging that Naval Group did not fail in its commitment,” a statement from Naval Group’s Paris headquarters said.

The Guardian submitted its FOI request for the letter on 24 September, in an attempt to verify what assurances if any Australia provided just before Morrison joined with Joe Biden and Boris Johnson to announce the new Aukus defence partnership.

The FOI decision maker opted to partially release two documents – the letter and the records of the time it was sent – with a small amount of material redacted on the basis it would disclose “trade secrets or commercially valuable information”.

“I found information in the document having commercial value to Naval Group,” the decision maker told the Guardian after consulting with the company.

“Disclosing the commercial arrangements agreed between Naval Group and the Commonwealth could reasonably be expected to benefit Naval Group’s competitors in winning future work for which Naval Group is competing by revealing the terms that Naval Group is prepared to accept.”

Morrison has repeatedly said he acted in Australia’s national security interests at a time of a worsening strategic outlook in the Indo-Pacific, while acknowledging France’s “disappointment”.

France has said any future talks between Macron and Morrison will have to be “seriously prepared” and have “substance”. On Friday the EU announced a one-month postponement of the next round of trade negotiations with Australia.


Daniel Hurst Foreign affairs and defence correspondent

The GuardianTramp

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