This is the story the Murdoch press buried. Investigative reporter, Anthony Klan, defected from The Australian newspaper after News Corp bosses muzzled his investigations, including this expose into secret Chinese plans to establish a mega-pilot training facility on an Australian airforce training facility.

Virgin Australia may have misled all levels of Australian government and has made dubious public claims about the true identity of its shadowy Chinese partners in its secretive proposal to take control of the nation’s biggest military pilot school, at an RAAF training facility in Tamworth NSW.

It can be revealed that the nation’s second biggest airline failed to inform the NSW Government, the Federal Government, the English speaking media – and even Tamworth council – about any foreign involvement in its proposal whatsoever, despite that mega-project being “certified” by the Chinese Communist Party a year ago.

It can also be revealed that Virgin Australia has made dubious public claims, denying the involvement of one of its two key partners in the project, despite those claims being easily disproved by conducting relatively simple company searches.

National security experts, including Swinburne University of Technology Professor John Fitzgerald, have described Virgin Australia’s secretive push in Tamworth as extremely concerning.

They warn the proposal appears to be a re-run of the highly controversial 2015 deal whereby the Chinese Communist Party-linked Landbridge Group was granted a 99-year lease over the Port of Darwin, a move which drew an angry rebuke from then US President Barrack Obama.

Tamworth RAAF base, now leased by BAE. Photo: ABC

Virgin Australia, which is listed on the Australian Securities Exchange (ASX) is overwhelmingly foreign-owned. Chinese entities owned at least 42 per cent of the airline at the end of last financial year.

Serious concerns about Virgin’s Tamworth mega-school proposal – including that it appeared to be secretly planning to take control of the facility with two highly questionable Chinese conglomerates – were first raised on the morning of March 22 this year, in an article which appeared on The Australian newspaper’s website (but not in print).

Cover-up

Virgin fiercely rejected those allegations and ran an aggressive and unethical – but until now, largely successful – campaign to prevent journalists from continuing to dig into the matter, and from publishing any further articles.

The Australian has not published a word on the matter since that initial March 22 online story. It can now be revealed the issues raised in that article were entirely accurate. There is much more.

Searches of company databases in Australia and Hong Kong reveal that Virgin Australia’s partners in its plans to gain control of the current Tamworth RAAF training facility are Chinese conglomerate HNA Group – which has close links to the Chinese Communist Party – and Winbright Overseas Investment Limited.

Winbright Overseas Investment Limited is a company domiciled in the British Virgin Islands, a prominent tax haven, and is an arm of the shadowy Chinese conglomerate the Beijing Winbright Investment Co. Virgin Australia has repeatedly, strenuously, denied having any involvement whatsoever with Winbright.

Barnaby Joyce, local government in the dark

Despite holding a string of formal meetings, and Virgin Australia claiming to have been “completely transparent” about the Tamworth proposal, the NSW Government, federal member for New England Barnaby Joyce and the Tamworth Regional Council all say they had no idea about any foreign involvement in the proposed Tamworth mega-school before that March 22 article.

That was despite the Communist Party of China having officially “certified” the proposed Australian mega-project in, or before, August last year – at least seven months earlier.

Barnaby Joyce: surprised

In October last year Virgin Australia announced its plans to create the Tamworth facility but made no reference to HNA Group, Winbright, or to having any partners in the project whatsoever.

In meetings with government in Australia, Virgin Australia has said it is creating the facility in conjunction with a small Australian-registered company called the Australian International Aviation College.

The AIAC operates a small flight school and is based at Port Macquarie on the NSW mid-north coast. However Virgin Australia failed to disclose to government that the innocuously-named AIAC is in fact owned by Chinese conglomerates HNA Group (80 per cent) and Winbright (10 per cent).

HNA Group and the Chinese Communist Party

HNA Group, one of Virgin Australia’s two key partners in the Tamworth proposal, is a highly controversial Chinese conglomerate which owns Hainan Airlines, along with a mixed-bag of other investments.

“HNA’s ownership structure is so opaque that some other market regulators have acted to prevent its involvement in acquisitions and mergers,” Professor Fitzgerald said.

“It is closely bound up with the CCP party state and acts on the party’s instructions. “The firm and its private foundation are heavily involved in ‘donations’ for political influence in the USA and internationally,” he said.

Cagey Chinese raider HNA needs eye of FIRB

 

HNA Group, whose chairman and co-founder Wang Jian died mid-last year in unusual circumstances after apparently falling from a wall in France, has also raised serious concerns among governments and security experts around the world, given its opaque structure and its ties to the Chinese Communist Party.

That murkiness has led to a number of groups, such as Bank of America, refusing to do business with it.
Separate from the Tamworth proposal, HNA Group has for several years owned about 20 per cent of the shares in the ASX-listed Virgin Australia. The Virgin stake was part of a global acquisition binge where HNA swooped on $US40 billion worth of acquisitions across six continents in two years.

Professor Fitzgerald said it was remarkable that long-standing connection between HNA Group and Virgin Australia had not yet been properly questioned, given that the serious concerns around HNA Group were well known among security experts.

John Fitzgerald. Baffling lack of scrutiny

“Given all this is public information, it has long baffled me that no-one has called Virgin to account for its corporate association with HNA,” Professor Fitzgerald said.

HNA Group is a well-known advocate of Beijing’s so-called Belt and Road global infrastructure roll-out, which is seen by many experts as being used by Beijing to advance its military interests by stealth.

Security experts have raised serious concerns that HNA Group’s current secretive advances on the RAAF facility – which sits adjacent to Tamworth Regional Airport’s large, military-grade runway, just 300km north of Sydney – could form part of Beijing’s clandestine military push.

HNA Group and Winbright have repeatedly failed to respond to requests for comment in recent weeks. AIAC has also declined to comment.

Monster proposal at military facility

The site that Virgin Australia, HNA Group and Beijing Winbright Investment Co are seeking to gain control of is a specialised military training facility that for the past three decades has been at the heart of the Australian Defence Force’s aviation training operations.

Since the 1990’s, it has been leased by Tamworth Regional Council to British defence giant BAE Systems, which has been contracted by the Australian Defence Force to train RAAF recruits at the facility.

In 2015 the Australian Defence Force put to tender a new, 25-year multi-billion dollar pilot training contract for that training role, and BAE Systems lost the bid to US defence group Lockheed Martin.

Virgin PR. No mention of Chinese partners

Lockheed Martin will train RAAF pilots from a base in Sale, Victoria. BAE Systems will cease training RAAF pilots in Tamworth by October 31. A September 2015 ABC article about BAE Systems losing its ADF contract underscored the specialised military nature of the Tamworth facility.

It quoted MP Mr Joyce who cited other possible tenants for the facility, including the Republic of Singapore Air Force, the Royal Brunei Air Force and the Papua New Guinea Defence Force.

“We are currently in negotiations with them in expanding their use of that facility,” Mr Joyce told the ABC.
“Our base in Tamworth will continue to be used and we’ve had the Prime Minister (Abbott) of Australia over in Singapore talking about Tamworth’s base to the Singaporean Prime Minister, to see what we can do to make that facility more available for them.”

At the same time, BAE’s Director of Aerospace, Steve Drury, highlighted the massive size of the Tamworth military facility, telling the ABC: “The deal we have with Defence is quite large and so I don’t think any one single contract can actually replace it”.

“We’re talking about a combination of possible futures that we can have and we’re also interested in determining whether civil flying training can be done in that facility.”

Mega-school for Chinese pilots, not Australians

Virgin Australia and its two Chinese conglomerate partners are well aware of the size of the Tamworth facility. Under their proposal, they would train 500 students at a time there, making it one of the biggest flight schools in the nation.

Such a mega-facility would be well beyond the needs of Virgin Australia: it currently trains between 10 and 40 pilots at a time at its existing facilities.

However, in a statement – which Virgin Australia has attempted to distance itself from – HNA Group and Winbright have told Chinese language media in Australia that the facility will actually be aimed squarely at Chinese nationals.

“It is aimed at Chinese high school graduates and undergraduate students under 26 years of age from overseas Chinese university students,” that statement quoted HNA Group and Winbright as saying.

Take-off

Virgin Australia’s plans to create a flight school in Tamworth first became general public knowledge on October 31 last year. In a statement on its webpage, Virgin Australia announced it would develop a “world-class pilot training school” at Tamworth Regional Airport after being “chosen” to do so by Tamworth Regional Council, which owns and operates that airport.

Qantas had been considering creating a flight school at the Tamworth facility, but instead chose to create a school in Toowoomba in southeast Queensland.

In its announcement, Virgin Australian made no reference to any foreign involvement in the project, or to any partners whatsoever.

Five months later, the March 22 online article in The Australian reported that not only were Chinese conglomerates HNA Group (owner of Hainan Airlines) and Winbright understood to be involved in the proposal, but that those two conglomerates – and Virgin Australia – had actually “officially launched” the project at a Chinese-language media only ceremony in Sydney on August 16 last year.


TIMELINE

  • August 2018: Chinese language media only press conference is held in Sydney to announce the “offical launch” of pilot school mega-project, which has Chinese government approval.
  • October 24 2018: Virgin Australia meets with NSW Government but refers to its partner in the proposed Tamworth project only as AIAC, making no reference to the two Chinese conglomerates.
  • Oct 31 2018: Virgin Australia publicly announces plans for a pilot facility in Tamworth, but makes no mention of any partners, offshore or otherwise.
  • March 6 2019: The date Virgin Australia claims to have lodged an application with the Foreign Investment Review Board regarding the mega-school proposal.
  • March 22 2019: Online article in The Australian newspaper reveals project “official launch” for Chinese language media seven months earlier. It was partnered by Virgin Australia and named proponents as China’s Hainan Airlines (HNA Group) and China’s Winbright Aviation. (Not another word has been published by The Australian on the matter since).
  • March-April 2019: Virgin Australia attacks that March 22 online article and says its mega-school partner is “AIAC”. Claims to have zero connection to Winbright. Denies the legitimacy of the August launch to Chinese language media, saying it has “no idea” about it.
  • July 2019: Company documents show ultimate owners of AIAC are in fact HNA Group and Winbright, proving false Virgin Australia’s claims that Winbright has zero involvement in the Tamworth mega-project.

That was two-and-a-half months before Virgin Australia made its vague October 31 announcement about the Tamworth facility, which made no reference to HNA Group, Winbright or to any other partners.

A press statement about that August 16 “official launch”, made only to Chinese language media, is here.

The statement, which appears to have been translated into English, says the mega-school was “aimed at Chinese high school graduates and undergraduates”.

“On August 16th, the launch ceremony of Winbright Aviation and Hainan Airlines Joint Pilot Training Project——‘The Dream Begins Here’ was successfully held in Sydney,” it states.

“The launch was jointly sponsored by Winbright Aviation, Hainan Airlines, Southern Cross University and the Australian International Aviation College (AIAC).”

Virgin Australia senior executive Peter Cai gave a speech at the launch and is photographed at the launch alongside members of the two Chinese conglomerates.

“Partners included Virgin Australia and the University of New South Wales China Association, local medias (sic) and agencies,” the statement says.

Press conference. Chinese media only

Despite the reference to “local media”, it is understood only Chinese language publications were invited to that August launch, and it was not covered by any English language media outlets.

Chinese language newspapers in Australia have recently been the subject of substantial security concerns.

In parliamentary committee hearings, security experts have warned the federal government that almost all such publications have been bought up by, or are controlled by, entities tied to the Chinese Communist Party.

Despite Mr Cai’s presence at the launch, Virgin Australia has claimed it had “no idea” about the launch and denied it was related to its Tamworth mega-school proposal.

Mega school officially “certified” by Chinese Communist Party

Remarkably, that August 2018 press release states that the new mega-school had been “certified” by China’s aviation regulator, the Civil Aviation Administration of China. “This project is the only CAAC-certified airline pilot training program in Australia,” the statement says.

It says Chinese high school and university students could begin training at the flight school after meeting a series of requirements including passing physical examination, psychological tests and a theoretical examination.

After those were met, “a training agreement can be signed with the shipping department and a full flight training at the aviation school.”

“After that, they will be able to sign a labor contract with the shipping division and become an airline pilot,” the statement says.

Australian Government and authorities had no idea

In response to the March 22 online report in The Australian, and despite Virgin Australia’s repeated claims that it had been “100 per cent transparent” about the Tamworth proposal, federal member for New England Barnaby Joyce said he was shocked and had “no idea”of any foreign involvement.

“I thought it was Virgin,” Mr Joyce said of the proposal, calling on Virgin Australia to come clean. Likewise, the office of NSW Premier Gladys Berejiklian also denied knowledge of any foreign involvement in the Virgin Australia mega-school project, when contacted by this reporter.

NSW Premier Gladys Berejiklian. No knowledge of deal

“This is first we’ve heard of it,” spokesman Miles Godfrey said in March.

After repeated requests for information over many days, NSW Department of Premier and Cabinet spokesman Matthew Sun distanced the NSW government from the project entirely, and said it was a matter for Tamworth council.

“Tamworth Regional Council independently made an agreement with Virgin Australia regarding the proposed Tamworth flight school,” Mr Sun said in a written statement.
“There was no NSW Government involvement in that specific decision.”

The statement continued: “Tamworth Regional Council announced its partnership on 31 October 2018”. “Questions regarding the selection and due-due-diligence process undertaken by Council prior to the announcement should be directed to Tamworth Regional Council”.

But remarkably, even Tamworth Regional Council had no idea of the involvement of major foreign conglomerates in Virgin Australia’s proposal before reading about it in that March 22 online article in The Australian.

Tamworth Council’s Paul Bennett. No idea

Days later, Tamworth Regional Council general manager Paul Bennett told local paper The Northern Daily Leader that the council had been in talks with Virgin Australia but it had had “no dealings with Chinese aviation giants Hainan and Winbright Aviation”.

“Any Chinese involvement in the Virgin Australia pilot training school is news to Tamworth Regional Council,” Mr Bennett told The Northern Daily Leader.

“Council had never heard of Winbright Aviation until the story was published in national media [last week].”

Aviation veteran and former chairman of the Civil Aviation Safety Authority, Dick Smith, was equally dumbfounded by the revelations.

“Virgin I thought was Aussie-owned but in fact it’s pretty well completely foreign-owned and it looks like it is completely Chinese government controlled,” Mr Smith said. “I am desperately worried about aviation and for this to be done secretly is just unbelievable.”

Virgin denies secret Chinese involvement

In response to the revelations in the March 22 online report in The Australian, Virgin Australia published a media statement attacking the article.

“The idea that we are in secret talks is completely untrue, and any suggestion that this is anything other than confidential, commercial negotiations would be wholly unsubstantiated,” Virgin Australia’s Ms Armstrong wrote.

Dick Smith. Dumbfounded

The airline claimed the press statement regarding the August 16, 2018 Chinese media-only launch (link above) was somehow false; that Virgin Australia had “no idea” where the statement had come from and that Virgin Australia had not been involved in that launch.

Ms Armstrong said that in August Virgin Australia had not yet formalised the deal with Tamworth Regional Council.

Virgin Australia ruled out having any involvement with Winbright whatsoever and said that the airline had “no intention to work with” Winbright in the future.

“Virgin Australia has no involvement with Winbright Aviation and has no intention to work with Winbright Aviation as their model doesn’t suit our requirements,” Ms Armstrong said.

She continued: “A Virgin Australia representative was at a conference where Winbright announced a partnership with Southern Cross University, however in no way does this indicate a partnership between Virgin Australia and Winbright.”

… but the documents

Irrespective of Virgin Australia’s aggressive denials, company records show Virgin Australia and Winbright Aviation are very much business partners in the proposed Tamworth aviation school.

The August 16 press release, which named Winbright and HNA Group as partnering with Virgin Australia in the mega-project, was spot-on.

Virgin’s Libby Armstrong: “100pc transparent”

The small Port Macquarie flight school, AIAC, is 80 per cent ultimately owned by HNA Group and 10 per cent owned by Winbright Overseas Investment Limited. Further, AIAC and Winbright share a common company director.

Security experts said Virgin Australia’s blanket dubious denials of any involvement with Winbright raised very serious concerns.

Either Virgin Australia was deliberately making dubious claims about who it proposed to create the mega-school with, or it did not know who it was actually entering into business with.

“If Virgin doesn’t even know who it is in business with here, in relation to an Australian registered company, how on earth is it going to have any idea about what HNA Group actually gets up to in China?” one national security expert said.

Those repeat dubious claims came on top of Virgin Australia’s failure to disclose to government in Australia the involvement of major foreign conglomerates in the Tamworth proposal.

When asked how Virgin Australia’s claims to have been “100 per cent transparent” about the mega-school project could be true, given all the secrecy and dubious claims, spokeswoman Libby Armstrong pointed to a formal meeting Virgin Australia held with the NSW Government and Tamworth Regional Council on October 24 last year.

“This meeting involved the department of Premier and Cabinet, the Deputy Premier of NSW and his chief of staff, the Member for Tamworth, the NSW Department of Industry, the Tamworth Regional Council Mayor, and the general manager for Tamworth Regional Council,” Virgin spokeswoman Ms Armstrong said.

“In this meeting, Virgin Australia’s proposed involvement with AIAC was fully disclosed.” However, at the meeting, Virgin Australia failed to disclose that AIAC was actually owned and controlled by HNA Group and Winbright.

In a final argument, Ms Armstrong defended Virgin Australia’s dubious claims of secretive dealings with the two Chinese conglomerates, saying “nothing has been signed” in relation to the Tamworth mega-school proposal.

This is despite Virgin having entered an agreement with Tamworth council last year, publicly announcing the project on October 31, and having lodged a formal application with Foreign Investment Review Board on March 6.

That FIRB application is the final step in the process.

The decision to approve or reject the proposal lies solely with Treasurer Josh Frydenberg.

———————–

About the author

The author is an investigative journalist. He worked for The Australian newspaper from 2004 to May 16 2019. This article also appears at anthonyklan.com.

Author bio

Investigative journalist specialising in corporate malfeasance and corruption.

Anthony Klan: investigative journalist

His investigations into the likes of superannuation, Google Australia, financial planning and Pink Batts have informed government policy and brought reform in Australia.

This is the first in a series of stories which the Murdoch media declined to pursue.

Have a tip-off or story idea? Email [email protected]
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Awards:

  • News Corporation Australia journalist of the year, Sir Keith Murdoch Award for Excellence in Journalism, 2010; (finalist) 2018
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  • Walkley Award for Business Journalism, All Media, 2007
  • Graham Perkin Australian Journalist of the Year, (finalist) 2010
  • News Corporation Australia Business Journalist of the Year, 2007; 2011; 2014
  • News Corporation Australia Business Journalist of the Year (highly commended) 2009; (finalist) 2016; (finalist) 2018
  • Citi Journalism Award for Excellence, Personal Finance, 2015
  • Citi Journalism Award for Excellence, Broadcast (finalist) 2016
  • NSW Kennedy Award for Outstanding Investigative Reporting (finalist) 2015
  • NSW Kennedy Award for Outstanding Finance Reporting (finalist) 2015; (finalist) 2016
  • Society of Publishers in Asia (SOPA) Excellence in Investigative Reporting (finalist) 2016
  • Society of Publishers in Asia (SOPA) the Scoop Award (finalist) 2016
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  • Best News Journalist, IT Journalism Awards 2018

When it comes to tax, it’s Virgin by name and Virgin by nature

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