That subcontractor was controlled by a powerful Nauruan politician who Austrac also warned might be corrupt,and who this masthead is not naming for legal reasons.

Before the Austrac warning to Home Affairs,the allegedly corrupt politician was paid more than $2 million in Australian taxpayer money to supply services on Nauru between 2016 and 2020. The payments continued for another two years after Austrac warned Home Affairs the politician and his company may be involved in “corruption” and “money laundering”.

In March 2022,after the federal police launched an investigation into allegations the politician may have corruptly used Australian taxpayer funds paid to him by Home Affairs’ lead contractor Canstruct,the payments continued,including about $400,000 paid since Labor took power in May.

Authorities are also investigating whether direct grants given to the Nauru government by Australia were also siphoned off by allegedly corrupt officials,who have not been named.

The new information comes after Home Truths revealed that a chain of suspect contracts worth millions of dollars led from the Home Affairs Department to powerful Pacific Island politicians.

All Home Affairs’ lead contractors – Broadspectrum,Canstruct and Paladin – are implicated in the suspected systemic misuse of taxpayer dollars in Nauru and Papua New Guinea,which is being investigated by the AFP and Austrac.

The revelations of the department’s dealings with Bhojani raise fresh questions for Dutton,the department and its longstanding secretary,Michael Pezzullo. Critics have said a focus on maintaining the system of offshore detention outweighed other considerations including probity.

Until last year,Home Affairs administratively oversaw both the police who were investigating and charging the Sydney businessman,and the offshore processing system that was awarding contracts to his company. When all the functions of Home Affairs were put into the same department in 2017,then prime minister Malcolm Turnbull said it would “entrench the co-operation between the agencies”.

The revelations also put pressure on Labor’s minister Clare O’Neil to explain how she will clean up the system,which she has promised to overhaul,after Radiance contracts continued until June this year,well into her time in office.

Dutton did not respond to a series of detailed questions,and O’Neil declined to comment. Bhojani did not respond after being contacted through his lawyer.

The Greens on Monday called for a royal commission on offshore detention following this masthead’sreporting into failures in the system,including suspect payments by contractors Broadspectrum,Canstruct and Paladin. Acting leader Mehreen Faruqi said it was the consequence of Australia outsourcing its “responsibilities to refugees to private companies and Pacific countries”.

Internal Broadspectrum communications,obtained by this masthead,show Bhojani companies were involved in selling food and other goods to the offshore detention centres.

Broadspectrum staff expressed concern in 2016 that a senior Nauru politician was receiving kickbacks through Bhojani’s company,AW Exports,which was also allegedly overcharging the Home Affairs contractor for water and soap powder.

The communications show that AW Exports was price gouging on the Home Affairs contract by charging excessive mark-ups on goods. Soap flakes,for example,were being sold at a 30 per cent mark up,and the company was also charging an “admin fee” on top.

A company linked with a senior Nauru politician,who this masthead is not naming for legal reasons,was “mentioned as part of” the AW Exports supply chain,the Broadspectrum emails say.

The alleged price gouging was occurring as the Nauru government was threatening to remove Broadspectrum’s import licence,and saying it wanted a Nauruan entity to import all the goods necessary to run the offshore detention program.

Throughout,Bhojani’s company Radiance International was still able to do business,and supplied goods to the Nauru entity at an “unknown margin”.

It did so only after seeking approval from the politician,“who also charges an unknown margin”,according to Broadspectrum’s internal emails.

That meant Broadspectrum was paying a 184 per cent premium on,for example,bottled water under contracts ultimately funded by the Australian government.

The Broadspectrum employees also complained about a lack of transparency regarding charges and fees,and having no ability to scrutinise them.

The Morning Edition newsletter is our guide to the day’s most important and interesting stories,analysis and insights.Sign up here.