Australian Defence contracts pass from Russian with money-laundering links to shady US military contractor Dyncorp

by | Dec 27, 2019 | Government

Why is the Australian Defence Force striking deals with a Russian military contractor whose associations stretch from Cyprus to the Seychelles? The ADF and Defence Minister Melissa Price have batted away questions about Australian taxpayers’ money being laundered through tax havens. Earlier this month, Michael West Media revealed the story of Operation Slippery which arose from the global data leak #29Leaks. Kim Prince digs deeper into the money trail as the call for answers grows louder.

Dyncorp International is a US military contractor which has been embroiled in controversies around the world, is controlled by a private equity firm and provides a range of military services including supplying mercenary forces.

It established DynCorp Australia in 2004 and public contract data shows that its pickings from the Department of Defence were slim for nearly eight years. A turning point came in 2011 when the local agent for a Russian aviation company, Vertical-T, failed under curious circumstances.

DynCorp took over the agency agreement and began working more closely with the Australian Defence Force (ADF). Since 2014, the firm has reaped at least $380 million from Australian government contracts.

These facts alone are unremarkable. However, a recent data leak from UK shell company factory, Formations House, has laid bare the details of payments made under the agency agreement. The leak, dubbed #29 Leaks, raises the spectre of money-laundering, and poses serious questions about how the ADF spends taxpayer money.

Dyncorp’s predecessor, Vertical-T, is run by a Russian aviation magnate, Vladimir Skurikhin. From late 2010 it was represented in this country by a newly incorporated agent, Vertical Australia. It won a contract with the ADF almost immediately and began providing heavy-lift helicopter services for the war in Afghanistan. Central to the services was a Mi-26T, the largest and most powerful helicopter ever produced.

Operation Slippery: Russian aviation magnate diverts Australian Defence profits to tax havens

Vertical Australia was responsible for collecting payments from the ADF. Less than 12 months into the arrangement however, it found itself at the centre of a dispute between Vertical-T and Wellman Limited. Wellman, based in Cyprus, is one of a number of companies involved in handling payments on behalf of Vertical-T. The Russian company and the Cypriot company both demanded that Vertical Australia remit them the cash directly.

Over a period of two months, Vertical Australia accumulated $2.3 million in payments from the ADF. Eventually, apparently keen to avoid being sued by another company associated with the Russian aircraft magnate Skurikhin, it parked the funds with the NSW Supreme Court and went out of business.

By the time the matter was heard by the Court, Vertical-T had appointed DynCorp Australia as its new local agent. Ultimately, documents show the court ruled in favour of Vertical-T and the accumulated funds were transferred to DynCorp, and from there to Vertical-T. That appeared to be the end of the matter.


Deep in the Formations House data this publication has discovered bank transactions belonging to another company controlled by Skurikhin, this time a UK company. The transactions reached across more than a dozen countries including Russia, Bulgaria and Uganda, and showed the regular use of tax havens and financial secrecy jurisdictions such as Seychelles, the Marshall Islands and Panama.

Outward payments were made from the Skurikhin accounts to numerous shell companies, and to at least one well known money laundering outfit, Progate Solutions LP.

Amongst the leaked transactions were payments from DynCorp Australia to Vertical-T. They were unremarkable, with the exception of four that occurred between late 2012 and early 2013, for a total of US$1.1 million. At that time, money launderers were using sham court cases and prepaid legal fees to disguise the true source of funds. The four transactions raised suspicions with their description of “refund legal fees overpaid”.

Further research has revealed that the warring companies, the companies which effectively tore Vertical-T’s Australian agent in two, were both closely connected to Skurikhin. He established Vertical-T in Russia and remains its General Director. He was, and continues to be, joint owner of the Cyprus company, Wellman Limited. Naturally, this raises questions about the authenticity of the court case.

The prospect of Australian taxpayer funds being laundered through Australian courts is worrying in itself, particularly where contracts relate to the ADF, the largest component of the Federal Budget and one of the government’s most secretive departments. In this case, those concerns are compounded by the fact that two of the suspicious payments to Skurikhin are immediately followed by large payments from Skurikhin to an unidentifiable recipient.

The payments, totalling US$730,000, appear to have gone to a UK company, Layne Design LLP. Layne Design was owned by two companies in the Marshall Islands, where the real owners were hidden behind a veil of corporate secrecy. Apart from its initial registration, Layne Design did not meet a single one of its filing obligations with the UK companies register. It was eventually struck off.

In other words, it appears that Layne Design was set up for the sole purpose of receiving a small number of secret, once-off payments.


The circumstances which led DynCorp to establish an Australian subsidiary are not exactly clear. We put questions to a former DynCorp director but have not received a response. It is possible however that the ADF, DynCorp and Vertical-T came together for the first time as part of the International Force East Timor (INTERFET), which was commanded by then Major General Peter Cosgrove.

The port facilities in East Timor were unsuitable for landing some of the equipment which had been brought by ship from a number of countries. The ADF sought the assistance of the US who provided two Mi-26 helicopters under contract from DynCorp. The two helicopters flew to East Timor from Russia under their own power, a trip that took ten days.

There is no suggestion that Sir Peter Cosgrove was in any way involved in any wrongdoing.


Since the initial revelations from earlier this month, transactions for another Skurikhin-linked bank account have emerged from the leaked data. These relate to the year leading up to the dispute between Vertical-T and the Cyprus entity Wellman.

The transactions show a total of US$5.4 million arriving from Wellman and a second Cyprus-based ‘feeder’ company, Evertime Limited. We know from past court documents that the Wellman amounts almost certainly include payments from the ADF.

During the same period, US$5.3 million was paid out from the account. Some 25% went to a company that has been difficult to trace, another 33% was paid to Stranger Agency LLP, a known money laundering outfit, and a mere 36% was paid to Vertical-T.

Stranger Agency LLP is known to have moved at least 420 million Euros through the Baltic and into Europe. Progate Solutions LP, a Scottish limited partnership that also received funds from Skurikhin, moved US$194 million out of Russia in 2013-2014.

As reported earlier, there is a lot more to this story. A parliamentary inquiry into the tender process for fixed-wing air services in Afghanistan; the notorious history of controversy for contracts in the Middle East Area of Operations (MEAO); and the chequered history of DynCorp International.

Perhaps the greatest concern however is that the ADF continues to ignore questions on this topic, despite a number of efforts to glean a response. Questions were put to both the Defence Industry Minister Melissa Price and to the ADF. This is about #YourRightToKnow.

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Kim Prince

Kim Prince

Kim Prince is a freelance software and technology professional with a strong anti-fraud, anti-corruption bias. He has worked in a wide range of industries throughout the Asia-Pacific region including publishing and distribution, telecommunications, insurance, events and hospitality. He is an advocate for responsible transparency in business and government, and sees data journalism as an important part of the way forward.

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