China's state-owned firms using Australian law firms to advise on sensitive work

China's state-owned firms using Australian law firms to advise on sensitive work

China's state-owned businesses are using Australia-based law firms to advise on takeovers of critical local infrastructure and minerals projects, according to a new report that exposes potential conflicts with other sensitive work the same firms complete at home.

The study also warns that confidential client files held in Beijing could be accessed by authorities in Beijing, which has called for Australia's Foreign Influence Transparency Scheme to be adjusted to remove exemptions for 'legal advice or representation'.

The report notes that the Chinese government has simultaneously fulfilled engagements for Australian government institutions, including those responsible for national security and foreign policy.

One of the report's authors, Canberra-based cyber security expert Robert Potter, said that some of the larger law firms they studied are completing sensitive Defence Department work while at the same time advising PRC-controlled companies.

Potter warned firms were advising on things 'as sensitive as government platform procurement' while using the same email servers to handle Chinese state-owned customers, without 'any of what we would expect in terms of technical separation of their infrastructure'.

We've looked at the law firms in terms of their potential risk for exposing government data from Australia externally through what we can see as less than optimal cyber security practices on their systems, he said.

The report also highlighted risks associated with how quickly Australian law firms were growing their Chinese business and the degree to which they're going beyond providing legal services, including promoting causes like Beijing's policy and semi-conductor industry.

The FITS laws do not encompass legal advice or representation, posing risk that foreign principals can engage legitimate legal services to facilitate outcomes without transparency that are prejudicial to Australia's national security interests, the document warns.

By collaborating with groups like the China-Australia Business Council, Potter said, the firms could go beyond their regular legal work which is exempt from the FITS regime.

Re advocating specific projects and specific policy positions which align with the Chinese Communist Party, Potter said.

One of Australia's legal firms documenting the study is global company Ashurst, which completes Defence Department work while also representing Huawei locally, even despite the federal government deeming the Chinese telco a 'high risk' vendor.

Ashurst has said it has strict systems and controls in place to assess risk, manage conflicts, and safeguard client confidentiality, as well as taking compliance with law and client requirements seriously.

Allens, Australia's largest servicer of PRC state-owned companies acquiring Australian critical minerals assets and renewable energy, mining, power, oil and gas, agribusiness and real estate, was identified in the report.

The report detailed how a longstanding Allens partner in China, Xinjiang Goldwind Science & Technology Co, was accused of exploiting Uyghur 'labor exports', but a company spokeswoman declined to comment when contacted by the ABC.

King & Wood Mallesons has been found to be the second most represented law firm operating in Australia, servicing PRC state-owned companies, with the report highlighting its work with Hong Kong's and initiatives.

The largest law firms are not even taking the most basic cyber security mitigations to protect the sensitive information they hold... frankly, it's negligent not to at the very least separate their systems, said Senate Majority Leader Harry Potter.

Australia's foreign influence laws were in need of urgent reform, said Senator Patterson, speaking on condition of anonymity.

It's very clear that the Foreign Influence Transparency scheme is not working as intended... there are people who should be registered on the scheme who are not registered, he said.

Australian FITS laws were introduced in 2017 by the Coalition government.