Telstra NBN rejection has the government demanding answers

The Telstra board has been called upon by the Rudd Government to explain to its shareholders why it did not ensure that it complied with the tender process for the $4.7 billion broadband network during its bid.

The warning that compliance to the five mandatory requirements had been issued to bidders for the network twice in November, said Stephen Conroy the Communications Minister.

Senator Conroy said “There was nothing to stop Telstra from submitting a complete proposal and competing vigorously with other proponents in this process. Instead, the Telstra board failed to comply with the mandatory requirements of the RFP.”

In proposing its own process for the bid Telstra have been accused of seeking special treatment according to Senator Conroy.

He said “Telstra’s board will have to explain to its shareholders why it has decided to sideline itself from a process that will shape the Australian communications sector for the next decade.”

In its failure to submit a small and medium business participation plan the telco, informed the market that it had now been excluded from the bidding process.

All proposals also had to be written in English, had to include a complete and signed declaration and had to use metric units of measurements to meet the other basic requirements of the process. Whilst assessing the bids the independent expert panel who were charged with the task found that the bid by Telstra could not be considered after obtaining five separate pieces of legal advice.

The internal government lawyers that provided the advice were the respected private law firm Corrs Chambers Westgarth, the Australian Government Solicitor, the senior counsel appointed by Corrs and lastly the Government’s top legal advisor, the Solicitor-General.

A high-stakes game of brinkmanship had been played between the Rudd government and Telstra in the run up to the bid deadline on November 26th. Telstra also sought assurances that the company would not be split in the event of a successful but, but Senator Conroy refused to offer any guarantees that the government would not do this.

Instead if a full bid Telstra lodged an eight page letter and on the condition that the government agreed to its terms it said it would offer more details. At the time the company said that it believed compliance with all the legal obligations laid down by the tender process had been met based on advice from a huge team of both external and in-house legal advisors.

The exclusion of Telstra by the government on the “most spurious” ground was the accusation level by the Opposition recently. In a statement to The Australian Senator Minchin said “I think that looks entirely manufactured and raises real questions about the integrity of this process.”