Mere coincidence? Crosby Textor is the common link in Morrison’s AUKUS deal

This piece is part of a series. Find the full series here.

A Crikey investigation into the power of conservative political lobbyists C|T Group has revealed that two US companies represented by C|T are set to be among the biggest winners of the “forever” AUKUS defence deal hatched by former prime minister Scott Morrison.

One of the companies, General Dynamics, is the lead contractor for constructing the US navy’s fleet of nuclear-powered submarines. The other company, Centrus Energy, is the leading provider of nuclear fuel for US national security purposes and for naval reactors.

C|T’s US entity, CTF Global LLC, has acted as a lobbyist for General Dynamics and Centrus Energy since it set up shop in Washington in 2018, taking on the client list of long-term lobbyist Larry Grossman who was seeking to extend the global reach of his firm. 

The evolution of the C|T Group as defence lobbyists came as it reached the peak of its political influence in Australia at the end of 2018 with its then-Australian CEO Yaron Finkelstein joining Morrison’s staff as principal private secretary.

In parallel with Australia, the C|T Group also enjoyed the closest of relationships with then-UK prime minister Boris Johnson — David Canzini, a former C|T executive, was part of Johnson’s team as a deputy chief of staff.

By the end of 2019, according to untested accounts Morrison has given, the prime minister — acting on his own — had begun to question the value of Australia’s submarine contract with the French Naval Group. In September 2021, in a move which shocked the French, Morrison suddenly announced Australia would join the nuclear submarine club with the UK and the US under the banner of AUKUS. The move was widely seen as an attempted political wedge against Labor on the twin issues of the US alliance and national security, with the 2022 election just months away.

For Johnson it was political manna from heaven. He was able to crow about the jobs that would be created at the BAE submarine yards in the north of England. It was also a foreign affairs fix for the UK which was seeking to project global ambitions post-Brexit. 

In the US, AUKUS held out the promise of new labour for C|T Group’s client General Dynamics, the giant defence contractor whose subsidiary, known as Electric Boat, is integral to US national security. Electric Boat was desperate to find workers for its nuclear submarine shipyards. Could it be that blatant?

This year local press in Connecticut, the home of Electric Boat’s shipyards, reported how it would benefit from the AUKUS deal: “Electric Boat will get a big boost on one crucial aspect of its business: extra hands, with Australia planning to send workers to Connecticut to learn how Virginia-class subs are built and contribute to their construction.

“Kevin Graney, Electric Boat’s president, said last month the manufacturer needs to hire more than 4000 people annually in the coming years to expand for a new class of ballistic missile submarines it is building for the US Navy, while replacing workers hitting retirement.”

AUKUS would also create a powerful argument for Australia to fund a desperately needed shipyard for the US Navy.

The official AUKUS announcement in March this year confirmed that Australia would contribute $3 billion over the next four years to US and UK production lines, with the bulk of that money headed to the US in what White House officials said would be a “substantial contribution” to US submarine production facilities. (Meanwhile Australia would inherit three to five used nuclear submarines from the US fleet.) 

As a cherry on the cake, AUKUS also meant a new member of the international nuclear club and a potential new client nation for America’s nuclear specialists (and C|T Group client) Centrus Energy.

The AUKUS creation story no-one believes

Morrison and his media acolytes have been fond of promoting the idea that the he alone came up with the idea of joining up with the UK and the US to build nuclear submarines. His lightbulb moment is said to have occurred around September 2019, three months on from his “miracle” election win. The moment of revelation — or Morrison’s version of it — was chronicled by two journalists from The Australian.

“It was in the weeks following Scott Morrison’s visit to the French coastal hamlet of Biarritz to attend the G7 summit in August 2019 that he began turning his mind to submarines,” wrote Simon Benson and Geoff Chambers.

“Poring over the defence contracts that Australia had signed up to, the prime minister wanted to assure himself that there would be no regrets in the $90 billion French deal for 12 Attack-class subs signed in 2016.”

From there Morrison is said to have included a slowly widening circle of Liberal operatives, defence and national security officials, all sworn to secrecy. Also brought into the loop was Johnson. As Crikey reported last year, no-one was keener than he for the AUKUS deal to become a reality. Led by the excited Johnson, a handful of British officials also worked in secret on the deal. They gave it a codename: Operation Hookless.

Yet amid the John le Carré style reporting which has dominated the AUKUS story, there has been little or no mention of C|T Group, despite it having a foot in every camp, from prime ministers’ offices to America’s nuclear and defence complex.

C|T Group and Larry Grossman

By 2018 C|T Group was well entrenched as the big noise in Australian and UK conservative politics. It ran election campaigns for the conservative parties, signed up corporate clients and then populated the highest political offices. But gaining a foothold in the US market was a new challenge. 

In 2018 the firm, led internationally by co-founder (Sir) Lynton Crosby, joined forces with long-term political lobbyist and K Street veteran Grossman. In a rare interview with The Australian Financial Review in 2019, Grossman explained that he joined the C|T Group because he realised Washington was “in ever-increasing ways impacting global business”.

“When Lynton and I first talked we were very like-minded, even if the businesses have a different focus — the US side is much more about lobbying for corporate clients, rather than political campaigns,” he told the AFR.

He also recalled Morrison’s words of praise for Crosby at an Australia-UK Chamber of Commerce event in London which Morrison attended in June 2019, within weeks of being reelected.

“Lynton taught me many things about campaigns and politics and being able to achieve things in public life,” Morrison said. (Crosby, an enormously influential figure in London, was a member of the chamber’s board. On that day there was reportedly a seat reserved for Crosby’s other PM Johnson, but he was unable to make it.) 

“It is really spot-on,” Grossman said of Morrison’s praise. “Sir Lynton sees the bigger picture; he sees how to get from here to there. Along with Mark Textor and Mark Fullbrook in London, they’ve been able to put all of this together for political parties and private-sector clients. They have a way of thinking, a process to help people make better decisions, to change perceptions and behaviours.”

Thus was born CTF Global LLC, incorporating the old Grossman Group, LLC. CTF incorporated the now linked-up names of Crosby, Textor and UK conservative lobbyist Mark Fullbrook who had joined the firm in London a decade earlier.

Canberra, London and Washington were now fused. And C|T Group had two prime ministers in tow. 

C|T Group and defence

So who do you get when Grossman with his 30 years in the lobbying business comes on board? 

According to US not-for-profit website Open Secrets, which tracks the money trail in politics, CTF Global LLC clients for 2023 include Centrus Energy, a company which supplies uranium for nuclear power plants and which is developing technology to produce enriched uranium for commercial and government uses including for national security.

The company boasts it has a “multibillion-dollar long-term order book” with customers around the world for its low enriched uranium as well as a “diverse base” of nuclear fuel supply contracts stretching to 2026 and beyond.

In an April 2023 note to stockholders, Centrus said it aimed to meet the full range of America’s commercial and national security requirements for enriched uranium, including “support for nonproliferation programs as well as naval reactors”.

The jewel in the crown though was General Dynamics which had been a Grossman client for at least two decades. General Dynamics’ Electric Boat (EB) is one of two major contractors — and supplies the lead shipyard — for all US Navy nuclear-powered submarine programs. Late last year, on the eve of AUKUS talks in Washington, Defence Minister Richard Marles visited EB’s submarine construction facilities at Groton, in Connecticut, with UK and US officials.

Under a long-standing deal with the US Department of Defense, Electric Boat is a joint builder of the US Virginia-class nuclear-powered submarines along with the contractor, Huntington Ingalls Industries. EB is the program’s prime contractor and is considered integral to US security plans with the emergence of China.

A primary aim of the joint arrangement was to keep production going at two shipyards and preserve a base of submarine-construction skills. According to a report from the US Congress Research Service, the arrangement has led to a roughly 50-50 division of Virginia-class profits between the two yards. So what’s good for Electric Boat is good for Huntington Ingalls.

The well-connected admiral

Centrus has one supremely well-connected board member in retired US Admiral Kirkland Donald. 

When it comes to nuclear power and submarines, Donald has a golden pedigree. He retired in 2013 as director of the US Navy’s nuclear propulsion program, where he was responsible for the navy’s nuclear-powered warships. Apart from Centrus, Donald is chairman of the Huntington Ingalls Industries board. He is also the chairman of a large not-for-profit research organisation called Battelle which specialises in national security applications.

To complete the circle, Battelle was a client of Grossman from 2011 until 2018. (Batelle is not listed as a client of the new merged operation with CTF.) 

Concurrent with these appointments, for several years the admiral was also an adviser to the Australian government as a member of the Australian Submarine Advisory Committee from 2016.

Donald resigned from the committee in April last year after it became apparent that his role on the board of Huntington Ingalls represented a conflict of interest. (Donald is one of several former US Navy officers to have advised the Australian government, as The Washington Post revealed last year.) 

The unanswered questions

Last year former senior US Navy official and military diplomat Brent Sadler pointed to long-term labour shortages as the key impediment to the US Navy’s nuclear-powered submarine program. Writing for the conservative Heritage foundation, Sadler said US shipyards had increased their workforce by 16% over the past decade but that had fallen short of the workforce needed to achieve the navy’s objectives of supporting a larger nuclear-powered fleet.

“As demand increases for nuclear-powered warships to pace the threat from China and Russia into the foreseeable future, it remains to be seen whether the public shipyards will be able to sustain the recruitment of skilled labor in the numbers needed,” he wrote.

Separately the US Congress’ Research Service concluded that the construction of Virginia-class nuclear- powered submarines had fallen further behind schedule and that construction costs had continued to grow above original targets because the navy was putting its labour force to work on another submarine, the Columbia-class submarine. This had led to a loss of experienced workers for the nuclear-powered submarines.

“The same companies build both submarine classes and have been challenged to meet both programs’ increasing workforce needs,” the analysis concluded.

So is AUKUS in fact the solution to the US Navy’s labour shortages?

Morrison once bragged about keeping AUKUS a secret for so long. The Albanese government, likewise, has shown no inclination to publicly discuss its creation story beyond its mantra of a changing security environment. In the absence of this we are left to wonder at the extraordinary and exquisite coincidence of the C|T machine being present at so many key points in the AUKUS chain — only to see its own clients emerge as beneficiaries.

The C|T Group made this on-the-record comment to Crikey:

At no time did C|T Group have any discussion with any government about AUKUS before it was announced. C|T Group complies fully with all its legal and regulatory obligations at all times.

Crikey does not suggest otherwise in relation to either C|T Group or any past or present C|T Group personnel. Crikey has attempted to contact Finkelstein through various channels but we have not heard from him.

Morrison has denied knowing of links between the C|T group and General Dynamics. He has also denied knowing that General Dynamics was the lead constructor for the US Navy’s fleet of nuclear-powered submarines as he pondered cancelling Australia’s contract for conventional submarines in favour of nuclear-powered submarines. Morrison has also denied speaking about the nuclear-powered submarine option with Finkelstein, who left CT’s Australian operations to join Morrison’s staff in 2018. 

Crikey gratefully acknowledges the help of the Twitter researcher/citizen journalist who tweets as Jommy Tee with aspects of this story. 

If you have information you wish to pass on about this story please email David Hardaker at dhardaker@protonmail.com