By Morsten Plack in Law — Oct 2, 2023

Entangled Duties: Law firms operating in Australia with PRC links

Law firms operating in Australia acting for PRC entities simultaneously fulfil engagements for Australian Government entities, including those responsible for national security and foreign policy.

By Robert Potter, James King and Morsten Plack.

PRC State Parent Entities

The Chinese Communist Party (CCP) is the power centre of the People’s Republic of China, ruled as a pyramid structure led by President and General Secretary of the Chinese Communist Party Xi Jinping. The Politburo Standing Committee comprises PRC’s top six political figures accountable to President Xi, followed by another eighteen politicians in the wider Politburo, some of whom have other concurrent positions in the government, party or military. The National People’s Congress writes laws and oversees the government, with PRC’s executive functions inclusive of government departments presided over by the State Council.¹

PRC’s State Council is led by second-to-Xi-Jinping Premier Li Qiang. It is the apex executive authority.

The Ministry of Finance is a constituent ministry of the State Council.²

The China Investment Corporation (CIC) is the world's largest sovereign wealth fund. It is PRC state owned.³

The State-owned Assets Supervision and Administration Commission (SASAC) manages the assets of central state-owned enterprises and is accountable to the State Council.⁴

The PRC Government can influence and control PRC enterprises, including through ownership (“PRC state-owned”), national security and defence legislation, corporate board appointments and Chinese Communist Party committees within the entity. Law firms operating in Australia are advising and acting for these PRC enterprises in relation to their interests both in the PRC and Australia.

Methodology

This report has analysed an openly sourced sample of 100 PRC engagements undertaken by law firms operating in Australia dated from 2005. Select engagements of note with historic commencement dates as early as 2005 are included in the sample given that Australian Government open sources indicate many remain active to date. PRC state-owned enterprises represent an overwhelming majority of the sample. Data sources include primary and secondary sources including law firm websites, credential publications and media releases; the Australian Government procurement database, AusTender; the Australian Foreign Influence Transparency Scheme Public Register; Australia’s trademark register, made available by IP Australia; PRC law; international think tank publications; and news media reports.

Cyber analysis contained in this report was conducted passively and with open source methods. The means available to externally assess the cyber maturity of firms was therefore limited. Email server infrastructure compartmentalisation was selected as the criterion given it indicates the level of operational integration and security isolation that firms maintain while operating internationally,including in jurisdictions considered high risk for state intelligence collection.

Summary

PRC state-owned enterprises have engaged law firms operating in Australia to advise on their expanding ownership of Australia's critical infrastructure and critical minerals. These legal engagements do not attract the transparency obligations that any other activities representing a foreign principal in Australia would necessitate. Law firms operating in Australia acting for PRC entities simultaneously fulfil engagements for Australian Government entities, including those responsible for national security and foreign policy. Law firms operating in Australia have formed combined operations with PRC firms, exposing them to PRC intelligence laws. Some are advising PRC state-owned enterprises from within PRC on initiatives consistent with Chinese Communist Party objectives that are designed to advance PRC strategic and economic interests internationally. Australia’s foreign interference and transparency laws do not capture 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.

Law firms operating in Australia have a wide range of appointments from PRC entities, as well as varying levels of separation of email server infrastructure.

Allens

The Foreign Acquisitions and Takeovers Act 1975 (Cth) Foreign Investment Review Board regime does not yet explicitly prescribe critical minerals as subject to national security approval. In May 2023, Allens published an advisory noting that “following recent Government comments, and the forthcoming release of the Critical Minerals Strategy, it is possible that the FIRB approval rules relating to critical minerals will be tightened.”⁵ Allens is among Australia’s largest servicers of PRC state-owned enterprises acquiring Australian critical minerals assets, as well as renewable energy, mining, power, oil and gas, agribusiness and real estate.

Among its clients has been Xinjiang Goldwind Science & Technology Co., Ltd, which Allens advised on its acquisition and proposed development of three wind farm projects in Australia. Tech Transparency Project found in June 2021 that Goldwind was in negotiations in 2015 to receive “labor exports” from Xinjiang, with officials from Hotan Prefecture visiting to "coordinate labor export work" with a view to "strengthen the organisational and disciplinary education” of the workers.⁶ Allens has advised its “longstanding client”, Goldwind, as recently as December 2022.⁷ Xinjiang Goldwind Science & Technology Co., Ltd announced in July 2023 that it had renamed the company, omitting “Xinjiang” from its name.⁸ The Office of the UN High Commissioner for Human Rights found on 31 August 2022 that “the extent of arbitrary and discriminatory detention of members of Uyghur and other predominantly Muslim groups” in China “may constitute international crimes, in particular crimes against humanity".⁹ The United Nations Special Rapporteur on Contemporary Forms of Slavery found earlier that month on 18 August that it was “reasonable to conclude that forced labour among Uighur, Kazakh and other ethnic minorities in sectors such as agriculture and manufacturing has been occurring in the Xinjiang Uighur Autonomous Region of China".¹⁰

In December 2014, Allens announced it was advising China Communications Construction Company, Ltd (CCCC) on its A$1.15bn acquisition of John Holland Group, one of Australia's largest construction firms.¹¹ The U.S. Department of Commerce’s Bureau of Industry and Security added five CCCC subsidiaries to the Entity List in 2020, a register of entities engaged in activities including those “contrary to U.S. national security and/or foreign policy interests”.¹² In 2018, the Canadian Government blocked CCCC's C$1.51 billion acquisition of construction company Aecon Group Inc citing national security concerns.¹³

Ashurst

Ashurst launched a partnership with PRC-based law firm Guantao in February 2018 located in Shanghai: the Ashurst Guantao Joint Operation Office.¹⁴ Public mail exchange (MX) records show that the email accounts of Ashurst employees based in PRC and in the Joint Operation Office share the same email servers as their Australian counterparts, a lack of infrastructure isolation risking exposing Australian email traffic to PRC’s intelligence laws.

Ashurst announced on 27 July 2023 it had advised PRC Ministry of Finance-owned investment company CITIC Securities International as its "international counsel" on one of the “largest dim sum bond issuances” of the year, noting the success indicated investor "dedication to Renminbi internationalisation."¹⁵ To “steadily promote RMB internationalization and see RMB capital go global” was included in PRC’s Five-Year Plan of 2016-2020 by the Politburo Standing Committee and adopted by the People’s National Congress.¹⁶ PRC holds US$970bn in US treasuries and securities, accounting for almost one-third of its foreign reserves. This coupled with its dependence on US dollars for international trade exposes PRC to economic sanction risk, with Russia’s invasion of Ukraine serving as a recent precedent of U.S. willingness to assert its economic dominance.¹⁷ Renminbi internationalisation increases PRC economic dominance and diminishes its vulnerability to the risk of U.S. sanctions.

Earlier in the month that Ashurst noted its success in harnessing investor interest in Renminbi internationalisation, Hong Kong’s National Security Department, established by PRC National People’s Congress’ 2020 National Security Law,¹⁸ announced a HK$1 million bounty for the arrests of two Hong Kong democracy activists residing in Australia, one of whom is an Australian citizen.¹⁹ Five days after Ashurst’s announcement, PRC’s domestic and foreign intelligence agency, the Ministry of State Security, endorsed the use of monetary incentives to recruit intelligence sources. Noting "national security is all for the people and everything depends on the people", it directed intelligence agencies to "recognise and reward individuals and organisations that report espionage or make significant contributions to counter-espionage work".²⁰

Ashurst remains Huawei's address for legal service for intellectual property filings in Australia, according to IP Australia. Bloomberg reported in December 2021 that Huawei delivered a malicious software update to Australian telecommunication networks in 2012, before Australia classed Huawei a high-risk vendor alongside the Five Eyes, the intelligence partnership with Canada, New Zealand, United Kingdom and United States.²¹ It also reported in June 2023 that Huawei surveilled a Denmarktelecommunication regulator that was investigating a leak to Huawei amid a competitive 5G tender process.²²

A subsidiary of a PRC state-owned enterprise China Taiping placed Australian company Sargon into receivership in January 2020 with the legal advice of Ashurst.²³ Australian politician Tim Wilson, then the Member for Goldstein and member of the Joint Standing Committee on Intelligence and Security,²⁴ told Parliament in August 2021: “if an Australian company were maliciously liquidated at the direction of a Chinese state-linked entity, this House would rightly be outraged, and it should be… documents that have come into my possession appear to indicate that there has been a deliberate campaign to trigger the receivership of Sargon by China Taiping."²⁵The dispute has since been the subject of Federal Court, NSW Supreme Court and Victorian Supreme Court action.

Ashurst was appointed to 241 Australian Department of Defence contracts between 1 January 2019 and 27 July 2023, according to AusTender.

King & Wood Mallesons

King & Wood Mallesons has advised on more than one thousand Belt and Road Initiative projects in 65 participant countries, including energy, transportation, information, infrastructure, finance, manufacturing and services.²⁶ Proponents of PRC’s BRI claim it facilitates new infrastructure and economic aid to developing economies; critics argue it facilitates PRC economic and strategic domination of countries in the Eurasia, Africa and Oceania route.²⁷

PRC launched its first intellectual property operation centre for the semiconductor sector on 26 March 2023. Partnering with King & Wood Mallesons, the facility in Wuxi was eponymously named the KWM Yangtze River Delta (YRD) Intellectual Property Centre.²⁸ It “will provide a full chain of services covering IP creation, application, protection, management and services by relying on KWM’s strengths in the legal service field and its extensive network in core markets."²⁹ The PRC Government considers sovereign semiconductor production a priority, with President Xi Jinping saying in 2016 “the fact that core technology is controlled by others is our hidden danger” and Vice Premier Ma Kai saying in 2018 “we cannot be reliant on foreign chips”.³⁰ Becoming a global leader in the semiconductor sector by 2030 was established as an objective by PRC’s State Council in 2014.³¹ U.S. President Biden signed an executive order on 10 August 2023 authorising Treasury prohibitions on investments in the PRC semiconductor sector.³² Reuters reported U.S. officials said the prohibitions, which also included microelectronics, quantum information technologies and some artificial intelligence systems, were intended to address “the most acute” national security risks.³³ Then-acting director of the U.S. National Counterintelligence and Security Center Mike Orlando said in a May 2021 interview with CBS that “we believe that there's no other country than China that poses the most severe intelligence threat to America. We're looking at $200 billion to $600 billion dollars a year in losses to intellectual property theft by China. And that's been going on for the last 20 years.”³⁴

A building with a bridge over water

Description automatically generated — Architectural rendering of the KWM Yangtze River Delta (YRD) IP Centre.³⁵

The Council on Foreign Relations describes PRC’s Made in China 2025 state industrial strategy to become the global leader in high-tech manufacturing as “[aiming] to use government subsidies, mobilize state-owned enterprises, and pursue intellectual property acquisition to catch up with—and then surpass—Western technological prowess in advanced industries.”³⁶ Referencing PRC’s talent plans, often referred to as the Thousand Talents Program, the United States Federal Bureau of Investigations says “China oversees hundreds of talent plans. All incentivize its members to steal foreign technologies needed to advance China’s national, military, and economic goals. China recruits science and technology professors, researchers, students, and others—regardless of citizenship or national origin—to apply for talent plans. Individuals with expertise in or access to a technology that China doesn’t have are preferred.”³⁷

The University of Technology's Australia-China Relations Institute, founded in 2013 with a $1.8m donation from Huang Xiangmo, is funded by King & Wood Mallesons.³⁸ Huang Xiangmo had his citizenship application denied and his permanent residency revoked in 2019 after ASIO found he was “amenable to conducting acts of foreign interference".³⁹ Other industry funders include PRC state-owned enterprise China Construction Bank and construction giant John Holland, owned by PRC state-owned China Communications Construction Company, Ltd.⁴⁰

King & Wood Mallesons is the second most represented law firm operating in Australia servicing PRC state-owned enterprises, second to Allens. Its international director, David Olsson, serves as national president and chair of the Australia China Business Council.⁴¹ He has separately served as Chair of the Australian Renminbi Working Group.⁴² In a March 2017 interview with PRC State Council-owned media Xinhua News Agency titled “Australia can help in Renminbi internationalization, B&R (Belt and Road) initiative”, Olsson said “Australia currently has around 3 percent of its trade transactions denominated in RMB so there's enormous opportunity between 3 and 50 percent for us to continue to grow and utilize RMB as a trade currency.”⁴³ These comments predated PRC’s economic sanctions on Australian exports.⁴⁴

King & Wood Mallesons announced in October 2022 that it had advised China Baowu Steel Group Co., Ltd on its entry into a $2bn joint venture with Rio Tinto to develop Western Australia's Western Range iron ore project.⁴⁵ It was approved by the Australian Government.⁴⁶ China Baowu Steel Group Co., Ltd's March 2022 social responsibility report asserts it "has practiced the national development strategy of civil-military integration" and that "the breakthrough in the key manufacturing technology of civil products has laid the foundation for the manufacturing of military products, made it possible to share technological achievements between the military and the people, and share production resources, enhance economic and national defense strength, and help realize the dream of a strong country and a strong military.”⁴⁷

Public mail exchange (MX) records show that the email accounts of King & Wood Mallesons employees based in Hong Kong share the same email servers as their Australian counterparts, a lack of infrastructure isolation risking exposing Australian email traffic to PRC’s 2018 Hong Kong National Security Law.

King & Wood Mallesons was appointed to 231 Australian Department of Defence contracts between 1 January 2019 and 27 July 2023, according to AusTender.

Corrs Chambers Westgarth

Corrs Chambers Westgarth has appointed Dr Geoff Raby, a former Department of Foreign Affairs and Trade deputy secretary and Australia’s ambassador to the PRC from 2007 to 2011, as co-chair of its PRC practice, the China Business Group.⁴⁸ Dr Raby is not registered as a practicing solicitor in any Australian jurisdiction and lists having no law qualifications on his website nor other professional biographies.⁴⁹ Raby has served as a director of Yancoal since 2012, an Australian coal producer owned by Yankuang Energy Group Co., Ltd in turn owned by PRC state-owned enterprise Yankuang Group,⁵⁰ for which he has registered on the Foreign Influence Transparency Scheme register.⁵¹

Corrs Chamber Westgarth advised Tencent Holdings Ltd as the lead investor in a US$13 million Series A capital raising for Australian financial technology company Airwallex in 2017.⁵² A partner at Corrs Chamber Westgarth lists the engagement among their “key deals”.⁵³ Citizen Lab found in 2016 that dominant Chinese social media and lifestyle platform WeChat, owned by Tencent and with 806 million monthly active users, was censoring criticism of the Chinese Communist Party, references to foreign media sources, Tibetan rights, Uyghur-language Islamic content, the Tiananmen Square massacre, the Jasmine Revolution democracy movement, Chinese government corruption cases and Falun Gong.⁵⁴ Tencent refused to appear at the Select Committee on Foreign Interference through Social Media in July 2023.⁵⁵ Noting it “is a company with many questions to answer about how it censors and surveils its users and its relationship with the Chinese Communist Party”, shadow home affairs minister and committee chair James Paterson said Tencent was “showing contempt for the parliament of Australia”.⁵⁶

China National Chemical Corporation Ltd, a PRC state-owned manufacturer of advanced chemicals, purchased Qenos Holdings Limited in 2005,⁵⁷ described as Australia’s sole manufacturer of polyethylene and polymers.⁵⁸ Corrs Chambers Westgarth advised on the sale.⁵⁹ U.S. Department of Defence designated China National Chemical Corporation Ltd in its "Chinese Military Companies" listings in October 2022.⁶⁰ The Department of Defence said it was “determined to highlight and counter the PRC Military-Civil Fusion strategy, which supports the modernization goals of the People’s Liberation Army (PLA) by ensuring its access to advanced technologies and expertise are acquired and developed by PRC companies, universities, and research programs that appear to be civilian entities.”⁶¹

Norton Rose Fulbright

Norton Rose Fulbright advised China Mengniu Dairy Company Limited in its 2019 acquisition of Bellamy's Australia, an organic infant formula and baby food producer.⁶² The Australian Treasurer declined to approve China Mengniu Dairy Company’s acquisition of Lion Dairy, owner of the brand Dairy Farmers, in 2020.⁶³

Herbert Smith Freehills

Herbert Smith Freehills announced in July 2017 it was advising PRC state-owned China National Petroleum Corporation on its investment in Iran's South Pars gas project, the first foreign oil and gas investment in Iran since sanctions were reduced in 2016.⁶⁴ The PRC Government appointed China National Petroleum Corporation to construct the Sila Sibiri 3 gas pipeline between China and Russia, an agreement reached in January 2023 amid Europe's collapsed demand for Russian gas.⁶⁵

China Minmetals Corporation through its subsidiary MMG Limited engaged law firm Herbert Smith Freehills on an unspecified US$512 million rights issue in 2017.⁶⁶ Australian Treasurer Wayne Swan refused its acquisition of OZ Minerals in 2009 due to its proximity to a sensitive Defence facility.⁶⁷

Xenophon Davis

Xenophon Davis, co-founded by former Australian senator Nick Xenophon, accepted Huawei as a client in 2019.⁶⁸ The firm promotes its view that "some battles need to be fought in public or political forums as hard as they are in a courtroom" on its website.⁶⁹ The firm publicly stated there was "no evidence" to justify its 5G network exclusion as a high-risk vendor and that it is "the most unfairly maligned company in Australian history".⁷⁰ Despite committing to "complement litigation with vigorous public and political advocacy where required", Xenophon Davis declined to register with the Foreign Influence Transparency Scheme, assessing that "lawyers are exempt".⁷¹ Section 25 of the Foreign Influence Transparency Scheme Act 2018 does not exempt “lawyers”; it exempts "legal advice or representation".⁷²

Xenophon Davis also rejected that Huawei constituted a "foreign principal". The Act defines a “foreign principal” to include a company that is subject to a "foreign government" or "foreign political organisation" that "is in a position to exercise, in any other way, total or substantial control over the company".⁷³ Huawei has publicly confirmed it has an internal Chinese Communist Party committee in accordance with PRC law.⁷⁴ Article 33 of the Constitution of Communist Party of China (CCP) states these committees “shall implement the Party’s principles and policies, guide and oversee their enterprises’ observance of state laws and regulations” and “promote the healthy development of their enterprises.”⁷⁵ On 26 November 2018, the Chinese Communist Party Central Committee issued Regulations on the Work of the Communist Party of China Branches (Trial Implementation).⁷⁶ Article 10(3) adds these committees are to “build an advanced enterprise culture”.⁷⁷ Article 24 adds these committees are to “generally select party branch secretaries from the management” and “should pay attention to the selection of party branch secretaries from the backbones [of the organisation]”.⁷⁸

Risk Concentration

A graph with numbers and a number of people

Description automatically generated with medium confidence — **Figure 1: Number of tenders awarded to law firms operating in Australia between 1 January 2019 and 27 July 2023 by Australian Government entities with responsibility for national security.**

King & Wood Mallesons and Ashurst have had a combined 472 tenders from the Australian Department of Defence. They are the most represented of all law firms operating in Australia accepting PRC engagements. The Department of Foreign Affairs and Trade has engaged Ashurst on 23 tenders.

Australian Government entities with responsibility for national security include the Attorney-General's Department, Australian Criminal Intelligence Commission, Australian Electoral Commission, Australian Federal Police, Australian Signals Directorate, Department of Defence, Department of Foreign Affairs and Trade, Department of Home Affairs and Department of Premier and Cabinet.

A graph with numbers and a number of names

Description automatically generated with medium confidence — **Figure 2: Number of PRC appointments of law firms in Australia on engagements relating to Australian critical infrastructure and critical minerals.**

These sectors include energy, telecommunications, finance, critical minerals, food, waste, property, transport and manufacturing. Select few engagements of note with historic commencement dates as early as 2005 are included in the sample given that Australian Government open sources indicate many remain active to date.

Figure 3: PRC entities that have acquired Australian entities in critical infrastructure sectors and the four law firms most appointed for legal services in those acquisitions.

A graph with numbers and a number of people

Description automatically generated — Figure 5: Total monetary value in Australian dollars of tenders awarded between 1 January 2019 and 27 July 2023 to law firms operating in Australia by Australian Government entities with responsibility for national security.

Allens and Corrs Chambers Westgarth are most represented in PRC appointments of law firms operating in Australia for Australian critical infrastructure and critical mineral asset acquisitions. They also have fewer appointments by Australian Government entities responsible for national security.

A graph with red and blue bars

Description automatically generated — Figure 6: Appointments of law firms operating in Australia by PRC entities for Australian critical infrastructure and critical mineral assetscontrasted with appointments by Australian Government entities with responsibility for national security (“Sensitive Appointments”).

Ashurst, King & Wood Mallesons and Minter Ellison are most represented in both PRC Sensitive Appointments and Australian Government Sensitive Appointments. Allens had one Australian Government Sensitive Appointment. Maddocks and HWL Ebsworth had no PRC Sensitive Appointments.

A close-up of a chart

Description automatically generated — **Figure 7: Law firms operating in Australia by cyber risk as assessed by email server infrastructure compartmentalisation.**

Separating IT systems such as email servers between sensitive PRC Government and Australian Government legal appointments reduces risk to both sides.

PRC Legal Risks

Article 30 of the Constitution of Communist Party of China states “party committees of state-owned enterprises shall play a leadership role, set the right direction, keep in mind the big picture, ensure the implementation of Party policies and principles, and discuss and decide on major issues of their enterprise in accordance with regulations. They “should focus their work on the operations of their enterprise.” They “shall guarantee and oversee the implementation of the principles and policies of the Party and the state within their own enterprise and shall support the board of shareholders, board of directors, board of supervisors, and manager (or factory director) in exercising their functions and powers in accordance with the law.” They “shall strengthen their own organizational development and lead work on political thinking, efforts toward cultural-ethical progress, work related to the united front, and work on trade unions, Communist Youth League organizations, women’s organizations, and other people’s group organizations.”⁷⁹

Article 7 of the National Intelligence Law states that “any organisation and citizen shall, in accordance with the law, support, provide assistance, and cooperate in national intelligence work”⁸⁰

Article 28 of the Cybersecurity Law states "network operators shall provide technical support and assistance to public security organs and national security organs that are safeguarding national security and investigating criminal activities in accordance with the law."⁸¹

Article 55 of the National Defence Mobilisation Law states that "any organisation or individual has the obligation to accept the expropriation of civilian resources according to law".⁸²

Discussion

PRC state-owned enterprises maintain ownership in Australia’s critical infrastructure and critical mineral sectors, legitimately facilitated by law firms without the same transparency obligations that other activities representing foreign principals in Australia would necessitate. Such engagements risk procuring foreign principals outcomes prejudicial to Australia’s national security.

“Addressing a clear gap”, the Turnbull Government introduced the National Security Legislation Amendment (Espionage and Foreign Interference) Act 2018 (Cth) to “criminalise covert, deceptive and threatening actions by persons acting on behalf of, or in collaboration with, a foreign principal aiming to influence Australia's political processes or prejudice our national security.”⁸³

Except for the rightfully legitimate context of legal services, representing a foreign principal can risk carrying all elements of a criminal foreign interference offence: it is funded and directed by a foreign principal; and can be influencing a governmental process, supporting foreign intelligence activities or prejudicing Australia’s national security. In circumstances where law firms are making representations to the Foreign Investment Review Board (FIRB) on behalf of foreign principals, it is noteworthy that FIRB is an advisory board advising the Treasurer on their exercising of executive power, arguably rendering it a “governmental process” and therefore representations to it an act of “influencing a governmental process”.

Although engaging legal services means a foreign principal may not itself be acting covertly, the engagement with the law firm attracts legal professional privilege and solicitor confidentiality duties. That the legal system can deliver foreign principals both legitimacy and confidentiality while they pursue their strategic objectives in Australia risks permitting an effective means to circumvent the intent of Australia’s foreign transparency and interference laws.

Employing a lobbyist would require that engagement be published pursuant to Australia’s Lobbyist Register. Working independently or engaging any other proxy would require that relationship be published pursuant to the Foreign Influence Transparency Scheme. Australia currently has no visibility of the engagements law firms undertake on behalf of foreign principals except at the discretion of the firm or client.

Law firms operating in Australia have been engaged by advanced technology companies that the Five Eyes consider high risk vendors, social media giants that refuse to appear at Australia’s foreign interference inquiries, and PRC state-owned energy leaders that have majority ownership in Australianelectricity companies. Meanwhile these law firms are entrusted with legal engagements involving Australia’s critical infrastructure and Australian Government entities responsible for countering national security risks.

PRC state-owned enterprises and PRC Government initiatives have secured Australia-based law firm engagement throughout the massdetention of the Uyghur ethnic minority in Xinjiang, the Hong Kong National Security Law, COVID-19 investigation suppression, the No-Limits Friendship with Russia amid Russia’s invasion of Ukraine and the continued detentions and secret trial of Australian citizens.

Recommendations

PRC state-owned entities are engaging Australia's law firms as a legitimate means to achieving commercial and economic outcomes that advance PRC strategic and political interests, risking prejudice to Australia's national security without transparency.

The Australian Parliament should repeal section 25 of the Foreign Influence Transparency Scheme Act 2018 (FITS Act) that exempts "legal advice or representation" from registration under the scheme.

The Australian Parliament should amend the FITS Act to create a new registrable activity for "legal advice or representation" that includes law firms and legal practitioners operating in Australia to increase public visibility of these engagements.

Law firms operating in Australia, practitioners and data networks with a presence in a foreign state are exposed to the intelligence collection laws and practices of that state. Australian Government entities, critical infrastructure assets and other at-risk prospective clients should have the means to independently assess potential national security risk when determining whether to engage a particular law firm for legal advice.

It is in the public interest for Australian practitioners and law firms, some of whom are among Australia’s largest enterprises, to make their engagements available to scrutiny when those engagements represent foreign principals whose pursuit of their strategic interests can pose risk to Australia’s national security.