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Thursday, 13 September 1984
Page: 1202

Mr LLOYD —by leave-First of all I thank the Special Minister of State ( Mr Young) for his courtesy in regard to this matter. The statement made today is the culmination of a series of reports and statements concerning Telecom Australia. Today's statement is the Government's response to the Vincent report on the Review of Matters Affecting the Australian Telecommunications Commission and follows a shorter response by the same Minister last Friday. The Vincent report, which was also tabled at that time, in turn, follows the annual reports, allegations and criticisms made in the annual reports of Special Prosecutor Redlich concerning Telecom and leaked correspondence which the Minister for Communications (Mr Duffy) has incorporated in the Vincent report and which was the subject of the terms of reference for Mr Vincent. The Minister for Communications also made a statement to Parliament in March of this year on the same subject.

All of these reports and statements concern the question of malpractice within Telecom. Even this series of allegations is not new; it goes back to 1963 to the Taylor Royal Commission into Improper Practices in the Postmaster-General's Department in Victoria, the Connor inquiry into casinos in Victoria, the Costigan Royal Commission on the Activities of the Federated Ship Painters and Dockers Union, the Stewart Royal Commission of Inquiry into Drug Trafficking, police Ministers conferences, the Age tapes and so on to this final chapter.

Some of the criticisms from these inquiries were not included in the Vincent reference and there has been no further reference to those points. The original response of the Special Minister of State also referred to a separate report made by Mr Vincent on certain matters which require further investigation or action but no reference is made to those today. I hope that we do get some response at an appropriate time to these matters.

There is, however, a tremendous similarity between the comments of Special Prosecutor Redlich and those of Mr Vincent, QC, concerning Telecom. The first point on which they agree is that there is no organised crime or great degree of corruption in Telecom. To my knowledge that allegation has never been made by any honourable member on either side of the House. It is certainly reassuring to find that both those people have indicated that that is the case. They have said as well, and the Special Minister of State indicated this today, that Telecom management's first priority is to protect the security and privacy of the telephone system. The necessity for that is fundamental and is respected and acknowledged by this side of the House.

Telecom is the greatest employer of people in this country, employing approximately 90,000 people. It is the largest organisation-the largest company, if you like-the largest industry contained within one organisation in this country. Therefore it would be very surprising, given that there are 90,000 people, if there were not some corruption or illegal practices. That would be natural in any organisation, any grouping of people of such a size. The fact that nothing of a substantial or organised nature has been found is to Telecom's credit.

Telecom is not just an ordinary organisation. It occupies a critical and key position in our society and among our industries and organisations in that it controls the telephone system, which is such an integral part of communications in our private lives, business associations and so forth.

Redlich and Vincent agreed also that the reaction of Telecom's senior management had impeded, rather than assisted, the investigation of the illegal activities that were taking place. They said that, in fact, a double standard was applied by some of the senior management-one must emphasise that, once again , they were referring to only a small percentage-to the illegal activities of Telecom's employees. Redlich and Vincent said that they were also concerned over the lack of action against people for internal administrative abuses-in relation to travelling allowances, conflicts of interest, et cetera-that there should have been. Their overall comment, if it can be summarised-I think Vincent himself said this at one stage-was that Telecom's management should put its house in order. The Special Minister of State acknowledged that in his statement last Friday, when he said of Mr Vincent:

He concluded that there seemed to have been inadequate emphasis given to questions of public responsibility in relation to improper or criminal activities within the organisation.

I make two points in relation to that. First, I believe that it is far better for Telecom's image for it to be seen to be pursuing the few who abuse the trust of their position than it is for it to say that that activity does not exist. That is a fundamental problem faced by Telecom's management. A fundamental change of attitude must take place. Secondly, I point out-the Minister for Communications and the Special Minister of State have made this point-that Telecom is not the only body that should look to putting its house in order. Not only government bodies but also large private companies should do so. Unless others in similar organisational positions can honestly say that they have checked matters and pursued inquiries and can, therefore, say that corruption does not exist in their organisation, they are not in a position to criticise Telecom.

Special Prosecutor Redlich has performed a great public service. He has been persistent in his endeavours. He has made repeated comments so that those practices will not continue and so that his recommendations and criticisms are not forgotten by government.

Had there not been the reporting of the Redlich letter of 17 January in the Age , I doubt very much that there would have been a Vincent inquiry or any response by this Government to the repeated criticisms that he made of Telecom. I am disturbed by the Government's response to the Vincent inquiry. In a descending order of concern about the managerial situation in Telecom in relation to illegal activities and malpractice, Redlich's concern would have to be at the top and the Minister's concern, from his response today, would have to be at the bottom. The Minister's response bears little resemblance to the Vincent report in either acknowledging the existence of a disturbing situation or responding to those recommendations. Vincent is far closer to Redlich than this document is to Vincent, and even the Minister's statement last Friday more accurately reflected the Vincent view. I am forced to conclude that the Government is not responding appropriately to the situation as revealed by Redlich and confirmed by Vincent.

Vincent had six specific terms of reference from the Minister for Communications and Vincent in turn made 13 very specific recommendations. Today' s statement has none of those specific points in relation to either the terms of reference or the recommendations. Without going into all of them, some I think are so important that specific recommendations should be made on them. The first of the terms of reference from the Minister for Communications was:

That employees of Telecom had engaged in illegal activities and in particular activities relating to SP Bookmaking.

If one wants to generalise, one could say that it asked whether Telecom should be concerned with State illegal activities or just Federal illegal activities. To be fair to Telecom, the Act at present does not require it to fully take into account illegal activities at the State level in the same way as it does activities at the Federal level. SP bookmaking, which is a State crime, is the obvious example because of its extent, because it cannot exist without a telephone, because large amounts of money and the loss of State government revenue are involved and because of possible connection with organised crime. Vincent found that such unlawful installation could not occur without the participation of relatively senior Telecom management.

Special Prosecutor Redlich recommended on several occasions that there was a need to create a Federal offence for using Federal facilities in furtherance of a State crime. This, he reminded us, is the procedure followed in the United States to handle this problem. Vincent rejected the Redlich proposal. He has suggested amending the Telecommunications Act by incorporating by-laws, increasing the maximum penalty to $500 for each offence of unauthorised connection and providing a penalty of two years imprisonment for such connections if committed in furtherance of other criminal activity. The Minister for Communications in his March statement said:

. . . it is proposed to amend the Telecommunications Act to make it clear that Telecom should take positive steps to prevent use of telecommunications services for the commission of an offence against a law of the Commonwealth or of a State or Territory.

In today's statement all we are told is that an interdepartmental working party has been established to report to Cabinet within three months on necessary amendments to the Telecommunications Act. That was on page 5 of my copy of today 's statement, but the Minister stated on page 3 that the Act will be amended to deal with the use of the network for illegal purposes. Does the Minister mean the same thing? Is he saying that there will be two series of amendments to the Telecommunications Act, one in this session which the Minister for Communications more or less indicated in his March statement, or that there will be one such amendment at some time in the future after this interdepartmental committee reports?

The second specific term of reference concerned whether there was hostility and an unco-operative attitude by Telecom staff towards internal and police investigators. Redlich, in his January letter to the Minister, states that as early as the 1963 inquiry Mr Justice Taylor admonished the then Postmaster- General's Department's management for its tendency to turn a blind eye to employees using their position and facilities for illegal purposes. He also stated that this encouraged an environment conducive to illegal activity. Redlich maintains that this continues. Equally disappointing to Redlich were the attempts by some senior Telecom personnel to conceal this illegal activity from public scrutiny. One result of this attitude, he claims, has been an unco- operative attitude towards Telecom's own internal investigators as well as the Australian Federal Police. In fact senior Telecom staff had interfered with the work of this investigation, and Vincent confirmed that. Redlich continued:

Overall the unsatisfactory pursuit of improper conduct by Telecom employees is compounded by the guidelines for the relationship between the internal investigators and the Federal Police.

The point is that these guidelines had not materially altered even though they were criticised in several inquiries. The guidelines basically require the Federal Police to refer to Telecom management every suspected case of illegal activity and it is then Telecom management which decides whether the police or its own internal investigators will be allowed to take further action or no action. Would not we all love to be in that position-to have our own boss say: ' We will look after it rather than let the police take over'? The Minister for Communications in his March statement said:

The Government has instructed all government agencies to take positive steps to ensure that their facilities are not used for illegal purposes and to be more positive with law enforcement.

The Minister stated in March that new working arrangements or guidelines were in place with Telecom and that the internal investigation unit was being strengthened. Redlich had previously reported that in Victoria, the worst of the State sections for illegal activity, the number of investigators had actually been reduced from 21 to 11. Redlich also reported that State police were deprived of any information gained by Telecom investigators, but the Minister considered that there was no need to change that arrangement. However, he stated that formal arrangements had been established in each State between Telecom and the State and Federal police.

The police had also criticised Telecom procedures which did not provide adequate information for the proper investigation of illegal activities. The Minister stated in March that Telecom would henceforth keep additional information for longer periods. Vincent basically agreed with Redlich's view of the negative attitude to internal investigations and to police inquiries by Telecom management. Vincent was evidently not impressed by the new guidelines which the Minister stated in March were in place, if, in fact, those new guidelines have actually been put in place. This is one of the questions that have to be asked. Vincent recommended that there be further changes, including that the identity of the installing technician be contained in Telecom computer information on the subscriber for a period and that new, more formal arrangements between the internal investigators and the police for the investigation of illegal practices were necessary.

Today we are told that Telecom is examining the best way of recording additional information on installation and maintenance of services. This question has to be asked: If Telecom today is investigating the best way of recording this additional information, does this mean that between March and now Telecom has done nothing to put in place these additional requirements that the Minister in his March statement had instructed Telecom to do?

Mr Cadman —You would have to assume that.

Mr LLOYD —I think that has to be assumed, but in the meantime Telecom has done nothing or, if it has done something, Vincent himself considered that those increased procedures were not adequate.

The next reference to the Vincent inquiry made by the Minister was as follows:

Telecom employees who had engaged in business activities outside their Telecom employment had taken improper advantage in relation to those activities.

Vincent detailed a number of other practices less serious than SP bookmaking which were improper, particularly in relation to the special position many Telecom employees enjoy. He recommended changes to the by-laws to require permission for outside employment to be in writing. He recommended that the categories of prohibited outside employment be widened and better defined and that criteria be established which must be met before permission for outside employment is granted. He also referred to the need to develop, promulgate and enact in staff by-laws a code in relation to conflict of public duty and private interest.

But will this actually be done? Doubt that it will be done was raised by Vincent himself when he stated that this Federal Government has accepted the recommendation of the Bowen Committee of Inquiry Concerning Public Duty and Private Interest, and a sub-committee of the Telecommunications Consultative Council was established to consider the application of a code of conduct within Telecom in relation to conflict of interest. Vincent then went on to say:

No code has been promulgated.

He believes that the sub-committee is moribund. Today we are told that Telecom by-laws will be amended and that Telecom will respond administratively. I for one would have greater confidence if the Minister for Communications were able to report in future on the actual implementation of the recommended changes which Telecom is doing itself internally.

The next reference was that Telecom had made improper use of its power under section 58 of the Telecommunications Act to deal with employees found engaging in criminal conduct by internal disciplinary action rather than by way of criminal charge in the courts. This was one of the major complaints of Special Prosecutor Redlich against Telecom management. He said that management had not allowed the proper course of legal action to be followed either by the internal unit or by the police and had improperly substituted an administrative fine of up to $40 when illegal activity had been discovered. Redlich also referred to the internal structural management problems which prevented the proper exercise of discipline for administrative breaches as well as criminal activity.

Vincent came to the same conclusion as Redlich-that the guidelines and procedures were inappropriate, that the section 58 procedure should not be used instead of legal action for criminal activity unless so advised by the Director of Public Prosecutions and that the decision to prosecute rests with the Director of Public Prosecutions. He concluded furthermore that offences should be graded according to seriousness and that the decision as to whether Telecom or the Federal Police should investigate an offence will be determined by the seriousness.

Today we are told that the Director of Public Prosecutions and Telecom management have agreed that where Telecom has evidence that one of its employees has committed an offence the matter will be referred to the Director of Public Prosecutions. Detailed guidelines have been prepared. One has to ask: Are these guidelines the Vincent guidelines or are they some watered down guidelines in their place? Even if the Vincent guidelines are faithfully implemented a great and grey area of discretion still remains with Telecom management to determine what will happen. I believe that the Government should consider more specific legislative requirements rather than guidelines. The next reference was that the senior personnel of Telecom had interfered with internal investigations.

Mr Kerin —This is like a reading from the Bible.

Mr LLOYD —This is a very serious subject and I believe that I am treating it in the manner it deserves. Special Prosecutor Redlich stated that the manner and degree in which senior personnel were able to interfere with internal investigations urgently needed rectifying and that the internal investigators were not truly independent and thus not able effectively to carry out their work . This was one of his reasons for recommending that the Australian Federal Police take over all of Telecom's investigations. Vincent disagreed with that recommendation and suggested changes. He was particularly critical of the Victorian situation where investigators complained of senior level interference. Victoria, of course, is where the unit was halved in size and the greatest problem of illegal and improper activity occurs.

Vincent's response must be a minimum recommendation and is hardly acceptable or adequate for the future good image of Telecom when both he and Redlich were very critical of management interference. The question for the Government is how it and Telecom will implement procedures to ensure that this practice stops and how it will be monitored in the future, as it is obvious that Telecom management so far has been incapable of doing so. Unfortunately, in today's statement there is no direct reference to this particularly serious problem. It is one of the terms of reference, and doubt must continue on the resolution of that problem without its inclusion in today's statement.

The final reference of Vincent concerned the subscriber call record printer machine. The critical part played by the telephone system in the conduct of SP bookmaking and other more serious illegal activities has resulted in repeated requests by the Police Ministers Conference for access to the records of call record printers. This is obviously a sensitive matter involving the security of a telephone system and the rights of privacy of subscribers. Interception can be legally made only under the Telecommunications (Interception) Act. Redlich recommended that the Act be changed to allow police access. Redlich, in support of that recommendation, reminded us that in the United States the Supreme Court has ruled that the machines, because they record only the number and not the conversation, do not constitute an interception and do not violate the right to privacy.

Mr Duffy —That is not the view here.

Mr LLOYD —I accept that point; just because it is the view in the United States it should not necessarily be adopted here. Of course, Vincent, as we have noted, recommended rejection of that.

Mr Young —It is something upon which the Americans and the Russians agree.

Mr LLOYD —The Russians might also listen to the conversation, I think. The Minister, in his March statement, stated that the Attorney-General (Senator Gareth Evans) had been requested to consider the Police Ministers' request and possible amendments to the interception Act. He also indicated that safeguards such as the issue of a warrant would also need to be considered. The Minister was reminded of this in a question I put to him on Monday. He stated that there would be a specific response to the use of the machine. Of course, that is what the Minister would claim has been done today. However, there are two matters that worry me about this. One is the earlier attitude of Caucus to the CRP machines, because Redlich referred to this in his 17 January letter. Secondly, there was an article in the Canberra Times, only two days ago, I think, indicating once again Caucus reservations to any access, not just to the machines but, as I understand that article, to the information on those machines .

Vincent, in his recommendations, said that a distinction should be made between access to the CRP machine or the information on it for SP bookmaking, on the one hand, and access in relation to serious crime, on the other hand. He also made the point, as I have said, that it should be only to the printout, that it should be only on the issue of a warrant for a limited period, and that the whole matter should be reviewed. He also acknowledged the problem of achieving a proper balance between effective police investigation and privacy. He has recommended that, in cases of serious crime where conviction for the offence would attract a gaol sentence of seven or more years, access should be available . For SP bookmaking it should be used or able to be used in those States where a substantial prison sentence may be imposed.

Vincent also made the very interesting and important point that not every State considers SP bookmaking to be a serious matter. In New South Wales there is no gaol sentence for a first offence. In Victoria it attracts a gaol sentence of up to two years as a maximum. Presumably, Victoria would come within the ambit of the Vincent recommendation, and New South Wales would not come within it. If New South Wales has any complaint, the obvious thing for it to do is to change its Act and to make, in its own view, SP bookmaking a serious crime.

Mr Young —The Law Reform Commission wanted up to seven years gaol.

Mr LLOYD —For all--

Mr Young —Unless the offence attracts a penalty of seven years gaol.

Mr LLOYD —Yes. It is not out to make the special qualification for SP bookmaking . My final point on that matter is that the Government has said in its report that amendments to the interception Act are being considered. The Opposition believes that better arrangements should be possible for the effective use by police, under limited circumstances, and that we would positively consider any legislation on the Vincent proposal that the Government puts forward.

The Government has not responded adequately to Vincent, either in specific detail to the six terms of reference or to the 13 series of recommendations. Too much of the response is vague and generalised and is dependent on Telecom management making internal changes or procedures. In view of Telecom's management record, this cannot be acceptable, as most of the problem is not with Telecom staff but with the attitude and practice of a small percentage of the management. To reassure the House and the people of Australia who depend on Telecom, and for the good name of Telecom and its 90,000 employees, the changes to the two Acts should be made as soon as possible, and the Minister for Communications should report to Parliament in detail on the implementation of the Vincent recommendations.