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Law Enforcement - Joint Statutory Committee Examination of the annual report of the Australian Crime Commission 2011-12 Report, May 2013


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May 2013

Parliamentary Joint Committee on Law Enforcement

Examination of the Australian Crime Commission Annual Report 2011-12.

ii

© Commonwealth of Australia

ISBN 978-1-74229-804-7

This document was prepared by the Secretariat of the Parliamentary Joint Committee on Law Enforcement and printed by the Senate Printing Unit, Parliament House, Canberra

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THE COMMITTEE

Members:

Mr Chris Hayes MP ALP, NSW (Chair)

Senator Fiona Nash NATS, NSW (Deputy Chair)

Senator Mark Furner ALP, QLD

Senator Stephen Parry LP, TAS

Senator Helen Polley ALP, TAS

Ms Sharon Grierson MP ALP, NSW

Mr Michael Keenan MP LP, WA

Mr Russell Matheson MP LP, NSW

Ms Maria Vamvakinou MP ALP, VIC

Secretariat

Dr Jane Thomson, Acting Secretary (from 2 April 2013)

Ms Fiona Bowring-Greer, Secretary (to 28 March 2013)

Ms Rosalind McMahon, Administrative Officer

PO Box 6100 Parliament House CANBERRA

Telephone: (02) 6277 3419 Facsimile: (02) 6277 5809 Email: le.committee@aph.gov.au Internet: http://www.aph.gov.au/le_ctte

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TABLE OF CONTENTS

THE COMMITTEE ......................................................................................... iii

CHAPTER 1 ........................................................................................................ 1

Introduction .............................................................................................................. 1

The committee's duty to examine reports ............................................................... 1

Report under consideration..................................................................................... 1

Examination of the annual report ........................................................................... 1

Structure of the committee report ........................................................................... 1

Acknowledgements ................................................................................................ 2

Note on references .................................................................................................. 2

CHAPTER 2 ........................................................................................................ 3

Australian Crime Commission Annual Report 2011-12 ...................................... 3

Background ............................................................................................................. 3

Annual report compliance ...................................................................................... 3

Emerging serious and organised crime threats and the ACC's response ............... 4

ACC priorities in 2011-12 ..................................................................................... 6

Developments and key achievements over the year in review ............................... 6

Financial management and resourcing ................................................................... 8

Security breaches .................................................................................................... 8

CHAPTER 3 ............................................................................................................ 11

Australian Crime Commission performance measurement ............................... 11

Key Performance Indicators ................................................................................. 11

ACC outcome and program structure ................................................................... 13

Challenges in measuring ACC performance ........................................................ 16

Committee view .................................................................................................... 20

CHAPTER 4 ...................................................................................................... 23

Australian Crime Commission activities 2011-2012 ........................................... 23

Program 1.1.1 Strategic Intelligence Services ...................................................... 23

Program 1.1.2—Investigations and intelligence operations into federally relevant criminal activity .................................................................................................... 27

Committee view .................................................................................................... 34

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Appendix 1 ......................................................................................................... 35

Witnesses who appeared before the Committee at the Public Hearing ............ 35

CHAPTER 1 Introduction

The committee's duty to examine reports 1.1 The Parliamentary Joint Committee on Law Enforcement (the committee) has a statutory duty to examine each annual report of the Australian Crime Commission (ACC) under the Parliamentary Joint Committee on Law Enforcement Act 2010 (the Act).

1.2 This is the third time that the committee is examining the annual report of the ACC since the widening of the committee's jurisdiction in 2010. Subsection 7(1) of the Act lists the following functions of the committee in relation to the ACC:

(a) to monitor and to review the performance by the ACC of its functions;

(b) to report to both Houses of the Parliament, with such comments as it thinks fit, upon any matter appertaining to the ACC or connected with the performance of its functions to which, in the opinion of the Committee, the

attention of the Parliament should be directed;

(c) to examine each annual report on the ACC and report to the Parliament on any matter appearing in, or arising out of, any such annual report;

(g) to examine trends and changes in criminal activities, practices and methods and report to both Houses of the Parliament any change which the Committee thinks desirable to the functions, structure, powers and procedures of the ACC or the AFP;

(h) to inquire into any question in connection with its functions which is referred to it by either House of the Parliament, and to report to that House upon that question.

Report under consideration 1.3 The ACC's Annual Report 2011-12 (the annual report) was presented to the Minister for Home Affairs and the Minister for Justice, The Hon. Mr Jason Clare MP, on 6 September 2012. It was tabled in the House of Representatives on 11 October 2012 and in the Senate on 30 October 2012.

Examination of the annual report 1.4 In examining the ACC annual report, the committee held a public hearing at Parliament House, Canberra on 14 March 2013. The witnesses who appeared before the committee are listed in Appendix 1.

Structure of the committee report 1.5 The report comprises four chapters:

• Chapter 2 concerns ACC compliance with annual report requirements and

trends in relation to serious and organised crime.

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• Chapter 3 considers the methods that the ACC employs to measure its

performance and provides recommendations on improvements in relation to the ACC's Key Performance Indicators (KPIs).

• Chapter 4 details the services, activities and initiatives undertaken by the ACC

under its two programs.

Acknowledgements 1.6 The committee acknowledges the cooperation of the ACC Chief Executive Officer, Mr John Lawler AM APM, and ACC officials who assisted the committee in conducting this examination.

Note on references 1.7 References to the committee Hansard are to the proof Hansard: page numbers may vary between the proof and the official Hansard.

CHAPTER 2

Australian Crime Commission Annual Report 2011-12 Background 2.1 The ACC is established under the Australian Crime Commission Act 2002 (the ACC Act) as a statutory authority to combat serious and organised crime.1 It has 'primary responsibility' for combating nationally significant organised crime in Australia.2 The ACC works with partners across law enforcement, national security, government and industry and provides a 'unique and valuable understanding of serious and organised crime, necessary to identify, disrupt and prevent the threats of most harm to the community'.3

Annual report compliance 2.2 The ACC annual report must comply with requirements specified in section 61 of the ACC Act. Subsection 61(2) requires that the report must include the following:

• a description of any investigation into matters relating to federally relevant

criminal activity that the ACC conducted during the year and that the Board determined to be a special investigation;

• a description, which may include statistics, of any patterns or trends, and the nature and scope, of any criminal activity that have come to the attention of the ACC during that year in the performance of its functions;

• any recommendations for changes in the laws of the Commonwealth, of a participating State or of a Territory, or for administrative action, that, as a result of the performance of the ACC’s functions, the Board considers should be made;

• the general nature and the extent of any information furnished by the CEO during that year to a law enforcement agency;

• the general nature and the extent of any information disclosed by the CEO

during that year to a body corporate under section 59AB;

• the extent to which investigations by the ACC have resulted in the prosecution

in that year of persons for offences;

• the extent to which investigations by the ACC have resulted in confiscation

proceedings;

• particulars of the number and results of:

1 ACC, About the Australian Crime Commission, http://www.crimecommission.gov.au/about-us (accessed 18 March 2013).

2 ACC, Annual Report 2011-12, p. 6.

3 ACC, Annual Report 2011-12, p. 6.

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• applications made to the Federal Court or the Federal Magistrates Court

under the Administrative Decisions (Judicial Review) Act 1977 for orders of review in respect of matters arising under the ACC Act; and

• other court proceedings involving the ACC;

being applications and proceedings that were determined, or otherwise disposed of, during that year.4

2.3 The ACC is a prescribed agency for the purposes of the Financial Management and Accountability Act 1997 (FMA Act). As an FMA Act agency, the ACC must comply with the Requirements for Annual Reports for Departments, Executive Agencies and FMA Act Bodies, prepared by the Department of the Prime Minister and Cabinet and approved by the Joint Committee of Public Accounts and Audit.

2.4 Based on the committee's assessment, the report meets the above

requirements.

Emerging serious and organised crime threats and the ACC's response 2.5 In the review by the ACC Chief Executive Officer (CEO), Mr John Lawler acknowledged new threats in 'cybercrime, offshore investment frauds, virtual illicit marketplaces, and harvesting of online personal and financial information'.5 When questioned by the committee about these four emerging threats, Mr Lawler identified cyber environment as the key threat for law enforcement. He noted that:

It has enabled organised crime like never before, in a whole range of different ways, and it has put the question of jurisdiction in question. Because these crimes are happening in cyberspace with anonymity it is often very difficult to understand where the crime is being perpetrated from. There need to be sophisticated capacities to deal with that. These people are very nimble and they are globally connected so that they can respond very flexibly and very quickly to crime opportunities.

I have used the example of the stimulus payment. Fraudsters in West Africa, within 24 hours, were sending unsolicited emails looking to get bank account details from people so the stimulus payment could be made to them. These are often people who have never come to Australia, never will come to Australia, do not have any assets in Australia and are often outside the reach of judicial processes from Australia. So there is a significant challenge, and in some ways there needs to be a rethink about what sort of treatments and tools might be used to disrupt, deter or dismantle these criminal networks.6

2.6 Mr Lawler explained that tackling the cyber environment required the application of non-traditional law enforcement methods while new skills were needed

4 Australian Crime Commission Act 2002, ss 61(2).

5 ACC, Annual Report 2011-12, p. 10.

6 Mr John Lawler, ACC, Committee Hansard, 14 March 2013, pp 4-5.

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to deal with some of its challenges. He noted that the cyber environment was 'profoundly' changing traditional community policing and organised crime responses as a judicial context in which a person is arrested, charged and put before the courts is 'impotent' in the context of some offences carried out in cyberspace.7

2.7 At the same time, 'traditional' illegal activities remain serious threats with the illicit drug market continuing to serve as a key source of profit for serious and organised crime. Mr Lawler noted the serious impact of illicit drug abuse on the country's health infrastructure and its social cost which is estimated at $8 billion a year.8 The illicit drug market, which accounts for a significant proportion of the profits generated by organised crime, and high risk transnational crime groups continue to view Australia as an attractive market. This is because of:

…new and emerging distribution networks, high discretionary income, high consumer demand and therefore the high return on investment and relative safety of remotely coordinating trafficking of illicit drugs to Australia. These groups partner with domestic groups who provide specialist facilitators capable of smuggling illicit drugs through border controls, and access to money launderers who repatriate the transnational groups' profit share.9

2.8 ACC intelligence confirms that the highest serious and organised crime entities 'continue to significantly influence Australia's illicit commodity markets, and are present in all Australian states and territories'. Most of the groups operate in two or more jurisdictions and transnationally while many have also established a presence within legitimate sectors to facilitate their criminal activity.10

2.9 The ACC reduces serious and organised crime threats 'by working in partnership to protect the community through knowledge'.11 The ACC's single intended outcome is to achieve a:

Reduction in the threat and impact of serious and organised crime, through analysis of and operations against national criminal activity, for governments, law enforcement agencies and private sector organisations.12

2.10 In order to achieve this outcome, the ACC 'enhances' national collaboration against organised crime through six mechanisms:

• national criminal intelligence data holdings;

• coercive powers;

• strategic products;

7 Mr John Lawler, ACC, Committee Hansard, 14 March 2013, p. 5.

8 ACC, Annual Report 2011-12, p. 10.

9 ACC, Annual Report 2011-12, p. 62.

10 ACC, Annual Report 2011-12, p. 62.

11 ACC, Annual Report 2011-12, p. 1.

12 ACC, Annual Report 2011-12, p. 1.

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• legislative framework providing for data sharing;

• specialist skills; and

• the Fusion capability.

ACC priorities in 2011-12 2.11 There were nine priorities for the ACC over the review period. These included:

• highest risk criminal targets;

• targeting criminal wealth;

• high risk and emerging drugs;

• national security impacts from serious and organised crime;

• making Australian hostile to serious and organised crime;

• establishing Criminal Networks-Victoria;

• high risk crime groups-South Australia;

• the National Indigenous Intelligence Taskforce (National Indigenous Violence or Child Abuse No. 2); and

• child sex offences.13

2.12 However, the annual report also noted that:

In light of several changes occurring in the criminal intelligence priority setting environment, such as the Commonwealth Organised Crime Strategic Framework and associated Commonwealth and National Organised Crime Response Plans, the purpose and the function of the National Criminal Intelligence Priorities are currently under review.14

2.13 As part of this review, the role, function and framework of the National Criminal Intelligence Priorities (NCIPs) are under discussion with a revised NCIP framework expected to include an updated set of NCIPs that will reflect the framework's objectives.15 The ACC noted that it was pre-emptive to indicate which of the nine priority areas (which are currently approved ACC Special Investigations and Special Operations) are likely to be reprioritised in light of changes to the NCIPs.16

Developments and key achievements over the year in review 2.14 One of the major developments for the ACC during the review period which will impact its reach and ability to share information and intelligence was legislative reform. The Crimes Legislation Amendment (Powers and Offences) Act 2012 came

13 ACC, Annual Report 2011-12, p. 1.

14 ACC, Annual Report 2011-12, p. 15.

15 ACC, Answer to written question on notice, No. 1, received 28 March 2013.

16 ACC, Answer to written question on notice, No. 1, received 28 March 2013.

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into effect in late June 2012 providing the ACC with the capacity to share its information with partner agencies, government and foreign bodies, and the private sector. Of the legislation, the ACC noted:

This significant change recognises the importance of being able to use criminal intelligence outside law enforcement, to enhance private sector capacity to protect against exploitation by serious and organised crime groups. For example, this can lead to more preventative partnerships with industry, improved policies and programs, informed decisions or triggers for further investigations that help reduce the cost of fraud in the private sector through early detection.17

Task forces

2.15 During the committee's examination of the annual report, Mr Lawler highlighted the important work that task forces have undertaken over the review period. The ACC-led Task Force Galilee was established in response to growing concern about serious and organised investment fraud which cost 2600 Australians more than $113 million in the last five years.18 The ACC engaged in identifying and disrupting these fraudulent activities with over 40 partner agencies and industry organisations on superannuation fraud. Mr Lawler explained that cyber-enabled individuals were targeting the life savings of Australians without even entering the country. He noted that cybercrimes of this nature was a focus area for the ACC. As part of the preventative measures taken by the ACC to deal with these threats, the ACC conducted a mail-out to every household in Australia which provided information about how to 'deal with unsolicited requests from these cyber-enabled criminals'.19

2.16 Mr Lawler also drew attention to the ACC's work in the Attero National Task Force. Established in June 2012, this task force targets the Rebels outlaw motorcycle gang.20

2.17 Other key ACC achievements for 2011-12 include the:

• Fusion Capability—phase two of the Fusion program was completed during

the year to enhance 'underlying technologies and analysis tools'.21 Fusion was launched in July 2010 with $14.3 million allocated over four years. Fusion achievements include the identification of more than 70 high-threat criminal targets previously unknown to national law enforcement and 1200 intelligence products for 83 partners during the review period.22

17 ACC, Annual Report 2011-12, p. 22.

18 ACC, Annual Report 2011-12, p. 11.

19 Mr John Lawler, ACC, Committee Hansard, 14 March 2013, p. 1.

20 Mr John Lawler, ACC, Committee Hansard, 14 March 2013, p. 1.

21 ACC, Annual Report 2011-12, p. 11.

22 ACC, Annual Report 2011-12, p. 24.

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• Production of 1884 analytical and tactical intelligence products provided to

partners through 5629 disseminations resulting in 26 disruptions to criminal entities.23 In addition, 35 topical strategic assessments were produced to inform future intelligence work and policy development in areas including assessment of the organised threat to the Australian carbon pricing mechanism, the cybercrime threat to Australia, and the national illicit firearms market.24

Financial management and resourcing 2.18 On 30 June 2012, the ACC comprised 598 staff in nine offices around the country.25 By comparison, as at June 2011, ACC had a total of 628 staff.26

2.19 The ACC received an unqualified audit opinion from the ANAO.27

2.20 In terms of financial management, ACC's financial result for 2011-12 was a deficit of $4.143 million. The annual report notes that:

Due to accounting treatments and taking into account unfunded depreciation, the ACC reported result was a surplus of $1.921 million. Without accounting treatments, in real terms, the ACC had an operating expenditure deficit of $0.705 million.28

2.21 The deficit was a consequence of the bond rate changing on employee provisions of $0.507 million and superannuation contributions due to staff transfer of $0.196 million.29

2.22 The ACC's total appropriation for 2011-12 was $90.602 million which included tied funding of $9.860 million and base funding of $80.742.30

Security breaches 2.23 In 2011-12, there were 98 security incidents over the period 1 January to 31 December 2012 which included:

• ICT security breach: 15

• Physical security breach: 71

• Unauthorised disclosure: 4

23 ACC, Annual Report 2011-12, p. 17.

24 ACC, Annual Report 2011-12, p. 29.

25 ACC, Annual Report 2011-12, p. 20.

26 ACC, Annual Report 2010-11, p. 171.

27 ACC, Annual Report 2011-12, p. 195.

28 ACC, Annual Report 2011-12, p. 21.

29 ACC, Annual Report 2011-12, p. 194.

30 ACC, Annual Report 2011-12, p. 195.

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• Maverick individuals (suspicious activity by an individual in or around the

ACC premises): 7

• Contact (an ACC employee has come into contact with a representative of a foreign country or with criminal elements): 1

2.24 Physical security breaches made up over 72 per cent of all the breaches reported. Of the 71 physical security breaches, most amounted to a failure to adhere to the 'clear desk policy'. Examples include classified documents left on desks, secure containers left open, and lost ACC access passes. The ACC explained that these incidents were mostly internal and classified as minor in impact.31

2.25 The ACC noted that there was no security incident reported during the review period which resulted in Code of Conduct action. It was also emphasised that the increase in reported security incidents was expected following the introduction of an awareness raising program.

2.26 Since the last review period, the ACC took a series of steps to improve ACC staff security awareness and to report security incidents including:

• automated and simplified self-reporting of security incidents in July 2012;

• increasing the number of security audits across all ACC offices;

• rolling out a Protective security Awareness online package which is

compulsory for all staff;

• production and dissemination of security awareness posters to all ACC

offices; and

• review and dissemination of Protective Security policy. 32

2.27 In comparison to the 98 breaches in 2011-12, the committee notes that from 2007 to 2011, there were a total of 62 breaches as follows:

• 2007: 2

• 2008: 8

• 2009: 13

• 2010: 21

• 2011: 18.

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2.28 In March 2012, the ACC acknowledged that the number of breaches was higher than it would have liked. It explained that it would 'continue to be vigilant about security and is continually improving risk assessment, monitoring, investigation and review and internal awareness raising'.34

31 ACC, Answer to written question on notice, No. 21, received 28 March 2013.

32 ACC, Answer to written question on notice, No. 21, received 28 March 2013.

33 ACC, Answer to written question on notice, No. 3, received 16 March 2012.

34 ACC, Answer to written question on notice, No. 3, received 16 March 2012.

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2.29 The committee acknowledges that initiatives undertaken over the review period to develop a self-reporting culture and improve security awareness may have led to an increase in the number of security breaches that are reported. Notwithstanding unique circumstances, as a security-conscious culture within the ACC strengthens, however, the number of security breaches should start to decline. The committee will continue to monitor security breaches in the next reporting period and the effectiveness of the measures in place to raise security awareness.

CHAPTER 3

Australian Crime Commission performance measurement 3.1 This chapter considers the ACC's Key Performance Indicators (KPIs) and the extent to which they serve as a meaningful benchmark of the ACC's performance. It examines the measurement tools utilised to inform the KPIs and to track performance over time.

Key Performance Indicators 3.2 The Outcomes and Outputs Framework (the framework) provides the basis for the government's approach to budgeting and reporting for public sector agencies and the means by which the Parliament appropriates funds in the annual budget context.1 In 2010, the Joint Committee on Public Accounts and Audit observed that measuring key aspects of an agency's performance is a critical part of the Government's Outcomes Framework.2 Within the context of the framework, KPIs are 'established to provide information (either qualitative or quantitative) on the effectiveness of programs in achieving objectives in support of respective outcomes'.3

3.3 The Department of Finance and Deregulation (DoFD) provided the following guidance for agencies in preparing the 2011-12 Portfolio Budget Statements (PBS):

Agencies should focus on reporting a strategic and meaningful level of performance indicators, demonstrating the link between the program performance indicators and the outcome.4

3.4 Agencies are required to provide a relevant, informative and useful range of performance indicators that can be tracked over time. In advice to entities on developing KPIs, DoFD recommended that agencies use both qualitative and quantitative information to measure program performance in their PBS and provided the following definitions:

1 Australian National Audit Office, Audit Report No. 23 2006-07, Application of the Outcomes and Outputs Framework, 2007, p. 15.

2 Joint Committee of Public Accounts and Audit, Inquiry into the Auditor-General Act 1997, Report 419, December 2010, p. 20, http://www.aph.gov.au/Parliamentary_Business/Committees/House_of_Representatives_Com mittees?url=jcpaa/agact/report.htm (accessed 6 March 2013).

3 Australian National Audit Office, Audit Report No. 5 2011-12, Development and Implementation of Key Performance Indicators to Support the Outcomes and Programs Framework, September 2011, p. 9, http://www.anao.gov.au/Publications/Audit-Reports/2011-2012/Development-and-Implementation-of-KPIs-to-Support-the-Outcomes-and-Programs-Framework (accessed 5 March 2013).

4 Department of Finance and Deregulation, Guidance for the Preparation of the 2011-12 Portfolio Budget Statements, March 2011, p. 38. http://www.finance.gov.au/budget/budget-process/portfolio-budget-statements.html (accessed 16 March 2013).

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Qualitative: this type of reporting is represented by narrative text. Agencies should identify aspirational goals or milestones that are intended to be achieved by the program.

Quantitative: this type of reporting is represented by numbers or percentages in a table.5

3.5 DoFD noted that KPIs must be designed to be 'capable of signalling to government, Parliament and the community whether programs are delivering intended results'.6 Further, consistent, clear reporting on performance provides an important record of an agency's 'progress towards meeting government policy objectives, how well public money is being spent and whether planned achievements are on track'.7

3.6 A performance audit report from the Australian National Audit Office (ANAO) titled Development and Implementation of Key Performance Indicators to Support the Outcomes and Programs Framework emphasised the importance of an 'appropriate mix of qualitative and quantitative KPIs including targets against which progress towards program objectives could be assessed'.8 The ANAO noted that a tendency to rely on qualitative KPIs reduces the ability of an agency to measure the results of program activities over time. Whereas:

A mix of effectiveness KPIs, that place greater emphasis on quantitative KPIs and targets, would provide a more measurable basis for performance assessment.9

3.7 The ANAO argued that because KPIs are statements of the pre‐defined and expected impacts of a program, it is important that they are:

• specific—so as to focus on those results that can be attributed to the particular intervention/program;

• measurable—include quantifiable units or targets that can be readily compared over time;

• achievable—realistic when compared with baseline performance and the

resources to be made available;

5 Department of Finance and Deregulation, Performance Information and Indications, October 2010, p. 7, http://www.finance.gov.au/financial-framework/financial-management-policy-guidance/performance-information-and-indicators.html (accessed 6 March 2013).

6 Department of Finance and Deregulation, Performance Information and Indications, October 2010, p. 2.

7 Department of Finance and Deregulation, Performance Information and Indications, October 2010, p. 1.

8 Australian National Audit Office, Audit Report No. 5 2011-12, Development and Implementation of Key Performance Indicators to Support the Outcomes and Programs Framework, September 2011, p. 53.

9 Australian National Audit Office, Audit Report No. 5 2011-12, Development and Implementation of Key Performance Indicators to Support the Outcomes and Programs Framework, September 2011, p. 53.

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• relevant—embody a direct link between the program’s objective and the

respective effectiveness KPI; and

• timed—include specific timeframes for completion. 10

ACC outcome and program structure 3.8 The ACC's outcome and program structure are detailed in the PBS.

Outcome 1

Reduction in the threat and impact of serious and organised crime, through analysis of and operations against national criminal activity, for governments, law enforcement agencies and private sector organisations.

Outcome strategy

The ACC will contribute to a nationally coordinated effort to reduce the threat and impact of serious and organised crime by collaborating with Commonwealth, state and territory law enforcement and related government agencies and private sector organisations. A highly developed understanding of the threats posed by serious and organised crime will underpin the ACC’s provision of specialised criminal intelligence services, and will focus operations on targets that pose the highest risk to Australian society.11

3.9 The ACC's single outcome is underpinned by two programs:

• Program 1.1.1—Strategic intelligence services, the performance of which is measured by two KPIs; and

• Program 1.1.2—Investigations and intelligence operations into federally relevant criminal activity, which are measured by five KPIs.

3.10 Of a total of seven ACC KPIs, three are quantitative measures of performance. The remainder are measured by way of stakeholder feedback.

3.11 Program 1.1.1 has a set of deliverables to meet the overall aim that:

The ACC's intelligence services are designed to provide Commonwealth, state and territory law enforcement and relevant government agencies with the criminal intelligence necessary to effectively and efficiently disrupt serious and organised criminal activity and reduce the vulnerabilities posed to the Australian community.12

3.12 The following table lists the program's KPIs, their targets and results for 2011-12.

10 Australian National Audit Office, Audit Report No. 5 2011-12, Development and Implementation of Key Performance Indicators to Support the Outcomes and Programs Framework, September 2011, pp 15-16.

11 ACC, Annual Report 2011-12, p. 27.

12 ACC, Annual Report 2011-12, p. 32.

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Program 1.1.1—ACC KPIs and performance 2011-12 13

KPI 2011-12 target 2011-12 result

1. ACC strategic intelligence is aligned with ACC Board endorsed National Criminal Intelligence Priorities (NCIPs)

90% 100%

2. The understanding of serious and organised crime by partner agencies is enhanced by ACC intelligence services, as measured by stakeholder feedback.14

90% 70% of senior executives of

partner agencies agree/strongly agree

3.13 In relation to the first KPI, the annual report noted that there were 38 strategic intelligence products produced during the review period which all aligned with the National Criminal Intelligence Priorities (NCIPs) including all ACC strategic products in the Picture of Criminality in Australia suite. In addition, a combined 1884 analytical and tactical intelligence products were produced during 2011-12. Of these, 93 per cent, or 1753, align to the NCIPs.15

3.14 The second KPI is measured by stakeholder feedback and the explanatory note in relation to it states that:

We are measuring feedback from a diverse range of state and territory law enforcement agencies, as well as Commonwealth law enforcement, regulatory, national security and policy agencies. Each stakeholder has its own role and priorities, and each has different needs for and uses of criminal intelligence. 16

3.15 The overall aim of program 1.1.2 is as follows:

The ACC's investigations and intelligence operations underpin its criminal intelligence services by providing unique intelligence collection capabilities. ACC investigations are conducted in partnership with law enforcement agencies with the objective of disrupting and deterring federally relevant serious and organised criminal activity. In 2011-12, the ACC, under the guidance of its Board, will further focus its coercive

13 ACC, Annual Report 2011-12, p. 55.

14 Partner agencies agree or strongly agree that the ACC's intelligence enhances their understanding of serious and organised crime.

15 ACC, Annual Report 2011-12, p. 55.

16 ACC, Annual Report 2011-12, p. 55.

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powers determinations to more comprehensively address emerging issues in the organised crime environment.17

Program 1.1.2—ACC KPIs and performance 2011-1218

KPIs 2011-12 result

1. Targeted ACC investigations and operations are aligned with ACC Board priorities as approved by the ACC Board.

89% of senior executives of partner agencies agree/strongly agree

(target was 80%)

2. The ACC's operational intelligence and contribution to joint intelligence investigations and operations enhance the efficiency and/or effectiveness of law enforcement efforts to disrupt and deter serious and organised crime, as measured by stakeholder feedback.

89% of senior executives of partner agencies agree/strongly agree

(target was 80%)

In addition:

• 42% of partner agencies achieved an operational success in last 12 months as a result of intelligence/ information received;

• 56% identified a new criminal target; and

• 50% identified a new law enforcement operational opportunity.

3. The activities of targeted criminal entities are disrupted as a result of ACC intelligence, investigations and operations, and activity is undertaken to confiscate proceeds of crime

26 disruptions

97 people charged

319 charges laid

45 convictions

$103.59 m proceeds of crime restrained

$31.63 m proceeds of crime forfeited

$4.42 m pecuniary penalty orders recovered

$49.68 m tax assessments issued

16 firearms seized

$5.47 m in cash seized

$67.71 m estimated street value drugs seized

$7.5 m value of the illicit drug production potential of precursors seized. 19

17 ACC, Annual Report 2011-12, p. 61.

18 ACC, Annual Report 2011-12, p. 111.

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4. The ACC's coercive powers are effective in resolving partner agencies' intelligence gaps or investigative needs that pertain to serious and organised crime, as measured by stakeholder feedback

77% of senior executives of partner agencies agree/strongly agree

(target was 90%)

5. A national criminal intelligence database and analytical tools are available, to facilitate the sharing and analysis of criminal intelligence across jurisdictions. The annual report translates this KPI into: Availability of the Australian Criminal Intelligence Database (ACID) and Australian Law Enforcement Intelligence Network (ALEIN)

Greater than 99% (target was 98%)

3.16 Three of the five KPIs under program 1.1.2 are measured by a stakeholder feedback through a survey. The fifth KPI under this program measures the 'availability' of the Australian Criminal Intelligence Database (ACID) and the Australian Law Enforcement Intelligence Network (ALEIN). While the availability of ACID and ALEIN achieved greater than 99 per cent in 2011-12 and 2010-11, its use is declining.20 In 2011-12, there were 331 664 searchers on ACID compared to 559 469 in 2010-11. The ACC noted that there has been a decline in ACID's use for the past three years and expects this trend to 'continue until reinvestment in ACID occurs and the utility of the system is enhanced'.21

3.17 The committee questioned whether the availability of these resources is an appropriate KPI to measure the value of ACID and ALEIN in light of the downwards trend in their use. For this reason, the committee recommends that the ACC review and re-examine this KPI.

Recommendation 1

3.18 The committee recommends that the Australian Crime Commission review and re-examine and review its Key Performance Indicator concerning the Australian Criminal Intelligence Database and the Australian Law Enforcement Intelligence Network.

Challenges in measuring ACC performance 3.19 The ACC annual report highlighted some of the complexities in measuring ACC results. It noted that statistics 'only illustrate part of the true value that we bring to reducing harm to Australia from organised crime' including the number of arrests, seizures, forfeitures and charges laid. These comprise the traditional methods of

19 ACC, Annual Report 2011-12, pp 110-111.

20 ACC, Annual Report 2011-12, p. 109.

21 ACC, Annual Report 2011-12, p. 105.

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measuring law enforcement outcomes. The ACC noted that quantitative performance measures had been the mainstay of ACC performance reporting but that they alone did not adequately convey the fullest picture of the value that the ACC brings to national efforts to coordinate and combat serious and organised crime.22

3.20 Furthermore, over a three year period, the ACC has shifted its operating model to focus on three key areas which 'reach beyond traditional measures'. These include:

• developing the criminal intelligence holdings of the nation;

• targeting ACC resources at the highest risk targets; and

• collaborating with a wider range of partners to break the business model of organised crime.23

3.21 ACC operational capabilities are directed to enabling partners to take action and to informing policy and legislative responses that 'harden the environment against organised crime by closing vulnerabilities, diminishing criminal profitability or wholly removing incentives for criminal exploitation'. Such an approach makes for 'less conventionally and less easily measured results'.24 However, Mr Lawler explained to the committee that work was underway to change the KPIs given that:

As we evolve it is becoming less relevant and less important in the context of the ACC's work, and more difficult, to try to map arrests, seizures and charges.25

3.22 The ACC has introduced a three-point grading scale applicable to direct and indirect results as part of its performance measurement framework. However, it is not clear how this grading scale has been applied and reflected in the KPIs. When this question was put to the agency, the ACC explained that it grades the level of contribution and effort expended by the ACC towards an operational result. It is currently applied to a 'limited set of quantitative measures, agency highlights, disruptions, seizure records and prosecutions' but is under examination as part of a wider review into the ACC's Performance Measurement Framework.26 Furthermore, recognising the need for 'a better balance between quantitative and qualitative KPIs', the ACC noted that the review of its Performance Measurement Framework is expected to lead to further modifications to improve value reporting by the ACC.27

3.23 Notwithstanding the ACC's comments regarding the difficulties in providing quantitative KPIs and the less tangible nature of its programs which makes the development of appropriate KPIs more challenging, the committee pursued this matter

22 ACC, Answer to written question on notice, No. 4, received 28 March 2013.

23 ACC, Annual Report 2011-12, p. 135.

24 ACC, Annual Report 2011-12, p. 135.

25 Mr John Lawler, ACC, Committee Hansard, 14 March 2013, p. 3.

26 ACC, Answer to written question on notice, No. 4, received 28 March 2013.

27 ACC, Answer to written question on notice, No. 6, received 28 March 2013.

18

during its examination. When the committee questioned the ACC about its reliance upon stakeholder feedback as a KPI measure, the committee was informed by ACC Executive Director, Mrs Karen Harfield that as the ACC's modus operandi was to work in partnership, the KPIs are directed at ensuring that the agency is 'extracting' information from its partners:

Because all the work we do is either with or for a partner, in an attempt not to simply count activities, which you can convert into quantifiable information, there was a sense of trying to achieve results against how we have improved or supported partners. That was the sort of emphasis when thinking through those KPIs, as well as how we could use stakeholder information to give us some feedback about how the products we produce and the work that we do impact on their environment.28

3.24 Mrs Harfield also underscored the importance for the ACC to understand and 'settle' its operating model from which it could build a performance framework:

The issue is trying to blend the balance of the quantitative, so we could have KPIs that literally went to the issue of the numbers of things that we produced in terms of intelligence, but of course that could have had a perverse outcome that people produce smaller, less insightful, not as useful pieces of intelligence but from a KPI perspective that looked like a good performance. We were conscious that we did not want to move into that sort of territory without being very clear about what it was that, from our partners' perspective as well as from an ACC perspective, we actually got the development of that performance framework right. That is work that has been carried on at the same time as still working towards KPIs that we have had for some time. The KPIs are not the only performance information that we collect or share with the board or with other partners and, clearly throughout the annual report, you see a blend of qualitative descriptors about cases as well as quantitative sorts of measures.29

Stakeholder surveys

3.25 The annual report noted that stakeholder surveys inform the ACC's reporting obligations against its PBS. Mr Lawler informed the committee that the ACC's KPIs 'relate principally' to the survey and have done so since 2009-10.30 However, the committee raised a number of questions in relation to the survey including its findings, the respondent pool and the agency's overall reliance on a survey as a KPI measurement.

3.26 In 2011-12, in an effort to reduce costs and imposition on stakeholders, the ACC condensed and targeted the survey sample to focus on senior executive representatives from Commonwealth, state and territory law enforcement partners with whom the ACC works 'routinely'.31 For these reasons, 66 senior executive

28 Mrs Karen Harfield, ACC, Committee Hansard, 14 March 2013, p. 2.

29 Mrs Karen Harfield, ACC, Committee Hansard, 14 March 2013, pp 3-4.

30 Mr John Lawler, ACC, Committee Hansard, 14 March 2013, p. 2.

31 ACC, Annual Report 2011-12, pp 18 & 109.

19

representatives from 25 Commonwealth agencies and state and territory law enforcement partners were surveyed. Conducted in May to June 2012, the research comprised an online survey and telephone interviews with ACC Board members. In contrast, previous surveys have involved a wider range of respondents. For example, the 2010-11 survey involved an 'online survey, which captured feedback from 268 respondents across 57 agencies, in-depth interviews with senior executives and focus groups with four partner agencies'.32

3.27 When asked about the decision to narrow the survey sample to senior executives, Mr Lawler explained the historical development of the survey:

When we started off, particularly around 2009-10, part of the issue was: who do you survey? For example, if we surveyed the whole partner agency I would say that probably 95 per cent of them would have no reference to the ACC at all because their work does not relate to organised crime. It is a case of who you try to survey and whether the response they give can be in any way meaningful. These are not just the board members; these are senior executive people whom we hoped would understand and have worked with the commission and be understanding of how the commission may have contributed or worked with them.33

3.28 Notwithstanding the argument that surveying senior executives is a more cost-effective and efficient approach, the use of the survey to inform most of the KPIs raises a number of concerns. As previously noted, agencies are advised to provide a balance of qualitative and quantitative KPIs while the majority of the ACC's KPIs relate 'principally' to the survey.34 The committee questioned the ACC about the use of a survey as the primary measure under the KPIs and the extent to which it gauges ACC progress and the quality of its work. In response, Mrs Harfield informed the committee that:

The stakeholder part of the current system is an important feedback mechanism as well as then converting that into a sort of ratio number which does provide people with some sort of insight, but there is a lot of detail that sits then underneath that in terms of what we get back from a stakeholder survey. So, the bold numbers probably do not produce for you as rich a sort of picture about what it tells us.35

3.29 In relation to the actual survey findings, the 2011-12 survey recorded 'moderate to strong ratings' against the PBS indicators in comparison to the previous year. However the 2011-12 ratings were lower when compared to the senior executive subset of 2011.36 The annual report does not detail why. As such an outcome is inconsistent with ACC observations that there were typically higher rates of

32 ACC, Annual Report 2010-11, p. 40.

33 Mr John Lawler, ACC, Committee Hansard, 14 March 2013, p. 6.

34 Mr John Lawler, ACC, Committee Hansard, 14 March 2013, p. 2.

35 Mrs Karen Harfield, ACC, Committee Hansard, 14 March 2013, p. 3.

36 ACC, Annual Report 2011-12, p. 19.

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satisfaction within senior management of partner agencies, the committee pursued this matter during its examination.37 When questioned about the results, Mr Lawler argued that the feedback from partners and ACC Board members was 'contradictory' to the extent that discussions outside of the survey process revealed that 'board members are very happy with how the agency is performing'.38

3.30 Mr Lawler informed the committee that those surveyed and ACC Board members were 'quite dissatisfied with this survey process and felt that the people conducting the survey did not have a sufficient understanding of the commission'. He further explained that they felt that some of the questions were not relevant to their interaction with the ACC:

For example, they were being asked about tactical intelligence products when some of these senior people being surveyed would not see such material. They were being asked questions that were difficult for them to comment on, which is being reflected in some of the survey material.39

3.31 While recognising that there was 'strong support for the commission across the survey results', Mr Lawler noted that 'unless that survey is precisely targeted we could ask people about the commission who would have little input to give, and that

can also reflect on the agency's performance and what stakeholders think of the agency.'40 Furthermore, Mr Lawler explained that as part of an attempt to 'get more meaning into the actual activity' of the survey, the ACC Board has since agreed that the survey will be conducted by the ACC executive rather than an outside contractor or an independent person. In the future, the senior executive will approach stakeholders and the ACC Board and by taking a 'bottom-up approach, with feedback from all the various areas that we might operate to the commissioner or to the secretary as to how the commission is functioning'.41 Furthermore, the ACC intends to provide each agency partner with a 'snapshot' of its interactions with the ACC. Mr Lawler explained the rationale:

There is a multitude of different facets as to how the commission interacts with its partners. That has not been captured properly—probably it is the commission's fault—so that the stakeholder can be properly informed as to what the true interaction looks like.42

Committee view 3.32 The committee appreciates the complexities involved for the ACC in developing meaningful qualitative KPIs that can be measured over time and

37 Mr John Lawler, ACC, Committee Hansard, 13 July 2011, p. 4.

38 Mr John Lawler, ACC, Committee Hansard, 14 March 2013, p. 6.

39 Mr John Lawler, ACC, Committee Hansard, 14 March 2013, p. 3.

40 Mr John Lawler, ACC, Committee Hansard, 14 March 2013, p. 3.

41 Mr John Lawler, ACC, Committee Hansard, 14 March 2013, p. 4.

42 Mr John Lawler, ACC, Committee Hansard, 14 March 2013, p. 3.

21

acknowledges that the nature of some of the ACC's work may not be directly quantifiable.

3.33 Notwithstanding this point, the ACC has noted its work towards more effective and meaningful measurable indicators over some time. In April 2011, in recognition of the need 'review and update our strategic plan and the key performance indicators that we use to measure our performance', the ACC commissioned Project Sisco.43 The 2011-12 annual report notes that Project Sisco was completed during the review period and provided to the ACC on 1 August 2011. While the annual report notes that implementation of the project's recommendations is 'progressing', it does not detail the extent to which the ACC's KPIs are the focus of the reform agenda.44

3.34 The committee's concerns regarding the ACC's reliance on the stakeholder survey and the need for a greater balance of measurable indicators is made more pressing given the fact that the key stakeholders surveyed comprise the ACC Board which is responsible for 'providing strategic guidance' and authorising ACC work

priorities'.45 While the survey results for 2011-12 can be explained at least in part by the manner in which the survey process was managed, it is not clear to the committee what can be deduced from the survey results. Notwithstanding the survey management difficulties faced during the year in review, the committee supports the use of an independent and impartial body to conduct the process. Placing the management of the survey into the hands of the ACC executive to survey what is small subset of senior executive colleagues in partner agencies will not strengthen accountability in relation to the process nor public confidence in the results.

3.35 The committee appreciates the complexities for the ACC in developing meaningful measurable indicators of its performance. It also recognises that there are other indicators of ACC performance including the deliverables which are well constructed and informative. However, it also notes that the KPIs are limited in measuring progress towards program objectives.

3.36 The committee holds the view that the usefulness of the ACC's qualitative indicators as a basis for performance assessment would be enhanced if the agency formulated more quantitative indicators and targets against which to examine performance results. Furthermore, while the committee recognises a stakeholder survey as an important means of gaging the ACC's performance given its focus on working in partnership with other Commonwealth, state and territory stakeholders, it should be used as one of a number of tools to measure performance. The committee recommends, therefore that the ACC move towards establishing a balance between qualitative and quantitative KPIs.

43 ACC, Annual Report 2011-12, p. 23.

44 ACC, Annual Report 2011-12, p. 135.

45 ACC, Annual Report 2011-12, p. 7.

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Recommendation 2

3.37 The committee recommends that the Australian Crime Commission work towards establishing a balance of qualitative and quantitative Key Performance Indicators (KPIs) which can be measured over time.

3.38 The committee recommends that the 2012-13 Annual Report of the Australian Crime Commission provide information on progress made towards establishing a balance of qualitative and quantitative KPIs.

CHAPTER 4

Australian Crime Commission activities 2011-2012 4.1 This chapter provides an overview of the ACC's programs and respective activities over the 2011-12 period of review.

Program 1.1.1 Strategic Intelligence Services 4.2 Deliverables in relation to the ACC's strategic criminal intelligence services include the provision of:

• an annual assessment of National Criminal Intelligence Priorities (NCIPs) for ACC board endorsement;

• intelligence-sharing mechanisms including the Fusion Capability;

• intelligence products to law enforcement agencies containing analysis of organised crime trends, methodologies and significant targets and emerging issues;

• a biennial Organised Crime Threat Assessment which underpins the Commonwealth and National Organised Crime Response Plans; and

• strategic intelligence reports.1

Efforts to improve criminal intelligence

4.3 During the year, the ACC revised its criminal intelligence product suite range by distinguishing analytical intelligence products from tactical intelligence products. Analytical material includes the 'Picture of Criminality in Australia' report, briefings, strategic assessments, operational analysis, Fusion reports, current and emerging issues reports and intelligence briefs whereas tactical products include information reports and 'other information'.2 Tactical intelligence products include information reports which contain immediate and relatively raw information. The information contained in these reports is often collated and used in analytical reports.3 The ACC commented that distinguishing and reporting on the various product types will allow for more effective internal prioritisation and resource allocation.4

4.4 From a range of over 20 lines of analytical intelligence reports in early 2011, the ACC has focused on rationalising its product suite to seven. These include:

• Strategic assessment—to inform high level clients such as Board members of

criminal issues and broad implications of likely changes in the criminal markets or crime types in the next two to five years.

1 ACC, Annual Report 2011-12, p. 32.

2 ACC, Annual Report 2011-12, p. 34.

3 ACC, Answer to written question on notice, No. 10, received 28 March 2013.

4 ACC, Answer to written question on notice, No. 10, received 28 March 2013.

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• Operational analysis-general—to inform operational law enforcement

managers and analysts about judgements regarding current, emerging and predicted criminal trends, methodologies and activities that aim to influence immediate operational decisions and inform the next planning cycle.

• Operational analysis-alert—to inform operational law enforcement managers and analysts about an emerging criminal issue or change that may require immediate operational, policy or legislative consideration or prompt further intelligence collection and monitoring.

• Operational analysis-target brief—to inform and support operational decision

makers in assessing key targeting priorities and developing strategies for disruption and/or intervention.

• Current and emerging issues report—to inform senior ACC stakeholders of current and emerging issues with strategic implications for the Australian criminal environment.

• Intelligence brief—to inform a customised client base about important

intelligence on a single issue of high interest to the ACC.

• Fusion intelligence report—to inform senior stakeholders of key feeds of current intelligence on areas of national priority relating to serous and organised crime.5

4.5 The ACC also noted that it had collaborated more widely to develop the agency's understanding of the nature of threats in relation to particular programs which led to the production of more strategic intelligence reports circulated to a broader range of agencies. Examples include potential threats to the Australian carbon pricing mechanism and the potential impact of organised crime in the investment sector.6

4.6 During the year, the ACC applied a new Intelligence Standards Framework (ISF) for intelligence analysts following a global best practice benchmarking exercise. The ISF provides a 'whole-of-life' approach for intelligence analysts from recruitment. It serves as an intelligence model to enable the ACC to bring intelligence standards, practices, processes and policies into one place.7 According to the ACC, the ISF has already delivered benefits such as providing a central point for the development of intelligence standards, practices and processes. It contains eight standards of analytic tradecraft for application alongside the ACC's new intelligence philosophy and principles—'pioneering, predictive, professional, precise and partnered'.8 The eight standards include 'properly describes quality and reliability of sources' and

5 ACC, Answer to written question on notice, No. 9, received 28 March 2013.

6 ACC, Annual Report 2011-12, p. 33.

7 ACC, Answer to written question on notice, No. 11, received 28 March 2013.

8 ACC, Annual Report 2011-12, p. 37.

25

'incorporates alternative analysis where appropriate' as well as 'logical argumentation'.9

4.7 Other efforts to improve tools and the methodology that underpins the ACC's intelligence collection and analysis include the development of a new online system for collecting vital information and intelligence from partner agencies about serious and organised crime targets operating in Australia. The creation of the online system followed from an assessment of the needs of partner agencies regarding the collection of data about criminal targets.10

4.8 An external review of the methodology used to assess the harms associated with specific types of serious and organised crime was also undertaken which identified the need to revise the ACC's process to align its harm assessment with international best practice.11 Further, the new risk assessment methodology involves a threat assessment and harms assessment process whereby risk is a function of the assessed threat and harm level: Risk = Threat x Impact.12 When asked to explain the equation, the ACC stated that it is conceptual and:

…refers to the idea that the risk posed to Australia by specific types of serious and organised criminal activity can be established through an assessment of the threat that the activity poses (based on the capability and intent of those undertaking the activity) and an assessment of the impact that the activity has on Australia (measured by the Harms assessment process in the ACC). These two factors--threat and impact--are then considered together to derive a qualitative measure of risk.13

4.9 A review was also undertaken of the Target Risk Assessment Methodology (TRAM) used to 'establish the significance of serious and organised crime networks in Australia'. The TRAM is part of the National Targeting System (NTS) and is used by the ACC and law enforcement agencies to manage the National Criminal Targeting List (NCTL). While the review found that the current methodology is consistent with international best practice, its recommendations, which are not detailed in the annual report, will be implemented in 2012-13 to 'significantly improve our ability to analyse and use information captured for operational and strategic outcomes'.14

4.10 When asked about the findings and recommendations of the review, the ACC responded that the key findings of the review included a need for a more nuanced approach to the analysis and comparison of threat types posed by serious and organised crime, and wider accessibility to intelligence submitted in support of a threat rating.15 The resulting methodological and technological changes which

9 ACC, Answer to written question on notice, No. 14, received 28 March 2013.

10 ACC, Annual Report 2011-12, p. 39.

11 ACC, Annual Report 2011-12, p. 39.

12 ACC, Annual Report 2011-12, p. 39.

13 ACC, Answer to written question on notice, No. 12, received 28 March 2013.

14 ACC, Annual Report 2011-12, p. 40.

15 ACC, Answer to written question on notice, No. 13, received 28 March 2013.

26

encompass 18 threat variables are collectively known as TRAM v2.16 The transition from the original TRAM to TRAM v2 will involve some overlap between assessment methodologies over 2013 as existing targets are reassessed and new ones are added to the NCTL.17

Key criminal intelligence publications

4.11 The flagship publications of the ACC concerning criminal intelligence which are highlighted in the annual report include the:

• National Criminal Target Report 2012 which details the risk posed by known organised crime groups operating in Australia. The report complements the National Criminal Target List which identifies organised crime risks. This year's report features three new sections—regional differences across the states and territories; looking back to understand how Australia's criminal landscape has evolved; and looking forward to highlight advances in the shared understanding of serious and organised crime.18

• Illicit Drug Data Report 2010-11 launched in May 2012. It details the extent of the illicit drug market in Australia. In 2010-11, there were 69 595 illicit drug seizures weighing over 9.3 tonnes nationally. This is an increase in the number and weight compared to 2009-10. The report noted that cannabis remains the dominant illicit drug in Australia in terms of arrests, seizures and use.19 Other notable statistics in the report included:

• 84 738 people arrested for illicit drug arrests in 2010-11 which is the second highest number of arrests reported in the last decade.

• 703 clandestine laboratories detected in Australia in 2010-11.20

• Organised Crime 2020 report which forecasts likely trends in the organised crime environment by assessing emerging issues drawn from Australian and international law enforcement and other intelligence resources.21

• Organised Crime in Australia 2011 report which is an unclassified version of the Organised Crime Threat Assessment and was launched in April 2011. The ACC intends to produce a public Organised Crime in Australia report every two years with the next report due in 2013.22

16 ACC, Answer to written question on notice, No. 13, received 28 March 2013.

17 ACC, Answer to written question on notice, No. 13, received 28 March 2013.

18 ACC, Annual Report 2011-12, p. 43.

19 ACC, Annual Report 2011-12, p. 43.

20 ACC, Annual Report 2011-12, p. 44.

21 ACC, Annual Report 2011-12, p. 45. The report was presented to the ACC Board at its meeting on 28 November 2012. By providing a snapshot of what law enforcement agencies can expect into the future, the report is expected to inform the planning and response strategies of such agencies (ACC, Answer to written question on notice, No. 15, received 28 March 2013).

22 ACC, Annual Report 2011-12, p. 45.

27

Strategic assessments and policy support

4.12 During the year, the ACC produced 35 strategic assessments covering topics including serious and organised investment fraud and cybercrime.23 The assessments featured in the annual report include the potential organised crime threat to the Australian carbon pricing mechanism, national illicit firearm assessment, and the potential impact of organised crime on sport.24

Program 1.1.2—Investigations and intelligence operations into federally relevant criminal activity 4.13 The three components of ACC investigations and operations include (a) special investigations, (b) special operations, and (c) national database and analytical tools. During the year, the ACC worked on four special investigations and five special intelligence operations.25

4.14 Through its special investigations and special operations, the ACC helped to disrupt a total of 26 criminal targets, stop $67.71 million worth of drugs from hitting the streets, restrain $103.59 million proceeds of crime, seize $5.47 million in cash, charge 97 people and convict 45 people. The ACC also conducted 328 coercive examinations and shared a total of 1884 intelligence products with partner agencies.26

4.15 The deliverables in relation to program 1.1.2 include:

• In response to priorities identified by its board, the ACC in collaboration with law enforcement and related Commonwealth, state and territory government agencies, undertakes intelligence operations, special intelligence operations and special investigations, which gather relevant information about the extent, impact and threat of criminal activity;

• special investigations are designed to disrupt and deter criminal activity through arrests and seizures of illegally obtained assets, in cooperation with partner agencies;

• the use of coercive powers under special intelligence operations and special investigations enables the ACC to collect information that may not otherwise be available to law enforcement; and

• the ACC also provides a national criminal intelligence database and analytical tools, which facilitate the sharing and analysis of criminal intelligence across jurisdictions.27

23 ACC, Annual Report 2011-12, p. 46.

24 ACC, Annual Report 2011-12, p. 48.

25 ACC, Annual Report 2011-12, p. 15.

26 ACC, Annual Report 2011-12, p. 58.

27 ACC, Annual Report 2011-12, p. 61.

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Special investigations

4.16 Special investigations are designed to disrupt and deter criminal groups by collecting evidence and intelligence about criminal activity. During the year in review, the ACC worked in four special investigations designed to disrupt and deter criminal groups with focus on high risk criminal targets, criminal wealth, established criminal networks—in Victoria, and high risk crime groups—in South Australia. The following tables provide an overview of the aims, highlights and achievements in relation to each special investigation.

Aims, highlights and achievements 2011-12 of special investigations

Highest risk criminal targets

Aim: To maximise the impact against, and disruption to, targeted serious and organised crime entities representing the greatest risk and threat nationally.

Highlights & achievements:

• Provided partners with 707 intelligence assessments, alerts, reports and briefs through 1917 disseminations to inform investigative opportunities and strategic decision making;

• Conducted 80 examinations including referrals to partner agencies and 150 notices to produce documents;

• Disrupted 20 high risk crime entities including three transnational syndicates involved in illicit drug offences of which two were also involved in money laundering and one was using commercial airline pilots to import drugs into Australia.

• This investigation contributed to the seizure of drugs and precursors with an estimated street value of $59.3 million.

• Seizure of more than $2.5 million in cash.

• Issue of pecuniary penalty orders to the value of $4.3 million.

• Recovery of 13 illicit firearms and ammunition.

• 146 charges laid against 47 individuals and the conviction of 34 individuals.28

Projects within this special investigation, including a number of multi-agency investigations, have disrupted drug manufacture and trafficking, seizure of drugs and arrests.29

In June 2011, the ACC board approved a special investigation into the highest risk criminal targets which is expected to run to 30 June 2014.

Targeting criminal wealth

Aim: Working in partnership with stakeholders to reduce the impact of serious and organised crime on the Australian community by detecting, disrupting and preventing activities through which criminal wealth is acquired, accumulated, concealed or transferred.30

28 ACC, Annual Report 2011-12, pp 63-64.

29 The projects and related initiatives under this special investigation are detailed on pages 64 to 72 of the annual report.

29

Highlights & achievements:

• Conduct of 132 examinations and issue of 202 notices to produce documents leading to the production of 458 intelligence assessments, alerts and briefs provided to partners through 1388 disseminations.

• Disruption of three crime entities including a money laundering syndicate in Melbourne and serious and organised investment fraud on the Gold Coast.

• ACC work contributed/led to seizure of drugs with estimated value of $78.5 million and of $2.7 million in cash. IT also contributed to the laying of 77 charges of 35 people and conviction of 8 individuals.

• Task Force Galilee, established on 13 April 2011 in response to concerns about serious and organised investment fraud operates under this special investigation.31

This special investigation is due to run to 30 June 2014.32

Established criminal networks—Victoria

Aim: To work in partnership with Victoria Police to enhance knowledge and understanding of the nature, extent, and methodologies of high risk criminal groups and their impact on the Victorian and national community. Through this work, the ACC also aims to reduce the threat posed by the highest risk crime groups operating in or impact on Victoria.

Highlights & achievements:

• Conducted 14 examinations and produced 6 intelligence products which were provided to partner agencies through 7 disseminations. Eight of the examinations supported ongoing Victoria Police investigations with the provision of intelligence about suspected drug trafficking, money laundering and firearms offences by a syndicate operating in Victoria.

• Coercive powers used to gather intelligence about the involvement of criminal networks in the evolving firearms market, processes used to launder proceeds of crime, and links to corruption.33

High risk crime groups—South Australia

Aim: Working in partnership with South Australia Police to enhance understanding of the nature, extent, methodologies of high risk criminal groups and their impact on South Australia and the broader Australian community. Through this work, the ACC also aim to reduce the threat posed by the highest risk crime groups operating in or impact on South Australia.

Highlights & achievements:

30 The special investigation has an additional aim to reduce the risk of criminal enterprises exploiting vulnerabilities, and to enhance national understanding of money laundering, nationally significant organised tax fraud and related financially motivated crimes. ACC, Annual Report 2011-12, p. 73.

31 ACC, Annual Report 2011-12, p. 75.

32 ACC, Annual Report 2011-12, pp 73-74.

33 ACC, Annual Report 2011-12, pp 84-85.

30

• Conducted 18 examinations and produced 16 intelligence products which were provided to partners through 22 disseminations.

• Through the special investigation and use of coercive powers, intelligence was gained on the membership, structure and activities of outlaw motorcycle gangs operating in South Australia, murders involving outlaw motorcycle gang members, drug production, financial affairs of a crime syndicate involved in drug manufacture/distribution, and the use of violence to facilitate criminal activities.

• Work within this investigation contributed to charges being laid against three individuals for offences under the Australian Crime Commission Act (South Australia) 2004.

In May 2011, the ACC board approved the extension of this special investigation to 30 June 2014.34

Special operations

4.17 Special operations are focused on gathering intelligence around particular criminal activity so decisions are informed by the extent, impact and threat of that activity. During the year, the ACC worked on five special operations, the aims and

highlights of which are summarised below:

Aims, highlights and achievements 2011-12 of special operations

High risk and emerging drugs

Aim: Working with partners to generate and share intelligence on illicit drug markets in Australia to develop a more detailed understanding of the size, profitability, trajectory and drivers of the markets; proactively monitor and report on new processes and methodologies; identify and report on the higher risk crime networks operating in the domestic illicit drug markets; and assist with the disruption of high risk criminal networks and the markets themselves.35

Highlights & achievements:

• Conducted 19 examinations and issued four notices to produce documents and other records. All examinations concerned importations, high-level domestic production of illicit drugs or attempts to exploit systemic vulnerabilities by organised crime groups to establish or increase their market share.

• Production of 111 intelligence products which were provided to partners through 347 disseminations.

• Coercive examinations enabled the ACC to contribute to briefs of evidence by two partner agencies in relation to drug offences before the courts.

• Assessment has found that traditional drug markets of methylamphetamine, cannabis, cocaine and heroin remain entrenched, but that the broader illicit drug market is becoming increasingly diversified, with a vast array of substances now available. It also notes that many drug markets are being shaped by the rapidly developing cyber and technology

34 ACC, Annual Report 2011-12, pp 86-87.

35 ACC, Annual Report 2011-12, p. 89.

31

environment, with details such as new drugs, doses, how to administer, effects and drug combinations now being spread via social networking and bulletin boards developed to promote illicit drug use, rather than just word of mouth.

The ACC board approved this special operation to run through to 30 June 2014. The overarching drug-related priorities identified in the Organised Threat Assessment are expected to guide the ACC's priorities under this special operation for the next two years. 36

National security impacts from serious and organised crime

Aim: To provide support on an 'as needs' basis through access to ACC coercive powers, to investigations by law enforcement and national security agencies into matters related to national security impacts from serious and organised crime.37

Highlights & achievements:

• 12 examinations conducted and 16 intelligence products produced which were provided to partners through 57 disseminations.

• Work with the AFP to target and disrupt domestic-based organisers and facilitators of people smuggling, and to identify and examine the nature of any actual or potential convergence between people smuggling syndicates and serious and organised crime groups.

• As a member of Task Force Polaris established to conduct waterfront-related investigations and to contribute to a whole-of-government response to organised crime in the maritime port environment. While 'much of what this task force has achieved is not public due to the classified nature of the work', the ACC noted that its work has already led to the arrest of 11 persons and over 60 charges being laid.38 Further, $883 980 and US$20 000 was seized as well as 114 tonnes of tobacco and 92 million cigarettes representing $74 million in duty.39

Making Australia hostile to serious and organised crime

Aim: To assist in making Australia's society, its institutions, industries and economy hostile to serious and organised crime.

Highlights & achievements:

• 8 examinations were conducted and 29 intelligence products were produced and provided to partners through 195 disseminations.

• Use of coercive powers to develop intelligence to support Department of Sustainability, Environment, Water, Populations and Communities investigation targeting an Australian-based syndicate suspected of being involved in international trafficking of endangered species.

• Central themes of this special operation include identity crime and cybercrime. Within this thematic work, the ACC provides strategic and operational analytical assessments on

36 ACC, Annual Report 2011-12, pp 89-93.

37 ACC, Annual Report 2011-12, p. 93.

38 ACC, Annual Report 2011-12, p. 94.

39 ACC, Annual Report 2011-12, p. 95.

32

emerging technologies and contemporary identity crime trends and methodologies.

• In conjunction with the Department of Climate change and Energy Efficiency, the ACC investigated the potential exploitation of the Home Insulation Program by serious and organised criminals. The ACC found no systemic exploitation of the scheme by such groups.40

National Indigenous Intelligence Task Force (Indigenous violence or child abuse No.2)

Aim: To collect and analyse information concerning violence and child abuse committed against Indigenous people and related criminal offending to produce reports and targeted intelligence that partner agencies can act on, support investigations, provide and instigate policy and law reform advice, and facilitate national intelligence collection and sharing.

Highlights & achievements:

• 18 field visits were undertaken, 42 examinations were conducted and 93 notices to produce documents were issued.

• 80 intelligence products including strategic assessments and intelligence briefs were produced and provided to partners through 284 disseminations.

• 72 tactical intelligence products were produced and disseminated 149 times to partner and non-partner agencies including five target packages which focus on criminality in Indigenous communities.

• 8 analytical intelligence products were disseminated 149 times to partner and non-partner recipient agencies. These included five target packages which focused on criminality in Indigenous communities and provided in-depth analysis for stakeholders.41

• The use of the ACC's 2010 publication Australia's Response to Sexualised or Sexually Abusive Behaviours in Children and Young People by the Law Reform Commission of Western Australia. The report examined therapeutic services available to divert children and young people from sexualised or sexual offending behaviours, and the Law Reform Commission used its findings to review the Community Protection (Offender Reporting) Act 2004 (WA).42

Child sex offences

Aim: To support law enforcement agencies to develop intelligence and investigate child sex offences, through the use of coercive powers.

Highlights & achievements:

• Three examinations were conducted with seven intelligence products produced which

40 ACC, Annual Report 2011-12, pp 95-97.

41 ACC, Annual Report 2011-12, p. 99.

42 ACC, Annual Report 2011-12, p.101.

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were provided to partner agencies through 22 disseminations.

• ACC's work contributed to the disruption of the activities of one person who was charged with a number of offences. That work also contributed to the ACC's understanding of the 'methodologies used to conceal child exploitation material on computers.'43

• Examination of the encryption methodologies that conceal child exploitation material on computers in cooperation with a law enforcement agency.44

• A 12-month investigation undertaken and reported on in the last annual report led in December 2011, to the sentencing of one individual to a term of 12 years imprisonment. Found guilty on 87 counts for offences against 55 separate victims across the country, original charges included multiple counts of using a carriage service to groom a child under 16 years of age for sex as well as possessing, procuring and producing child pornography.45

National criminal intelligence database and analytic tools

4.18 The national Australian Criminal Intelligence Database (ACID) serves as a repository for much of the intelligence that the ACC assembles itself as well as the intelligence uploaded by its partners.

4.19 ACID enables more than 24 Commonwealth, state and territory law enforcement agencies and other regulatory authorities to securely 'share, collate and analyse criminal information and intelligence nationally'.46

4.20 A scoping study initiated in 2011 to consider how ACID should evolve into the future is now 'well advanced'. The study is expected to identify the business requirements for a new criminal intelligence database to replace the existing database and tools.47

4.21 In addition, a data quality improvement program is currently underway to reduce the incidents of data duplication and increased consistency in searchable fields. Therefore:

Next year we expect to see changes in access control to improve information sharing, better integration of ACID data into the ACC-led National Criminal Intelligence Fusion Capability and improvements to ACID data quality.48

43 ACC, Annual Report 2011-12, p.102.

44 ACC, Annual Report 2011-12, p. 103.

45 ACC, Annual Report 2011-12, p. 103.

46 ACC, Annual Report 2011-12, p. 105.

47 ACC, Annual Report 2011-12, p. 104.

48 ACC, Annual Report 2011-12, p. 105.

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Committee view 4.22 The committee acknowledges the important work that the ACC has undertaken over the review period and recognises the commission's efforts in areas including joint taskforces such as Task Force Galilee.

Mr Chris Hayes MP Chair

Appendix 1

Witnesses who appeared before the Committee at the Public Hearing Thursday, 14 March 2013 - Canberra ACT

Australian Crime Commission

Mr John Lawler, Chief Executive Officer

Mrs Karen Harfield, Executive Director, Fusion, Target Development and Performance

Mr Paul Jevtovic, Executive Director, Intervention and Prevention

Dr David Lacey, Executive Director, People, Business Support and Stakeholder Relations