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Australia's Security and Intelligence Agencies - Report of Royal Commission on Sheraton Hotel incident, (Commissioner, Mr Justice R. M. Hope), dated February 1984


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The Parliament of the Commonwealth o f Australia

ROYAL COMMISSION ON A U STRALIA’S SECURITY A N D INTELLIGENCE AGENCIES

Report on the Sheraton Hotel Incident

February 1984

Presented and ordered to be printed 29 February 1984

Parliamentary Paper No. 1/1984

Royal Commission on

Australia's Security and Intelligence Agencies

Report on the Sheraton Hotel incident

February 1984

ROYAL COMMISSION ON AUSTRALIA'S SECURITY AND INTELLIGENCE AGENCIES

Report on the Sheraton Hotel incident

February 1984

Australian Government Publishing Service Canberra 1984

© Commonwealth of Australia 1984

ISBN 0 644 03198 0

Note

As noted in paragraph 6.5, the Report as presented by the Royal Commission was classified Top Secret, consistent with past treatment of ASIS's special operations.

However, the Government has decided to declassify the Report because this is necessary for an understanding of the Sheraton Hotel incident.

This declassification has necessitated minor editing to protect national security and for international relations; the substance of the Report has not been affected.

The changes have been discussed with the Royal Commission.

Printed by C.J. Thompson Commonwealth Government Printer Canberra

CONTENTS OF REPORT

List of Abbreviations vi

Chapter Page Para

1 THE INQUIRY 1

Background 1 1.1

The Incident 1 1.5

Terms of Reference 2 1.8

Format of Report 3 1.10

Procedures Adopted 3 1.12

2 THE EXERCISE 6

Preparatory Work 6 2.2

Scenario 8 2.8

Briefing the Acting Director General 8 2.10

Surveillance 9 2.13

Preparations for the 1 Snatch 1 10 2.14

The 3 pm 1Briefback1 10 2.17

Execution of the Plan 12 2.23

3 SPECIAL OPERATIONS 16

ASIS ' Functions 16 3.1

Special Operations 17 3.5

Steps Taken 17 3.7

Ministerial Responsibility 17 3.8

ASIS1 Projects 18 3.9

Methods of Training 19 3.12

Training Manuals 20 3.15

Recruitment of Trainees 21 3.19

Carriage of Firearms 21 3.22

iii

Chapter Page Para

3 Planning of the Exercise 22 3.26

Cent1 d

Involvement of the Army 23 3.29

4 WHAT WENT WRONG AND

RESPONSIBILITY

25

What Went Wrong 25 4.1

Responsibility 30 4.13

Responsibility of P/EM 31 4.15

Responsibility of Acting

Director General 40 4.25

Responsibility of ADG 44 4.31

Responsibility of DDG 45 4.33

Responsibility of H/EP 47 4.35

Responsibility of the Army

Instruction Team 48 4.37

Responsibility of Trainees 49 4.40

Responsibility of 1 John1 and the 'Foreign Intelligence Officers' 54 4.47

Liquor 55 4.49

5 OFFENCES 56

6 RECOMMENDATIONS 68

General 68 6.1

Publication 70 6.5

APPENDIXES TO REPORT ON THE SHERATON HOTEL INCIDENT

Contents Page

APPENDIX I PARAGRAPH (a) OF THE TERMS OF

• REFERENCE 71

APPENDIX II MR HAYDEN'S STATEMENT -HOUSE OF REPRESENTATIVES DAILY HANSARD, 1 DECEMBER 1983 , p. 3162 73

iv

Contents Page

APPENDIX III THE PRIME MINISTER'S LETTER DATED 7 DECEMBER 1983 76

APPENDIX IV MESSAGE FROM THE ACTING DIRECTOR GENERAL, ASIS TO THE CHIEF COMMISSIONER, VICTORIA POLICE

78

APPENDIX V ORDER OF THE HONOURABLE

MR JUSTICE DAWSON MADE ON 19 DECEMBER 1983

80

APPENDIX VI POSSIBLE SECURITY AND FOREIGN RELATIONS CONSEQUENCES OF DISCLOSURE OF PARTICIPANTS' NAMES

Omitted

v

ABBREVIATIONS

USED IN THIS REPORT

(not listed in alphabetical sequence)

ASIS - Australian Secret Intelligence Service

ADG - Assistant Director General (Operations)(B) of ASIS

DDG - Deputy Director General (Production) of ASIS

H/EP - Head of Emergency Planning and to act as Head of

proposed ASIS Directorate of Covert Action and Emergency Planning from February 1984

P/EM - ASIS officer who was both in Charge of the

Project and Manager of the Exercise (see below)

AIT - Army Instruction Team

OIC - Officer-in-Charge of AIT

First NCO ) Second NCO) - NCO1s attached to AIT

Team Leader - The trainee appointed by P/EM to lead the trainee team for the Exercise

the Project - A programme within ASIS to develop Special Operations capability

the Exercise - a Project training exercise which culminated in the Sheraton Hotel incident

vi

CHAPTER 1

THE INQUIRY

Background

1.1 The primary function of the Australian Secret Intelligence

Service (ASIS) is the collection of foreign intelligence.

1.2 ASIS is also required, under its Directive (the formal Cabinet document prescribing its functions), to maintain a

covert action capability. Since August 1982, ASIS, with Ministerial approval, has had a project aimed at developing a

new basis upon which a covert action capability could be maintained. This is referred to in this report as the 1 Project1.

1.3 For the purposes of the Project, a very small unit was established within ASIS to recruit and train a small group which

would give the Service a covert action capability. The persons

so recruited and trained were to be part time agents who would

come together for periods of intensive training but who would

otherwise pursue their normal civilian occupations.

1.4 The matters referred to in this section are dealt with in more detail in Chapter 3.

The Incident

1.5 On the night of 30 November 1983 there was an incident at the Sheraton Hotel, Melbourne, arising from a Project training

exercise. Throughout this report, this exercise will be referred to as 1 the Exercise'.

1.6 Those directly involved in the Exercise were a group of the

trainees who had been recruited for the purposes referred to in

1

1.3, and some ASIS staff members. The Exercise involved the

rescue of a hostage being held in a hotel room by two 1 foreign intelligence officers of a major power1. The ' foreign

intelligence officers' and the hostage were played by ASIS staff members. Six ASIS trainees had been tasked to carry out the

rescue.

1.7 It was intended to conduct the Exercise without publicity and without involving persons other than those directly taking

part. In the event, members of the public did become involved and it was publicly revealed that the trainees had been carrying

weapons, had threatened members of the public with them and had forced an entry into a room of the hotel causing damage to the hotel.

Terms of Reference

1.8 The Government became aware of the incident on 1 December.

On that day I was asked by the Government to undertake an inquiry into it. I accepted that request as part of my more general inquiry into the activities of the security and intelligence agencies pursuant to paragraph (a) of the Terms of Reference contained in the Letters Patent issued to me on 17 May

1983. Paragraph (a) is set out in Appendix I.

1.9 The scope of the inquiry into the Sheraton Hotel incident

was outlined in a preliminary form by the Minister for Foreign Affairs in a statement in answer to a question in the House of

Representatives on 1 December. The text of that statement is Appendix II. A statement of the extent to which a separate and

special report was sought on the incident was conveyed formally by the Prime Minister in a letter to me dated 7 December. The

Prime Minister's letter is Appendix III. In that letter, the Prime Minister asked me to explore all aspects of the Sheraton

exercise 'including the way in which it was prepared and developed, the manner in which it was put into operation, the

general conduct of all persons associated with it including

2

those who exercised a supervisory role, whether any persons exceeded their proper authority in relation to this matter and

whether any breach of the law was committed by anyone carrying

out or authorising the exercise1.

Format of Report

1.10 I have excluded from the Report the identities of ASIS staff members, other than the former Acting Director General of

ASIS, (referred to hereafter in this Report as the Acting

Director General), members of the Army, and of the trainees. I

am submitting these separately. There are valid reasons based on

security and international relations considerations (dealt with

in 6.5 to 6.7 and Appendix VI), why these names should be kept secret.

1.11 Accordingly, in the Report persons are identified by their title in ASIS or, in the case of the trainees, by their function in the exercise. These will generally become apparent in the

text of the Report. It should be noted that the ASIS staff officer who was in immediate charge of the Project, the Project Manager, was also the Exercise Manager for the Exercise. He is

therefore referred to in this Report as P/EM.

Procedures Adopted

1.12 The process of collecting evidence about the Sheraton

Hotel incident began on 2 December. During this process, many

persons were interviewed and a number of lines of enquiry pursued. After all parties involved in the incident had obtained

legal representation, I commenced formal hearings in Melbourne on 12 December 1983. The hearings concluded on 4 January 1984.

During those hearings, I heard evidence from participants in the Exercise, ASIS officers involved in its preparation and

development, senior officers of ASIS, members of the Army

Instruction Team (AIT), staff of the Sheraton Hotel, and the

Deputy Commissioner (Operations) of the Victoria Police.

1.13 The Deputy Commissioner (Operations) of the Victoria

3

Police was called to give evidence on the involvement of members

of the Victoria Police in the apprehension of some of the trainees and to produce a document which apparently had been found in the possession of one of the trainees who had been

detained. A copy of the document was produced and tendered in

evidence. However, the Deputy Commissioner indicated that he was

unwilling to provide information to the Commission on the

involvement of the members of his force in the matter or to indicate the nature of the material which was in the possession

of the Police concerning the incident. I took the view that my

inquiries should not intrude into police investigations which, I

was assured, were continuing and could be compromised by compelling the Deputy Commissioner to give evidence.

Accordingly, I did not require him to give further evidence.

1.14 My hearings were interrupted by the decision by some

parties to seek a High Court injunction against disclosure by the Commonwealth of the names of the participants in the

exercise to the Victoria Police. The application to the High Court followed the Commission being informed on 14 December that

the Minister for Foreign Affairs had directed the Acting Director General of ASIS, Mr John Ryan, to inform the Chief

Commissioner of the Victoria Police that the Minister had instructed him (Mr Ryan) to pass on to the Chief Commissioner

the names of persons, other than those already known to the

Police, involved in the Exercise. I was also told that legal

advice had been received as a result of which the Acting

Director General would delay the passing on of those names for a

further 24 hours. Mr Ryan called on the Chief Commissioner on 15 December 1983 and read to him the statement reproduced as

Appendix IV. The parties affected by the Minister's direction sought and obtained from the High Court interim injunctions prohibiting the disclosure or publication of their names. One of the interim injunctions is Appendix V.

4

1.15 Because of the national security considerations involved

in this matter, I conducted all hearings in camera. I have made orders under s.6D of the Royal Commissions Act 1902 that neither

the names of the witnesses, nor their evidence (other names and evidence of the hotel staff and some of the of the one police witness) should be published.

than the evidence

5

CHAPTER 2

THE EXERCISE

2.1 This chapter outlines the history of the training exercise

which terminated at the Sheraton Hotel on 30 November 1983. I should emphasise at the outset that what occurred at the

Sheraton Hotel was, in fact, part of a training exercise. It was not, as has been speculated, a real operation.

Preparatory Work 2.2 The Exercise was the final phase of a three-week training period undertaken as part of the training, development and

testing of trainees for the Project. The training period began

on 11 November and was scheduled to finish on 2 December. In the

first two weeks of the training period, the trainees concentrated on development of physical fitness and course work

(in matters such as close quarter combat, surveillance, unarmed combat, methods of entry, medical skills and photography) and

engaged in a surveillance exercise of about 4 days. As was customary in ASIS training, the training period was to conclude

with a major exercise.

2.3 The trainees had undertaken previous training courses, both at ASIS training facilities and elsewhere, including one

surveillance operation in a city location.

2.4 The scenario of the exercise had not been devised until the three-week training period actually commenced. It was drafted by P/EM, with some assistance from one of the NCOS in the AIT. The role of the AIT and its relationship to ASIS is dealt with in

3.29 to 3.33.

2.5 P/EM discussed the Exercise briefly, and in general terms, with his branch head, the Assistant Director General

(Operations) (B) - hereafter referred to as ADG. That discussion

6

occurred some time between mid-October and mid-November 1983.

ADG asked P/EM for a written plan of the Exercise; that was

never provided to him. P/EM also talked about the Exercise on or about 22 November to the Head of the proposed Directorate of

Covert Action and Emergency Planning (referred to hereinafter as

H/EP). That officer had no direct responsibility for the

Project, but did have an interest in the special operations

field and was scheduled to take direct responsibility for that

area after a proposed internal re-organisation within ASIS (see

3.28). At that discussion, H/EP was told that weapons would be

carried during the Exercise. He was told that the weapons would

be concealed handguns. He informed P/EM that P/EM would reouire

the approval of the Acting Director General for the carriage of firearms.

2.6 In anticipation of the Exercise commencing on 27 November, on 24 November P/EM drew up a list of equipment which could be

called on by the trainees for use during the Exercise. The

equipment was intended to form a small quartermaster's store -

the trainees knew what was held in the store, and could

requisition items they felt they might need for the Exercise.

The list of equipment included four Heckler and Koch sub machine

guns, two of them silenced, and six Browning 9mm. automatic

pistols. On 25 November the weapons, having been drawn from the

armoury at the ASIS training facility, and other pieces of

equipment were packed into a trunk preparatory to their removal to a location in Melbourne.

2.7 On 25 November P/EM contacted the ASIS security section and

asked for the issue of Commonwealth exercise cards for the

trainees involved in the Exercise. ASIS holds a stock of these cards, obtained from the Defence authorities, which indicate that the holder is taking part in a Commonwealth government exercise and list three officers at Victoria Barracks who may be

contacted to obtain confirmation of the holders' bona fides. There is a conflict of evidence about what was said at the

meeting between P/EM and the security officer to whom he spoke.

7

What is clear is that P/EM advised that weapons would be carried

at some stage during the Exercise, and that the security officer

communicated that fact to the appropriate Army liaison officer. What is not clear is whether P/EM said that he had obtained

approval from the Acting Director 'General for carriage of weapons or said that he was obtaining such approval. The

security officer claims that, after being informed of the intention to carry weapons, he told P/EM that he knew of no

legal authority which would permit the carriage of weapons in public by ASIS personnel.

Scenario

2.8 The team of trainees was given its first briefing on the

Exercise on Saturday 26 November. More detail about the scenario

was conveyed to the trainees on 27 November. At those meetings the trainees were told that their job was to conduct

surveillance on a man named John, who had earlier defected from his country and who was at the time living and working on a farm near Geelong. John was the brother of Michael, a cypher clerk at his country's Embassy in Canberra. Michael himself wanted to

defect, but required assurance of his brother John's safety before doing so.

2.9 At this stage the trainees were told only that the Exercise

would involve surveillance of John. There was no suggestion that any rescue of John was to be attempted.

Briefing the Acting Director General

2.10 The Acting Director General of ASIS and H/EP visited the ASIS training facility on 25 and 26 November, to meet the

trainees and to observe their training. On 26 November, after

watching some sessions of course work, the Acting Director

General and H/EP were spoken to by P/EM about the planned Exercise. ■

2.11 There is a conflict of evidence about the length of that

meeting, with estimates ranging from three minutes to half an

8

hour. There is also a dispute about whether the discussion

constituted clearance of the Exercise by the Acting Director General.

2.12 P/EM briefed the Acting Director General and H/EP about

the proposed course of the Exercise. P/EM outlined the scenario

of the Exercise, as described above, and gave the name of the

hotel to be used. He advised that the Exercise would change from one of surveillance to a rescue operation and that it was

proposed to carry weapons during it. H/EP asked whether the weapons would be concealed and was assured by P/EM that they

would be. The Acting Director General asked P/EM to keep him informed of how things were going when the rescue stage of the

operation was in prospect. The Acting Director General stated in

evidence that he was told that whilst there had been

consideration of force being used to effect the rescue, no force would, in fact, be used.

Surveillance

2.13 The Exercise began on 27 November and the trainee team began surveillance of their target the next day. They conducted

surveillance on a farm near Geelong where John was working. John then left for Geelong, where he met two 1 foreign intelligence

officers', being impersonated by ASIS staff members. After a

break in the meeting the two 1 foreign intelligence officers'

went through the motions of abducting John and then took him by car to the Sheraton Hotel. The trainees lost John and the

'foreign intelligence officers' on the way to Melbourne and had to be told, by a member of the AIT, that they could be found at

the Sheraton Hotel. For the team, the period 28 to 30 November then settled down into routine surveillance at the Sheraton

Hotel. For their part, the 'foreign intelligence officers' regularly left the hotel for exercise and to pick up food. On

one occasion, on the morning of 28 November, they took John for

a walk in the Treasury Gardens. During the days John and the

guards were in the hotel, about $70 worth of liquor was consumed by them.

9

Preparations for the 'Snatch'

2.14 The trainee Team Leader, a trainee selected by P/EM to lead the trainees in the Exercise, was advised by P/EM at about 4 pm on 29 November that the team's objectives had been altered, and that they now were required to rescue John from the 1 foreign

intelligence officers'. A written instruction to that effect, called a Warning Order, was given to the Team Leader. This

required the rescue to be effected early in the evening of 30

November using the minimum force necessary. The Team Leader was

instructed to devise a plan to effect the rescue. He asked for

equipment for use in the rescue, including listening devices and

a lock picker or lock picking equipment. A member of the AIT attended the meeting.

2.15 Another meeting between the Team Leader and P/EM (also

with the same AIT member in attendance) was held at 9 a.m. on 30 November. P/EM told the Team Leader that listening devices, a

lock picker and equipment for picking a lock were not available. The Team Leader also asked for handcuffs, a sledgehammer and

jemmy, 3 Browning pistols and 2 submachine guns, balaclavas and gloves, to be provided. The submachine guns were requested because the 'foreign intelligence officers' might be armed, and

these guns would provide a clear margin of superiority and would be silenced. The Team Leader was told by P/EM that he would have

to purchase the sledgehammer and jemmy, because they were not obtainable from ASIS stores.

2.16 The equipment actually provided from ASIS stores was

handed over by P/EM to a member of the trainee team at a meeting

in the early afternoon of 30 November at the National Gallery

carpark. At that meeting, the team member was told by P/EM that the team would have to purchase the sledgehammer and jemmy which they had requested.

The 3 pm 'Briefback'

2.17 P/EM informed the Acting Director General that he intended to hold a meeting (called a 'briefback' by ASIS) with the Team

10

Leader at 3 pm on 30 November at the Fitzroy Gardens and invited

him to attend. The Acting Director General1s recollection is

that he was informed of the meeting in the morning of 30 November. P/EM said, however, that he advised Mr Ryan on a

previous day. The meeting was intended to provide the Team Leader with an opportunity to outline in detail his plans for

accomplishing the rescue and to obtain final approval for his plans.

2.18 The 1briefback1 was attended by the Acting Director

General, P/EM, the Team Leader and a member of the AIT. The Team

Leader stated that he proposed that the team use subterfuge to

enter the room where John was being held (the suite 004-P4, on the tenth floor of the Sheraton Hotel). The plan was that one

team member would dress as a waiter and ask that the door to the suite be opened so that he could obtain a signature for a parcel

delivery. (Other plans for entry by subterfuge were said to have been considered, but the waiter scheme was the preferred

option). The Team Leader stated that if the subterfuge plan failed, the team would break the lock on the door by using a

sledgehammer.

2.19 After hearing the Team Leader's plan, the Acting Director General called P/EM away and walked with him some distance from

the Team Leader and the AIT member. There is a conflict of evidence on what was said. What is agreed is that the Acting

Director General sought assurances that force would not be used to effect the rescue. P/EM advised the Acting Director General

that the good judgment of the team would mean that doors would

not be knocked down, and that the option of force had been

included only for the sake of completeness. Mr Ryan left after

telling P/EM to proceed with the Exercise.

2.20 P/EM then returned to the Team Leader and said that the

plan had been approved, but that the Acting Director General had been a bit concerned about the use of force. P/EM also said 1 let common sense prevail1.

11

2.21 The Acting Director General had spoken directly to the

Team Leader on one matter only. The Team Leader had asked

whether the 1 foreign intelligence officers' would be armed. The

Acting Director General had replied that it was reasonable to expect 1 foreign intelligence officers' to be armed in such a

situation.

2.22 The Deputy Director General (Production), hereafter referred to as DDG, informed the Commission that at about

6.30 pm on 30 November, the Acting Director General mentioned to him in passing that he, Mr Ryan, had observed a surveillance

exercise in the Treasury Gardens that morning, and that there was to be a further exercise in Melbourne that night. No further

information was given and, in particular, no mention was made of weapons, force or any other detail. Although the DDG had earlier

seen an outline of the 3 week training programme, he had not previously known any details of the Exercise.

Execution of the Plan

2.23 The trainee team assembled in room 007 adjacent to the suite (rooms 004-P4) in which John was held at about 8 pm on 30

November. Dusk had been chosen as the best time for carrying out the rescue, since conditions would facilitate a quiet getaway.

Team members were issued with party masks, which were to be worn

to conceal their identities and also to maintain a cover story

that they were escorting John on his bucks' night. The equipment

to be used in the rescue, including the weapons, had earlier

been taken to a room on another floor of the hotel (room 1109) , which the team had been using as its base for surveillance.

Shortly before the rescue was attempted, it was moved down one floor to room 007. The weapons had been guarded at all times.

All the weapons were loaded with plastic cartridges. These cartridges make a bang, do not emit a missile, but in some

circumstances can cause injury at close range. The cartridges were included to simulate reality.

12

2.24 At about 8.30 pm the subterfuge plan commenced. One team

member, dressed as a waiter, sought admission to the suite

004-P4, using as an excuse the need to procure a signature for a parcel delivery. The 1 foreign intelligence officers' rejected this approach, and refused to open the door.

2.25 The Team Leader then commenced without delay to break down

the door of 004 with a sledgehammer. He took about 9 blows. He,

and 4 members of the team with him, then entered the room (the

sixth member, the driver, was waiting in a 1 get away1 car in an

alley outside the hotel). John, feigning a drugged state, a role decided by him and his 'foreign intelligence officer 1 captors,

had elected to place himself nude in the bath shortly before the

team entered as he felt this would add reality to the situation.

Some team members dried and partially dressed John at the same

time as others handcuffed the 1 foreign intelligence' guards,

covered their heads, and gave them a simulated injection.

2.26 The location of P/EM during the rescue warrants particular

attention. Two trainees stated in evidence that they saw P/EM on the tenth floor before the first sledgehammer blow was struck. P/EM, on the other hand, contends that he was on the stairs between the tenth and the eleventh floors when the sledgehammer

first hit the door. He admits that he was on the tenth floor in time to see the last few blows land on the door.

2.27 After subduing the 1 foreign intelligence1 guards, the Team

Leader then returned to the corridor to press the button for a

lift. The Sheraton Hote-l Manager, who had been alerted by a

hotel guest to the activities on the tenth floor, started to get

out of a lift. The Team Leader, surprised by this development,

entered the lift as the Hotel Manager retreated back into it.

The lift started to descend. They jostled each other on the way

down to the ground floor, the Team Leader trying all the while

to stop the lift at another floor and telling the Hotel Manager that nobody would be hurt. When the lift stopped at the ground

floor, the Hotel Manager for whose coolness and courage in

13

dealing with persons he believed to be engaged in an armed

robbery I commend highly, got out and called for someone to ring

the police. The Team Leader returned to the tenth floor, briefly

saw P/EM, ran down the stairs and rejoined the rest of the team

as they were leaving the hotel through the back door to the

kitchen. After the team had left the tenth floor, P/EM entered

room 004 , told the 1 foreign intelligence officers' to clean up, pay the bill and leave the hotel, and then took a lift down to

the foyer.

2.28 In the meantime, in the absence of the Team Leader, the rest of the team had taken John down in another lift. The plan

was to get out at the first floor, then depart the hotel by the rear fire stairs. In fact, the lift stopped at the ground floor

and a group of hotel employees, who had been gathered by the Hotel Manager to prevent the escape of the presumed armed

robbers, were then confronted by the team. Some of the trainees assumed that the hotel staff were playacting by arrangement with ASIS, as part of the Exercise.

2.29 The Hotel Manager was holding a nightstick, which he had

been given by a member of staff. The nightstick, a stick about

30 cm. long of metal covered with heavy-duty red tape, was normally kept at the hotel reception. One of the team members

lowered his submachine gun and pointed it at the Hotel Manager.

A trainee held his hand gun in the air so that it could be seen.

Seeking a way out of the hotel, the team advanced into the kitchen with some hotel staff, including the Manager, retreating

before them. There is a conflict of evidence about whether guns were pointed at hotel staff in the kitchen. Hotel staff maintain

that submachine guns were pointed directly at them, and that a handgun was waved about. The trainees contend that the

submachine guns were held across their chests and that one handgun was held up, but not pointed at anyone.

14

2.30 I am satisfied that the guns were used to keep the

bystanders in check, which it undoubtedly did. A number of the bystanders were clearly frightened by this action.

2.31 The trainees found the exit from the kitchen, entered

their getaway cars and left. One of the getaway cars was stopped by the police and the occupants of the car were taken to police

headquarters for questioning. The other members of the team, and

the 'foreign intelligence officers', left the hotel without

being caught. Shortly after the team left the hotel, P/EM declared to police in the hotel foyer that he could explain what

had happened and offered to pay for the damage to the hotel door. He was also taken to police headquarters.

15

CHAPTER 3

SPECIAL OPERATIONS

ASIS' Functions

3.1 ASIS operates under the authority of a Directive issued by

Cabinet to the Director General of ASIS. That Directive gives ASIS a number of functions. Of those, the most important is the

collection of foreign intelligence. That collection responsibility is the reason why ASIS exists. All ASIS 1 other

functions are adjuncts to or additional to the task of collecting foreign intelligence.

3.2 One other function specified in the Directive obliges ASIS

to maintain a covert action capability for war-time or other very special situations. That capability is to be maintained

only on a contingency basis. The covert action function is, and is treated as, less important than any of the other practical,

day-to-day jobs which the Government has instructed ASIS to perform. Covert action therefore absorbs only a small proportion

of ASIS1 resources, as measured by any criterion - personnel, money, energy or time.

3.3 The Exercise was conducted as part of covert action

training, under the authority of the covert action function as outlined in the Cabinet Directive.

3.4 The Exercise had no connection whatever with ASIS' main

responsibility, the collection of foreign intelligence. ASIS 1 performance in its task of intelligence collection should not be judged by what occurred during the Exercise. I intend to assess fully ASIS1 performance on the collection of intelligence in my

wider report on ASIS. This present Report will not draw general conclusions about the quality of ASIS' performance in carrying

out its intelligence collection duties, in respect of which it has had many years of practical experience.

16

Special Operations

3.5 The term, covert action, used in the Directive needs some

elaboration. Covert action is a broad and general phrase. Among

the activities covered by the term are what ASIS calls special

operations. Special operations can be defined roughly as

unorthodox, possibly para-military, activity, designed to be

used in case of war or some other crisis. For instance, there

may be a need in war, or when diplomatic relations have been

severed, for the Australian Government to mount a rescue or

other operation overseas. Nothing in the field of special

operations, as understood by ASIS and as authorised by the

Government, would permit ASIS to conduct any operation designed to de-stabilise another Government.

3.6 ASIS has taken only a few limited and cautious steps to

develop a special operations capability. The development of this

capability was designed as a precaution against a crisis in the

future. It has always been clearly understood that any use of

special operations could not be countenanced outside of special

circumstances, and that prior ministerial approval would be

required for any step at all into the special operations field.

Steps Taken

3.7 The steps taken by ASIS to develop a special operations capability were clearly consistent with the Directive under

which the Service operates. Moreover, ASIS sought ministerial

authorisation for the steps chosen to develop that capability.

That approval was given originally by the Honourable

A. A. Street, the former Minister for Foreign Affairs, in June

1982. The authority was renewed by the present Minister, the

Honourable W.G. Hayden, in March 198 3. The two Ministers

approved a general project. They were not asked to approve any particular form of training, let alone the Exercise or anything comparable to it.

Ministerial Responsibility

3.8 It is convenient to deal with the question of ministerial

17

responsibility for the incident at this point. There was no suggestion that the Minister responsible for ASIS, Mr Hayden,

should have been informed of the kind of special operations

training which was being undertaken in November, nor of the

specific exercise which concluded at the Sheraton Hotel. The Acting Director General had no duty to inform the Minister of

the training proposed. For his part, the Minister had no duty to inquire into what specific training was proposed or proceeding

in the special operations field. Having given his general

approval for the projects ASIS had commenced, the Minister was

entitled to believe that the Acting Director General would ensure that special operations activities were conducted

legally, properly, and safely.

ASIS' Projects 3.9 There are compelling national security reasons for not

disclosing the operational and technical details of ASIS' training projects. Without disclosing details, I should note that ASIS decided that a more efficient and appropriate way to develop a limited capability in special operations than that

previously adopted was to train a small cadre of part time agents in that field. They would then form a core group capable

of undertaking covert action in a war or some other crisis. In selecting personnel for special operations work, ASIS

concentrated on people whose previous training and skills had prepared them to some extent for the sort of work that might

have to be done. Logically, that meant focussing on individuals with some sort of military background, as well as with

specialised skills which could then be refined and utilised by ASIS.

3.10 In training these persons, ASIS concentrated on the

development of a very wide variety of skills. Among those skills were surveillance, unarmed combat, photography, medical

training, 1 snatches1 and reconnaissance. None of the persons trained has been used in the field, since no special operation

has been proposed by ASIS or endorsed by the government. None of

18

the persons trained was meant to undertake any form of special

operations work in any circumstances within Australia.

3.11 Much still needed to be done in special operations

training at the time of the Exercise. Only an early stage had

been reached, and not all aspects of training had been

completely thought through. In the natural course of events,

refinement of the Project would have occurred through the use of training exercises to probe the capacities of the individuals

involved. The Exercise was one of a number of tests designed to examine the limits and potential of the special operations trainees.

Methods of Training

3.12 In examining the Exercise, I shall deal with some general

precepts of ASIS training. The relevant ones are that

. training should be as realistic as possible;

. mistakes should be made and corrected during training periods, to avoid any later slip-ups in the field;

. trainees should, to some extent, be kept in the dark about the exercises in which they are involved; - this

technique enables the training managers to develop surprises and to add complications with which the

trainees are expected to cope;

. trainees should be assessed under conditions of severe, sustained pressure.

3.13 These general precepts are applied also to special operations training, and were therefore regarded as being

applicable to the Exercise.

3.14 However appropriate these training precepts are - a matter which I will consider in my general report - ASIS did not take

sufficient care institutionally to scrutinise and supervise their application in the course of training.

19

Training Manuals

3.15 I have examined the ASIS training manuals relevant to the conduct of the Exercise, and have concluded that those manuals

are inadequate in many critical areas. The general special operations manual is deficient in that:

(a) there is no clear, firm instruction to trainers to

obtain police clearance for any exercise in any public

place (there is a suggestion in the manual that

obtaining a letter from the police about the exercise

might prove 1 handy. Might save a lot of bother'); this deficiency remained despite the fact that ASIS had, on an earlier occasion, experienced some difficulty as a result of police intervention during the course of an exercise;

(b) trainers are not instructed that they should be obliged to notify and obtain the consent of the owners or

managers of any property on which exercises are to be

conducted (again, the manual contains suggestions rather

than directions on this matter);

(c) trainers are not instructed to insist that in no

circumstances should members of the public be harmed or alarmed.

3.16 The specific manual prepared for the Project of which the

Exercise was a part, was grossly incomplete. No contingency

plans or termination procedures had been drafted for Project

exercises. No chapter on training procedures and constraints had been written.

3.17 Neither the general manual nor the specific one gives sufficient attention to contingency planning in the event that an exercise went off the rails, nor to procedures to be used to abort an exercise in cases of error or unanticipated risk, whether risk to the public or to the Project.

20

3.18 The incident could have been avoided if there had been more deliberate and categorical requirements in the training

manuals as to the conduct of exercises, and if there had been a firm obligation on trainers to observe requirements for

consultation. These manuals must urgently be reviewed in light of the Exercise experience.

Recruitment of Trainees

3.19 With an important qualification, the trainees appear to have had the appropriate skills and experience for an operation

of the kind envisaged by the Exercise, and to that extent the recruitment policy adopted by ASIS is shown to be correct.

3.20 The important qualification concerns leadership. I find it

difficult to imagine that a real covert operation, similar in

nature to the Exercise, would not require the presence of a

leader with the experience, capacity and judgement which a military officer would have. It may be that any such operation

would be under the direct control of an ASIS officer, such as the P/EM. If that is so, the Exercise lacked an important and

available aspect of realism. If this is not envisaged, it does

not appear that the recruitment policy has been directed to this

important matter and to that extent is deficient.

3.21 I shall deal further with the recruitment of trainees for the Project in my general Report.

Carriage of Firearms

3.22 The manuals, in addition to the deficiencies I have already mentioned, do not give adequate attention to the

problems involved in carriage of firearms by ASIS staff. The essential problem is that ASIS officers have no special legal

authority whatever to carry firearms within the State of Victoria or elsewhere. The lack of such authority does not

appear to have troubled successive Directors General of ASIS.

21

3.23 This situation is unsatisfactory and requires attention. I

shall consider the matter further in my general report on ASIS.

3.24 I should also note at this point that the procedures for

authorising and recording the issue of weapons for use outside

ASIS1 training facilities broke down at the precise point where

they were most needed. The submachine guns carried in the

Exercise were not signed out of the armoury at ASIS1 training headquarters, nor was any written authorisation provided for

their removal from store. ASIS has been unable to explain satisfactorily how this most serious breach of regulations

occurred. The manner in which the weapons used during the Exercise were drawn from the armoury suggests that either the

procedures for the control and issuing of firearms are defective or these procedures are not being properly enforced. In the

future, weapons should only be issued from the ASIS armoury

after obtaining the prior written authority of a senior and

responsible officer and all movements of weapons ought to be recorded in properly maintained records. Responsibility for

authorising the issue of weapons should be in the hands of one senior officer at a level higher than P/EM.

3.25 Although not of direct relevance to my inquiry into the

Exercise, I sought advice as to the carriage of firearms by ASIS

officers overseas. I have been assured that ASIS officers

serving overseas are not permitted to carry firearms without

first obtaining permission from the Director General. I am informed that such permission has never been given.

Planning of the Exercise

3.26 My examination of ASIS' training precepts and training

manuals has led me to conclude that those precepts and those manuals provide inadequate guidance and insufficient control on

the conduct of exercises such the one in question. Moreover,

even within the inadequate guidelines set by ASIS, the Exercise

was poorly planned, poorly prepared and poorly co-ordinated.

22

3.27 To some extent, these faults can be explained by the way

in which ASIS chose to manage the Project. ASIS management recognised only belatedly the requirement for better

supervision, closer direction and tighter control of the Project. A decision had been taken at meetings on 4 and 8

November 1983 to re-organise the arrangements for supervising the Project, but the decision was not to be implemented finally

until 1 February 1984. There were suggestions that P/EM was over-worked because of a lack of administrative and training

staff to support his activities. Again, this matter was not to

be finally addressed before February 1984.

3.28 At the time of the Exercise, the line of authority for the Project ran from P/EM up to ADG, then to DDG, and then to the

Acting Director General. The ADG had had line responsibility for the Project only since 1 September 1983 and, while still

familiarising himself with the detail of it, was also advocating

its transfer elsewhere and anticipating his own transfer within

the Service. There had been a number of meetings in ASIS

(including two early in November 1983 mentioned above) , intended

to develop new arrangements for handling the Project. ASIS1 plan was to establish a new Directorate of Covert Action and

Emergency Planning. The Directorate was to be set up by 1 February 1984. Because of staff shortages, H/EP was designated

to run the Directorate on an indefinite acting basis. Although

H/EP had not assumed formal responsibility for the special

operations field, he was taking an increasingly active personal

interest in special operations matters. As at the date of the

Exercise, H/EP was limited in responsibility to the provision of

Australian Defence Force support and military advice and was

responsible to DDG. Nonetheless, no officer in the line of

authority (as constituted at 30 November 1983) had any right to disregard or neglect his supervisory responsibilities for the Project.

Involvement of the Army

3.29 In examining the preparation and development of the

23

Exercise, I wish to give separate attention to the involvement

of Australian Army personnel.

3.30 Those personnel were involved in the exercise because they

were serving as members of the Army Instruction Team attached to the ASIS training facility. The Army Instruction Team (AIT)

remained under the direct command of the Commanding Officer, 1 Commando Regiment, during the term of its attachment to ASIS.

The head of the AIT was, nonetheless, instructed to take directions from the ASIS head of training concerning tasks in support of ASIS. Those tasks would normally involve the use of

skills in which the AIT had particular expertise and experience.

Such skills would include close quarter battle, unarmed combat, house and vehicle searches, and general weapons training.

3.31 Nothing in the AIT's orders gave the ASIS officer

responsible for the development of the Project any authority to give instructions to the members of the AIT.

3.32 Nothing in the AIT1s orders gave the AIT any direct role

in planning or organising exercises such as the Exercise, since nothing in that exercise required the use of any skills in which

the AIT could be regarded as having special expertise or experience.

3.33 The issue of Commonwealth exercise cards to the trainees

involved in the Exercise did not imply the knowledge or consent of the Army for the Exercise. Although an Army Liaison Officer

at Victoria Barracks was informed that weapons would be carried during the Exercise, and he passed this information on to a

superior Army officer, the giving of the information and the issue of the cards was not and cannot be regarded as application

for, or the giving of approval by, the Army to the carrying of weapons on the conduct of the Exercise. There was nothing

improper in the decision of the Army to give ASIS exercise cards.

24

CHAPTER 4

WHAT WENT WRONG AND RESPONSIBILITY

What went Wrong

4.1 As stated in 1.7, the Exercise was meant to be conducted

without publicity and there was an intention that persons other than those directly taking part should not be involved. In this

chapter I shall consider what went wrong during the Exercise, and the degrees to which responsibility for what occurred ought

to be borne by the various persons who were involved in its

authorisation, planning and execution.

4.2 The period of Special Operations training which commenced

on Friday 11 November and concluded on Friday 2 December, 1983 had been planned to culminate in an Exercise which would utilise

some of the skills which had been learnt during that, and earlier, training periods. Among those skills was surveillance, unarmed combat, close quarter battle (including methods of entry and room and floor combat) and specialist demolition. More than

half of the skills taught during the various training programmes stressed aggression. The concentration on violence and

aggression during the course may have been a contributing factor

in the formulation of the actual plan for the rescue of John and

the subsequent conduct of some of the trainees.

4.3 A scenario involving surveillance and rescue of a hostage is, in my opinion, appropriate for Special Operations training.

However, such a scenario requires particular skill and care in both its planning and execution. It is in these areas that most of the problems arose.

4.4 The scenario, even from a very early stage of its

development, contemplated the 1 snatch' of John from his captors

in the Sheraton Hotel. It was thus apparent to all involved in planning the Exercise that, except for an earlier surveillance

25

exercise carried out in a city, most other Project exercises had been conducted either at the ASIS training facility or in reasonably remote areas, and that an exercise to be held in

public, and partly within the confines of an inner city international hotel, and going far beyond surveillance, broke new ground. The scenario should have been planned, and the Exercise supervised, in a way which avoided any harm or alarm to

any member of the public. This did not occur. Innocent bystanders were greatly distressed by certain actions of the

trainees. The potential for personal harm to members of the public was real.

4.5 Every aspect of the Exercise, including preparation for its execution, ought to have been so planned and supervised as to

ensure that it was carried out lawfully. ASIS has no licence to

conduct unlawful exercises in Australia. This may mean that ASIS

is effectively precluded from conducting certain types of

exercises, and is required to proscribe certain activities of

its officers or agents. So be it. If the Service, or its

Minister, believes that obedience to the law is unduly

restrictive of these activities, then the answer lies in legislative change rather than ignoring the existing law.

4.6 One of the most obvious areas in which the planning of the Exercise was deficient was in the failure to notify either the Victoria Police or the manager of the Sheraton Hotel of the

Exercise. P/EM gave evidence that his primary reason for not

informing the police was to avoid compromising the security of the Project:

The basic reason that crossed my mind when I dismissed the possibility of informing the police was that I was probably concerned about the security of the actual operation itself, not necessarily the Exercise, and was worried that informing

the police might cause them to show some interest in our activities in Melbourne at that time and perhaps even identify some of the operatives. But I must say that I dismissed the possibility of informing the police fairly

early in the piece and chose myself on this occasion not to inform them.

26

He justified his decision not to inform the Hotel Manager of the

Exercise on the basis that, at all stages in its planning, he

'didn't envisage that any of the hotel staff or any member of

the public would be involved with the team and, in fact, the

hotel staff would not even know the team were in the hotel.'

4.7 I do not accept either of the preferred explanations for not informing the police or the Manager of the hotel. It is

difficult to accept that any person could have seriously believed that the police or hotel management did not need to be

notified that a group of men, armed with submachine guns and wearing masks or balaclavas, intended to conduct a para-military

Exercise in and around a city hotel. Notice to the police would not have made lawful acts which were unlawful, but it may have

ensured that unfortunate, or even tragic, events did not occur. That no one was killed or injured by shots being fired at the

getaway vehicles is as much a tribute to luck as to the cool-headed, professional handling of the situation by those

officers of the Victoria Police who were involved in the apprehension of some of the trainees. There is no basis for

believing that notification to the police could have created any

security problems. No senior officer of ASIS who gave evidence

thought that this was a valid consideration. The police should always be notified if any government or intelligence agency is

to carry out activities in public places which might attract police action. Notice to the Hotel Manager extends beyond mere

courtesy to prudence and ought not to be an act designed to persuade him to permit damage to his hotel. Private property,

particularly that frequented by the public, should not be used by a government agency in a manner entirely foreign to its

normal and proper use without the consent of its owner or controller. The obtaining of that consent is one way of ensuring

that no harm or alarm is caused to the staff or the wider public.

4.8 In the same way as a real covert operation would require contingency plans, the preparations for a training exercise of

this nature should provide for a 'safety net' in the event that

27

things might go wrong, and there should be provision for and

preparedness to abort an exercise if necessary. However, to the extent that there were any contingency plans for the Exercise,

they were inadequate and inchoate. I can find no evidence that any consideration was given to the circumstances in which the

Exercise, or any part of it, may have to be aborted. These

failures in planning effectively meant that, once the final

stages of the Exercise had commenced, the trainees were out of control. Nothing short of a specific order from an ASIS officer

of p/EM's seniority at least, would have stopped the trainees from completing their assignment with single-minded

determination - no matter what reservations any of them may have felt as to the propriety of their conduct. The Team Leader

claimed in evidence that he had the right to abort the Exercise at any time, and, as a matter of fact, he clearly could have

done so. His failure at any time to consider aborting the

Exercise is relevant in considering his responsibility, as well

as being an illustration of the recruiting policy deficiency referred to in 3.20.

4.9 The trainees were instructed by P/EM to carry out the

Exercise with as much realism as possible. Whilst I accept that a certain amount of realism in an exercise is desirable, I find that where the desire to inject this realism led to a disregard for the law, and the welfare and interests of persons uninvolved

in the Exercise, such realism was unjustifiable and inexcusable.

It seems to me that most of the excesses in conduct committed

during the Exercise are attributable to the desire to achieve greater realism than was reasonable or desirable, and a failure

to take elementary precautions (some of which have already been dealt with). The striving for realism led to the breaking of the

hotel door with the sledgehammer, the attempt to restrain the

Hotel Manager, the carriage of arms by three of the trainees,

and the display of those arms to the people on the ground floor of the hotel when the trainees were escaping. I doubt that the

effectiveness of the Exercise, as a training exercise, would

have been significantly diminished if the trainees had been

28

unarmed and, instead of battering down the hotel door, entry

into the room was gained by an alternative, non violent means or

by merely simulated violent means, once the subterfuge failed. After all, no one has suggested that the failure to use live

ammunition or to inject a real drug or to arm the 1 foreign intelligence' guards, or the guards' inactivity during the time

it took to land the 9 or so blows to the door of their hotel room compromised the authenticity of the Exercise.

4.10 The use of the sledgehammer was inexcusable. It should

have been absolutely prohibited. If it is deemed necessary to

train agents in the breaking of doors, then ASIS ought to use its own doors and facilities for practice. Unless clearly defined limits are placed upon exercises, I fear that someone -

possibly an innocent bystander - will be seriously injured. One

of the trainees, in his evidence, referred to the distortion of

the trainees' perceptions as a result of the endeavour to

provide realism in the Exercise. Such a distortion, he agreed,

could lead the trainees to believe that they were actually

involved in a real operation. If this were to occur, the

resultant danger to both the trainees and the public is manifest.

4.11 The worst feature of the incident was the threatening of the people in the hotel foyer and kitchen with the guns carried

by the trainees. This part of the incident was unintended and occurred when the trainees were confronted with an unexpected

situation and were without their leader. The Team Leader's plan

for the rescue of John called for his removal from the hotel

through the fire escape on the first floor. For reasons which

the witnesses could not explain, the descending lift did not

stop at the first floor, and the trainees were confronted with the unexpected stopping of the lift at the ground floor. If the rescue had proceeded according to the plan, it is unlikely that

any member of the public or hotel staff would have seen the

departure of the trainees from the premises. Nevertheless, the

sudden appearance of men from the lift, most of whom were masked

and three of whom were carrying arms including two submachine

29

guns, forcing their way out through the foyer and kitchen must have appeared as real to the onlookers as was intended by the

trainees. Both submachine guns were displayed to bystanders, and

one and possibly both were pointed either directly at or, at

least, in the general direction of the bystanders. A hand gun was drawn and waved around in a manner intended to intimidate

innocent persons. One member of the hotel staff at whom a submachine gun was pointed gave evidence that he was so

frightened by the incident that he subsequently felt

'emotionally unstable...has suffered from a lack of sleep

despite medication and ....has recurring headaches'. It is clear that other members of the Hotel staff were distressed by the

display of weapons.

4.12 Although this part of the incident was unplanned, it is an example of the excessive realism which crept into the Exercise.

It highlights the inadequacy in the planning of the Exercise and the lack of any consideration having been given to the

circumstances in which it ought to have been aborted. One trainee explained the use of arms as being 1 mainly to discourage

attempts to assault team members.' Apart from any possible illegality involved, this explanation ignores the effect on a

bystander of an aggressive and threatening display of arms. I can find no justification for the use of the weapons in the

manner I have described.

Responsibility

4.13 Who, then, ought to bear responsibility for what occurred

at the Sheraton Hotel? In answering this question, I shall consider the position of all the persons who were involved in

the authorisation, planning or execution of the Exercise. I shall refrain from repeating what I have already written on the

lines of authority and areas of responsibility in Chapter 3 - but these a.re relevant when considering responsibility for the incident.

30

4.14 I do not deal here with responsibility in the sense of

liability under the civil or criminal law. I deal with responsibility within the ASIS structure. The concept of

responsibility within an organisation such as ASIS is complex.

The former Acting Director General of ASIS said during

cross-examination that 1 he who knows ought to be responsible.1 However, he admitted to having some difficulty in grappling with

the proposition that 1 he who ought to know ought to be responsible.1 This questioning of Mr Ryan occurred in the

context of his having stated in evidence that he had no feelings of 1 personal guilt1 in relation to the Sheraton Hotel incident.

He accepted responsibility for the incident 1 only in the sense that anything that happens to ASIS is in fact the responsibility

of the Director General in terms of the directive by which he is guided.1 I have some difficulty in dealing with the concept of

responsibility in the abstract. In determining who, within ASIS,

ought to be held accountable for what occurred, I shall have

less regard to the theoretical concepts of responsibility than to what I find to have been the degrees to which individuals

contributed, or ought to have contributed, to the Exercise.

Responsibility of P/EM

4.15 It will be apparent from what I have said earlier (see 4.2

to 4.12) that much of what happened at the Sheraton Hotel was

attributable to deficiencies in the planning process. It is my

view that primary responsibility for these deficiencies is

attributable to P/EM. Before examining the areas in which he

failed to fulfil adequately his assigned functions, I shall make a few brief comments about him. He has had a long and useful

career in ASIS and had previously demonstrated himself innovative and diligent. He was trusted by his superior

officers. He was given a good deal of autonomy in the running of

the Project. However, by early November 1983, responsible

officers in ASIS perceived that the tasks which had been thrust

upon him were too onerous for one person. Accordingly, the

decision, referred to in 3.27-3.28, was made to transfer the

Project to the control of a 1 Directorate of Covert Action and

31

Emergency Planning1 to be established by 1 February 1984. That

Directorate would have provided P/EM with the planning and administrative support which he had requested on a number of

occasions. It would also have placed controls on him and his activities which had been lacking previously. All of the ASIS

officers whose conduct I shall examine were aware of the

impending change in the responsibility for the Project. It is

impossible to escape the conclusion that the changes in responsibility and involvement with the Project which would have

accompanied the establishment of the new Directorate contributed to the happening of the incident at the Sheraton Hotel by

leading some of those officers to be perfunctory in the discharge of the responsibilities they bore in November 1983 . Clearly these impending changes cannot be regarded as having relieved any of those officers of their responsibilities within

the Service for the Project as at November 1983.

4.16 As at the date of the Exercise, P/EM bore the major

responsibility for the planning and execution of the Project

training programs. He was also the only ASIS officer working on

the Project. It appears that not only was the Project classified

as 1 Top Secret1 , but even within ASIS knowledge of it was unusually limited. It is apparent that a great deal of

responsibility had been placed upon P/EM1s shoulders. It ought

to have been apparent to him, however, that the secrecy of the Project and the responsibilities cast upon him gave rise to

concomitant obligations. He was, after all, part of a line of authority which existed for the purpose of sharing

responsibility, and providing checks and balances on the activities of the Service and its personnel. In my view, two of

the major obligations cast upon him were first, to consult with

and inform his superior officer of his activities and those of the Project, and secondly, not to exceed the relevant bounds of his authority without obtaining the prior informed consent of

one of his superiors. He failed in both these obligations.

32

4.17 It seems clear that by early in the training period which

commenced on 11 November (or possibly as early as mid-October

according to the evidence of ADG), P/EM had decided to end the

training with an exercise which would involve the rescue of a

hostage held against his will in a hotel, and that the rescue would probably entail the trainees carrying arms. I am satisfied

that by 24 November - three days before the Exercise actually commenced - he had decided that weapons would be carried by the

trainees, and that those weapons would include Heckler and Koch silenced submachine guns. On that day, he drew up a list of

equipment to be collected for use in the Exercise. That list

included four submachine guns. However, although he mentioned

weapons to four different persons on different occasions - two

of whom were senior to him - not once did he say that he had

decided, or was even contemplating, arming the trainees with submachine guns. Sometime between mid-October and mid-November

he mentioned the Exercise to ADG and told him that the trainees may be armed. ADG apparently responded by indicating to him that

the carriage of arms in a public place was a 'problem area1 and queried whether any consideration had been given to liaison with

the police. He also said that he would want to know more about the Exercise before it took place and asked to be kept informed.

As now appears from the evidence, the first ADG heard of the Exercise actually taking place was late in the evening of 30

November - after the damage had occurred. Sometime, just over one week before the Exercise commenced, P/EM gave H/EP a brief

oral outline of the scenario for the Exercise. He was told that the Exercise would involve the rescue of a hostage being held in

a city hotel and that 'it was intended that people in the

exercise would carry weapons.1 H/EP enquired of P/EM whether the

weapons would be hand guns and concealed. When told that they

would, he told P/EM that provided the hand guns were concealed

there should be no problem with the carriage of weapons.

However, he advised P/EM that he (P/EM) would have to get the

Director General1s approval. On 25 November, in a conversation with an ASIS Staff Security Officer who, to P/EM1s knowledge, had 20 years experience in weapons and their handling, P/EM

33

mentioned that Browning pistols would be carried for a short

time during the forthcoming exercise. The officer, with an obvious display of concern, informed P/EM that he knew of no

legal authority which would permit the carriage of weapons in public by ASIS personnel. This discussion, it should be noted,

occurred after P/EM had prepared an equipment list which

included submachine guns. No mention of these weapons was made

by him. The fourth person to whom P/EM spoke about weapons was the former Acting Director General. He had two conversations

with Mr Ryan - on 26 and 30 November. On 26 November, in a short conversation at the ASIS training facility in which P/EM, H/EP

and the Acting Director General participated, P/EM gave a brief outline of the exercise to Mr Ryan. The outline included a

proposal that weapons be carried. When asked if the weapons would be concealed, P/EM indicated that they would be. Both H/EP

and Mr Ryan have stated that, on the basis of what they were told, they believed that the weapons to be used would be

handguns. When it was indicated to the Acting Director General that the weapons would be concealed and that force, whilst

considered as an option, would not be used, he agreed to the exercise proceeding. At 3.00 p.m. on 30 November, Mr Ryan

attended a meeting in the Fitzroy Gardens with P/EM, the Team leader, and an AIT NCO whose assistance P/EM had obtained. The

purpose of the meeting was the presentation, by the Team leader, of his plan for the rescue of the hostage, and for the approval

of that plan. The Team Leader asked if the 1 foreign

intelligence1 guards would be armed. Mr Ryan replied that

'heavies on an exercise like this usually carried pistols. ' No other mention of weapons was made at that meeting.

4.18 It is clear that P/EM never sought, nor obtained, approval from any of his superiors for the use of submachine guns during

the Exercise. His whole conduct in relation to the use of the

submachine.guns suggests deception on his part. He appears to

have deliberately withheld from others the fact that he was

proposing to issue these weapons to the trainees. Although he

had been alerted to possible difficulties associated with the

34

carriage in public of even concealed handguns by ASIS personnel, he appears not to have sought clarification of this matter, nor

did he ever instruct the trainees that the handguns were to remain concealed at all times - even though he was aware that

this was the basis upon which approval for the Exercise had been

given. I find that he had no authority to issue submachine guns to the trainees and that, in failing to inform his superiors of

his intention to do so, he acted improperly. He did not even

draw the submachine guns from store in the authorised way. To

the extent that it can be said that he obtained approval for the

trainees to carry handguns, I find that the consent given by Mr

Ryan was on the basis that the weapons would be concealed. If,

when he sought aproval for the carriage of the hand guns, P/EM intended to permit the trainees to use them as they saw fit (which is what, in fact, occurred), then the consent of Mr Ryan was obtained improperly and cannot be regarded as an informed

consent. If, on the other hand, he intended that the hand guns

would remain concealed, but failed to so instruct the trainees,

then he was negligent in the performance of his duties.

4.19 The question of the authorisation of the trainees to carry

weapons is but one example of P/EM having exceeded his authority and failed adequately to inform his superiors of his plans. A

further example of this is the use of the sledgehammer to smash the hotel door. It was during the discussion involving P/EM, Mr

Ryan and H/EP on 26 November (see 4.17) that P/EM first informed

anybody that force was being considered as one of the options

for securing the release of the hostage. As earlier indicated,

Mr Ryan 'agreed to the exercise proceeding1 on the basis that

force would not be used. In my opinion, P/EM should not have

waited until the day before the Exercise was due to begin before

raising, for the first time, the possible use of force. ADG had earlier requested P/EM to keep him informed about the exercise. P/EM failed to do this. Setting aside, for the moment, any duty

of the part of ADG or DDG to have demanded more information from him, it was clearly incumbent upon P/EM to have informed his superior officer of the scenario for the Exercise in significant

35

detail. That P/EM had a general authority to conduct training

programmes for the Project trainees is not in question. However,

the Exercise clearly broke new ground in exercises. It was a radical departure from the sort of Project exercises which had

hitherto been conducted. It was both challenging and sensitive. It demanded an extraordinary amount of detailed planning and

thought. I have no doubt that any responsible ASIS officer, upon being presented with even the broadest outline of the scenario,

would immediately perceive the need for great care in its planning. Notwithstanding his discussion with Mr Ryan on 26 November, it is apparent that P/EM did not tell the Team Leader, or any of the trainees, that force was to be excluded from any

rescue plan which they might develop. So it was that, at the 'brief back' held in the Fitzroy Gardens at 3.00 p.m. on 30

November, the Team Leader submitted to both P/EM and the Acting Director General a plan which, whilst proposing a rescue by

means of a ruse, nevertheless contained a proposal that a forcible entry to the room, by smashing the door, be employed if

the ruse failed. After hearing the Team Leader's plan, Mr Ryan spoke to P/EM out of the hearing of the Team Leader and said -

11 trust you're not going to allow the team to use the alternative plan involving force.1 Mr Ryan's recollection of

P/EM's response was - 'Don't worry, common sense will prevail. ' P/EM's recollection of his own response was that 'the

good-judgement of the team would mean that doors would not be bashed down but that the Team Leader had covered this option for completeness of the planning process'. I accept P/EM's version of his response as being the more accurate. In any event, as

P/EM agreed in cross-examination, when he and Mr Ryan parted after the conversation, 'the question of bashing the door, be it

by way of sledgehammer or otherwise was, as far as (Mr Ryan) was concerned, just not a goer.' When P/EM returned to the Team

Leader after conversing with Mr Ryan he informed him that the Director General 'is a bit concerned about the breaking down of

hotel room doors' or 'is a bit concerned about the use of force'. He also said to the Team Leader 'Let common sense

prevail'. P/EM has admitted that he did not instruct the Team

36

Leader not to break down the door and has sought to explain this

on the basis that 'the Director General never said to me 'I don't want a hotel room door knocked down...'1 This explanation

fails to take account of the fact that P/EM had assurred Mr Ryan

that 'doors would not be bashed down'. Mr Ryan was surely

entitled to accept P/EM's assurance of this fact.

4.20 Irrespective of the manner or adequacy of Mr Ryan's communication to P/EM about the use of force, I have no doubt

that P/EM left his meeting with Mr Ryan believing that the Acting Director General had proscribed the use of force in

attempting the rescue of the hostage. Nevertheless, P/EM said

that he was not disposed to give the Team Leader such a specific

prohibition. His failure, thereafter, either to communicate Mr

Ryan's directive to the trainees, or prevent the use of force is inexcusable and clearly in breach of his authority. Subject to

what I say in 4.44 the trainees were entitled to assume that the

Team Leader's plan - including the use of force if necessary - had been approved.

4.21 Entry by means of a ruse to the room in which the hostage

was being held having failed, entry was then effected by the

trainees by the method which they believed had been approved,

i.e., by breaking the door open by force. Notwithstanding the

failure of any of the trainees expressly to question whether the

hotel management had consented to such a course, it is not open

to P/EM to complain about, or to avoid responsibility for, an

action which had been squarely put to him as part of that Team Leader's plan, and which he had led the trainees to believe was something they might do, if necessary, in order to rescue John. Further, I am satisfied that before any blows from the

sledgehammer landed on the door to Room 004, P/EM was standing at the southern end of the corridor of the tenth floor of the

hotel and in a position to prevent any damage to hotel property.

The Team Leader, who actually wielded the sledgehammer, gave

evidence that he saw P/EM before he commenced hitting the door but that P/EM neither signalled to him nor said anything before

37

he swung the sledgehammer, or at any time during the breaking of the door. The Team Leader's evidence is supported by that of

another trainee. P/EM's failure to intervene was capable of being interpreted, at least by the Team Leader, as sanctioning his conduct. I do not accept P/EM's evidence that, when the first blows landed on the door, he was not on the same floor as

the trainees. It is my view that he should have called out to

the Team Leader to prevent any damage being done to the hotel.

Only he, of all ASIS personnel on the tenth floor at that time,

knew that the hotel had not been informed that the Exercise was

taking place. He owed a duty to the trainees to prevent them

from committing a possible criminal act. It was clear, at that stage, that the Exercise was about to enter a phase which, to P/EM's knowledge, had not been approved by the Acting Director

General - the only senior ASIS officer who had any detailed knowledge of the Exercise. P/EM's failure to step in and halt

the Exercise at that point is culpable.

4.22 P/EM did not give sufficiently clear or explicit

instructions to the trainees. For example, there was confusion

in the minds of some of the trainees as to the precise nature

and purpose of the Exercise. I have already expressed my view on the extent to which an emphasis on aggression during training

may have contributed to the formulation of a plan involving the use of force (see 4.2). P/EM claimed that he stressed the

surveillance aspects of the exercise, and intended to convey to the trainees the need for the rescue of John to be effected by

clandestine or surreptitious means. On the other hand, the trainees clearly believed that they were authorised to use force

- albeit minimum force - to rescue the hostage. P/EM's claim that it was never intended that force should be used stands in

stark contrast to the evidence of the trainees and the Warning Order, which impliedly authorised the use of some force. I

reject his evidence on this. If, however, P/EM genuinely intended that John was to be rescued without resort to any

force, then his failure to convey this properly to the trainees is a serious and glaring example of his failure adequately to

38

instruct the trainees. Likewise, I find he failed adequately to

inform the trainees of the extent to which they were permitted

to make use of persons not involved in the Exercise, for

example, hotel staff. Those trainees who gave oral evidence to

the Commission were clearly of the view that contact with 1 outside1 persons had been prohibited. P/EM, in evidence, denied

that such a prohibition existed. I am particularly concerned about what appears to have been the lack of any instruction at

all to the trainees on the use which could be made of the weapons they bore, and the handling of members of the public

should they be encountered during the Exercise. As previously

indicated (see 4.11 and 4.12), the manner in which the firearms

were used, and the handling of certain members of the public, particularly the hotel staff, was deplorable. P/EM must bear

responsibility for these matters for failing to have given

adequate instruction to his trainees on these two most important subjects.

4.23 I do not propose to repeat what I have already said about

the failure to notify the police and hotel manager of the

Exercise, and the demand for excessive realism in the Exercise (see 4.6 to 4.9). Although P/EM may not have been responsible

for the actual implementation or development of these matters - for example, actual notification of the police and hotel may

have been done by ADG or the Head of Security in ASIS - he is, nevertheless, to be held accountable for these failures as they

clearly ought to have been within his contemplation as the Head of the Project. He is clearly responsible for the lack of any

adequate contingency plans. Even if the plan to be formulated by the Team Leader should have included contingency plans, the

1 briefback1 on 30 November showed that they were not included, and the Team Leader's plan was nonetheless approved by P/EM.

4.24 P/EM1s reluctance to seek advice from, or involve his

immediate superior officers in the Exercise stands in contrast with his apparent eagerness to involve the Acting Director

General. It may be, although I doubt it, that P/EM felt that as

39

Mr Ryan had, on occasion, expressed interest in the Project he

was obliged to report directly to him on matters concerning it. In my opinion, P/EM by-passed ADG because he believed that he

would be more demanding in requesting information on the training programmes and Exercise, and would be unlikely to

approve the scenario as devised. P/EM's failure to keep ADG informed of the details of the Project and, more particularly,

the Exercise, was a significant contributing factor to the Sheraton Hotel incident. I do not accept his evidence that ' I

continued to keep ADG informed...'

Responsibility of Acting Director General

4.25 Although the oirect involvement of Mr Ryan in the Exercise

did not commence until the morning of 26 November 1983, it is appropriate to look briefly at what he claimed, in evidence, was

the extent of his knowledge of the Project before that date. Mr Ryan indicated that the Project was only a small part of the

organisation over which he exercised control and, as such, he had limited knowledge of Project activities. In referring to the

period shortly before the Exercise commenced, he said -

What drew my attention to the Project at that stage was the fact that (P/EM) had produced a memorandum directed to his Branch Head and Divisional Head, before the meetings of the 4th and 8th of November, which, and a copy came to me for

information, which suggested that he wasn't happy about the amount of support, that he needed more manpower, etc., etc., etc., to cover the training. And that is why I called the meeting of the 4th November, at which we didn't complete our business, and so we met again on the 8th November to discuss

rather more organised ways of handling (the Project).

4.26 Before commencement of the Exercise, Mr Ryan began to

suspect that the Project lacked cohesion and organisation. As he said in evidence - 'I felt, and this I am prepared to say, that

I didn't think the branch was taking its supervisory responsibilities - I am not pointing a bone at ADG when I say

40

this because he had only been in the job a few weeks - but I

didn't feel that the branch was taking its supervisory

activities towards the section carefully enough1. Both ADG and

DDG were also well aware of deficiencies in the handling of the Project.

4.27 As the training period, which began on 11 November, was

the first period of training after the meetings referred to in

4.25 which meetings 1 had awakened some concern about the

programme1 in his mind, Mr Ryan, accompanied by H/EP, went to

the training facility on 25 November with a view to observing

some of the training and meeting the trainees. This he did and,

as he was preparing to leave, he was spoken to by P/EM for a few minutes in the presence of H/EP. This is the conversation

referred to in 2.10 to 2.12. P/EM gave Mr Ryan an outline of the scenario of the Exercise including the fact that the Sheraton

Hotel was to be used and the proposal that the trainees be

armed. P/EM was asked by H/EP - in order to highlight the point

for Mr Ryan - whether the weapons would be concealed. P/EM said

that the weapons would be concealed. He also indicated that

force had been considered as an option for gaining entry to the hotel room in which the hostage would be held, but that it was

'the least favoured option', and, in fact would not be used. On the basis of the assurances given by P/EM, Mr Ryan agreed to the

exercise proceeding. Towards the end of the discussion, Mr Ryan expressed a desire to be involved in the Exercise and asked P/EM

to 'let me know how things are going when you get to the point when you do something about the snatch. '

4.28 At P/EM's invitation, Mr Ryan attended the 'brief back' in

the Fitzroy Gardens at 3.00 p.m. on 30 November. I have dealt

with this meeting in 4.17 and 4.19 and wish to add only that, after warning P/EM about the use of force and receiving his

assurances on the matter, Mr Ryan said to P/EM either 'that's

fine' or Ό.Κ., you better get on with it'. He did not

explicitly veto the use of force.

41

4.29 P/EM gave evidence that, after his discussion with Mr Ryan on 26 November, 1 the Director General expressed a desire to be

personally involved in monitoring the exercise.' Mr Ryan said - 11 think monitoring really is a little too broad and sweeping -

observing I think is a better word.' I am satisfied that, whatever the role which Mr Ryan intended to play in the

Exercise, the role which he in fact played was greater, and more influential, than that of an observer. In his report to the

Minister for Foreign Affairs on the Sheraton Hotel incident, which was prepared a few days later, he wrote that he 'agreed to

the exercise proceeding' on 26 November on the basis of the assurances he had received from P/EM about weapons and force.

Shortly after the 'brief back' on 30 November, he expressed disapproval to P/EM of that part of the team's plan which

proposed the use of force as an alternative method of entry to the hotel room and, thereby, implicitly authorised the rescue

plan which did not involve the use of force. It is clear that the combination of his actions on 26 and 30 November was to

authorise a training operation to be conducted in public, and in and around the Sheraton Hotel, during which concealed weapons

would be carried by trainees. This authorisation was given by Mr Ryan upon only the most basic information. He did not know, and

did not enquire, if the Victoria Police or the hotel manager had been notified of the Exercise. He did not know, and did not

enquire, if permission had been sought or obtained for the carriage of firearms in public places by the trainees. He did

not know, and did not enquire, about such things as how the trainees were to be equipped, where they would be located at

various stages of the Exercise, what tasks they would perform during the Exercise, whether any other agencies were to be

involved, what contingency plans had been developed, or what control or supervision of the trainees would be exercised during

the Exercise. Finally, he did not know, and did not enquire, if the Exercise had been cleared with either DDG or ADG or whether

they had any knowledge of it at all. Mr Ryan has, himself, conceded that he was ill-equipped to give instructions

42

...it was unusual for the Director General to be in this position. The Director General does not normally involve himself in this detail and I was therefore to some extent and remained ignorant of a number of detailed applications

in this sort of exercise.

I had never ever been to such a briefing before. I was not equipped to give instructions. I am no expert on Special Operations.

I still remain ignorant of some detail of the procedures in use in Special Operations training.

4.30 Once the Acting Director General had indicated to P/EM that he wished to be kept informed of the activities of the

Project, and had displayed an interest in the Exercise, certain obligations devolved upon him. First, he ought to have informed

P/EM's immediate superiors (DDG and ADG) of his interest and

involvement in the Exercise. This would have served to put them

on notice as to his role and have enabled him to co-ordinate

their relevant activities. It may have prevented a situation

arising in which a subordinate officer might have made an

assumption that, because the Director General was involved in the matter, the Exercise had been cleared. Further, as Mr Ryan had already identified problems in the 1 supervisory

responsibilities' of the Branch, such liaison with ADG and DDG may have helped alleviate these problems. Secondly, he ought to have directed P/EM to report, through the normal lines of authority, to his superior officers as if he, the Acting

Director General, were completely uninvolved. This would have

ensured that the skills and knowledge of ADG would have been

utilised, and it would have brought DDG1s considerable

experience and judgement into the picture. It appears, however,

that he mistakenly assumed that 1 those people in ASIS who were briefed on the Project1 knew of the Exercise. Thirdly, if for

some reason which I cannot at present contemplate, neither of

the first two courses appealed to him, Mr Ryan ought to have

accepted full responsibility for the supervision of all details

of the planning and management of the Exercise. This would have

entailed receiving briefings on the scenario, knowledge of the

types and quantities of weapons, ammunition and stores to be

43

used by the trainees, discussion on the notification of the

police, hotel management and other relevant authorities, and knowledge of contingency plans should something go wrong during

the Exercise. This third course would have been a most unorthodox and inappropriate way to handle business. As it

transpired, Mr Ryan approved the plan without having any of the

detailed knowledge which, in my view, was essential for an

informed approval to be given. It may be that had Mr Ryan been

informed that neither the police nor hotel management had been

notified, and that submachine guns would be carried, he may not

have approved the plan after the 'brief back1 at 3.00 p.m. on 30 November. In my opinion, notwithstanding his expressed reservations about the use of force, Mr Ryan's involvement in the exercise was a factor in the cause of the incident.

Responsibility of ADG

4.31 P/EM was directly responsible to ADG. However, as indicated in 4.17, ADG had only the most general knowledge of

the Exercise and, apart from a conversation with P/EM sometime

between mid-October and mid-November about the forthcoming

Project training course during which the Exercise was briefly

mentioned, the first detailed knowledge he had of the Exercise was after it had taken place. ADG has sought to explain his lack of knowledge and control of both P/EM's activities and the

Exercise on the bases that first, he was to be relieved of any responsibility for Special Operations when the new Directorate was formed and, secondly, he was aware that 'P/EM was in frequent contact with the Director General who took a direct

interest in the Project activities. Clearance with the Director General would, in my eyes, constitute proper authority for

P/EM.' i do not accept that his knowledge of P/EM's liaison with the Acting Director General absolved him of his own responsibilities for the Project, but the attitude he adopted highlights the difficulties which can occur when normal lines of

authority are not adhered to and an officer steps out of the chain of command. Mr Ryan also commented upon this when he said

that 'if you're running an organisation, normally you have to

44

run it through channels, and things are liable to get out of focus if in fact you don't do it through channels....' ADG

impressed me as a careful and responsible officer. Although it is impossible to know whether the errors which occurred in the

planning of the Exercise would have been avoided if he had been informed of the details, I am satisfied that he would have been

more alert to some of the dangers existing in the plan than either DDG or the Acting Director General. It appears that he

expected to be kept informed by P/EM, but took insufficient steps to ensure that his expectation was realised. He gave

evidence that he knew that ' there was a close direct liaison

between (P/EM) and the Director General on (the Project).... I

had told P/EM that I didn't mind that, providing he kept me informed of what went on because I didn't want any

surprises...'.The serious criticism which should be made of ADG's conduct is his failure to keep himself properly informed

of business in his branch, to follow up serious queries about the conduct of business, to rectify known deficiences in the

Project, and to supervise his junior officer closely.

4.32 It should be noted that, in evidence, ADG said that he would not have expected P/EM to have consulted him on all

details concerning the Exercise but only on matters 'which to my mind or to his mind or the mind of any officer includes

delicate, potentially delicate, aspects of any activity whatsoever... anything which looks as if it might require

clearance, or at least a policy decision, should be put up through the proper channels.' He went on to agree that 'anyone

being presented with the scenario for the Exercise would see it immediately as a very sensitive operation.' I agree with these

comments and repeat what I have said earlier that the nature of the exercise demanded that P/EM obtain prior informed approval

for all of its significant details.

Responsibility of PPG

4.33 ADG's comparative lack of knowledge of the Exercise is exceeded only by that of DDG, the present Acting Director

45

General. In this position he was responsible for the supervision

of the Branch of which the Project formed a part, and the

personnel of that Branch. Apart from glancing at the syllabus

for the Project training programme to be held between 11

November and 2 December 1983, which referred to the Exercise by

name only and a fleeting conversation with Mr Ryan late in the afternoon of 30 November, during which Mr Ryan told him that an

exercise was to be conducted in Melbourne that night, he had no knowledge of the Exercise. He was, until his conversation with

Mr Ryan, unaware of the involvement of the Acting Director General in the Exercise, although he would be entitled to assume

after that discussion that the Exercise had been approved. The training syllabus contained a reference to the Exercise but, as

previous exercises conducted by the Project had been, what he

called, 1 low-key affairs or had been borrowed from standard ASIS

training courses', the reference did not arouse his curiosity.

It is doubtful that Mr Ryan's mention of the Exercise late on 30

November would have allowed DDG sufficient time to review its planning and organisation.

4.34 DDG's evidence - and to a lesser extent, that of ADG -

raises a most difficult question: to what extent is there a responsibility cast upon a person in DDG's position to take steps to ensure that he is kept informed of the activities of

the Branch falling in his line of responsibility? Mr Ryan gave

eviaence that he would have expected both DDG and ADG to know

about the Exercise. When asked how he expected them to have

become aware, he replied -'....when you run a Branch which includes a section which is engaged in an exercise, or when you

run a Division that includes a Branch that includes a section running an exercise, in my book you're expected to know what's

going on.' He then agreed that it would have been appropriate for P/EM to have informed ADG and DDG of the Exercise, and also

for ADG and DDG to have sought information from P/EM. Bearing in

mind the security, sensitivity and problems of the Project as

discussed at the meetings on 4 and 8 November (both of which

were attended by DDG and ADG), DDG ought to have assumed a more

46

active role in the supervision of the Project and its activities and of its control by ADG. The Project had problems but was too

important to be allowed to drift along with inadequate control until 1 February 1984 , when the new Directorate was scheduled to

assume responsibility for the Project. If DDG had been more attentive to the Project, I am confident that the Exercise would

have come to his notice and, in all probability, the Sheraton

Hotel incident avoided.

Responsibility of H/EP

4.35 I turn now to consider the role of H/EP, who, although he

was destined to assume a more significant role in relation to

the Project after 1 February 1984, was, as at the date of the Exercise, limited in responsibility to the provision of

Australian Defence Force support and military advice. He was responsible to DDG. In 4.17 , 4.19 and 4.27 I have detailed the

full extent to which H/EP had knowledge of, or was involved in,

the Exercise. In essence, it was limited to him giving advice to

P/EM on the carriage of weapons and being present while P/EM

informed the Acting Director General of the scenario for the

Exercise on 26 November. It will be recalled that, some days before the Exercise began, P/EM sought H/EP1s opinion on the

carriage of weapons. H/EP advised him that if the weapons were concealed hand guns and not waved around indiscriminantly 'there

should be no problem1, but that he would have to get the

Director General1s approval. It appears that at no time before

the Exercise began did H/EP believe that weapons, other than

hand guns, would be used. He first saw a copy of the training

syllabus when he arrived with Mr Ryan at the ASIS training facility on 25 November.

4.36 The advice which H/EP gave P/EM concerning the use of hand guns was erroneous. He appears to have based his belief as to

the lawfulness of bearing concealed hand guns in public upon his military experience. He admits that he was unaware that ASIS

personnel were not permitted to carry firearms off Commonwealth property and conceded, in evidence, that 1 with hindsight now of

47

course, I am not the most appropriate person to talk to about

the carriage of weapons.' However, as H/EP was aware that his

function did not include any input into policy of the Project, or giving advice which could have been wrongfully interpreted as

authorisation for the carriage of weapons, he ought not to have given the advice he did, and should have referred P/EM to either ADG or DDG. H/EP must bear some of the responsibility for the carriage by the trainees of concealed weapons during the

Exercise.

Responsibility of the Army Instruction Team 4.37 I turn now to consider the responsibility of the three

members of the AIT - the Officer-in-Charge at the ASIS training facility (QIC) and two others whom I shall call the First and

Second NCO's.

4.38 QIC was initially requested by P/EM to provide one member of the AIT to assist with the formulation of the syllabus for

the Project training period to be conducted in November and early December 1983. The First NCO was allocated that task.

Subsequently, other members of the AIT were asked to conduct certain aspects of the training. However, as it now appears,

both the First and Second NCO's became increasingly involved in the conduct of the course and, particularly, the Exercise. They

variously assisted in some areas of administration of the course, assisted in the drafting of the Exercise, took

photographs of a farm at Ocean Grove, helped pack and transport weapons and equipment, supervised the trainees' security

procedures, attended meetings between P/EM and the Team Leader, and a meeting between P/EM, the Team Leader and Mr Ryan and, in

the case of the Second NCO, acted as a lookout in the foyer of the Sheraton Hotel during the actual rescue of the hostage. Most

tasks were performed at the request of P/EM and were carried out in, what OIC described as, 'a spirit of co-operation with ASIS

and in some instances to keep the exercise running.' I am satisfied that neither NCO's had been authorised by OIC to be

involved in such activities. OIC, it appears, was unaware of the

48

use that was being made of the members of the AIT. When it came

to his attention that the First NCO had been involved in the writing of the Exercise, he consulted first with H/EP, and then

raised the matter with P/EM. It appears that there may have been

a misunderstanding between P/EM and OIC as to the precise role

of the AIT for P/EM gave evidence that he believed that the

Team's role was to assist in the preparation of the Exercise and

help in its running when it began. I accept that this was his belief although it was not in accordance with the orders the

Army had given to the team. It is an example of the failure to give emphatic and explicit instructions about the limits to

P/EM's authority. Nevertheless, both NCO's were subsequently instructed by OIC to limit their involvement in the Exercise to

maintaining a 'static location'. I have no doubt that thereafter they understood the limits of their involvement in the exercise,

for as the Second NCO said in evidence, although he knew that

his role was one of 'providing advice on any military aspects of

the exercise' and it was not part of his duty to write operational orders or perform duties for P/EM, 'I was supposedly

going to be stuck in a motel or a hotel and I think basically I was asked to get out of the hotel and I agreed to go to get out

of the place. There was no cricket on.'

4.39 In my opinion, both NCO's exceeded their authority in

becoming involved in the Exercise in the mannner I have already

indicated. This involvement was in contravention of both the

specific orders of OIC and the specific orders under which

members of the AIT were to operate.

Responsibility of Trainees 4.40 I shall now consider the responsibility of the ASIS

trainees. I have already indicated my views about the content of the training programme which the trainees underwent at the ASIS

training facility. The programme's emphasis on aggression,

together with the issuing of a warning order which impliedly

authorised the use of force by merely limiting the trainees to

effecting the rescue of the hostage by use of the 'minimum force

49

necessary1, undoubtedly encouraged the formulation of a rescue

plan by the Team Leader which contained some proposal involving force. For the same reasons the other five trainees in the team,

whom the Team Leader consulted about the plan which he had the responsibility for formulating, readily accepted the inclusion

in the plan of the proposal for the use of force.

4.41 When the Team Leader presented his plan at the meeting in

the Fitzroy Gardens at 3.00pm on 30 November, it probably came

as no surprise to P/EM for, as noted earlier, at a meeting at

9.00 a.m. on the same day, he had been asked by the Team Leader

to supply certain equipment for possible use in the rescue. The

list included machine guns, pistols, balaclavas, a waiter's uniform, a sledgehammer, a jemmy and masks. Although the plan

troubled Mr Ryan (see 4.19), it is clear from the evidence that, when the Team Leader left the 3.00 p.m. meeting, he believed

that his plan had been approved not only by the Head of the Project but, also, by the Acting Director General of ASIS. It is

my view that he was justified in that belief for although P/EM

after conferring briefly with Mr Ryan out of the Team Leader's

earshot returned to the Team Leader to inform him that the Director General was 'a bit concerned' about the use of force or the breaking of the hotel door and said 'let common sense prevail', he nevertheless informed the Team Leader that the plan

had been approved and did not veto the use of force. I am also quite certain that the other members of the team justifiably

believed that the Team Leader's plan, including that part of it

which included the breaking open of the hotel door by force, had

been approved. As regards the Team Leader there is to be coupled

with his justified belief as to approval my earlier finding (see

4.21) that P/EM was visible to the Team Leader on the tenth

floor of the hotel before any damage was done to the hotel door and was in a position to prevent that damage.

4.42 The trainees had been instructed to conduct the Exercise

in a manner vzhich imparted as much realism as possible into its execution (see 4.9). Their previous experience outside ASIS and

50

their training in the Project led them to accept unguest.ioninoly what their instructions were, and they obeyed the instruction as

to realism to the letter. The planning and execution of the plan for the rescue of the hostage proceeded with a single-minded

determination. The conduct of the ASIS trainees leads me to conclude that, because of their association with ASIS, their

background experience and their involvement in the exercise, the apparent approval of the Exercise, and their carrying of Defence

cards, they believed that they were authorised to carry weapons in a Melbourne hotel and other places and to break down the door

of the hotel room in which the hostage was held if this was necessary to carry out the Exercise successfully.

4.43 Although this conclusion may not affect legal liability, whether civil or criminal, the trainees were justified in believing that they were authorised to carry weapons in the

hotel, and outside the hotel after having rescued the hostage. They could reasonably assume that they would not have been

authorised by ASIS to carry the weapons if the law prohibited it. The trainees had no responsibility (in the sense I am

considering it) for the mere carrying of the weapons. As will appear, the justification does not extend to the use of the

weapons, by display or otherwise, against persons not involved

in the Exercise, even though the trainees thought that this was,

or might be, necessary for the success of some part of their mission.

4.44 The responsibility of the trainees for the use of force to open the hotel room door depends upon whether it was reasonable

for them assume (as they did) that if that action had been approved by ASIS, the consent of the Hotel Manager must have been obtained, for, without that consent, the battering open of

the door was probably illegal. Although there is a conflict in the evidence, I am satisfied that contact with, and the use of,

hotel staff by the trainees during the Exercise had been proscribed. As well as precluding the trainees from gaining

access to the room by asking or bribing a hotel employee to open

51

the door or to provide a key to the lock, this proscription

precluded them from asking staff if the hotel management had been advised of and had consented to the operation. Effectively

the only person who could tell the trainees whether that consent had been obtained was P/EM. Neither the Team Leader nor any

other trainee asked anyone whether that consent had been

obtained. Of the trainees, the only person in a position to

question P/EM on the matter was the Team Leader. He was undoubtedly entitled to believe that his plan, including the

option to force the door open, had been approved. Nevertheless, although primary responsibility for not vetoing the proposal to

use force rests with P/EM, I have concluded that the statement by P/EM on the occasion when the approval was given as to the

Acting Director General1s reservations about the use of force and the reference to common sense should have induced the Team

Leader to have sought clarification of the approval or an assurance that the apparent illegality of this action had been

removed by the hotel management's consent. I appreciate that the whole background of his experience and training, including his

training with ASIS, disinclined the Team Leader to question any direction given to him in relation to the Exercise. His actions

illustrate the point made in 3.20 about the deficiencies in the recruitment of trainees. Nonetheless, since he was the Team

Leader and he was involving not only himself but the other

trainees in the carrying out of the plan, I have concluded that

he must bear some blame in the matter. I emphasise that I am

here dealing with his responsibility within the ASIS structure.

It may be that different considerations apply when considering criminal liability. The position of the other trainees is different. They knew of no reservation expressed by the Acting Director General as to the use of force or the reference to common sense by P/EM. They were not in a position to raise these matters with P/EM. They knew only that what was in fact done had

been approved. I have concluded that they bear no responsibility for this action.

52

4.45 Apart from the attack upon the door, the trainees used

force, or a show of force, against persons not involved in the

Exercise. This happened on two occasions. The first was when the Hotel Manager appeared on the tenth floor in a lift. The Team

Leader saw him and decided that he would take him into

'protection'. He said to 1 Come with me, you're not going to be hurt, but come with me'. When the Manager retreated back into

the lift the Team Leader (who was masked but not armed) followed him to give effect to his decision but was frustrated by the

lift door closing and the lift descending to the ground floor.

There was jostling in the lift, each trying at times to hold the

other. The Team Leader kept saying to the Manager that he was not going to harm him. As previously described, the Manager

escaped on the ground floor and the Team Leader returned to the

tenth floor. The decision of the Team Leader to take the Hotel

Manager into 'protection', and his actions in attempting to do

so, were quite unjustified. I do not consider that the action

was within the scope of the approval he had obtained, or that

the Team Leader could reasonably have thought that it was. He

said in evidence that he regarded himself as having authority to call off the Exercise at any time. Once a member of the public

had intruded into the Exercise in circumstances in which the Team Leader considered that he would have forcibly to restrain

that person for the sake of the success of the Exercise, he should have aborted the Exercise. Here again, although he did

not see the incident, the primary responsibility is that of P/EM for not having required the planning to cover such a

contingency, and for not having expressly vetoed the use of any

force against outsiders. Nonetheless the act was that of the

Team Leader, and he must share the responsibility for it. His

experience and training and his involvement in the realism of

the Exercise, and his unverified belief that the Manager was probably involved in the exercise in an acting role, provide

mitigating circumstances, but do not exculpate him.

4.46 The second occasion, which is of considerable concern, was

the use which was made of their weapons by three of the trainees

53

when they arrived in a lift at the ground floor in the course oJ

taking John from the hotel. I have already dealt with this

matter in 4.11 - 4.12. Attempts have been made to justify the

use of the weapons on the basis that the trainees believed that

the Hotel Manager was acting a role in the Exercise, and that the staff had been briefed and were also taking part. It was

also submitted on behalf of some of the trainees that the Hotel Manager, by carrying the night-stick and taking up an attacking

pose outside the lift door 'precipitated the reasonable reactions of the trainees to such an attack, i.e. the reflex

pointing of a weapon for a very short period of time and the showing of weapons to the kitchen staff ...' I cannot accept

either the attempted justification of the trainees' use of the weapons, or the submission put on their behalf. P/EM must bear a

significant responsibility for this action because of his failure to instruct the trainees that under no circumstances

were the firearms to be displayed to or used against members of the public. The three trainees must otherwise bear the

responsibility for this use of the firearms.

Responsibility of John and the 'Foreign Intelligence Officers' 4.47 Finally, I shall consider the degree of responsibility of

John and the 1 foreign intelligence' guards. Until John was rescued from his captors, he, and the two guards, played a

passive role in the developing exercise. They had been issued with 'briefs' directing them how to behave and respond in the

various situations in which they might find themselves. As with the trainees, they were encouraged to make the Exercise as

realistic as possible - even if this meant, as it did, that it would be difficult to gain entry to their rooms by means of a

subterfuge. However, I note in passing that both the guards believed that the rescue would be effected by means of a trick

rather than force. Upon rescue, John was instructed to feign being in'a drugged state. So realistic was his 1 performance ’

that one of the rescuers actually believed that he had been drugged. As the guards were handcuffed by the trainees after

being overpowered, they were not involved in any subsequent

54

activities involving either members of the hotel staff or the

police. John, acting as though drugged, continued to play a

passive role in the Exercise. However, his position is

complicated by the fact that he was in the car which was apprehended by the police a short distance from the hotel. In

the same car, police located one submachine gun, the sledgehammer, the jemmy, four plastic masks and variety of other

equipment used during the exercise. There is no evidence which suggests that John knew that any of this equipment was in the

car in which he had been placed by his rescuers.

4.48 The ASIS staff members who played the roles of the 1 foreign intelligence officers' and John acted reasonably and

effectively in those roles. Both guards gave evidence that they believed that the hotel management had been informed of the

exercise and, in my opinion, none bears any responsibility for what actually occurred during the exercise.

Liquor

4.49 I should add one final point. In the publicity which followed immediately after the incident, there was some

suggestion that drunkenness was involved. There is no evidence to support this. On the contrary, except for one, none of the

trainees had had any liquor from the Friday preceding the incident in some cases and the Saturday in others until after

the incident which occurred on the following Wednesday night.

The exception was that one trainee drank two glasses of white

wine at lunch over a long period in the Hotel restaurant to give him a reason for being there as a cover for surveillance duties.

Although John and the two 1 foreign intelligence officers' had consumed about $70 worth of liquor over the 3 day duration of

their stay in the hotel, this was not regarded by hotel management as excessive.

55

CHAPTER 5

OFFENCES

5.1 In his letter to me of 7 December 1983, the Prime Minister asked me to explore 'whether any breach of the law was committed by anyone carrying out or authorising the exercise1. I do not

understand the Prime Minister's request to require me to make findings that a particular person involved in the Exercise,

whether in its execution or authorisation, committed a particular offence. As most, if not all, of the offences which

may have been committed involve breaches of Victorian law, in my opinion it would be oppressive for me to make specific findings

about an individual's possible breach of State criminal law and provide those findings to the Federal Government which would not

be involved in any prosecution process. Accordingly, I shall restrict my examination of possible breaches of the law to

identifying those statutory provisions which seem to be applicable in the present circumstances. I do not in this

Chapter deal with any mitigating circumstances which it may be relevant to consider if any offences were committed. To the

extent that they exist, they may be found elsewhere in this Report.

5.2 The Prime Minister has asked that I examine whether

offences were committed by anyone 'carrying out or authorising the exercise.' I have already dealt with the question of the

general responsibility of certain persons within ASIS, and on secondment to ASIS, for their roles in, or lack of control of,

the Exercise. It is my view, however, that neither DDG, ADG, H/EP nor QIC, at any time, had sufficient knowledge or

involvement in the Exercise to render them liable under criminal law, or to bring them within the phraseology of the Prime Minister's letter.

56

5.3 It should be said at the outset that Australian law does

not recognise as a legitimate defence the claim that 'I was

merely following orders.1 It was submitted to me that where a

person acting under superior orders succeeds in establishing that he honestly believed the order to be lawful when it was

unlawful, he is entitled to rely upon the defence that he was 1 following orders. 1 To the extent that the submission urges me

to find that obedience to superior orders is a defence, I reject it. However, the submission also raises the complex question of the extent to which the absence of mens rea - criminal intent - may be a defence to statutory offences. This Royal Commission is

not the appropriate place to attempt a statement of the law relating to mens rea in statutory offences, and I limit myself

at this point to observing that the absence of mens rea may, in certain cricumstances, provide a complete defence to statutory

offences. I express no view on whether it is available as a

defence to any of the statutory provisions with which I shall deal.

5.4 The applicability of State law to members of Commonwealth Defence Forces was definitively determined by the High Court of

Australia in 1925 in Pirrie v WcFarlane (1925) 36 C.L.R.170. In that case, the High Court held that, in the absence of any

provision in a Commonwealth law giving members of the defence

forces immunmity from State laws, a member of the defence forces

is obliged to comply with State law. This was held to be so even when the actions of the serviceman, which were contrary to State

law, were performed pursuant to superior orders which he was bound to obey. I have no doubt that the decision in Pirrie v

McFarlane is equally applicable to ASIS officers and individuals who are contracted to work for ASIS. Accordingly, in the absence

of specific statutory exemptions, I find that all persons who either took part in, or authorised, the Exercise were obliged to comply with Victorian law.

5.5 I turn first to consider the Firearms Act 1958. All

statutes unless otherwise indicated, are Victorian. Section 3

57

of the Act, the definition section, contains definitions of

'firearm1, 'machine gun1 and 'pistol1 which would cover the weapons used during the exercise in the condition in which they were used - namely, although loaded with plastic cartridges,

would otherwise be capable of discharging a shot, bullet or

other missile. 'Possession' in relation to any firearm or

prohibited weapon is defined as including 'as well as the actual

physical possession thereof, the custody or control thereof or

the having and exercising access thereto either solely or in

common with others.' The following appear to me to be the

relevant provisions of the Firearms Act 1958:

S.22. (1) Subject to the provisions of this Act no person shall purchase have in posession or carry a pistol unless he holds a pistol licence or other authority authorising him so to do granted under this Part and in force at the time.

S.26 (1) No offence against any provision of this Part shall be deemed to be committed -(a) in the case of any person actually serving as a member of the naval military or air forces of Her

Majesty or of the Commonwealth -(i) by having in his possession during his service as such a member; or

(ii) by carrying whilst actually on duty as such a member or whilst going to or returning from such duty -a firearm the property of Her Majesty or of the Commonwealth

issued to him in consequence of such service.

S.29E (1) Any person who carries a loaded firearm -(a) in a town or populous place;

shall be guilty of an offence and liable to a penalty of not more than $100 or to imprisonment for a term of not more than two months.

S.32. (3) It shall not be lawful for any person, except with the authority of Her Majesty or the Governor in Council or in pursuance of a direction authority or duty duly given to or imposed upon him in connexion with the naval military or

air forces of the Commonwealth to bring any machine gun into Victoria or being in Victoria to cause any machine gun to be brought or sent into Victoria, or to manufacture sell purchase carry or have in his possession any machine gun,

58

and every machine gun shall for the purpose of this Act be deemed to be a prohibited weapon.

(4) Any person who contravenes any provision of the last preceding sub-section shall be guilty of an indictable offence and shall be liable -(a) for a first offence to be imprisoned for a term of

not less than one year and not more than two years.

S .34. (1) A person shall not manufacture have in his possession sell purchase or use a silencer whether attached to a firearm or not.

(2) In this section 1 silencer1 means any instrument or thing by means of which the sound caused by the discharge of a firearm is rendered less audible, whether such instrument or thing forms part of the firearm or is or can be affixed

or attached thereto.

(3) Any persons who contravenes any provision of this section shall be guilty of an offence and shall be liable to a penalty of not more than $100 or to imprisonment for a term of not more than six months or to both such penalty and

imprisonment.

5.6 It will be noted that s .26 (1) (a) and s.3 2 (3) provide exclusions in the case of persons who are members of the 'naval

military or air forces' of the Commonwealth. These exemptions

may be relevant to the position of the First and Second NCO1s to the extent that they were involved with the weapons which were

used during the exercise. However, s.30 and s.31 of the Defence

Act 1903-1973 (Commonwealth legislation) seem to preclude members of ASIS and the trainees from falling within the definition of 'military forces.' Further, it would seem that

Regulation 201(1) of the Australian Military Regulations may

operate to exempt Army personnel from the operation of State laws in relation to the need to be licensed, or to obtain

permission, for carriage of firearms only where the member is

carrying the firearms 'in performance of his duties as a member of the Army' (R.201(1)).

59

5.7 It has been submitted that the ASIS trainees and P/EM may

be exempt from compliance with various sections of the Firearms

Act 1958 by reason of the possible application of Section 117A

of the Defence Act 1903-1973. That section provides that:

A person, not being a member of the Defence Force, who accompanies any part of the Military Forces, whether within or beyond Australia, shall be subject to this Act as if he were a member of the Military Forces in the following manner:-

(a) if he accompanies the Military Forces by order of the Governor-General or the Minister in an official capacity equivalent to that of an officer or if he holds a pass from the officer commanding the part of the Military Forces to which he is attached, entitling him to be treated on the footing of an officer - as an officer;

(b) in all other cases - as a soldier.

Without deciding the matter, it seems to me that there are two main problems with the submission. First, I doubt that it could

be successfully argued that P/EM or any of the trainees were

accompanying 'any part of the Military Forces' at any relevant

time. Secondly, the section appears to do no more than deem

someone 'who accompanies any part of the Military Forces' an

officer or soldier for the purpose of making that person subject to the Defence Act. I doubt that it is relevant in the present circumstances.

5.8 The ASIS training facility is Commonwealth property. It remains, nonetheless, part of the State of Victoria. This may be

relevant to the application of s.32(3) of the Firearms Act 1958 which deals with the bringing and sending of machine guns into

Victoria.

5.9 I turn now to consider the relevant provisions of the Crimes Act 1958. S

S .37.· Whosoever is convicted of any assault occasioning actual bodily harm, shall be guilty of an indictable offence, and shall be liable to imprisonment for a term of not more than five years; and whosoever is convicted upon

60

presentment or indictment for a common assault shall be liable to imprisonment for a term of not more than two years.

5.76. (1) A person is guilty of burglary if he enters any building or part of a building as a trespasser with intent -(b) to commit an offence -(i) involving an assault to a person in the

building or part in question; or

(ii) involving any damage to the building or to property in the building or part in question -which is punishable with imprisonment for a term of five years or more.

(3) A person guilty of burglary is guilty of an indictable offence ana liable to imprisonment for a term not exceeding fourteen years.

5.77. (1) A person is guilty of aggravated burglary if he commits any burglary and at the time has with him any firearm or imitation firearm, any offensive weapon, or any

explosive or imitation explosive...

(2) A person guilty of aggravated burglary is guilty of an indictable offence ana liable to imprisonment for a term not exceeding twenty years.

S.91. (1) A person shall be guilty of an offence if, when not at his place of abode, he has with him any article for use in the course of or in connexion with any burglary, theft or cheat.

(2) A person guilty of an offence under this section shall be liable to imprisonment for a term not exceeding three years.

S.197.(1) A person who intentionally and without lawful excuse destroys or damages any property belonging to another or to himself and another shall be guilty of an indictable offence and liable to imprisonment for a term of not more

than ten years.

S.199. A person who has anything in his custody or under his control -(a) with the purpose of using it, or causing or permitting another to use it, without lawful

excuse - ( i )

(i) to destroy or damage any property belonging to some other person or to himself, the user or both of them and some other person;. . .

61

shall be guilty of an indictable offence and liable to imprisonment for a term of not more than ten years.

5.10 Section 197(1) and s.199(a)(i) provide that the conduct alleged to constitute offences by those provisions is punishable

only in the absence of a 1 lawful excuse' for such conduct. Section 201 of the Crimes Act 1958 stipulates circumstances in

which an accused shall be treated as having a lawful excuse.

From the wording of the section, it would appear that it is not

intended as an exclusive statement of what constitutes 1 lawful excuse1. The only part of the section which appears to be

relevant in the present circumstances is that which treats an accused person as having a lawful excuse if, at the time of the

conduct alleged to constitute the offence, he believed 1 that the person or persons whom be believed to be entitled to consent to

the destruction or damage in question had so consented or would have so consented if he or they had known the circumstances of

the destruction or damage.1 For the purposes of s.201, 'it is immaterial whether the belief is justified if it is honestly

held' (sub-s.(4)). It is not part of my function to predict the likely success of a defence to a prosecution under any of the

provisions which I have been considering, and I refrain from so doing. I merely indicate that s.201, together with other common

law defences such as absence of mens rea (based upon a belief that the conduct complained of was permitted when engaged upon

an authorised quasi-military training operation) - if, in fact, the defence is available in these statutory offences - ought to be borne in mind when considering the degrees of culpability of persons who took part in the Exercise.

5.11 Before completing my examination of the Crimes Act 1958, I

want to make reference to the provisions of s.323 and s.324.

Both sections provide for the punishment of persons who aid,

abet, counsel or procure the commission of either indictable offences .or offences punishable on summary conviction as

62

principal offenders. These sections, together with s.325 which

provides for the punishment of 'accessories after the fact1 , may be relevant to the positions of the ASIS officers who planned or

authorised the Exercise.

5.12 The Summary Offences Act 1966 and the Vagrancy Act 1966

both contain relevant provisions.

SUMMARY OFFENCES ACT 1966

S.9 (1) Any person who -(c) wilfully injures or damages any property (whether private or public) the injury done being under the value of $500;

shall be guilty of an offence. Penalty: 25 penalty units or 6 months.

S.17 (1) Any person who in or near a public place or within the view or hearing of any person being or passing therein or thereon -(d) behaves in a riotous indecent offensive or

insulting manner -shall be guilty of an offence. Penalty: $1,000 or 2 months

(S.3 1 Public place1 includes and applies to -(o) any open place to which the public whether upon or without payment for admittance have or are permitted to have access;

(n) any place of public resort;)

S .23 Any person who unlawfully assaults or beats another person shall be guilty of an offence. Penalty: 15 units or 3 months.

S.24(2) Any person who in company with any other person or persons assaults another person shall be liable to imprisonment for 12 months and any person who by kicking or with any weapon or instrument whatsoever assaults another

person shall be liable to imprisonment for 2 years.

63

VAGRANCY ACT 1966

S.6 (1) Any person who -(e) is found armed with an offensive weapon or instrument unless such person gives to the court a valid and satisfactory reason for his so being

armed;

(f) has on or about his person without lawful excuse (the proof of which excuse shall be on such person) any deleterious drug or any article of disguise shall be guilty of an offence. Penalty: 1 year.

S . 7 (1) Any person who -(g) has in his custody or possession without lawful excuse (the proof of which such excuse shall be upon such person) any picklock-key iron jack or

bit or other instrument of housebreaking;

(h) is found disguised or has his face blackened with an unlawful intent;

(i) is found without lawful excuse (the proof of which excuse shall on such person) in or upon or within the precincts of a building or structure.... shall be guilty of an offence. Penalty: 2 years.

S.8 Any person who

(a) is armed with criminal intent, with a firearm or an imitation firearm within the meaninct of section 36 of the Crimes Act 1958 or any offensive weapon or instrument... shall be guilty of an offence. Penalty: 3 years.

5.13 These provisions are self-explanatory. A number of them contain a statutory defence permitting conduct which would

otherwise be proscribed, where there is a lawful excuse for such

conduct or the person charged gives to court a valid and

satisfactory reason. I refer to my earlier comments on such defences (see 5.3 and 5.10).

64

5.14 The evidence of the Manager of the Sheraton Hotel suggests that the damage to the hotel did not exceed $500.

Accordingly, s.9(1)(c) of the Summary Offences Act 1966 may be applicable to the damage done to the hotel room door.

5.15 The Motor Car Act 1958 contains one relevant section.

S.29 (1) Any person driving a motor car upon any highway shall when requested so to do by a member of the police force produce his permit or licence to drive a motor car for inspection and state his name and address.

(2) If such a person fails to produce his permit or licence or refuses to state his name and address or states a false name or address he is guilty of an offence against this Act.

Penalty: 5 units or 1 month.

5.16 There are three possible common law offences which may have been committed. First, common assault - any act which

intentionally causes another to apprehend immediate and unlawful violence. Secondly, affray - an unlawful skirmish or fight by one or more persons in which a weapon is drawn or a stroke given

or offered, or a display of force by one or more persons without

actual violence in such a manner that is calculated to frighten

or intimidate people of reasonably firm character. The offence

is concerned with the effect of the violence on persons who are not direct victims of that violence. Thirdly, conspiracy - the

agreement of two or more persons to do an unlawful act, or to do a lawful act by unlawful means. An indictment for conspiracy

will lie if it alleges an intention to do an act or acts which would have consequences which would be criminal by the law of

Victoria. The significance of the offence in the present case is that it may have the effect of implicating persons, other than

the actual participants in the raid, in criminal conduct. However, as there are considerable evidentiary problems relating

to the precise knowledge of certain persons other than the principal participants, I make no specific finding on whether

the offence of conspiracy is, in fact, appropriate in the present circumstances.

65

5.17 The following is a list of the areas in which one or more

of the offences to which I have referred in 5.5 to 5.16 may have been committed.

(a) Planning and approving an exercise during which firearms

would be carried by persons not authorised to carry them

(b) Carrying, whether concealed or otherwise, the pistols,

submachine guns and silencers in Victoria.

(c) Possessing and conveying the jemmy, sledgehammer and masks.

(d) Wearing the masks.

(e) Entering, and being found in, the Sheraton Hotel (bearing in mind the purpose for which the entry was made).

(f) Keeping a lookout in the foyer of the Sheraton Hotel.

(g) Breaking the door to the room in the Sheraton Hotel.

(h) Touching and grappling with the Hotel Manager when he

commenced to get out of the lift on the tenth floor of the hotel, and continuing to touch, hold or grapple with him as the lift descended.

(i) Displaying the firearms to the persons congregated outside the lifts on the ground floor, and the staff in the kitchen.

(j) Behaving in a manner which caused affright to onlookers.

(k) Failing to state a correct name and address to a member

of the police force when the getaway vehicle was apprehended (this would only be applicable to the driver of the vehicle).

(l) Any person who assisted, organised or approved of any of

the conduct which may be found to have been unlawful, may also have committed criminal offences.

5.18 It was submitted on behalf of the Commonwealth of

Australia and the Minister for Foreign Affairs that as 'the

persons responsible for such breaches of State law as may have

been committed in the course of or in relation to the exercise neither intended to commit such breaches as breaches nor

66

committed such breaches for their own purposes but rather in

accordance with the directions given them by persons whom they

reasonably believed to be authorised to give such directions, no good purpose would be served by the prosecution of the persons. 1 I express no view on this submission, but it is appropriate to state that -

(a) I make no finding that any person has committed any offence; and

(b) I make no recommendation that any person ought to be

prosecuted for having possibly committed offences.

As I said earlier in this Chapter (see 5.1), I do not regard it as either part of my Terms of Reference or appropriate to make

such findings or recommendations.

67

CHAPTER 6

RECOMMENDATIONS

General

6.1 In his letter to me of 7 December 1983 (see Appendix III) the Prime Minister asked me to inquire into all aspects of the

exercise which led to the incident at the Sheraton Hotel and also to give particular attention to the appropriateness and

effectiveness of ASIS training in the special operations field

as well as other fields of its training activities. In

accordance with the Prime Minister's request that I should give the highest priority to the matters relating to the Exercise

itself, early in the hearings I advised Counsel present that th hearings would be concerned with the circumstances surrounding

that incident alone. My present Report does not go beyond that. I shall, however, be reporting on the broader aspects of ASIS

special operations, including the Project, in my wider Report.

6.2 Although I have made findings about the responsibility of ASIS officers and others, I do not consider it appropriate to

make recommendations as to what disciplinary or other action, ii any, should be taken in respect of them.

6.3 I have concluded that the Exercise was poorly planned,

poorly supervised, and poorly run. The reasons for this finding will be apparent from the chronology of the incident. The

chapters on the Exercise and on Special Operations suggest some measures which should be taken to preclude any recurrence of an

incident like that at the Sheraton Hotel. I do not propose to include all those measures in the recommendations which I now

make, but I do not intend thereby to imply that those measures should not be taken. My recommendations will be directed to the

more important measures which I consider should be taken.

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6.4 I recommend that:

(a) no ASIS officer, trainee or agent be permitted to carry

any type of firearms in any public place in Australia;

(b) no ASIS exercise, conducted outside ASIS' own facilities, which may attract the attention of the

police or members of the public, should be undertaken without clearance from the police, from the local

military district (if exercise cards provided by Defence authorities are carried) and from any private citizen

whose property may be affected or who may become in some way involved in the exercise;

(c) no exercise should be conducted by ASIS which would harm

or alarm members of the public, and ASIS trainees should be so instructed;

(d) comprehensive plans for any exercise which takes

trainees away from any ASIS training establishment must be cleared in writing by an ASIS Deputy Director

General, at least one month before the exercise is scheduled to begin;

(e) the approved plans should contain all appropriate

contingency plans;

(f) ASIS training manuals should be amended or completed as a matter of urgency to incorporate the above

recommendations; and

(g) all requirements in ASIS training manuals should be complied with by ASIS trainees and supervisors in the

carrying out of any exercise, and failure to do so should be regarded as a serious breach of discipline.

69

Publication

6.5 Since this Report is concerned with ASIS' special operations and training for that purpose, matters heretofor

treated as Top Secret, I propose to recommend that no part of

this Report should be published otherwise than to the Prime

Minister and to such other persons or in such manner as he shal

direct. No doubt the Prime Minister will bear in mind that

findings are made about the acts and responsibility of persons

participating or otherwise involved in the incident, and that

they would expect to know what those findings are and the

reasons for them. There may be considerations other than that oi

national security which ought to be considered in deciding whether the Report or any parts of it ought to be published. The weighing of such considerations is a matter for the Prime Minister and not for me.

6.6 Special problems arise in relation to the disclosure of the

names of the persons involved in the Sheraton Hotel incident

which are the subject of additional considerations. During the course of my inquiry the Department of Foreign Affairs provided

me with a statement about the consequences for foreign relations

and national security of disclosure of the names. These are

summarised in Appendix VI. I am satisfied by the material in that statement that the disclosure of the names would be likely

to have the consequences claimed by the Department.

6.7 In my opinion, these considerations are sufficient to

warrant my recommending, as I do, that the names be not

disclosed. In making this recommendation I am mindful, however,

that the question of whether there are legitimate counterveiling considerations may come before the High Court for decision. I do not regard it as any part of my function to attempt to resolve that issue.

70

APPENDIX I

EXTRACT FROM THE TERMS OF REFERENCE OF THE

ROYAL COMMISSION

NOW THEREFORE We do by these Our Letters Patent issued in Our name by Our Governor-General of the Commonwealth of Australia on

the advice of the Federal Executive Council and in pursuance of the Constitution of the Commonwealth of Australia, the Royal

Commissions Act 1902 and other enabling powers, appoint you to

be a Commissioner to inquire into, and in relation to

(a) the activities of the agencies, especially since the completion of the inquiry made by the Royal Commission

appointed on 21 August 1984 to inquire into matters relating to the intelligence and security services of

the Australian Government (hereinafter called the Royal Commission on Intelligence and Security), with particular reference to -(i) the progress made in implementing Government

decisions on the recommendations of the Royal Commission on Intelligence and Security and of the

Protective Security Review; (ii) whether the agencies have efficiently, effectively

and properly served the interests of the Australian people and Government, including

whether effective arrangements exist for the establishment of policies and priorities, for the

co-ordination of their activities and for the oversight of their work;

(iii) whether any changes in existing law and practices are required or desirable -(A) to ensure that the agencies are properly

accountable to Ministers and the Parliament;

(B) in relation to keeping the Leader of the Opposition informed on matters relating to

security and intelligence;

71

(C) to provide for proper safeguarding, including

safeguarding against unauthorised publication

of intelligence, including information

provided by foreign governments in confidence

(iv) whether there is adequate provision for effective redress for any persons who may be unjustifiably

disadvantaged by actions of the agencies; (v) whether existing law enables effective oversight by the Auditor-General of the Australian Security Intelligence Organization and the Australian

Secret Intelligence Service in financial matters.

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APPENDIX II

HOUSE OF REPRESENTATIVES DAILY HANSARD

1 December 1983

Page 3162

Mr HAYDEN - The following comments, which would have comprised a

short statement to the Parliament later, will adequately respond

to the honourable member's question. If he seeks further information which I can supply at this point, of course I will respond. Honourable members will be aware that last night a particularly nasty and, as far as I am concerned, intolerable

incident occurred at the Sheraton Hotel, Melbourne. That incident arose from an Australian Secret Intelligence Service training exercise. I should make clear from the start that that

incident took place without my knowledge, without my authority,

and certainly without my consent. This applies to all other

members of the Government. I have promptly put in train action to have a high-level investigation conducted into all aspects of this matter. I will come back to that point in a few seconds.

The scenario for the exercise I refer to entailed the lodging at

the Sheraton Hotel of a 'hostage1 under guard by two supposed

strong armed men. The trainees in question had been instructed

to rescue the supposed agent and take him to safe custody,

meanwhile neutralising the two supposed guards. The emphasis of

the exercise was the use of deception and subterfuge to gain

control of the supposed hostage. Instead, the trainees chose a

violent attack on the room of the hotel in which the supposed hostage was held under guard. There followed involvement of the trainees with the hotel management and guests at the hotel,

including use of force on the part of the trainees. It is clear to me that the exercise was either poorly conceived, poorly put into operation, or both. The trainees were not authorised to

73

use, and should not have used, force or pretended force against

hotel property, members of the public or hotel staff.

The explanation provided by the Director-General of ASIS shows

that no prior arrangements were made with the Victoria Police c the hotel management. I believe that the exercise should not have been conducted without such arrangements being in place with the approval and full knowledge of those two authorities,

have expressed in the clearest terms imaginable my extreme condemnation of the exercise to the Director-General of ASIS. I

make no excuses for - in fact I have only the sternest condemnation of the conduct of the exercise to the point of the

hotel manager's intervention. Nonetheless, at that point of intervention this unjustifiable behaviour should have ceased.

Certainly the hotel management staff or bystanders should not have become involved in the exercise and the trainees should

have desisted from further participation and asked for the police to be called. The Victoria Police were called to the

scene of the incident last night and subsequently arrested several of the trainees, who were later released after

questioning. I

I have been in contact with the Victorian Premier, Mr John Cain, and have apologised about this incident. I continue to maintain

contact with him on this matter. T have been in contact with the New South Wales Premier, Mr Neville Wran, to seek approval for

an immediate and full investigation to be conducted into this matter by Mr Justice Hope, who is currently conducting the Royal

Commission on Australia's Security and Intelligence Agencies.

The New South Wales Government has given its approval for Mr

Justice Hope to conduct that inquiry. Mr Justice Hope has been contacted and has undertaken to commence investigation into this

matter promptly, and tomorrow the first initiatives of that investigation will be under way. I hope for an early report on

the matter, and of course, bearing in mind any obligations about classified security matters which might come up, the report will

be made available to the Parliament. Justice Hope has been asked

74

to explore all aspects of this exercise, including the way in

which it was prepared and developed, the manner in which it was

put into operation, the general conduct of all people associated

with it, and whether any person exceeded his proper authority in

relation to this matter. It is my understanding that the current

terms of reference for the Royal Commission which Mr Justice

Hope is conducting are sufficient to allow him to conduct this

inquiry. Justice Hope has ensured that this inquriy will be dealt with with the greatest dispatch.

In a more general way, I have instructed that the whole question

of ASIS training be reviewed without delay. Quite clearly, specific guidelines need to be drawn up laying down firm rules,

including a requirement for prior consultation with other authorities or other people likely to become involved in or have

some proper concern about particular training projects. The matter of firearms, which the trainees were carrying during last

night's exercise but without live ammunition, will also be attended to. On a more substantial level, Mr Justice Hope has also been asked, as part of the more extensive inquiry he is conducting into ASIS also to consider those matters. I should

point out that apart from not being aware of this exercise and

my approval not having been sought and certainly not being

provided, I have also established today that there has been no

other such exercise during the time that I have been Foreign Minister.

Let me conclude by saying that the Government regards last night's incident as thoroughly inexcusable, in no way seeks to

excuse it, and certainly will not condone it. Naturally I have been in close contact with the Prime Minister on this matter and

will continue to report to him on developments. As a matter of courtesy I will ensure that the Opposition Leader is also

advised of any relevant developments in this matter.

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Appendix III

7 December 1983

The Hon. Mr Justice R.M. Hope, CMG Royal Commission on Australia's Security and Intelligence Agencies Queen Victoria Terrace BARTON ACT 2600

Dear Judge

Mr Hayden has already spoken to you about the incident that

occurred in the Sheraton Hotel Melbourne on 30 November 1983

arising from an Australian Security Intelligence Service

training exercise. As you are aware, private citizens became involved and there was some damage to property. The Government

is greatly concerned as to the circumstances of the matter.

The Government believes that paragraph (a) of the terms of reference given to your Commission would authorise an inquiry

into the incident. However, if you should see any difficulty in pursuing such an inquiry under your existing terms of reference

the Government would recommend to the Governor-General that the

terms of reference already given to your Commission should be

extended to make explicit provision for the proposed inquiry.

In particular the Government would wish you to explore all aspects of this exercise including the way in which it was

prepared and developed, the manner in which it was put into operation, the general conduct of all persons associated with it

including those who exercised a supervisory role, whether any persons exceeded their proper authority in relation to this matter and whether any breach of the law was committed by anyone carrying out or authorizing the exercise.

76

In addition, the Government would wish you to give particular

attention to the appropriateness and effectiveness of ASIS training in the special operations field as well as in other

fields of its activities. We should like you to examine the need for specific guidelines laying down firm rules including a

requirement for prior consultation with other authorities or other people likely to become involved in, or have some proper

concern about, particular training projects. The need for guidelines as to use of firearms should also be examined.

As I have indicated above, the Government believes that an

inquiry into the above matters is authorised by your existing terms of reference. However, if you have any difficulty in this

regard I should be glad if you would let me know. The Government would wish you to give the highest priority to the matters

mentioned in the third paragraph of this letter.

Yours sincerely

R.J.L. Hawke

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APPENDIX IV

15 December 196

Message from the Acting Director General, ASIS to the Chief Commissioner, Victoria Police

I was instructed yesterday by Mr Hayden to inform you that I

should convey personally to you the names of those involved in the Sheraton Hotel incident.

In conveying those names, I was instructed to refer to Mr Hayden's request to Mr Cain that the names be handled by the

police on a confidential basis. I was instructed also to refer to the undertaking conveyed to Mr Hayden in Mr Cain's message of

8 December 1983 that the names would not be revealed for any purpose other than to enable the police to pursue investigations

and consider charges. I was required to tell you that at all stages the Commonwealth would wish to be consulted by the

relevant Victorian authorities as to how the confidentiality of the names could be protected. I was also told to advise you that

in the event charges were laid the Commonwealth would propose to argue in any court proceedings, that, on the grounds of national

security, the names in question should not be revealed publicly.

After Mr Hayden authorised the foregoing, legal advice was received about possible contractural obligations on the part of the Commonwealth which could be legally challenged by individuals if their identities were disclosed. This legal

advice, which Mr Hayden has accepted, is that in the

circumstances, the persons concerned in the Sheraton Hotel

incident should be given notice, say 24 hours, of the intention

78

to disclose their identities. This will provide such persons

with an opportunity to seek an injunction to restrain the

disclosure.

I am therefore precluded from disclosing the names to you

for at least 24 hours and a decision as to how to proceed will

have to be taken after that lapse of time.

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APPENDIX V

IN THE HIGH COURT OF AUSTRALIA

THE MELBOURNE OFFICE OF REGISTRY No. M103 of 1983

G

Plaintiff

and

THE HONOURABLE WILLIAM HAYDEN in his capacity as MINISTER OF STATE FOR FOREIGN AFFAIRS THE COMMONWEALTH OF AUSTRALIA

First Defendant Second Defendant

and

JOHN RYAN in his capacity as DIRECTOR GENERAL OF AUSTRALIAN SECRET INTELLIGENCE SERVICE Third Defendant

BEFORE HIS HONOUR MR JUSTICE DAWSON MONDAY THE 19TH DAY OF DECEMBER 1983

UPON APPLICATION made this day at Melbourne by Counsel on behalf

of the Plaintiff UPON READING the Writ of Summons dated the 16th day of December 1983 , the Summons dated the 17th day of December

1983, the affidavits of Gavin James Richard Forrest sworn the

17th day of December 1983 and the exhibits thereto and the 19th

day of December 1983 , the affidavit of Eric Thomas Miller sworn the 19th day of December 1983 and the exhibits thereto and the affidavit of Brian Edward McMillan sworn the 19th day of December 1983 and all filed herein AND UPON HEARING Mr J.L. Sher

One of Her Majesty's Counsel and Mr J.R. Perry of Counsel on behalf of the Plaintiff, Mr M . Rozenes of Counsel on behalf of

the firstnamed and secondnamed Defendants, Mr J.D. Lowenstein of

Counsel on behalf of the thirdnamed Defendant and Mr H.

Berkeley. One of Her Majesty's Counsel and Solicitor-General for

the State of Victoria and Mr P.G. Nash of Counsel intervening on

behalf of the Attorney-General for the State of Victoria AND

UPON the Plaintiff undertaking by his Counsel to pay to the

firstnamed Defendant any damages which the firstnamed Defendant

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may sustain by reason of the injunction hereinafter granted and which the Court of a Justice thinks he ought to pay IT IS

ORDERED BY CONSENT that the firstnamed Defendant, William

Hayden, Minister of State for Foreign Affairs, and his servants

and agents be restrained until the hearing and determination of

the action or until further order from disclosing, publishing or

otherwise making available to any person the names, addresses, occupations and other personal details of any of the persons

detailed to participate in the Australian Secret Intelligence Service training exercise involving the Sheraton Hotel between

the 27th day of November 1983 and the 30th day of November 1983 AND it IS FURTHER ORDERED that pursuant to Section 85B (1) (c) of

the Crimes Act 1914 (Commonwealth) no person without the

approval of the Court shall have access to any affidavits, exhibits or other documents used in this application for an

injunction which is on the file in Court or in the records of

the Court or the Writ of Summons and Statement of Claim and Summons issued pursuant to the Order herein made on the 15th day of December 1983 other than that Order and this Order AND IT IS FURTHER ORDERED that the said order made pursuant to Section

85B (1) (c) of the Crimes Act 1914 (Commonwealth) shall, with

respect to the said affidavit of Brian Edward McMillan, apply to

the parties to these proceedings AND IT IS FURTHER ORDERED that

the costs of this action be reserved AND IT IS CERTIFIED that

this was a matter proper for the attendance of Counsel.

Deputy Registar

This Order was taken out by Messrs Blake & Riggall of 140 William Street, Melbourne, Solicitors for the Plaintiff.

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