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Federated Ship Painters and Dockers' Union - Royal Commission (Mr F.X. Costigan, Q.C.) - Report - Final, dated October 1984 - Volume 2 - Investigatory Techniques


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The Parliament o f the Commonwealth of Australia

ROYAL COM M ISSION ON THE ACTIVITIES OF THE FEDERATED SHIP PAINTERS A N D DOCKERS UNION

Commissioner: Mr Frank Costigan, Q.C.

Final Report

Volume 2

Pursuant to Resolution o f the Senate o f 22 October 1984— (1) Deemed to have been presented to the Senate, and publication authorized, on 1 November 1984,

and

(2) Ordered to be printed, on the authority o f the President o f the Senate, on 1 November 1984

Parliamentary Paper No. 285/1984

.

ROYAL COMMISSION ON the activities of the Federated Ship Painters and Dockers Union

FINAL REPORT, Volume 2

The Government of the Commonwealth of Australia

and

The Government of the State of Victoria

ROYAL COMMISSION ON THE ACTIVITIES OF THE FEDERATED SHIP PAINTERS AND DOCKERS UNION

Commissioner: Mr Frank Costigan, Q.C.

Final Report

Volume 2 Investigatory Techniques

Ordered to be printed by the Legislative Assembly Victoria 1982-84

No. 176

ISBN for set: 0 644 03746 6 ISBN for Final Report - Volume 2: 0 644 03748 2

Publisher's note: This publication has been reproduced in part from photocopies of the original documents. Any loss of definition in reproduction quality is regretted.

Printed by Authority by the Commonwealth Government Printer, Canberra 1984

ROYAL COMMISSION ON THE ACTIVITIES OF THE FEDERATED SHIP PAINTERS k DOCKERS UNION

FINAL REPORT

VOLUME 2

INVESTIGATORY TECHNIQUES

VOLUME 2

INVESTIGATORY TECHNIQUES

Table of Contents

CHAPTER PAGE NO.

1. Silence 1

2. Golden Robes 8

3. Power 15

4. Sources 21

5. Approach 30

6. Control 41

7. Order 51

8. Money Tracker 64

9. Information Crunching 75

10. Breaking Walls 83

11. Targetting 92

12. Analysis 118

13. Remedy 129

14. Exposure 148

ATTACHMENT

2.9A Periods of Work of King 166

References 167

CHAPTER 1 SILENCE

"Be silent and safe - silence never

betrays you."

(John Boyle O'Rielly)

1.001 On 16th June 1981, Jack Nicholls died by his

own hand on the Hume Highway a few kilometres south of

Albury. He was on his way to appear as a witness before me,

and had in his possession the ballot papers of a critical

Union election which, so he asserted, demonstrated he had

defeated Billy Longley in a fair ballot. His moment of triumph - the production of the ballot papers - never arrived. As a coroner later found, he placed a gun to his

head and took his own life.

found.

No satisfactory reason for his demise has been

1.002 The next day, certain members of the Union

claiming to be the Melbourne executive and branch members, met at the Council Club Hotel in South Melbourne. A

resolution was put and carried. It laid the blame for Nicholls1 death on my Commission. More significantly, it recorded a resolution said to emanate from the Federal

Executive of the Union:

"That having heard the report of the

position in Melbourne, the Federal

Executive recommends to all Branches that there be no further co-operation with the Royal Commission." (Vic.Exhibit 2411)

1.003 Thereafter all members of the Union, or

persons claiming to be members, when summonsed to give evidence, attended as required but refused to answer

questions put to them. When asked why, each and all of the

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Silence

witnesses referred to the Union resolution; even in cases

where the members were called outside Victoria.

This was directly contrary to the provisions

of section 6 of the Royal Commissions Act 1902:

"(1) If any person appearing as a witness before the Commission refuses to be sworn or to make an affirmation or to answer any question relevant to the inquiry put to him by any of the Commissioners he shall be guilty of an offence.

(2) The penalty for an offence under sub-section (1) is a fine not

exceeding $1,000 or imprisonment for a period not exceeding 6 months."

1-004 The witnesses were duly referred to the

Commonwealth Attorney-General, and prosecutions were initiated. Each took approximately 8 months. The average penalty was $500. The witnesses, when called, maintained

their silence, showing no fear of the certainty of

prosecution and the imposition of such penalties.

1-005 The justification advanced for the flagrant breach of the law was not one recognisable in law. By all

other measures, it was humbug. That was so for two

reasons. Whatever reason Nicholls had to take his own life,

the existence of my Commission was not one of them.

Nicholls enjoyed the centre of the stage, and was no

stranger to the witness box at times when more was at stake than was the case that day. He was to produce triumphantly the ballot papers, thus demonstrating Longley had been

defeated - a situation Nicholls would have enjoyed. What is

more, the members of the Union knew of his intentions that

day and of his delight in the opportunity he was being given.

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Silence

1.006 The statement was humbug for another reason.

It implied that until that time the Union and its members had "co-operated". It was true that in the first few days

of the life of the Commission each Union Secretary

throughout Australia had produced the Union files. It was

also true that a number of Union members had given evidence before me. But it was nonsense to suggest this constituted

"co-operation". Had the files not been produced willingly, I would have called on the police to bring them before me.

As for the witnesses, none of them volunteered the truth. In every case they dissembled, and admitted nothing until it

was demonstrated that the truth was known.

1.007 Despite the humbug the issue of the

resolution, and its compliance by all members, provided a

valuable lesson. In a civilised community there is a limit

to the extent to which laws may be enforced, especially

where those laws are directed at compelling citizens to

provide information. It is possible - and it is done in a very large number of statutes - to require citizens to attend and give evidence. But it is not possible to make them speak, far less to speak truthfully. Different classes

of citizens are more or less easily intimidated into speaking. Those less well acquainted with the criminal law

tend to speak more freely when confronted by authority; but

those in the criminal fraternity are not overwhelmed by the

status of the questioner and are well schooled in the

advantages of maintaining silence.

1.008 The consequence of silence to an investigator is serious. Most police investigations are dependent upon

information being forthcoming. If there is no innocent

bystander who observed the criminal act, then the police

depend upon informers and admissions from the culprit in the vast majority of their cases. Without them, the crimes

remain unsolved.

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Silence

1.009 It is for this reason that criminal

organisations throughout history, and around the world

today, rely on silence as their prime defence. The criminal

lore abounds with stories of the fate of those who "inform", and, indeed, the "informer" is shunned in popular

imagination as a person of low repute. Rarely is he

accorded the accolade of a virtuous citizen doing his duty and performing a public service.

1.010 The penalties meted out to informers play a

significant part in these stories. Death is a traditional

consequence in some, and often a gruesome ending at that.

Maiming, whether by beating or a bullet, is another. I have received evidence of members of the Union - indeed, in one

case Nicholls himself - pistol whipping citizens whom they held responsible for unwelcome attention by the police. In

one case, a painter and docker gave evidence before me in which he was confronted with many aliases he had used, but

which he thought were well concealed. Later the same day

another unionist, wrongly suspected of having informed the

Commission of the aliases, was shot at and wounded.

1-011 The extent to which silence may be imposed on

the ranks of those party or witness to the criminal

activities measures the likely success or otherwise of the

law enforcement agencies. I started the Commission believing the painters and dockers had imposed silence to a

remarkable extent. Evidence adduced before me confirmed that belief.

1·012 Large scale theft on the wharves is endemic.

Yet less than 5% is reported to the police, and then only

some days or weeks after it has occurred. The rate of

solution of those reported is miniscule. The reason is a

complete lack of information flowing from those on the wharves who know of the incidents.

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Silence

1.013 The problem does not stop with such theft.

There is a large number of major armed robberies more likely than not committed by members of the Union; yet the

successful completion of the investigations is a remote

possibility. Likewise with a number of murders, all heavily

touching upon the Union and its members, and all unsolved.

1.014 Many members of the Union are criminals with

long acquaintance with the law. They have no desire to

assist the authorities in solving crime; they are too

frightened to assist even if the thought were to pass through their minds. The result is a wall of silence.

1.015 The effect on traditional law enforcement is

dramatic. It is demonstrated no better than by an

investigation into the Victorian Branch of the Union conducted by two Victorian police officers in the months

before I commenced my duties. The report concluded:

"The violence referred to in the articles is mainly historical and goes back to the early 1950s, with the main thrust of the power struggle between the two factions

taking place in the early 1970s between Longley and Shannon factions. Since Longley was convicted of murder in 1975, there have been no incidents of violence

which are directly attributable to

members of the Painters and Dockers Union in respect of their operations.

The conviction of Longley appears to have halted the violence and the current executive of the Union (despite their impressive criminal histories) appear to

be conducting the affairs of the Union without any noticeable problems.

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Silence

Since 1975 the Union appears to have been operating without any great difficulty and there are no reported incidents to the Victorian Police of extortion,

intimidation, violence or corruption by members of the Union and the companies operating on the waterfront.

(Victorian Police Internal Report 1980) (Exhibit 0986)

1.016 The two officers were not lacking in

intelligence: they were not corrupt, nor were they naive. Indeed, one of the two was later posted to the Commission

and served with considerable distinction. But they were compelled to rely on traditional forms of investigation. They had neither the powers nor the staff and equipment to do otherwise. Those traditional methods required a flow of

information from informants to be successful. There was no

flow. This was not because there was nothing to speak

about. Indeed, at that very time major drug importations were being arranged, murders committed, and significant

armed robberies were taking place. In the absence of information, there was no way in which the two officers

could even suspect a connection, let alone determine the scale and depth of the organisation.

1-017 Such is the effect of silence. When starting

the Commission, I determined that some means should be

developed of investigating major criminal activities

conducted behind such a wall. Some way had to be found of Penetrating it.

1-018 In the end, the techniques of investigation

recorded in later chapters in this Volume of the Report were developed. Their objective was to inform authority of that

which the criminal perpetrators work to keep secret. It was to achieve this in accordance with the law and without

resort to uncivilised standards of behaviour. The systems achieved both of those objectives.

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Silence

1.019 The systems were primarily designed with the

painters and dockers as the subject. But on development, it

was found that they were as useful against others who

similarly sought to keep quiet their criminal ventures.

This coincided with a developing understanding that the

painters and dockers were making themselves available for employment by others as much as they employed themselves in

crime. Thus the systems came to be used against the "white

collar" criminals as much as against those with a stained

blue collar.

Volume 2 -7-

Chapter 1

CHAPTER 2 - GOLDEN ROBES

"The love of money is the root of all

evil things and there are some who in

reaching for it have wandered from the faith and spiked themselves on many

thorny griefs."

The first Epistle of Paul to Timothy VI.10.

2.001 The strength of criminal organisations such as

that comprised by the Ship Painters and Dockers' Union as well as most others lies in the internal discipline of the

members and the rigorous maintenance of silence. An attack

directed at that strength is doomed to failure. Attempts to

break the silence by enactment of laws compelling disclosure have demonstrably failed. Attempts to penetrate by the

development of friendly relationships, overt and covert

surveillance, or the use of undercover agents, have likewise

failed - irrespective of whether the attempt was by police or other law enforcement agencies such as Customs. Offers

of rewards, no matter how great, fail. It may be expected that any future attempts at a direct attack will also fail.

2.002 Notwithstanding the strength of this

formidable wall of silence, there are other ways of

ascertaining the truth. These ways centre upon two

fundamental weaknesses of criminal organisations. The first

is that it is an organisation. The second is that it is motivated by a desire for profit.

2-003 An individual bent on breach of the law,

unless amateurish in his conduct, is by far the most

difficult to apprehend. He leaves few signs. He alone

knows the details of what he has done and, unless he has

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Golden Robes

used others to assist in perpetration of the wrongdoing,

often the only means of establishing his guilt or even identifying who he may be is by his admission.

2.004 A criminal organisation is a very different

matter. There must be contact between its members; such contact requires the recording of names, addresses, and

telephone numbers. Meetings take place, joint action is

planned. All of this leaves a trail. For example, in the

Letter of Credit Fraud - perpetrated by Sydney painters and dockers as long ago as 1968 - the group met in a motel room

in Coburg, Victoria, to plan the perpetration of the fraud.

There were records of each travelling to the meeting, of all

being present together, and of their dissipation after the fraud had been executed. There was a trail.

2.005 A second aspect of the weakness of the

organisational structure of the group is that criminal activities are not isolated or single ventures. The success

or failure of the first is followed by a second and a

third. Even as the investigation proceeds, more crimes are

being planned and executed. Thus the investigator, who may have only a sketchy knowledge of the group's past

activities, may nevertheless predict the future with some accuracy. In such circumstances other forms of

investigation may be brought into operation.

2.006 For example, one group was identified as

having perpetrated a particular form of taxation fraud. Although the evidence of participation by it in those

matters in the past was not as overwhelming as might have been hoped, it did identify the group as being one worth

surveying. Sure enough, a new criminal venture was detected even as it was being planned and put into effect. This time

evidence was collected as the scheme progressed, the principals were arrested and are now committed for trial.

Volume 2 -9- Chapter 2

Golden Robes

The weakness of this group was not in a failure to maintain

silence (which it did with varying degrees of

effectiveness), but in it maintaining its structure and

continuing with criminal ventures.

2.007 A further characteristic of this

organisational structure is that, so far as I have seen, there is little specialisation. Each spreads its net of

activity very widely. As a result, all manner of crimes are

perpetrated. The result is that upon an investigation being directed at the organisation (rather than any particular

crime committed by it), all kinds of criminal activity are

uncovered. Some crimes are easier of proof than others. A

selection of the more easily proven crimes allows the

disruption and eventual suppression of the group.

2.008 Thus the organisational structure of the group - involving a number of people in contact with one another,

and being characterised by repetition of criminal activities over a broad spectrum - is a significant weakness. It

should be exploited by the investigator.

2.009 It may be noted that this reveals a very

different approach between that of the investigator and that

of the prosecutor. The latter concentrates on proof of the

specified offence. The former is more concerned to find the

broad spread of offences so that he may choose that easiest of proof. Thus the investigator focuses on the criminal

group and all of its activities; the prosecutor

concentrates on the selected offence and its proof. The

investigator is "group specific" whereas the prosecution if "offence specific".

2.010 An even greater weakness, however, is that

criminal organisations are motivated by a "love of money". All of their operations are designed to maximize the

Volume 2 -10- Chapter 2

Golden Robes

profit. It is for that reason that laws are broken. It is

for that reason that there is a tendency by all of them to concentrate on those areas where profits are greatest.

Hence the continual shift of criminals into the drug area and, for as long as the view prevailed that the criminal law

ought not to be invoked for taxation fraud, the rapid employment of criminals in taxation schemes.

2.011 The criminal organisations in general, and the

painters and dockers in particular, are not involved in crimes of passion, whether caused by emotions fanned by

alcohol or by dreams of revolution. Certainly individual members, like others in the community, may commit such

crimes. When they do, it is not as part of the

organisation's schemes. Certainly, when accepting work for

others, they may be serving people motivated by such

passions. But in their execution they are acting soberly and with an eye on the profit.

2.012 Many instances of this occurred during the

course of my Commission. For example, through the painter

and docker organisation a man was employed to place

explosives on a car belonging to a lawyer. The principal

was a disappointed litigant, undoubtedly emotionally upset by the litigation. But the painter and docker, and the

organisation behind him, was not emotional in the

performance of the task. The job was done for $20,000. It

was carefully planned and executed, though as chance had it the bomb detonated shortly after being placed on the car and

long before the lawyer was present.

2.013 Thus money is the motivating force. This

gives advantages to the investigator. He knows there will

be money involved, and usually a great deal of it. Here is

something he can look for. What is more, it leads the

criminal organisation to attempt its hand at many different

Volume 2 -11- Chapter 2

Golden Robes

schemes - with all the advantages previously adumbrated that

accrue to the investigator on that account. The principal opportunity proffered by the lust for wealth, however, lies

in its enjoyment. Few if any of the principals of criminal organisations wish to acquire the wealth merely to conceal it in a bank safe or in a buried tin. They wish to enjoy

the fruits of their labour in the same fashion as any honest person does.

2.014 It is this which offers the opportunity to the

investigator. The enjoyment of the profits, especially in

the amounts I have found to be prevalent, means purchasing

properties, buying cars and living a very high life style.

Those cannot be done in our community without leaving a documentary trail. When the trail is discovered the

expenditure pattern may be mapped with considerable accuracy. Since the legitimate income may be and often is

negligible the conclusion that there is another illegitimate source is easily reached.

2.015 To this is added yet another opportunity for

the investigator. The criminal acts fraudulently or illegally in the pursuit of profits. He does not do so,

taking the risks involved, simply for the opportunity to pay a sizeable portion of it to the Government as tax. In the

past the facile argument has been put that active criminals do submit taxation returns and declare their illgotten gains. I have found, with my access to taxation records, that this is not so. A number do not submit taxation

returns at all. Where returns have been submitted they do

n°t on my examination (which extends to more than 650)

accurately portray the true income of the criminals.

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Golden Robes

2.016 The criminal is as willing to devote his

attention to defrauding the revenue as he is to amassing the

income in the first place. And it is not merely the income

tax which he seeks to avoid. It is all taxes. Illegal

gambling is a good example of the catholic taste in this

regard. One illegal starting price bookmaker investigated

fully by my staff was found to have submitted income tax returns. But he had not disclosed his full income. The

result of my investigations was a taxation assessment for

$1.9 million. This, however, was merely one aspect of

taxation evasion. Starting price bookmaking is basically a

tax avoidance scheme - not avoidance of income tax, but of

turnover tax (which is a State tax) . In the same case

examination of his records disclosed an evasion of turnover

tax matching the evasion of income tax, amounting to

approximately $2 million. The total tax evaded was in the

order of $4 million. (On arrest, he faced a maximum fine of $20,000 for operating a bookmaking service illegally!)

2.017 The criminal organisations, and their

principals, do seek to conceal their wealth, whilst still allowing its enjoyment. In one case the principal employed

a large number of companies (none being readily traced to

him) to hold title to the various properties acquired. In

another case the criminal adopted many different names and

held properties in each of those names. Yet in both these

cases it was possible to discover the possessions without forcing the admission from the mouth of the criminal. In

both cases there was a documentary trail to be found. It required access to the documents of the criminal and to

those held by his accountants and his solicitors. The documents did exist - the task was to find and interpret

them.

Volume 2 -13- Chapter 2

Golden Robes

2.018 What is more, the discoveries allowed action

to be taken. In each case the investigations revealed unexplained wealth and massive tax evasion. The two men

were suspected of drug trafficking and many other criminal activities; none of which was easy to establish on evidence

admissible in a Court of Law. But the acquisition of wealth was capable of being established; and their dishonest

non-disclosure to the Taxation Offices (both State and Federal) was readily revealed. This allowed massive

taxation assessments and, accompanied as it was by

injunctions enjoining use of the properties until the tax

and penalties were paid, effectively deprived them of their illegal profits.

2.019 The consequence for the criminal organisation

is plain. It deprived their principals of the profits illegally obtained and it removed capital by which further

criminal ventures could be planned and executed. In each case it was possible to bring criminal proceedings as well,

though in one case that was thwarted by the criminal fleeing Australia. Nevertheless, the criminal organisation had been

severely damaged and its future operations crippled.

2.020 Thus, despite the disciplined secrecy with

which criminal organisations envelop themselves, the

investigator does have a chance. He should direct his attack in an indirect manner, concentrating on the. accrual

of wealth and the manifestations of organisation rather than vainly hoping for some informer to speak, or some admission to be made.

2.021 It was on this analysis that my staff

commenced the development of the investigatory techniques

with which this Volume of my report is concerned. They were directed at the documentary records evidencing organisation

and wealth which, if such criminal organisations were extant, should be readily found. The systems devised were

found to be remarkably successful.

Volume 2 -14- Chapter 2

CHAPTER 3 - POWER

"If total isolationism is no answer, total interventionism is no answer

either. In fact, the clear, quick,

definable, measurable answers are ruled out. In this twilight of power, there is no quick path to a convenient light

switch."

Adlai Stevenson 17 June 1965

3.001 The comments by Mr Stevenson to the Harvard

University in 1965 were made at a time when the United

States was at the height of its power. He was speaking of

the limits on that power, notwithstanding its ascendancy. There were and are limits of a definable and critical

nature. So too with Royal Commissions, despite popular belief to the contrary.

3.002 The primary power granted to a Royal

Commissioner is to summons witnesses. Depending upon

whether it is granted by a State or the Federal Parliament,

that power may or may not be accompanied by the removal of

certain limitations, such as the privilege against self-incrimination, legal professional privilege and the

privilege accorded to communications between doctor and patient, priest and penitent. The power allows the forcible

attendance of the witness (should that be necessary) and the

insistence on production of documents or answering of questions. A refusal exposes the witness to penalty, which

may be as much as six months' imprisonment, but does not

compel the disclosure of the information save to the extent

that fear of the penalty induces the witness to speak.

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Power

3.003 The Federal legislation (Royal Commissions Act

1902) treats the non-production of documents more severely than it does the failure to answer questions. Concealment,

mutilation or destruction renders the offender liable to two years' imprisonment. Further, should a Royal Commissioner

believe that within the next 24 hours a document may be found on certain premises, and that otherwise it may be

concealed, lost, mutilated or destroyed, he may seek a search warrant. In practice the use of this power is

infrequent. In the course of my Commission, it has been

employed on only four occasions.

3.004 Thus a Royal Commission is granted powers of a

very limited ambit. It is equipped to compel attendance and to ask questions; but the witness may prefer the lesser

penalty visited upon a refusal to answer than the greater peril in which his answer may place him. The Commission is

equipped, in a fashion, to procure documents by use of search warrants. However this power is more limited than

that granted to police officers, who may seek a search warrant irrespective of whether they have formed the opinion

that the documents may otherwise be destroyed or concealed.

3-005 There are a number of investigative techniques not available to a Royal Commission - at least not directly

and specifically granted. These include:

. No established group of informants.

• No capacity to employ undercover

agents; nor the time to insert

them; nor the personnel to train; nor any organisation capable of controlling and supporting them.

. No capacity to place suspects under physical surveillance, the

Commission lacking the necessary manpower, and management skill and expertise.

Volume 2 -16- Chapter 3

Power

. No capacity to conduct electronic surveillance, the Commission lacking legal authority, trained personnel and equipment.

• No capacity to tap telephones, the Commission lacking any legal

authority and the trained personnel and equipment.

. No capacity to conduct entrapment operations, whether so low level as to be constituted merely by seeking to purchase drugs (for example), or more sophisticated operations

involving the establishment of businesses (e. g . to purchase stolen goods).

• No forensic science capability.

3.006 Police forces and other law enforcement

agencies, to varying degrees, do possess some or all of

these powers. To that extent they are better equipped than a Royal Commission to investigate criminal activity - that

is, if those techniques are successful. As a Royal

Commission I did avail myself on a few occasions of the

services of the police force to place suspects under surveillance for limited periods of time. On each occasion

I was dependent upon the goodwill of the force concerned and was able to seek the assistance only in those cases where I

held persuasive evidence that the suspect may have or may have been about to commit an offence within the category

with which the force was required to police.

3.007 As for the remaining powers, and especially

those concerning electronic surveillance and telephone

interception, I regarded myself as having no power to request the police to provide the service, nor did I regard

the police as being lawfully able to provide the service

should I have requested it.

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Power

3.008 Thus I return to the singular power granted to

me - that of summonsing witnesses and procuring documents.

When isolated, as it is, it can be seen that a Royal

Commission is bereft of many powers granted to others

pursuing investigations. And even the power to conduct and examine witnesses is not unique. Leaving aside the courts of law, Commonwealth legislation alone grants the power to

no fewer than 79 different authorities and officeholders.

State legislation mirrors this widespread grant of such

powers. There are very many people in our community who may

summons and question, with a failure to answer carrying

penalty in law.

3.009 Nor is the removal of the privilege against

self-incrimination a novel concept. Out of the 79 cases where a witness may be summonsed and questioned under

Federal law, in 69 cases (or some 87%) the witness is

compelled to answer notwithstanding. Although my staff has

not conducted an exhaustive study under State laws I believe

a similar situation will be found there.

3.010 My reason for stating these matters is to draw

attention to the fact that a Royal Commission is not unique in the powers granted to it. The powers are limited and far

from untrammelled. The advantage my Commission had was not the existence of such a common power (to examine witnesses

and procure documents) but rather the methods by which the power was exercised.

3.011 In concluding this chapter I wish to make it

clear that I am not complaining of the lack of the

additional powers. They are vested in ordinary law

enforcement agencies, and properly so. A Royal Commission is quite an inappropriate authority in which to place such powers. It has neither the experience nor the facilities to employ those powers properly and effectively. I am drawing

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Power

attention to the limitations for a different reason. Such

success as my Commission has enjoyed is not attributable, in any meaningful manner, to the existence of unusual powers.

Rather it is due to the operational techniques which have

been developed to take advantage of the information procured by powers which many possess.

3.012 Even with the success the Commission has

enjoyed there were limits beyond which the Commission was

unable to pass. We live in a democracy, an institution

which demands - unlike a totalitarian state - constraints on

the exercise of power. But in a perfect world every serious crime would be detected, usable evidence assembled, and the

culprits dealt with in accordance with the law. In practice that is not possible in every case and no amount of

lawmaking will make it possible.

3.013 Some of the law enforcement agencies enjoy the same, even greater, powers than have I. The NCSC, the

various Commissioners of Corporate Affairs, and the officers

of the Bankruptcy Court immediately come to mind. They

could all achieve the same results or even more than I have done. There is no lack of necessary power. What is lacking

are techniques and equipment.

3.014 I cannot say the same in respect of the police

forces. Whilst improved investigatory techniques would

produce better results the police do lack an essential power - to summons witnesses - which is given to so many other law

enforcement agencies. They attempt to make up that loss by employing some of the other techniques denied to Royal

Commissions. I am far from certain that those other

techniques are as effective as the single power granted to

Royal Commissions to summons witnesses. But I am certain that even the grant of that power to the police would serve

little purpose unless proper and effective investigatory

techniques are adopted.

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Power

3.015 In another part of the report I have recorded

my views on the establishment of the National Crime

Authority. When its establishment was being debated in

Parliament, there was much discussion and anxiety about the

powers granted to it (or the lack of them) . There was

little debate about how the Authority would investigate -

about the techniques - except for a pious hope expressed by all sides of Parliament that my "systems" would be adopted. Similar expressions of hope have been made about equipping

police forces and Corporate Affairs Investigators with such

techniques. I have witnessed much talk, but little action. There is, in my opinion, a pre-occupation with power and too little concern about its successful exploitation for the

good of the community.

Volume 2 -20- Chapter 3

CHAPTER 4 - SOURCES

"Obviously a man's judgment cannot be better than the information on which he has based it. Give him the truth and he may still go wrong when he has the chance

to be right, but give him none or present him only with distorted and incomplete data, with ignorant, sloppy or biased reporting, with propanganda and

deliberate falsehoods, and you destroy his whole reasoning processes, and make him something less than a man."

Arthur Hays Sulzberger 1948

4.001 I have spoken of the difficulties I

encountered in adducing information by oral testimony where there was deliberately imposed silence. However, even in

those cases where the silence seems to be broken I have

found it difficult to place much reliance upon the spoken

word. Witnesses from all walks of life when asked to reveal matters which may reflect upon themselves or others whose

interests they put ahead of their legal duty to tell the

truth, were prepared to evade the question or give an

untruthful answer. Whilst it was frequently possible to expose the dissembling that exposure did not reveal the

truth.

4.002 For example, the Giannarelli brothers were

called before me to provide information about their various

bank accounts. They admitted to some accounts but denied others which were operated in false names. My staff knew of

some other accounts but suspected there were more. It was possible to demonstrate the lie (for which the brothers were

subsequently prosecuted - a matter reported elsewhere) . But the exposure of the brothers as perjurers did not reveal the

other accounts (if there were any); nor did it provide

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information about the reason for the false accounts. Their

explanation of the false accounts, of course, could be treated only as highly unreliable.

4.00 3 The willingness of witnesses to dissemble is

not conditioned by the class of society from which they come. It may not be surprising that witnesses with criminal

records who were members of the Union would prove untruthful in the witness box. They certainly did. There was a number

of such cases prior to the Union determining it would not allow its members to give evidence. For example, when

witnesses were asked to provide the false names used by them, more often than not there would be an initial denial;

subsequent admissions were forthcoming only to the extent that it was perceived that my staff already knew the truth.

Oddly enough, witnesses from this area of society showed greater concern about a possible charge of perjury than did

witnesses coming from other areas of society.

4.004 It has been my sad experience to find that

witnesses coming from all ranks in society showed scant

regard for the oath when pressed on difficult matters. I found businessmen of apparently considerable wealth and

powerful influence who would evade questions, or provide answers which may be regarded only as humbug. One prominent

businessman, for example, when asked to account for a very substantial amount of cash, replied that he liked to have

large amounts of cash about him. A "squirrel mentality", he said. Since the amount of cash was measured in hundreds of

thousands of dollars, and since he was much experienced in matters of finance, I could only conclude that the answer

was nonsense. The deposit of so much cash in a safe at his home or office rather than in a bank on deposit, or invested

with some financier, at the very least, at 24 hour call, was costing him a lot of money. Examination of his affairs

revealed he was well acquainted with the proper investment

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of monies. My ultimate conclusion was that he gave the

nonsensical answer to avoid telling the truth. But such a conclusion did not, of course, reveal the truth.

^ · 005 Sadly, my experience was the same with

witnesses from the professions. I have had accountants

appear before me with extraordinary lapses of memory. When matters are brought to their attention which tend to

demonstrate they had some knowledge of events at the time, I

have been entertained with assertions that they deliberately

ignored such things at the time. They suggested that in the course of their professions they deliberately abstained from

making the requisite and normal enquiries that any person

discharging his duty to a client would make so as to ensure

his advice was proper. They also suggested that they accepted instructions blindly, and without even thinking of

what they were being asked to do. Whilst such answers

demonstrated, perhaps, that they were professionally

incompetent I am of the view that the truth was that the witnesses preferred findings of incompetence to those which

affected their integrity and were prepared to dissemble to

achieve it.

4.006 Likewise with solicitors. Here I have been

treated to a full range of evasion. It has included a

simple denial of any recollection of the events (in one

case, to this was added a brutal attack on another witness who did remember even though the solicitor professed no

memory). On other occasions evidence has been given which

has been untrue and very evasive. One solicitor, who in a different part of this report I have referred to the

Victorian Attorney-General, adopted an aggressive and contemptuous attitude and in that fashion avoided answering

any questions he chose.

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4.007 It would be possible to provide examples of

witnesses from all walks of life but enough has been said.

It is not surprising, given the nature of my Commission,

that I should have encountered this type of person. I speak

of it now to emphasise that this mode of acquiring

information is not very lucrative. It has its uses of course. If information has been acquired by other means,

and a hypothesis drawn, it is valuable to put the hypothesis

to the people concerned to determine whether there is some

innocent explanation overlooked by the analyst. Avoidance

of the question, a failure to answer, or an untruthfulness, tend to suggest there is no innocent explanation. It does

not establish, however, that the hypothesis is correct. In my experience it has often been found that the analysts have

failed to make a sufficiently harsh judgment which further

investigations have shown to be warranted.

4.008 If the witness providing oral testimony is not

a fruitful source of information, where may one look? It is in answer to this question that some misunderstandings have

arisen about the processes my Commission has employed. There have been suggestions, usually by inference rather

than direct assertion, that my Commission has acted upon "tittle tattle" or "scuttlebut". Thus it is supposed that

rumours, bar room talk, the often ill-motivated tales of informers, have all played a part in my deliberations.

^•009 It is true that "street talk" (the description given by some police officers to what others describe as scuttlebut") does play a part in police investigations.

The sources of information available to the police are very limited, and police are compelled in the initial stages of

an investigation to rely heavily on such sources. Indeed, if a whisper is heard that some crime has been committed by

some person the police are duty bound to investigate and determine the matter.

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Sources

4.010 In discussions I have had with intelligence

officers in police forces it has been openly stated that such sources, unsatisfactory as they are, form a substantial

part of the source of their information. One agency

suggested it was as high as 707= of all sources. For this

reason the intelligence agencies in police forces have an intelligence grading system fairly rigorously applied, by

which they determine the reliability of the source as best they can.

4.011 It would be a mistake to conclude that my

investigations have been dependent upon such sources to

anything like the same degree. There have been occasions,

as would be expected, where informants have given evidence. They have not been frequent. Their evidence has proved of

little value. There have been other occasions when I have received police files which contain in them reports based on

such material. Many police files contain no such

information but rather comprise records of personal details

of convictions of criminals or comprise the documents seized in execution of search warrants.

4.012 The files received from the various police

forces are tabulated in Table 4-1:

Table 4-1

Police Source Files Pages

ABCI 4 149

AFP 351 37,588

VIC 711 51,837

QLD 47 3,030

NSW 62 4,501

SA 3 20

WA 2 192

TAS 15 425

1,195 97,742

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Sources

4.013 The Commission's total holding of files as at

31 August is 20,594, comprising 2,852,761 pages. Files

received from the police comprised less than 6% of the

total; and the number of pages was less than 3.5%. As I

mentioned earlier, many of the police files contain material

which is of a much higher reliability than "street talk"

including documents seized on search, criminal histories, company searches and the like. Thus the gross quantity of

the less reliable material is even less than the 3.5% these figures reveal.

4.014 It is not possible with the same precision to

extract figures showing the extent to which relevance is placed on this kind of material. However an examination of

the analyses would reveal that the occasions when "street talk" are even referred to are few and far between. Where

they are included it is only for the purpose of suggesting lines of investigation that may be followed.

4.015 The normal sources of information for the

Commission have been documentary in their nature and comprise documents which are original in their form and capable of establishing with accuracy and reliability the

information contained within them. The documents are such that if the fact which they evidence required proof in a

Court of law it could be achieved by production of the

document and proof of its origin. Almost all documents held

by the Commission fall into this category - a percentage approaching 97%.

^ -016 At times there have been suggestions that a

Commission such as mine has not acted on "admissible

evidence". This standard is different from that specified

in the last paragraph. The documents held by me meeting the

requirements of the last paragraph may, in addition, be admissible in evidence. It will depend not upon the

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reliability of the document as proof of the facts within it (which criteria they all meet), but rather upon questions of

relevance to some issue before a court. Obviously enough, the fact that documents are relevant to matters I am

investigating will not make them relevant, necessarily, to

far narrower issues which may be before a Court of law.

This will depend upon the decision of the prosecutor as to

the charge. Since I am in no position to forecast what the

charge may be, I am never in a position to determine

admissibility in this sense. I could only do so in respect

of any recommendation I made concerning specific charges that should be made. That is a step far down the track of

an investigation and is one which in the course of my

investigations I have left to others.

4.017 In the debate that has a taken place in

Australia in recent times concerning Royal Commissions of Inquiry, there has been strong criticism of the evidentiary

base, calling for reliance to be placed on "admissible evidence" rather than "reliable information", and calling

for more prosecutions (great though the number may have been). The strongest appeal of these criticisms has been to

lawyers who should have known better. Commissions of Inquiry have a great deal more to do, and their work is of

far greater value, than mere preparation of a brief for prosecution.

4.018 Under the Royal Commissions Act, the evidence of a witness is not admissible in Court. Thus if a witness admits to criminal behaviour in respect of which there is no other evidence available, there is no evidence admissible

against him in a Court of law. But there is other action

that may be taken. In one case before the Commission, the transcript was usable in Departmental proceedings to have a

public servant dismissed. In other cases, the evidence has allowed the levying of taxation; the disallowance of tax

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deductions; and the correction of laws and administrative

irrespective of whether the evidence is inadmissible because

of the provisions of the Royal Commissions Act or because, whilst reliable, it is not sufficient technically to be

admissible on a trial. (In other Commissions of Inquiry where tape recorded telephone conversations have been

produced this has been the case.)

4.019 In these circumstances I formed the view, and

continue to be of the view, that the source on which I would

be prepared to act should be shown to be reliable and

capable of proving the facts it asserts, rather than

concerning myself with the far more esoteric question of whether, some time in the future, it may be admissible in

proof of some criminal offence in a Court of law.

4.020 In Table 4-2 I have set out, in four

categories, all of the sources accessed by the Commission.

The categories are merely a convenient division. Plainly,

with the Freedom of Information Act now operating, documents

in the second category may well be as accessible to the public as documents in the first.

policies which were being exploited. This applies

Table 4-2

Public Records Category One

Government Records Category Two

Birth Marriage and Death Court files CCA records Electoral rolls Municipal records

Newspapers, media

Bankruptcy Receiver CCA Investigations Customs Records Educational records Electoral Records Electricity Sc Gas

Immigration records Liquidators' Records MRB & TRB Records Passport Office Police Records Postal Records Reserve Bank Foreign

Exchange Records Society Security

Records Taxation Records Telecom Records

Telephone directory Titles Office Who s Who (local & Int.)

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Sources

External Category Three

Target Category Four

Accountants' records Bank records Building Society records Business records (of others)

Bystanders' oral evidence Club records Credit cards & vouchers

Employer records Estate Agents' records Financiers' records Insurers' records Professional bodies' records

Solicitors' records TAB records Union records Victims' oral evidence

Address Books Business Papers Diaries Oral Evidence Teledexes

4.021 Systematic interrogation of these many sources produces a vast amount of documentary material. As

indicated earlier, the Commission has taken into its possession some 20,594 files comprising 2,852,761 pages. Not all has been examined. Indeed, less than 27% of the pages has been subjected to the collation process.

Collation involves specially trained staff extracting relevant information from files and converting that information into a form which can be directly input and stored on the database. I have taken an exhaustive approach

to collating material from Commission documents. Great emphasis is placed on cross-indexing and recording all the information. The thoroughness of this approach has been a key factor in the success of my investigations. The

examination that has taken place has allowed many

substantial criminal activities to be uncovered and a great deal of remedial action to be undertaken.

4.022 The systematic examination of information from sources such as these, a disciplined analysis, and proper interpretation, would enhance law enforcement in our community. As I said in the previous chapter, many agencies have powers equal to or greater than mine. They have access

to most of these sources. What is lacking is their

examination and analysis.

Volume 2 -29- Chapter 4

CHAPTER 5 - APPROACH

Awake, my St John! leave all meaner

things To low ambition, and the pride of Kings. Let us, since life can little more supply Than just to look about us and to die

Expatiate free o'er this scene of man; A mighty maze! but not without a plan."

Alexander Pope An Essay on Man 1688-1744.

5.001 When the Commission commenced there was no

clearly expressed objective other than to investigate the Union. The Victorian Branch had been notorious for its

violence over many years. There were suggestions of widespread "ghosting" (names of fictitious employees on

payrolls), of failure to comply with financial regulations relating to Union accounts, of pilfering and other

comparatively minor offences.

5.002 Accompanied by Counsel assisting me, I visited Canberra in the early days of the Commission to seek

information from the heads of departments likely to be

concerned in some way with the Union. Whilst courteously

received and entertained, my quest was unsuccessful. The Victorian Government, at that time lacking in enthusiasm for

the Inquiry, was even less helpful. I approached police forces, only to find that the sole repository of information

on the union of any continuous nature was a file kept by

Senior Detective McMahon of the Victorian Bureau of Criminal

Intelligence. The Australian Federal Police had made some enquiries about office bearers of the Union in anticipation

of my inquiry. The sum total of collected intelligence was of negligible proportions.

Volume 2 -30- Chapter 5

Approach

5.003 The position was thus like virgin country.

There were many sources of information available but each of those was likely to produce only a fragment of the whole

picture. It was, in theory, possible to collect information from all of the sources and thus put the picture together.

That was an exercise requiring considerable skill for the picture was set against a mosaic of general criminal

activity, and distinguishing the relevant picture from the

general mosaic was not likely to be easy. I did not have

available any person who had attempted this task before in respect of the Painters and Dockers. There was no public

servant, no officer of police, no intelligence analyst, who had worked on the information with the objective of drawing

such a picture.

5.004 It is often difficult for those who have no

experience of mastering a myriad of information to

appreciate the difficulties of the task. If true mastery is achieved, the master presents an account so clearly stated

and lucid in reason that the listener accepts it without question and often with a silent rejoinder that it was all

obvious enough. But the truth is that in the initial stages of an investigation nothing is obvious. It may become so as

the investigation proceeds. At first, however, so little is known that the less gifted at this work can see little to

investigate. The analysis of the information morass requires people with certain talents. The intellect must be

of a high order; the capacity for hard work also of a high order; and they require an ability for tangential thought,

a capacity to "jump" between seemingly unrelated areas, so

as to pull the matters together.

5.005 There are not many such people in our

community. They are often required by the military, and security forces. Their success in recruitment is not

something I have studied. But I have seen the results of the attempts by the police forces to recruit and train.

Volume 2 -31- Chapter 5

Approach

They have a number - an alarmingly small number - of trained analysts. They have none to spare. Indeed, they require

many more. But not only do they not have the resources to employ them I doubt whether they would be able to find many

suitable candidates.

5.006 At the very beginning, I appreciated that

large as the task was, there were limits on the number of talented and experienced assistants I would be allowed to employ. Those limits were likely to be imposed both from a

lack of suitable people to employ, and budgetary constraints.

5.007 Nor was it merely at the senior level that I

was likely to have problems. The recruitment of large

numbers of police officers also had problems. Indeed, the police forces available (Victorian police and the Australian Federal Police) did not have large reserves readily

available to do my bidding. I had no administrative

experience in controlling large bodies of men; and

certainly no experience in police operations. It would have been ludicrous for me to have taken on such a role.

5.008 Thus I was thrown back on the Counsel

appointed to assist me. Their numbers were limited to two at first; subsequently a third was appointed by the

Attorney-General. The task was to be achieved without any

addition (as I saw it at that time) , yet by conventional means the mass of information was far in excess of anything

that any two counsel had previously been able to master within a reasonable time. I was extraordinarily fortunate

that the Counsel who were appointed had the qualities I have

referred to above. Without their intelligence and hard work

my task would not have been possible to do.

5.009 Thus the problem was one reducible to a

relatively simple proposition. Were there means available by which I could increase the productivity of the two

Volume 2 -32- Chapter 5

Approach

assisting counsel beyond anything yet achieved? If so, was the increase in productivity of sufficient order to warrant the cost likely to be involved?

5.010 The answer lay in the management of the

information. In a matter of ordinary proportions, the

information is received, examined, and filed away with often little more than a note in some haphazard system. The lack

of order and system does not matter, for it is corrected by the high recall capacity of the barrister. Such a system

has its drawbacks, for recall often requires confirmation by again locating the desired passage, and this can be very

time consuming.

5.011 In this case, such a system could not possibly

work. The amount of data was too disparate and far too

great. The ability to bring the data together depends, in the normal system, very much on the same person working on

all of it; and that was not likely to be possible. In

addition, it requires the data to be characterised by

features making it noteworthy. Again that was not likely given the types of sources being accessed. It is very

difficult for example to be impressed (and thus retain in the memory) the records of a local Electricity Board about

who was paying the electricity account at particular premises at any time.

5.012 Further, the task of properly indexing all

such items of information so that they could be quickly

accessed was likely to require, on any manual system, a

staff of very large numbers.

5.013 In these circumstances I determined to review the management of information to create a more efficient

system which in turn would greatly increase the productivity of my assisting counsel. As things turned out this review

was successful and systems were developed which have led the

world in some of their applications.

Volume 2 -33- Chapter 5

Approach

5.014 In reviewing the problem I was conscious of

the lack of any bank of processed information. Thus I had nothing to guide me on how information should be processed.

On the other hand I was not constrained by the existence of any existing system which cost would have compelled me to

adopt.

5.015 I was also conscious of the widespread nature

of the sources of information available and the seemingly

inconsequential nature of much of the information procurable from each of those sources. On its own each item of

information counted for little. It was only if it could be combined in a satisfactory manner that it would prove

valuable. The system of combination was critical.

5.016 The best form of combination was not easily

forecast. In some cases I anticipated I would wish to bring

together all matters relating to the same incident. In

other cases I could see a need to bring together all matters

relating to the same person. Yet in other cases I might be

more concerned with a group; and in others I might wish to

employ statistics. My information had to be catalogued so as to facilitate each of these approaches and perhaps some

which I could not anticipate.

5.017 Something also had to be done to break down

the bulk of the information. Each of the sources was likely

to produce its bit of information in a mass of immaterial matter. The more the material matters could be stripped

from the rest, the better: a filtering process, so that ultimately the matter may be reduced to a size

comprehensible by one man.

5.018 All of this had to be done within a limited

budget. In that regard, I was moved by one particular

consideration. Whilst my assisting counsel were

Volume 2 -34- Chapter 5

Approach

irreplaceable, for each additional counsel I could employ many other people on lower salaries provided I did not

require high training or experience. What I needed was a system of management which allowed the employment of such

people.

5.019 Attacking the problem with these matters in

mind, I determined to use the system of management employed in most parts of the world in military matters. This

divided the information management into four phases:

1. Collection of Information.

This was expected to be usually

through the issue of summonses and attendance of witnesses. In the event a great deal of information came to me without that being

necessary.

2. Registration of Information

This was to achieve control of the information.

3. Collation of Information

This was to reduce the mass of

information, including editing to ensure a degree of accuracy.

4. Analysis of Information

The final phase necessarily

involving the lawyers but which I expected to be far more productive as a consequence of the first three phases being done by others.

5.020 Economy was to be achieved by the employment

of staff on the first three phases. This was intended to

leave only the analysis phase to the senior lawyers. As it

turned out, this was not achieved until the last year of the

Commission. When it was, the full fruits of the plan were

realised.

Volume 2 -35- Chapter 5

Approach

5.021 Having determined the management structure, it was necessary to consider how the information should be

recorded. It was apparent that with many sources being accessed the same information may often be procured. This

was not wasted effort for it assisted in determining accuracy; but it raised a problem of how the records should

be maintained. Obviously enough, they were likely to be

continually updated. It was not likely that all information

pertaining to one event, or one person, would be likely to gathered at the one time.

5.022 This was a considerable management problem.

Staff at each point of the management system was likely to want access to the same records at the same time. Delays

which are necessarily incurred when one staff member removed

a file for updating, editing, or analysis, and another staff

member wanted it, were likely to become endemic.

5*023 In this regard I was well served by a senior

public servant, Mr. Arthur Palmer, of the Department of

Administrative Services. His department, in the early days, was responsible for the administration of the Royal

Commission and I recall him attending at my Chambers to discuss with me and my assisting Counsel the provision of

computers for the Commission. They were the answer to the problem. They provided a means of disseminating the

collated information to all elements of staff whilst

allowing each element to work on the information at the same

time. Mr. Palmer assured me the computers were available, and available with sufficient terminals to meet my (then) modest needs.

5*024 Mr. Palmer, however, arranged the provision of only the hardware. He did not provide the programmes to be

tun on the computers. Thus the acquisition of programmes, or their creation, was left to me and my staff. We asked to

Volume 2 -36- Chapter 5

Approach

see what was available and inspected the Australian Federal

Police computer installation (which we were to share) where their programmes were then under development. We looked at

some others. In the end we adopted parts of the Police

programmes as the basis of our own and proceeded to modify

them to meet our requirements.

5.025 At this point I made certain decisions which I

believe were absolutely critical to the ultimate success of

the management system. I vested full responsibility for the specification of the computer programmes in the senior

counsel assisting me, eschewing any committee. Thus it was left to Counsel to specify precisely what was required. As

the senior "analyst", and therefore the senior operational person, this meant the specifications were directed at

providing the precise operational needs.

5.026 A second decision was to engage consultants to advise on how I could use computers. Consultants were

engaged, and I was fortunate, indeed, to have the services of Mr. Phillip Jackson (now of Logica). His task, however,

was not to give advice on my operational techniques. Rather his task was to advise how the operational needs specified

in great detail by my assisting counsel could be met. He did this by writing the programmes to achieve that end and

wrote them very well.

5.027 Another decision made in the early days was of

a technical nature, though it proved of vital importance in

the later development of the analytical systems on the computer. The recording of data on a computer may be

divided into two different methods. One is to record the data as "free text". This technique allows the data to be

recorded in a fashion which is similar to the original form. The computer then applies to the data various

searching techniques which allows matters to be located.

Volume 2 -37- Chapter 5

Approach

5.028 Thus transcript of hearings may be recorded in free text form. Search routines are available which allow

all instances of a particular word, or sequence of words, to be recovered.

5.029 The advantages of this system are that initial data entry is quick; nothing is lost; and once entered the data may be searched comprehensively and all instances

recovered with some confidence that the search has been comprehensive. The disadvantage is that it places the mass

of information formerly in written form into electronic form

without any reduction. No collating or editing takes

place. No interpretation takes place. The work left for the analyst remains very considerable.

5.030 The other system is described by many terras.

The one I will use is to call it "formatted fields". Here the data is not entered in its original form at all. It is

read by a collator, or in accordance with instructions, and certain information is extracted leaving behind everything

else. It is entered on to the computer against specified

fields and must accord with criteria laid down in the

computer programme.

5.031 The advantage of this system is that there is

a reduction of the mass of information as only part is being

recorded. That which is recorded is recoverable more quickly and comparisons are possible between records. This allows

analytical routines to be worked on the data. It also allows editing to be done thus improving the quality of the

data. All of this work can be done by personnel less

skilled than the most highly qualified, thus increasing the

productivity of the most expensive.

5.032 The disadvantage is that some good may be

thrown out with the bad and perhaps lost. Editing may be

faulty and, far from being improved, the data may be spoiled.

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Approach

5.033 However, in practice, I have found few

instances of the disadvantages; and considerable - overwhelming - advantages. The use of formatted fields has allowed sophisticated computer techniques to be employed and

has permitted inquiries not otherwise possible.

5.034 The programmes developed for the computer have

been recorded on tape and I deliver with this report a copy

of the tape together with Technical Programme Instructions, to each Government. It is Appendix 2-A. Appendix 2-B is

the Technical Programme Documentation prepared by Mr. Jackson and his fellow consultants. I shall leave for later

chapters a description of each of the programmes.

5.035 In the operation of the programmes no

distinction was made between investigations. Thus only one

data base was established. Late in the life of my

Commission the data base was made available to the Royal

Commission into the Nugan Hand Bank, and data was entered by

that Commission onto the same data base.

5.036 It was a happy circumstance that I did not opt

for separate data bases for each line of investigation. Although I did not appreciate it fully at the time the

number of people involved in the criminal scene in Australia is relatively small. The same criminals and their

associates appear, to greater or lesser degrees, in many other investigations and at times when least expected. The

use of a single data base rather than several results in the information already amassed for an earlier investigation

being immediately available for a later investigation. Towards the end of the Commission the time saved by having

the data already appearing on the computer was

immeasurable. The productivity of the Commission was

improving exponentially.

Volume 2 -39- Chapter 5

Approach

5.037 I am in the happy situation of being able to

report that the plan worked. The Counsel assisting me were relieved of a great deal of work which others could do quite

capably, and were able to spend a far greater proportion of their time on that work for which they command high fees.

The advantages, however, were far greater than merely this. The systems developed on the computer allowed the bringing

together of many matters which otherwise would never have been associated, or at least not to the same extent. It

revealed patterns of criminal behaviour in Australia evidencing a far higher level of organised crime than was

previously believed to exist. It ultimately allowed investigations to be concentrated towards the

indentification of the principals behind those criminal organisations.

5.038 Time has not allowed the full exploitation of

the systems. I started from scratch. There was no data base. There were no systems. There were no trained

employees. Four years is not a long time for the

development from the beginning of such a system. The

progress made in that time has been extraordinary, and in doing so, the nature of criminal investigations in

Australia, and the perception by the public of crime, has fundamentally changed.

5.039 In the next four years, if these systems and

this philosophy are accepted and followed, the progress

should be equally significant. It remains to be seen whether this will occur. At the moment it seems there is

little enthusiasm to learn about these systems or to make

use of them or to employ people likely to use them to their best effect. Should this prove to be the case, the loss to the people of Australia will be great.

Volume 2 -40- Chapter 5

CHAPTER 6 - CONTROL

"Chaos: A rough unordered mass of

things."

Metamorphoses 1,7

6.001 The collection of documentary material from

all manner of places can have consequences far beyond the pursuit of a Commission of Inquiry. The documents may well

be potential exhibits in some future proceeding in Courts of law. The collection of them by a Commission without care in

the recording of their receipt and the maintenance of their integrity may result in the destruction of their evidentiary

value in the future. A simple example may suffice.

6.002 In the course of the Commission's work,

accountants were asked to produce files relating to their

clients' affairs. Often the files were produced in

disorder. On inspection the files revealed information

which showed entries in books of account of companies to be false. On other occasions the notes laid out the manner of

working of fraudulent schemes. In yet other cases, there were omissions of data in files which secondary records (in

books of account) required for their support.

6.003 At the time of production of such files to a

Commission of Inquiry, they are at least evidence against

the person producing them; they may also be evidence against others on whose behalf the producer was keeping

them. Once they leave the person's control, however, their evidentiary value commences to slip. The length of the

slide depends upon the ability of the Commission staff to vouch for the integrity of the file whilst in its care.

Volume 2 -41- Chapter 6

Control

6.004 The potential for later dispute is very

great. It may be suggested, perhaps falsely, that

incriminating entries were not in the files at the time of production to the Commission. This will be more easily

sustained if the files do bear marks placed upon them by Commission staff, no matter how innocuous those marks may be. It may be said that documents have been removed or lost

and they would have explained all; it may be said that until it is established that the integrity of the documents

has been maintained whilst with the Commission they are not

admissible at all.

6.005 Problems such as these are the same

irrespective of the number of documents or the time they are

held. However, when the number of files reaches 20,594, comprising 2.8 million folios, and the time for which the

documents are held stretches into years, the problem is not one solved other than by a strictly disciplined system of

receipt and registration. The only manner in which the

integrity of documents may later be properly asserted in a

Court of law is for there to be a system of receipt and

treatment strictly applied at all times.

6.006 It was out of considerations such as these

that the system of registration of documents within the

Commission was designed. But these were not the only

considerations, serious though they were.

6-007 As explained in the previous chapter, it was

proposed to engage in active collation of the material,

effecting a reduction. This was to be done by staff other than lawyers. Frequently it was done directly by the data

processing staff operating off the prime records. Any form of human intervention brings with it the inevitability of

error. The greater the ambit for human judgment, the

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greater the ratio of error. Since collation was a process

of reduction, or summary, the expectation of error increased markedly.

6.008 At the time of analysis, the lawyer was to be

presented with the summaries on the computer. Useful as the computer may be in bringing together like matters, in

stimulating thought, in exposing unsuspected associations, there could be no certainty that the information recorded on

the computer was accurate. Therefore it was essential that

every item on the computer be traceable to the primary

document. The analyst may then check everything against the prime document, using the computer to no greater extent than

a good cross indexing system. But to make this a reality and to lessen the likelihood of analysts neglecting to check

through reluctance born out of the time likely to be taken, a system of registration of documents was required which

allowed their rapid recovery from the storage cabinets.

6.009 These were the two prime considerations in the development of the process of registration that took place

in the course of the Commission. As time went by, other considerations (not anticipated through lack of foresight)

came to hand. They were readily accommodated in the system, notwithstanding its development. They will be explained

shortly.

6.010 The process of registration is twofold. The

first involves the physical handling of the document on

receipt by the Commission. The second is the computer programme devised to provide methods of retrieval of

documents.

6.011 On receipt by the Commission, all documents

were sent immediately to Registry. If they entered through

the hearing room, they were identified on the transcript and marked as an exhibit. If they were received otherwise, and

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as time went by this was often the case, they were taken to Registry where details were given to the registry clerk.

They were later tendered at a hearing, often by production by Commission staff. (This left a gap in proof of

continuity; but this practice was rarely adopted where the

documents were coming from some contentious source.)

6.012 Registry staff were responsible for the

enclosure of the document in some container - usually a large envelope - and the marking on the envelope of the

description and a registry number. Details of source, date

and other matters of an administrative nature were also

taken. The document was then marked for photocopying.

6.013 In copying, the staff maintained the original order of the folios within the document. No rearrangement

or sorting took place. Once that task was completed, the original was returned to its container which was sealed and

put away in a safe place. Thereafter, except where the photocopies were illegible, the original documents were not

used in the Commission's work. They were not marked; their

original order was not disturbed; there were no additions or deletions.

6.014 The copied files were given a unique number.

Each page within them was also numbered by Commission staff

irrespective of the original internal numbering that may have been there. Once this was done, should any item of

information be removed from the file at a later time the item could be identified by reference to the file and page

numbers. The files were stored in the several compactus rooms in accordance with their numbers which were allocated

in order of receipt of the file. Thus analysts could find

the file and the page by simply going to the appropriate

file room, taking out the file and opening it at the stated page.

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6.015 The storage of files in order of number gave a

further advantage to security. Nobody gaining unlawful

entry to the Commission could expect to find files within the filing rooms unless he had access to the computer index

system or otherwise knew the number allocated to the file by the Commission. He might find the file, but it would be

mere luck. If he did, he would not find other files nearby dealing with the same subject matter unless they happened to

be received by the Commission at the same time.

6.016 Three copies of the file were made. One was

sent to the ACT so that should any mishap occur to the

Melbourne files, a complete set was available there. The other two were kept in Melbourne. One was described as the

library copy and was for use by me in hearings. It

duplicated the original file in every respect except for the

page numbering which was added. The second copy was

described as a working copy. It was available for use by

the analyst. It could be marked or rearranged, or even mutilated. In other words, it could be used in any fashion

that the analyst thought helpful.

6.017 Thus the first two objectives were attained.

The original records were isolated and their integrity

maintained. They were copies and by a numbering system each page gained a discrete identity by which all data taken from

it could be referenced on the computer system. Some control

was achieved. It was not enough.

6.018 It was quickly found that the receipt of files

outstripped their rate of collation; by the end of the Commission only 47% of all files had been collated. There

were many reasons for this, some of which will be explained in later chapters. The result, however, was that in the

course of current operations it was necessary to know what files related to the investigations yet had still to be

collated.

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6.019 Further, as the Commission grew in staff it

became necessary to have means of checking on how the work was progressing so that remedial action would be taken where

necessary. Enquiries from suppliers of documents became more common; so too did enquiries from law enforcement

agencies seeking evidence by which charges may be

sustained. A system of recording details of files became necessary.

6.020 At first, partly because a concentration of

work on the development of other systems precluded work on

this system, a manual card index was employed. It was inadequate. Before the end of the first six months of the

Commission a computer-based registry programme was developed. It has been improved since that time and now is

a powerful instrument in controlling files.

6.021 The system allowed the recording of

administrative details concerning files. Thus details such

as file number, identity of file, source and various dates

of receipt, registration, collation and so on were entered

against formatted fields. These are mundane matters yet were essential for the proper working of the Commission.

The entry of the data was by the keyboard but simplified to such an extent that it could be operated by staff previously

untrained in computers, typing, or filing.

6.022 The programme allowed recovery of the data by

a variety of methods. Full details of the file could be

obtained by use of the file number or exhibit number. A list of files from a particular source could be produced

immediately, together with a division of the files between those collated and those not. Schedules of files could be

printed and arranged in any order the imagination might entertain. One particular application I favoured was to

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have produced a weekly summary of all files received over the preceding week so that I might keep check on the flow of documents through the Commission.

6.023 Statistical programmes were developed for the

files. These systems allowed the immediate production of

statistics on files held, the number collated, the number sent to Canberra. In addition, the statistics informed the

reader of the same information based on the folio count

rather than file count. This was often the more accurate

measurement.

6.024 As collating fell far behind the rate of

receipt of files (twice as many files are received per week

as are collated) , a need arose for some form of indexing of

files when entered upon the registry. It was important to

ensure that the process of cross indexing files at

registration did not become as time consuming as collation,

which really was a complex form of cross indexing itself. Accordingly, a system of keywords was chosen with a limited

number of sixteen fields available by which files were to be indexed. The registry staff selected appropriate keywords

from a thesaurus. Emphasis was placed upon the task being

discharged quickly with files expected to be recorded on the

registry within 24 hours of receipt. Thus the registry

staff was not expected to read a file and prepare a

comprehensive index. Rather, they were to capture the

obvious.

6.025 Such a system has limitations. At times there

was undue reliance placed on the cross indexing, it being assumed that an enquiry based on the keywords would

reproduce all files touching on those keywords. It did not

do this. Such could be achieved only by comprehensive

examination of files and that was left to the collation

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stage. Nevertheless, the keyword cross indexing system was valuable and played an important role in giving access to files.

6.026 The thesaurus was not fixed in its allocation

of keywords but grew as the Commission worked. A copy of it

in its ultimate form (but excluding sensitive keywords) is

to be found in Appendix 2-C. It is, itself, on the computer

and whenever registry staff seek to use a keyword an

internal check is done by the computer to ensure it is

approved.

6.027 The facility to add keywords proved useful in

other directions. The financial systems required the

identification of files containing financial records of particular types. Keywords were allocated to files matching

the description and other staff were able to check quickly on outstanding files from time to time.

6.028 However, in the end the keyword system proved

inadequate to meet another need of the Commission, namely to keep track of work being done on particular investigations.

In the early days this was not of great concern for the Commission was investigating, at a time, only one or two

matters. But in later years the Commission was often investigating a large number of areas at the same time.

Documents were received which related to different

investigations but on their face the identity of the matter was difficult to discern. The person procuring the document knew, of course, and so a system was required to mark the

document with the particular investigation in respect of which it was sought.

6.029 This was achieved by creation of another field

on the registry programme by which the code name of

particular investigations might be recorded. Because

documents may have related to several investigations,

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provision was made for up to four code names. It was

planned that the code names be entered at the time of

receipt, and that dates of collation and inclusion in

analysis be entered as they occurred. Statistics were then possible working off the dates. Thus the size of any

particular investigation, the number of personnel likely to be required and the time it was likely to take, could be

partly determined by reference to the current situation.

6.030 The development of programmes such as these

involved choices of the path to be followed. An early

choice was to not place the whole content of a file on the computer, whether by direct data entry or by some microfiche

system. The decision against doing so was primarily based on considerations of cost. Irrespective of whether a whole

file was placed on the system the administrative detail was still required. It would have been supplementary, not a

substitute.

6.031 If the system had been one designed for the

indeterminate future its supplement by a microfiche system

would have been attractive. There are now available computer-based microfiche storage systems which allow the

microfiche of the original document to be produced on the screen on request. This would enhance the system. It would

not replace it.

6.032 The computer-based registry programme was of simple design and did not involve sophisticated

programming. Since I have been engaged on this work, I have had occasion to visit many departmental offices where

investigatory work is performed in both the Federal and State spheres. I have noted the absence of any modern form

of control over documentation within those offices. This is a major defect in their operations which may be cheaply, and

immediately, remedied. At the very least, the registry

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system developed for my Commission should be made available

to law enforcement agencies. Better still, such systems

should be specifically designed to handle the immense flow

of documents through those agencies incorporating modern

microfiche systems.

6.033 One such office was the Australian Bureau of

Criminal Intelligence. It had the microfiche system

available and operational. It did not have the

administrative system provided by the programme developed

for me. In the final months of the Commission I authorised

the release of the registry programme to the Bureau and I understand that it is being or is to be employed by it in future operations.

6.034 It is not merely law enforcement agencies

which have a need for such a system. So too do many other

departments of State. So too do Commissions of Inquiry. The Government, when establishing any Commission of Inquiry,

ought to regard as an essential part of its administration the provision of the Registry programme together with at

least one person assigned to its operation. If the Inquiry

is small the Secretary may be the assigned person. If

larger, it requires the allocation of a person at the lower

end of the range of clerks employed by governments. In this fashion, Commissions of Inquiry will be provided with

considerable support without the necessity of the planning and creative effort demanded of me and my staff at the

commencement of this Commission.

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CHAPTER 7 - ORDER

"Order and simplification are the first steps toward the mastery of a subject - the actual enemy is the unknown."

Thomas Mann

The Magic Mountain (1924)

7.001 The assembly of vast quantities of incidental

facts, often minor and inconsequential in themselves, may be likened to the bag of jumbled jigsaw pieces. Until removed,

sorted and put in place, there is no picture and all is

confusion. In that state it is an easy path, for those so

minded, to declare there is nothing there at all; to seize

upon each piece in turn and challenge the complainant to make

something of it; to denigrate those concerned that injustice has occurred, ridiculing their claims by asserting they lack substance. For as long as the pieces remain apart the initiative remains with those who seek to protect the

criminal, and criminal designs and enterprises remain immune

from the strictures of the law.

7.002 The sorting of the myriad pieces of information

was not an easy task. Whilst like the jigsaw in many

respects, in others it was different, and far more

difficult. Unlike the jigsaw there was no assurance that all of the pieces belonged to the same picture; on the contrary

many did not. There was no jigsaw comprising so many pieces, nor so diverse in form and feature. Whilst the intuition

which marks a successful jigsaw assembler has its use in the

rationalisation of such confusion far more was required.

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7.003 In approaching the work of the Commission I had

no finished picture against which I could compare an

individual piece to see where it fitted. I had no assurance

that ultimately there would be only one picture to view.

Indeed, my suspicion was that there would be many without any correlation between them.

7.004 Thus in determining how items of information

should be sorted and brought into order I had no ultimate

goal against which the individual items could be

characterised, marked and filed. In developing operational

systems I was compelled to categorise the individual items in accord with characteristics each bore; and not by reference

to their place in some grand order the like of which I had

yet to determine .

7.005 It is this which distinguishes the approach of

the investigator from that of the prosecutor or, for that

matter, the approach of any lawyer who is presenting a matter

to a Court. In the latter case there is a goal. It is

readily identified and its characteristics are known. The

conduct of the accused has been uncovered. The laws against

which it offends are known. The lawyer has the task of

identifying each element of the impugned conduct and of

establishing it by proof of fact.

7.006 The investigator is in no such position, at

least not when confronted by a task such as mine. All he has is the occurrence of a number of facts which warrant

investigation. He knows nothing of the ultimate conclusions

likely to be reached. Indeed, he is a poor investigator if he approaches the investigation with any preconceived notion

that a particular offence may be involved or that a

particular scheme has been perpetrated.

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7.007 This may be contrasted with lesser

investigations initiated by a complaint. In that case the complaint may well identify the nature of the offence, thus

giving the investigator the "goal" of determining whether the accused did commit the offence. This approach is inapt where

there has been no complaint.

7.008 It is appropriate to note that it is here that

a fundamental difference arises between the approach adopted

in my Commission and the approach forced upon the National Crimes Authority. In the latter case the Authority is

precluded from investigating matters unless and until someone is in a position to identify "relevant criminal offences".

Thus it commences an investigation only after the goal is known. It is not allowed to commence at an earlier time,

when the nature of the of fence may be wholly unknown. That

is left to other agencies none of which, so far as I can determine, have the expertise, equipment or techniques to allow substantial success to be attained.

7.009 I have explained earlier that ultimately, the

rationalisation of information is the task of the counsel assisting me. However, it was my intention to relieve them

of as much as possible. This required that means be devised by which other less experienced staff could commence the

sorting and categorisation required to bring order to the jumble of fact. As I have said, the only basis on which this

could be done was by paying attention to the individual characteristics of each item of information.

7.010 Most information may be characterised by its

relationship to some matter or some entity. Sometimes, the same item of information relates to both. It is, however,

more easily identified by characteristics when it is categorised by its relationship to an entity than it is

simply to some indeterminate "matter". Let me explain.

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7.011 Let it be assumed that an illicit drug shipment

is intercepted on the wharves, being found in a container. At that stage, there are no suspicions as to who arranged it,

to whom it was intended to go or who was to facilitate its

passage through the wharf .

7.012 Such an item of information has, in itself, a

high degree of reliability. The drugs were intercepted; of

that there is no doubt. The particular container is identified as is the shipping company and the agents through

which the importation was arranged. All of this is

information to be received and stored. Whether it will

ultimately lead to the culprits who arranged its importation is not yet known .

7.013 The information has certain characteristics

which may be catalogued according to the subject matter. It

is a drug importation. It may have labels attached to it

identifying the type of drugs, the points of departure and

arrival, dates and so on. This may prove useful later. More

information concerning that drug importation may come to hand in which event some combination with it is required.

Alternatively, other like drug importations may be discovered. In this case, some comparison between

importations, drawing attention to like importations, is requ ired .

7.014 In the designs devised for my Commission, time

allowed the adoption of only a subject indexing system. This permitted a summary of the incident to be recorded and to

have attached to it keywords which fully described it and allowed its later recall. The system was implemented at an

early stage of the life of the Commission, and some 3,500

summaries have been entered.

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7.015 This system is inadequate. A better system was

specified for the analysis of major theft on the wharves.

This was to allow the full recording of all characteristics

of each incident of theft. Statistical routines were then to be applied so that like matters should be brought together.

The specifications for this programme still remain but time

has not allowed the writing of the programme or the entry of the da ta .

7.016 There is ample room for development of systems

to accommodate the recording of incidents generally. All

incidents suggesting criminal activity should be recorded by

systems which allow each characteristic to be captured in a recognisable and consistent manner. Once done, the

comparison of all incidents to find like matters should be facilitated .

7.017 The subject indexing system does none of these

things. It allows merely the recovery, by use of keywords, of matters given the same keywords. It is narrow in its

operation and the summaries are constrained by too short a

length. Whilst the latter aspect may be readily corrected

more development is required of a fundamental nature.

7.018 Much greater and more far reaching attention

was given to the second aspect of recording information, that which related it to entities. In the example given, the

information may be related to several entities. There is the shipping company; the ship itself; the consignor and

consignee of the container; the names of those employed on

the wharf at a time when it may be supposed the drugs would

have been removed from the container had they not been

intercepted; perhaps the identity of the wharf itself.

Against each of these, the information may be recorded.

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7.019 But the simple circumstance that the data may

be recorded is not enough in itself. A more important question is how it is recorded. This is answered by having

regard to the various ways in which the information may later be used in the investigation.

7.020 Investigations such as those being conducted by me are not confined to single criminal acts. I was asked to look at the repetition of criminal activities by a number of

people. Thus the incidents were spread over time; they were

by a large number of people; and they were geographically

diverse. The ultimate mosaic, or mosaics, of which they may

form part, could be equally diverse in their nature. Thus

the categorisation of the information had to be in such a

form that comparisons and connections, to the extent allowed,

would be easily retrieved.

7.021 The programmes created to achieve this were

therefore heavily oriented towards a disciplined orderliness

of storing information. Wherever possible information was categorised by its characteristics. In some cases the

categories suggested themselves. In others the categories were less apparent. Thus the recording of addresses in a

category reserved exclusively for that purpose was obvious enough. That personal characteristics should likewise be

specifically recorded, together with associates, was also apparent. The list of characteristics to be so recorded was

not easily imagined.

7.022 In the end the programme provided a number of

alternatives. Only one was manadatory . There had to be a

head field in which the identity of the entity was recorded. It had to have a name. There also had to be recorded the type

of entity. Whether it was a person (and if so, which sex), or a company, or a ship, or a country, or whatever. All other

information was stored in subordinate fields, none of which

was mandatory.

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7.023 The first of the subordinate fields was one to

handle information properly described as a defined

characteristic of the entity. This field was open ended in the sense that new types of characteristics could be entered

as they were identified. It required authorisation by the manager of the computer systems but ample room was left for

new ideas. The field required a two character code which allowed a possible 676 different types of characteristics to

be stored. In the first year or so some 120 were

identified. By the end of the Commission the number had

risen to 207. All manner of characteristics were stored. Some relate to personal matters, such as colour of hair or eyes; others to extrinsic matters such as telephone or telex

numbers ; others to the extent of investigations, such as

whether a birth certificate was held.

7.024 A second subordinate field to which a similar

approach was adopted was that of associations. There was a

need to record the associates of the entity, be they persons or companies, or something else. It was necessary to record

the nature of the association. For this a coded system was again employed, the programme allowing a two character code.

Some 76 different types of association were recorded in the

system.

7.025 Closely associated with this, and achieving a

similar purpose though in a different manner, was a

subordinate system which allowed entities within the system

to be linked one to the other. Again, a two character code was so employed with some 65 codes being employed at the

end. In addition there was also recorded the degree of reliability of the information establishing the link, the

degree of its significance and the date on which or period during which it occurred. I shall refer again to this in a

la ter chapter .

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7.026 The final formatted field was that of

addresses. Specific places were allocated for the storage of each element of an address ensuring that in any comparison

between addresses like would be compared with like.

7.027 In examining any item of information a collator was instructed to seek out these characteristics and record

them in the appropriate format. Thus he was taking any item

of information and extracting from it all that it could

give. He did not need to know what it may ultimately

establish or how it may fit into the large picture. Thus it

became possible for the jumble of fact to be sorted into order.

7.028 There were, as may be expected, some items of

information which defied characterisation in this manner. To

accommodate those items a free text field was also provided. Here the collator could insert summaries of the items. The requirement was merely that he record the date on which it

occurred, if that was discernible.

7.029 The resulting system became a most powerful

tool. It allowed many analytical systems to be devised which

re-ordered the information, and allowed its portrayal in manners helpful to the Counsel assisting me. These systems would not have been possible without the discipline imposed

in the entry of the data in the first instance.

7.030 It has been occasionally suggested that such an

approach, whilst useful in my enquiries, is not so useful in

general law enforcement operations. I do not accept that.

The approach is based upon the fundamental objective of a

rigorous and disciplined storage of information in accord

with its intrinsic nature and not in accord with some view of its eventual significance. The information is not

contaminated by subjective opinions. Eventually opinions do

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have to be formed. When they are they should be on all

available information bearing upon the matter. This approach

is directed at achieving that end, putting off the formation of the opinion until a time is reached when all available information can be examined.

7.031 Accordingly, I believe that this approach is

one suitable for general law enforcement agencies and should be adopted by them. This is not to say that the format of

the programmes cannot be improved; it can and was the

subject of daily improvement throughout the life of the

Commission .,

7.032 There was one other programme which was

specific to the Commission, and not of much use except in

continued investigations of the Union. This programme was

one designed to record information on the members of the

Union from sources exclusively within the Union (being the Union records) . It was linked to the general data base and

provided additional information on those men recorded there who were also members of the Union.

7.033 Such philosophies and systems do not allow for

ease in data entry. They require collators who understand how to examine information and extract material facts from it.

To a considerable extent it was possible to devise systems of collation by which certain classes of information could be

examined and rules applied which left little or no room for independent judgment. Thus teledexes, diaries, corporate

affairs records, and other documents bearing a consistent pattern could be and were subjected to inflexible criteria

for data entry. In these cases the data entry was possible through a direct examination of the documents by data

processing staff. But in other cases, the majority, it

required judgment.

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7.034 For most of the life of the Commission it was

left to the lawyers to collate the files. It was not until

December 1983 that a request of some 18 months earlier was

acceded to, and seven collators (employed far more cheaply

than the lawyers) were engaged in March 1984 to do this work. The productivity of the whole Commission increased

greatly as a result. However, even with the benefit of their

support for the last six months of the Commission's life,

only 27% of the total folios (763,000 out of 2.84 million) were collated. It may be noted that the revelations of that

amount of collation were shattering, revealing far greater

organised crime than had previously been supposed.

7.035 Collation is an art and requires training. The

seven collators were subjected to a five week course, one week of which was a basic collation course run by the

Victorian Police. I am most grateful for its support. The people chosen as collators had no legal background, nor any

previous training or experience which might have been expected to fit them for the task. They were chosen for the

brightness of their intellect and their expected application to work. It was the training course which equipped them with

the knowledge and skill; and thereafter there was a learning period during which they grappled with its intricacies. In

this they had the support of a Collator's guide, a copy of

which is to be found in Appendix 2-D.

7.036 The result of the operation of the programmes

and the collation is gratifying. A marked reduction in bulk was achieved. If the financial programme (which I have yet

to explain) is left out of consideration the reduction in mass achieved was such that the original was reduced to

8.8%. That may be regarded as significant.

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7.037 What is more the information was categorised in

a manner which facilitated easy retrieval. I leave to one side for explanation later some of the analytical programmes

which it permitted. In terms of simple retrieval the data base became most powerful. Any enquiry by the name of an entity produced that name, and any like names, no matter where they occurred. Enquiry was not limited to names. It

could be by address, or part thereof, or by personal

characteristics and so on. All manner of enquiries were

facilitated. A Computer Systems Enquiry Manual describing

the enquiries, and how they may be made, is in Appendix 2-E.

Appendix 2-F is a Guide to Programme Use which is a manual

for Data Process Operators explaining in greater detail the

operation of the systems.

7.038 Accuracy in data entry is an elusive goal. A

system such as this has many points at which error may occur.

The amount of information handled is so great, and by so many

hands, that human error is inevitable. It may be something

overlooked by a collator; something misread by a collator;

a typing error; a misremembered code. Yet other errors may

arise through believing that information relates to the same person when in fact it relates to two different people. There are instances of different people bearing precisely the same full names. Any system of filing has such problems and

this no less than others.

7.039 For this reason it was a requirement from the

very beginning that every item entered upon the computer should bear the reference to the document from which it came.

That requirement was maintained to the end of the

Commission. Where the same information came from several sources there was a subsidiary file in which the additional

file references were recorded.

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7.040 In an endeavour to reduce errors in data entry

a more elaborate coding system was introduced in the latter months of the Commission. This provided rigorous disciplines

for data entry. If in response to a particular code the data entry could be only yes or no, then only one of those answers

would be accepted. Similarly only a date entry which

reflected an actual date was permitted. In this manner some

errors were detected and eliminated.

7.041 Collators usually dictated the summarised

material which was then typed on a word processor. It was then re-entered upon the computer thus making room for further typing errors. Towards the end of the Commission

arrangements were made for the word processor to transmit electronically the typed material to the computer, thus

eliminating this as a source of error.

7.042 Weekly prints of all material entered were

scanned by editing staff to detect format and grammatical

error, allowing correction of the obvious error.

7.043 Errors of this kind are annoying but not fatal

as they are usually apparent to the lawyers analysing the

material later in the operation. More significant errors could arise where data was entered against the wrong person.

This usually occurred where the names were the same.

Instructions were given that except in cases of complete

certainty new names were to be created and the data kept separate. This was improved by allocating the task of

determining the name against which the data was to be entered to specially trained data processing staff. Special

programmes were run bringing together people whose names or

addresses or other characteristics were the same. Editors

examined these prints to determine whether the two entries should be combined. If so, a special programme allowed the

immediate combination ; if there was still uncertainty a link

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Targetting

between the two could be inserted which reflected the degree

of certainty felt for them being the same person. Thus the lawyers at a later stage had the full benefit of all opinions

on the identical nature of individual entries without there being irremediable confusion of the data.

7.044 This systematic approach to editing data proved

an asset of incalculable value to the Commission, and the manager of the data processing staff, Mr. R . Wright, has my

admiration and gratitude for the manner in which he

implemented these procedures. My gratitude is also due to

the many members of the data processing staff who applied themselves so willingly to such arduous and what, at times,

must have seemed so unrewarding work. Marked as Appendix 2-G are the tapes containing the data base of the Commission.

7.045 This work is very much the gravamen of

intelligence systems. Certainly much depends upon the ability of the senior operational staff in their interpretation of the information. But their output would be puny indeed were

it not for the intensive and far reaching work done at this

lower level. It is the stuff from which first rate

intelligence is born .

7.046 Law enforcement agencies in Australia have

nothing matching this system (by which I include not only the programmes but the whole operational staff). It is a major

defect in their operations. It should be corrected as a

matter of the highest priority.

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CHAPTER 8 -MONEY TRACKER

"Everything which is properly business we must keep carefully separate from life. Business requires earnestness and method; life must have a freer handling

Elective Affinities (1809) Goethe

8.001 Criminal organisations profit in large amounts of money. Criminals engaged in petty crime use cash. Some

of their bolder colleagues use a lot of cash. Criminal

organisations also employ large quantities of cash. But

additionally, the amounts being so large, they make use of the banking system in the country. Even the active sole

criminal tends to do so. It is all very well to use cash for the daily necessities, for shouting all to a drink, to

sport the generous bank roll. Criminals associate with other criminals and the latter are only too ready to take

for themselves the illgotten gains of others. The cash concealed in a wall, under a mattress, or in a car, is as

susceptible to theft as any honest citizen's possessions,

and is perhaps more so. Thus financial institutions such as

banks are resorted to for much the same reason as any

businessman finds their facilities convenient.

8.002 Banks are not the only institutions preferred by criminals. I have seen considerable evidence of building societies being employed to meet their ends ; and there is

no doubt that gambling institutions such as the TAB are

employed in the unfamiliar role of banker. An account is

opened and over a period of time money is paid in so that it is in substantial credit. Some of the money may be employed

in gambling but the greater percentage is simply left

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there. After some months it is all withdrawn by a cheque

drawn by the TAB. Should any question arise about the source of funds the criminal refers to the cheque and, if he

does not say so explicitly, allows the inference to be drawn that he won the money on one or more races.

8.003 Nor is this type of dealing limited to

financial institutions. There is no doubt on a great deal of the evidence before me that certain solicitors have

allowed their trust account, if not their strong rooms, to

be employed as repositories for monies the source of which,

on any rational view, could only be illegal enterprises. By depositing monies with such solicitors, some hope or

expectation is held that law enforcement agencies will have difficulty in locating the funds and in seeking explanations

for them.

8.004 In all of these cases the criminal employs

false identities. A bank manager or other custodian willing

to accommodate such preference attracts criminals to him like flowers attract bees. From my investigations it seems

that such corrupt managers (and they are not limited to banks; they are to be found in branches of building

societies and so on) are more likely to be encountered in small branches rather than large. This facilitates

investigation, for once such a person is identified in respect of one criminal there is every prospect of other

criminals being found employing him.

8.005 The operation of false accounts muddies the

waters for an investigator. It makes difficult the tracing

of monies if the starting point is the criminal activity. The criminal, conscious of the need to cover his tracks,

takes every precaution to ensure that the proceeds of the crime cannnot be traced to him. But if the starting point

is different, if it is at the point where the criminal commences to enjoy the possession of the money, the tracing

exercise is far easier.

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8.006 Criminals, and their organisations, are no

less (and may be far more) fond of the usual manifestations

of wealth than any other rich person. They seek to possess wealthy homes, land, expensive cars, yachts, and incur high

living expenses. In all of these cases they use money in

large quantities. They may pay for much by cash; but

ultimately, and especially as detection-free years pass by, they find the normal financial institutions far more

convenient and seemingly no less safe to use.

8.007 What is more the illgotten gains tend to be

employed fully in satisfaction of their lust for the good

life. This often leaves little to finance further criminal

ventures. By their nature (though not universally so)

criminals show little self restraint and have little financial ability. With their success in crime they plan

bigger and more expensive criminal ventures. These require capital. There is little doubt that as a result they seek

out loans to provide the monies required. Sometimes the

loans are on the fringe money market involving financiers

who well know that some illegal enterprise is planned and who exact their return accordingly. Yet on other occasions

the financiers are legitimate, being persuaded to advance the money for seemingly honest ventures. This has the

advantage from the criminal's point of view in that the return to the financier is more modest. However, in such

cases the criminal must employ apparently legitimate business techniques and this means using the normal banking

system.

8.008 For all of these reasons criminals in

organised or large scale crime do make use of the banking system. This leads to the creation of large accounts with many taxation vouchers. Once located, those vouchers

provide a fertile source of intelligence to the

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investigator. They permit accurate assessments of cash flow

and allow comparison with suspected but unsolved crimes.

They facilitate investigation for the purposes of recovering tax and assist in identifying the other parties in the criminal organisation.

8.009 However, as any investigator in the Australian Taxation Office, Customs, or any Office of Corporate Affairs

will confirm, the seizure of a large account poses

difficulties in handling it in the investigation. I recall

one account seized by the Task Froce Zebra of the Victorian Police in the early days of the Commission. It was a large account operated by a well known starting price bookmaker. Its analysis revealed the identities of most major

bookmakers in Australia. Yet the resources of the Victorian Police Task Force allowed the analysis of no more than one

year of that account. It was simply too big to handle by

manual means. The data could not be readily manipulated so

as to extract its full value.

8.010 Problems of size beset other law enforcement

agencies. Investigators in the Corporate Affairs Offices

and in the Australian Taxation Office are confronted daily with immense tasks. It is not generally appreciated that

upon it being announced that an investigation will be undertaken the number of people allocated are sometimes merely two and often only one person. There is little

clerical support and certainly no system support such as has been developed during my Commission. In the case of major

corporate investigations - where a Special Investigator is appointed - the most signficant impact is the imposing title rather than the allocation of substantial resources. Often a Special Investigator is on his own or is supported by

merely one or two officers.

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8.011 The result is a grossly deficient

investigation. The investigators do their best but they are constrained by time and the pressure of new investigations

requiring their attention. Consequently, they do that which the little time allows and no more. The most vulnerable

area to such restrictions is the analysis of cash flow. Yet that is the very area where the principals behind the

sophisticated criminal activity are likely to be discovered. It is also the place where the most telling

remedial steps may be taken. The effect of hamstringing the investigators by inadequate allotment of resources is to

permit the more serious offenders to escape and to limit the effectiveness of legal recourse.

8.012 The lack of support for investigations imposes

the greatest injury in the area of financial analysis. It is here that my operational systems have allowed the

deficiencies to be overcome to a significant degree. However, it should be appreciated that the systems require

personnel to operate them. There must be a computer and programmes; there must be a data processing staff. For any

single investigation the provision of such resources would be far too expensive. What is required is the existence of

such resources for all such investigations. The cost is then spread over many. Both State and Federal Law

enforcement agencies need to adopt this approach especially in areas concerned with financial matters. In particular,

the fraud squads, corporate affairs investigations, special investigations, liquidators, bankruptcy registrar officers

and taxation investigations have an immediate need for such support.

8.013 A financial investigation usually encompasses

two objectives. The first is to track the money. This involves identifying the stolen money (which is often

difficult) and then following it through perhaps several

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Money Tracker

accounts to its destination. The second is to assess the financial worth of the person being investigated and to

identify the sources of the wealth. As will be observed,

the investigation approaches the task from two directions: one is the point of loss (or fraud); the other is the point of receipt (or the beneficiary). Ideally, an investigation

moves from both ends at once. More often, however, the investigator finds it difficult enough to identify just one

of these points.

8.014 It is appropriate at this point to draw

attention to the high likelihood that in any investigation

it is probable that at least two law enforcement agencies will be examining a matter. A fraud squad or corporate affairs investigation will often be involved commencing at the point of loss (there having been some allegation of

fraud). There may well be a tax investigation at the other end, it being suspected that the beneficiary of the fraud

has not declared his full income. The result can often be two groups of investigators striking each other in the

pursuit of their objectives. The inhibition in law on the tax investigator informing the other investigators of his work not only is highly inefficient in the application of the resources of the State but also often works to frustrate

the investigation by the non-tax investigators. This arises because the tax investigator may have seized documents

pertaining to the matter which, by the operation of the Income Tax Act, he cannot disclose to the other

investigators. The documents may thus be irrepairably lost

to the other investigators. The criminal is protected, at

least from the criminal and civil law. He need only fear fiscal laws. Such a situation is disgraceful yet remains

despite protests over many years by all law enforcement agencies, and by myself. It is justified on the ground of

privacy - in this case, privacy from investigators charged

with investigating matters so that the law may be enforced.

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Money Tracker

8.015 A starting point for investigations is usually

the identification of bank accounts, and the seizure of the vouchers by which the account has been operated. Once they have been seized, the task is to examine them. Occasionally

there are not many; but more often they are voluminous.

There are cases of 20,000, 30,000 and more vouchers which I have taken into possession. The task is to examine these

vouchers in a meaningful manner.

8.016 The vouchers reveal a great deal of

information. They show, to the extent that cheques were

used, the identity of sources of money both by name and

paying bank ; and the identity of payees again both by name and collecting bank. Endorsements often reveal addresses,

telephone numbers and other useful information. Cash flow is also established. Should cheque butts and/or cash books be seized, dissections of the cash flow may be made and ledgers and balance sheets prepared. The investigator may

then go to the banks of selected payers and payees and

examine their accounts. Moneys flowing back to or coming from the same branch of the bank as the first account holder

may be examined to see whether, to the extent a different account holder is shown, the moneys come from the same

person. Thus other accounts may be discovered. Further, the accuracy of cash books and balance sheets may be checked

(an important matter for many investigators), and where

other accounts are found the investigator may combine them

to give a full picture.

8.017 However, all of this takes a great deal of

time. If done manually there is much need for noting

amounts in different orders (e.g. by name of payee/payer, by date, by bank), and much recreation of accounting records.

The work is not only time consuming, it is very monotonous. As a result, enthusiasm wanes and errors proliferate.

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8.018 To overcome this problem, systems were

developed which allowed the data entry to be undertaken by

the data processing staff. Various standard forms of books

of account were identified: banking records, such as ledgers, cheques, deposit slips and accounting records, such

as invoices, cheque butts, cash books. For each of these a programme was written which presented on the computer screen

a facsimile of a typical record. The staff was instructed to take the records in their original form (photocopying such

voluminous material was impractical), and enter the data from it into the computer. Since errors were as likely here

as with an investigating accountant doing it manually, certain of the information (such as date and amount)

required entry twice, with the computer checking the second attempt to ensure it was the same as the first. There were

other verification devices. The computer checked to ensure

that no identical entry (such as the same cheque number,

date and amount) had already been made, thus eliminating double entries. It also checked whether the totals on bank

statements matched the addition of the entries it comprised.

8.019 Once the data was entered in this fashion all

manner of analyses became possible. Data relating to the

same account was brought together. Accordingly, data found on cheques could be compared with the data in cash books and

where different a discrepancy report printed. For any account, or any combination of accounts, the cash flow could

be measured overall or in any division of time requested. The data could be presented in accordance with an

alphabetical listing of names of payers and payees or in accord with the paying and collecting banks or in simple

chronological order.

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8.020 Equally important was the generation of a

summary of each account, which was placed against the name

of the person entitled to operate the account. The summary indicated the extent to which the Commission held financial

records relating to the account and the periods between which each of the records ran. It also showed total cash

flow and the cash flow in six monthly and annual periods.

Thus the significance of the account, and the time when it

was significant, could easily be seen.

8.021 All of these programmes flowed from the

initial data entry of the data processing staff. No further work was required by personnel. It was done by the

computer. The saving in man hours of investigators' time

was considerable. Some 4,845 accounts were processed in this manner involving 1,500,915 entries. The work could not

have been done manually.

8.022 The production of printed reports of the type

I have described was of great assistance to the

investigator. The ability to specify the differing

accounting periods enabled the system to be as much use to

taxation investigations as it was to fraud investigations or any other type of investigation. On several occasions I was

able to be of assistance to law enforcement agencies by making these systems and staff available to process some

major accounts they had seized. But the advantages did not

stop with those reports.

8.023 The two objectives I specified earlier were

the tracing of moneys, and the assessment of financial worth. To achieve these two ends required further

development of the financial system.

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Money Tracker

8.024 The tracking of money was achieved by use of

the link analysis which I describe in a later chapter. It involved the entry of links between account holders and the payers/payees. Thus every significant payer/payee was

entered as an entity on the general system and data entries were made against those names recording the financial events, and entering the necessary links. At first this work was done manually and proved very time consuming.

Towards the end of the Commission computer systems were

developed to do the work. This required intensive editing

of the names of payers/payees and the identification of the

names with any that may already be on the system. Once that

was done the system allowed automatic generation of the data with the general system. The analysis of this data is a matter I will recount in a later chapter.

8.025 The assessment of wealth required the ability

to manipulate the primary financial records so that balance

sheets could be produced. The early systems allowed the recreation of cash books. Later the supplementary financial accounting records were planned for generation. Fields were

added allowing investigating accountants to dissect cash receipts and payments and thus permit the generation of ledgers and subsequently balance sheets. This work was still underway at the close of my Commission. It should be

followed through. Ultimately the system should allow for the capture of balance sheets of the entity under

investigation, and for those to be compared with the balance

sheets generated by the computer from the primary records.

8.026 Systems such as these financial programmes are

in urgent need in all law enforcement agencies where analysis of financial accounts is required. All governments

should establish a centre where data processing staff is provided with programmes such as these so that the various

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Money Tracker

investigating agencies may avail themselves of these

facilities. Investigations will be expedited and more competently discharged. In due course I would expect each

law enforcement agency to have its own facility to attend to

such work.

8.027 Questions have been asked from time to time

about the admissibility of the product of such work in the criminal court. Provided the original records are produced

I see no reason why the computer record of those matters

should not be admissible as an aid to the Court in the

interpretation of the original documents. It would require some evidence that it had been checked for accuracy but that

would be straightforward. An explanation of dissections, for example, if supported by a printed document showing the

dissection made in each case, should be more than sufficient to persuade a Court to accept a final balance sheet produced

by these methods. Thus the systems may well prove valuable at all stages in the law enforcement process, including the

criminal and civil trials.

Volume 2 -74- Chapter 8

CHAPTER 9 - INFORMATION CRUNCHING

"In the past human life was lived in the bullock cart; in the future it will be lived in an aeroplane; and the change of speed amounts to a difference in quality."

Science and the Modern World (1925)

Alfred Norman Whitehead

9.001 In the first year of my investigations, I came

across the strange phenomenon of the dead being

resurrected. No fewer than 22 cases were identified, the

names of some of the "dead" being:

William Arthur Woods Leslie George Cunningham William James Baxter Francis Joseph Lee

George White Maxwell James Flemming Leonard O'Sullivan Alan William Bees

John Thomas Donnelly Frederick Mason John McLeod

9.002 It is not the purpose of this part of my

report to examine the reasons for the "resurrections".

Suffice it to say that in one case investigated in some

detail the "dead man" remained dead, his name and identity being adopted by a criminal to escape from the law. In

another case the names and identities of two dead men were

adopted by one man who, under those two adopted names, was

the subject of an unsuccessful search by police

investigating a murder .

Volume 2 -75- Chapter 9

9.003 The use of false names is not limited as a

cover for violent criminal activities. They are used also to perpetrate fraud. One man, King, was found to be

operating some 32 different names and under them was collecting taxation refunds, social security payments, and

workers' compensation. He established an 'operations room' in which the records for each identity were placed in appropriate files and were maintained by him for some years. He was convicted of fraud and sentenced to four

years imprisonment. A chart showing his use of the

different names is attached as Attachment 2.9A to this

Cha pter .

9.004 There is ample evidence of the Union

facilitating the use of false names. When I started the

Commission it was suggested to me that each unionist may be employing up to four different names each year in order to

minimise taxation and effect frauds on employers, the

Department of Social Security and workers' compensation

insurers. Whether every member of this union engaged in

these practices I do not know; but there has been

sufficient evidence to satisfy me that a very large number did and still do.

9.005 Thus the problem of breaking aliases was perceived early in the life of my Commission, and thought was given to how it would be accomplished. Standard police work in this

area depends very much on information being received about

the use of false names, and then being checked by comparison

of fingerprints, comparison of writing, or of photographs.

Those methods were not likely to be of much use in the

absence of information identifying aliases and of no use in

breaking aliases no longer in use. Other methods had to be

devised.

Information Crunching

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Information Crunching

9.006 A person seeking employment under a false

name, or making a claim for compensation or social security benefit has a problem. He is asked at the time of

application to answer all manner of questions relating to his personal history. If he chooses to do so under a false

name he must recall it accurately, and the related history, in the future for the likelihood is that as time passes, enquiries will arise which he will want to answer

consistently so as to execute the fraud to his profit.

Recalling a false name is one thing; recalling the manner in which a number of questions were answered is another. In

my investigations, I have found that it is difficult for an offender to maintain accurately a totally different family

history to meet each circumstance. Most seem to find the memorising of their false name, and perhaps a false date of

birth, more than enough. There is a tendency to maintain the true names of wives, children, dates of birth of the

family, and to give correct answers to other questions.

9.007 Even in the task of memorising a false name

for himself the villain has a problem. Often the false name

is his mother's maiden name and his false date of birth is

merely a juxtaposition of day, month and year of his true

date of birth.

9.008 Hence there was an opportunity, given the

recording of data of this type, for my staff to break

aliases by comparing like records and establishing which of

those names seemed to have a number of similar

characteristics. Once pairs of names were arranged in order and an alias was still in use the two names could be

subjected to surveillance and the alias broken. If the alias was not in use, comparisons could be made of

signatures and the weight of the identical information

mea su red .

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Information Crunching

9.009 At first this was attempted manually. At that

stage it was believed there were about 1600 members of the

Union, but even then over 6,000 names had appeared. The manual comparison of so many names was out of the question.

9.010 The first of the analytical programmes was

then developed on the computer. On being instructed to compare two names the computer compared various categories

of stored information and identified those items of data which were identical. These were presented in succession to

the viewer who had the opportunity to judge for himself the significance of the similarities. The computer was doing in

less than seven seconds a task which two officers formerly spent two days doing.

9.011 While this programme provided a system to

identify like information it became apparent that unlike information may be just as important in breaking aliases. Full records of periods of employment and compensation were on the computer. A comparison of unlike information would

reveal the period of time when each name was used.

Employment under one name followed in time by employment

under another name, though unlike data to the computer, tended to suggest a pattern of conduct revealing the use of

an a lia s .

9.012 Although neither of these systems proved the

alias they drew attention to characteristics found in

documents which might prove significant (and which would have some evidentiary value) in establishing an alias. The

system filled the place of the informer except that the quality of its information was rather higher than is usually

the case for an informer.

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Information Crunching

9.013 The system grew rapidly eventually comprising

some 90,000 names with data entered against them. (Many of them are companies, businesses, ships, places and so on; and where they are names, some are unknown names or merely a given name.) The comparison of so many names by use of a

system which requires the selection of any two was not a practicable course to follow. Some further system was

required.

9.014 The obvious answer was for the computer to

compare each name with every other name. It was to look for the common information and where it found it it was to present a report pairing the names. Even this would not be enough. The characteristics being recorded were such that most names would have something in common. Thus all names would be paired with a resulting document of extraordinary

length. The Commission was not interested in mere

commonality however ; it needed a system of grading so that

the more significant common data would produce a listing of

more pairings where the more significant were identified

before the less.

9.015 In the system later developed the first task

was to provide for the exclusion of certain items of data which did not have any significance. An example is a coded entry which recorded whether the Commission held a birth certificate. Plainly that was of no significance in

breaking an alias as the possession or otherwise of a birth certificate by the Commission was outside the influence of the individuals concerned. (The existence of two birth

certificates was not even a significant point of departure

because aliases were often created by adopting the names of actual people for whom birth certificates existed.) On the other hand, there were classes of information where the commonality was very significant. The same fingerprint, for

example, is one. All other characteristics, however, varied

in importance depending upon the degree of frequency with

which they occur in life.

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9.016 Having established such a table, which

included the use of a variety of mathematical methods, the programme then proceeded to compare every name. Pairs of

names were then arranged in order of greatest similarity to least, with a cut-off point beyond which no pairs were

printed. In this fashion the computer acted as an analyser allowing concentration of effort on those names where the

similarities were so great as to make it most probable that

the names were aliases. It did not prove the matter and,

indeed, experience showed that close associates often had

similar characteristics thus producing each other's name as

a possible a lias .

9.017 The resulting pairs of names served one

purpose of the Inquiry, namely to allow concentration of

effort on breaking likely aliases. It was not easily

applied to a case where a particular man was suspected of having aliases but where there was no information about the possible names he was using. The lists had to be searched

to locate the name, perhaps in several places. Since the lists were very long it was arduous and was likely to

produce error. A further programme was developed to accommodate it. By this programme, the top fifteen matching

pairs to the nominated name were produced.

9.018 The use of this system proved remarkably

successful. In the top fifteen there was usually found

about four of the aliases (not always the top four

possibilities). Indeed, so successful was the system that

when confronted in the witness box with the question of what other names he used, the witness (concerned about a possible

charge of perjury) often told me all of the false names he used. This often extended beyond the names known to my

staff. For a while, the members of the Union believed there must be an informer, and on one occasion following a sitting

a supposed informer was shot at (not fatally) by friends of

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Information Crunching

the witness. However it soon became known that the computer

systems of the Commission were responsible, and I believe this was a major factor influencing decision to refuse to answer any questions when called before the Commission.

9.019 This demonstrates a valuable use to which a

computer may be put in the analytical work of an Inquiry. Computers have remarkable capacities to sort and manipulate numbers. Some describe it as 'number crunching1, but as the heading to this chapter suggests, I think the better

description in this work is 1 information crunching1.

9.020 There were other analytical tasks performed by the computer. One such programme allowed the rearrangement

of personal characteristics in order of date, which

facilitated the preparation of chronologies. This programme

was devised so that the user could request all dates, or merely those dates relating to particular areas of

interest. One area was employment history; another was compensation history. This programme allowed consequential

programmes to run which checked to determine within the Commission data base or the data base of some other agency

(such as Social Security) any clash of periods during which social security benefit was paid and work was performed.

9.021 A further programme allowed the analyst to

inspect records entered since he last enquired of the data base or after some specified date. This was of particular

value where an analysis was being prepared, the analyst was called away for some days and on return he wished to see if

any further information had come to hand.

9.022 Towards the end of the Commission programmes

were implemented which allowed the user to retrieve data

relating to persons of particular orders of

characteristics. Thus he could ask for all employment

histories, criminal histories, travel movements and so on.

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9.023 In the examination of the free text

entries against entities considerable advances were made in

analysis. Often the amount of text stored against an entity

may have reached tens of screens of information. As it was

entered in no particular order it tended to be a jumbled

mass and required sorting. Fields were added which allowed the analyst to note dates and labels or keywords and the

computer then sorted the text under each heading.

9.024 It is to be hoped that as time passes these

systems will improve far beyond their present state

(assuming they are retained and the work continues as

before) . As they stand, however, they represent a new approach to investigations. They substantially reduce the time investigations take and allow methods of investigation to be employed which were never before possible. They save money notwithstanding that their implementation costs

money. They greatly enhance the rule of law by making proper investigations economically feasible.

Volume 2 -82- Chapter 9

CHAPTER 10 - BREAKING WALLS

"Lay me on an anvil, 0 God. Beat me and hammer me.into a crowbar Let me pry loose old walls. Let me lift and loosen old

f ounda tions ."

Prayers of Steel (1920) Carl Sandburg

10.001 Perhaps the singular characteristic of

criminal organisations is the erection of barriers between the senior principals and the perpetrators of the criminal

act. Silence is one aspect. There are others. The planning and control of the criminal activity is through lieutenants

and often concealed behind a corporate wall. Steps are taken to ensure that the investigator will be confronted not

only by silence but also by a structure as impenetrable as

man may fashion it.

10.002 The weakness of this wall is that the

successful operation of criminal enterprises demands that there be gaps. Communication must take place between senior

and junior members. There must be a means by which the profits of the venture may be passed from the perpetrator to

the principal and some system whereby the perpetrator is rewarded. To maintain silence the perpetrator must be both

protected and disciplined. All of these matters involve

windows in the wall.

10.003 So too with the types of criminal ventures

being executed. The more experienced the organisation, the

more likely it is to embark upon complex ventures requiring

capital, the employment of a number of people, planning and

the utilisation of normal methods of communication and

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Breaking Walls

transport. Yet, by its nature, the organisation is

compelled to rely upon people of little trustworthiness.

The opportunity for the organisation, or its principals, to be cheated is always present, and this acts as a form of

pressure on the principals to mount the wall and peep over to see what their minions are doing.

10.004 In one case, as a result of action taken by

Special Prosecutor, Mr. Redlich, the assets of the principal were being enjoined throughout Australia. In a desperate

attempt to remove assets a courier was employed to take jewellery and cash from Australia to California where he was

to hand it to the wife of the principal. At that time she was living with a man whose brother was a member of a Mafia

organisation in that State. The courier did as he was bid, except that on arrival in California he posted the jewellery

back to himself in Australia. I do not know what he did with the money. Although threatened by the wife, although

told and believing that she could call upon the enforcers of the Mafia, the courier had little compunction in "stealing"

the jewellery. So Much for the often asserted discipline said to be imposed on such couriers through the threat of

repr isa 1.

10.005 In another case at the hearings of my

Commission a particular painter and docker came into

prominence. Although not known to me at the time, he was often used for the shepherding of drugs from Sydney to

Melbourne. His "exposure" led to the principals believing it was too risky to employ him. As a consequence, one of

the principals escorted the next shipment himself; and was

caught.

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10.006 In yet another case the principal erected a

number of companies between him and the scene of the fraud.

The dealings were conducted by his "bagman" without reference to his principal. But when it came to handling the money flow the principal insisted that the cheques be signed by himself or his secretary' . Quite a breach in the wa 11L

10.007 Most cases, in my experience, are more

difficult to break. They require a concentration of effort

on the links between the junior and senior members of the

group. This can be difficult because the identity of the

members of the group is usually not known. Thus the

investigation has to proceed in the development of links without knowing, especially in the early stages, precisely

where the ultimate senior principals may be found.

10.008 The "links" to which I refer are the types of

associations that bind people together in a community. In the law, the characterisation of a person by his associates has a bad name. But in life, it is by associations that a

person operates his business and becomes an integral part of the community. He is judged, daily, by the company he keeps

and the people with whom he deals.

10.009 One form of association is friendship. It is

the least useful in an investigation. Another form, more

useful, is the association constituted by the passage of

money from one person to another. Yet others include family relationships, which are strong links in some communities.

Then again there are associations arising from offices held in companies and businesses, from premises occupied, from telephone contacts, meetings and travel. There is

considerable value to be derived from examining merely financial links; but at times the wall may be breached only

by examining all forms of associations.

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10.010 The concept of breaking down the walls by

examination of associations is not new. It is done often in commerce where attempts are made to trace ultimate

shareholdings or to find who is behind some venture. Nor is it new to policing. Police-trained analysts spend much of

their education in the preparation of complex matrices resulting in large charts being displayed revealing the

nature of the organisation. The purpose here is often to do little more than provide a briefing guide to new

investigators and to allow senior officers to concentrate the investigatory effort on persons whom the analysis

reveals to be more significant than others. To some extent new discoveries are made in the course of drawing matrices

but usually that which is new is limited not to the

identification of previously unsuspected criminals but

rather a re-ranking of those already well known.

10.011 In approaching the work of the Commission I

found the existing techniques too limiting. The preparation

of matrices took too much time and required work by skilled

personnel who were in too short supply. What was more, the

resulting matrices were not likely to serve my purposes

well. I was anxious to uncover new names and not merely

express views about the ranking of the old. I also found existing matrices inadequate for my task. I wanted to know

a lot more than most of them displayed. I wished to know the position at various dates and wished to be informed a

great deal more about the nature of the association.

10.012 Accordingly, a new approach to the problem was adopted making use of the power of the computer. First

tackled was the proper description of the link or the association. They came in different types, so each type was

identified and coded. The coding allowed for expansion to more than 600 though only 65 types were used. Then the type

of link had four characteristics added. The date of its

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occurrence, or the period, was one characteristic which was regarded as vital. Another was the reference to the source

document from which it was procured. Then there were some quality matters. One was the degree of reliability ; the

usual intelligence grading (A-G, 1-6) was employed. The last was the degree of significance. The collator was given a

range from 0 to 99. Thus each link was identified by type, source, date and characteristics. Every time it was used

those characteristics would be evident and would allow the analyst to assess the value of the association. What was

more, since the computer recognised each link by each of its component parts discriminatory analysis could be undertaken.

10.013 The next phase was to determine how the links

should be employed. One answer was simply to draw the matrices in similar fashion to the police analysts, but

using the computer. This, however, was regarded as too limiting. Instead, three quite separate programmes were

developed .

10.014 The first programme was one in which two names were entered, and all links or associations between those

two entities were printed. The links may be direct, as they would be if there had been direct dealings between them. Or

they may be indirect. Here other entities may intervene yet

the association may be real enough .

10.015 An example of this was where each of the named

persons was a director of some company. The two companies may deal with one another. This programme produced those

dealings as an indirect line of association between the two chosen persons. The first would be shown as director of his company; that company would be shown as having dealt with the other company; and the last company would be shown as

having as one of its directors the other person. The

programme accommodated up to three intervening entities. As

there have been in excess of 173,000 links entered, the value of this programme cannot be gainsaid.

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10.016 Its value was demonstrated shortly after it

first became available. A witness admitted knowing another

man whom he described as "a crook". He protested he would

not deal with such a person. The programme was run and some 36 different lines of association were shown between them.

After examining the witness on only the first four lines of association he admitted close business dealings.

10.017 This programme, and the other two to which I

will shortly refer, demonstrate the value of the single data

base for the whole investigation. Once entered, links

remain for use at any time in the future. No investigator could hope to master the whole data base and recall all

associations. But whenever this programme is run every association ever entered is searched and used should it

prove relevant to the enquiry. In this fashion, walls may be demolished and organisations revealed for inspection. Associations are called out of the depth of the computer

memory and presented to the analyst though he may never have

appreciated they existed.

10.018 The first programme, which is described within the Commission as a "pathway", was limited by the need to identify the two entities for the enquiry. Thus two of the participants had to be known. The second programme required knowledge of only one. In this case, described within the

Commission as a "network", the computer presented the

shortest line of association between the specified entity

and every other entity in the computer to which it was connected, with up to six interveners. The resulting

document was often very lengthy, though where entities were

encountered which had too many direct associations the

association from it was replaced by a message suggesting

that if those were required the entity be chosen as the prime target.

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10.019 The "network" was an extremely valuable report

because it revealed associations between individuals which

may not have been suspected. A perusal of it showed by name

the many people with whom the target was directly or, more importantly, indirectly associated. Significant names

appeared and if a full report on the associations with that name was required, a "pathway" (the first programme) could be run.

10.020 Both programmes were flexible. The work could be limited to particular types of associations. Thus it

could be restricted merely to financial associations or corporate links or any combination. It could be restricted

to associations of particular significance, excluding the minor associations. It could be as long as the lifetime of

one of the people, or as short as a day.

10.021 Thus if a person was found to have received $ 1

million on 1 May of some year and it was desired to know

what information was held about its disposal, a network limited to outwards monetary flow could be run, restricted

to the month of May of that year (or such other period as desired). If the information was held anywhere within the

Commission files it would reveal the flow of the money through as many as seven different entities. Thus could

money be traced .

10.022 The final programme was developed to

facilitate the identification of senior principals in

criminal organisations. It was appreciated that often the perpetrators of criminal activities were known, they were

frequently several in number and found at geographically diverse places. If some four or five such people were

suspected of answering to the single organisation, then by close examination of the associations of each it should be

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possible to identify those common to all or most of them. This is easy enough if the associations are direct; but

manually it becomes very difficult if the associates are one

or two removed.

10.023 The problem was overcome by instructing the

computer to ascertain the pathways between various

combinations of pairs that could be found amongst the

selected targets. The paths were then examined to locate any entities which were common. A report was generated

which identified such common entities and noted their location on the paths. Plainly, those farther away from the

face of the criminal activity were the ones warranting the

closest attention.

10.024 This programme was known as a hierarchia1

analysis and, so far as I am aware, was the most advanced

and sophisticated of its type in the world. It allowed

penetration of criminal organisations to a far greater extent than had previously been possible because it

permitted discovery of such organisations where previously none may have been suspected.

10.025 The time taken for each of these programmes to

run was merely overnight. This may be compared with the time taken for an analyst to draw a matrix. A single matrix,

of moderate complexity, may take the analyst weeks. At the end it has none of the flexibility allowed by these systems.

This is not to say that matrices will no longer be found. They still are the easier to read and absorb. What has happened was that the analyst, when he has access to these systems, uses them to extract the information he requires to

draw the matrix. This is not efficient and on the drawing boards at the close of my Commission was a plan to allow the

computer to do the drawing for him.

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10.026 The programmes did more than merely shorten

the time employed in this type of work. They opened new

horizons. New ideas emerged as to how these may be used to further investigations into complex matters. Closer attention was being given by investigators to the seizure of documents from which associations may be recorded. In

short, a more professional (and clinical) air was breathing upon criminal investigations.

10.027 Nowhere was this more apparent than in the

conduct of police raids, the examination of documents found

on persons arrested, and the execution of search warrants. Pocket books, address books, teledexes and the like have often been taken by the police in the past yet have had little value through lack of systems capable of employing

them to full advantage. These systems redress that

situation with the result that much greater care is now

taken in operations.

10.028 I have spoken of police operations. The same

applied with as much force to investigations by Corporate

Affairs Commissions where enquiries are directed at identifying beneficial shareholdings or the ultimate

beneficiaries of misappropriated monies.

10.029 These systems should be made available to all law enforcement agencies and there should be training in

their use .

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"An investigation may be opened where there are facts on circumstances that reasonably indicated a federal criminal violation has occurred, is occurring or will occur. This standard ... does

require specific facts or circumstances indicating a violation.

Where the factual basis for an

investigation does not yet exist, but some response appears to be warranted to an allegation on other information

concerning possible illegal conduct, these guidelines also permit the limited scope of conducting a preliminary

"inquiry". Inquiries as a general rule should be less intrusive and of shorter duration than full investigations."

Guidelines issued in 1980 by US Attorney-General Benjamin R. Civiletti.

11.001 To this point I have dealt with the collection

and collation of information, its preparation for analysis, and have described systems which reduce much of the

analyst's work and provide opportunities for investigation never before known .

11.002 It is now incumbent upon me to describe the

process of analysis and there is no better nor more

difficult starting point than a discussion of the methods I

have employed in targetting matters for investigation and

the principles I have applied.

11.003 The purist may argue that this discussion

should have taken place at a much earlier point, for until a target is determined surely no investigation is launched and

no data collected. In theory this may be true; but in

practice the theory applies only to the initial

investigation. Once any investigation commences the data

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flows in to the Inquiry and from it other investigations

spring. Investigations of the character I have encountered

have no finite limits. There are no strict boundaries. They may result in principals being charged yet leave for

further investigation their associates who, though in minor roles in that investigation, are principals in other

criminal ventures.

11.004 My starting point in this Commission of

Inquiry, by default, fell into a consideration of matters

alleged in articles which appeared in The Bulletin and Penthou se magazines in the early months of 1980. They

alleged, amongst other things, malpractices at the naval dockyard at Williamstown. In particular, a company

identified as McBell Minerals Pty.Ltd. was stated to be

engaged in a form of union racketeering. I chose to

investigate McBell Minerals Pty.Ltd.; and that led to most

other enquiries conducted by my staff.

11.005 McBell Minerals Pty.Ltd. was not the only

target identified in the early days of the Commission. Indeed, some twenty potential targets were listed for

investigation. In the end, however, the investigations spawned by the McBell Minerals matter, and one or two

others, consumed much of my time and attracted my attention to some extremely serious criminal activities of great

magnitude occurring in Australia. I have no regret at the

choice and if I had my time again the choice would be no

different. Nevertheless, I occasionally reflect on whether a different choice would have led to other major crimes

being uncovered, perhaps in other areas. That shall remain

a tantalising thought in the years ahead.

11.006 Selection of McBell Minerals for investigation

was relatively easy given the publicity in the magazines

which, of course, led to the Commission being established.

I describe it as "easy" as far as I was concerned as this

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seemed to be what was required of me by the then

Government. Thus the choice was made for me and it required

merely my acceptance. However, it concealed some difficult

decisions none of which I realised at the time. As it

happened, McBell Minerals was defunct and its directors were

people engaged in activities which warranted close attention

(as did their personal activities). The reputation of the

company had already been tarnished by the magazine articles and, by inference, as a result of my appointment. So too

the Union which, after all, was the major target. Later in

my work it became necessary to select as targets people and

companies which had not previously been tarnished by publicity of investigation. What is more, selection of them as targets meant the imposition of a major load on the investigatory capabilities of the Commission. It then became a matter of judgment on my part whether I should

embark on each investigation.

11.007 The selection of a target means the

identification of a matter for investigation. It may be the

choice of some incident or it may be the selection of some

person or persons (dead or a live) as the focus of the investigation. During my Commission there have been examples of both types. The selection may be based upon the occurrence of some criminal activity or it may not. In some cases a murder was the focusing point. In another case it

was a transaction in which property was exchanged at a price

only half of its worth. In yet another an explanation was sought for a company paying a substantial sum of money for

no apparent reason. The sum was not too substantial, as events later proved, being only $4,000. In others it was the flow of millions of dollars through the bank accounts of

companies with only $2 capital.

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11.008 In all cases, no matter how the investigation

was described people were affected. The effectiveness of the Commission, for example, and the workload of its staff, were

affected; and the people who, as a consequence of the targetting, were investigated were also affected.

11.009 In other Volumes I have dealt with the history

of the Commission and have detailed the staffing. It will be recalled that the Commission grew from a small staff of

approximately 20 to in excess of 100 at the end.

Throughout, however, the Commission had limited numbers and

therefore limited capacity to conduct investigations. There

were always far more potential investigations than could be conducted at any one time. What is more, the initial

capacity of the Commission was limited by more than mere

lack of numbers. The workload was greater than expected.

The Commission was busy developing investigatory systems. These occupied a great deal of the time of my senior

assisting counsel reducing the time he had available for the active pursuit of investigations. Additionally, the data base was very small. Whereas later a fresh investigation

could depend on some material already having been gathered incidentally to earlier investigations, in the initial

stages all material had to be gathered for the first time.

11.010 It is difficult to quantify the capacity of

the Commission to conduct investigations towards the end of

its life. There were three counsel who were the heads of operations and the effective limits were the number of

investigations those three could handle. Their capacity was greatly expanded by the systems available beyond that

normally expected. However, it was for those three to supervise (if not write) the detailed analyses and direct

further enquiries. The solicitors working to them, and the ancillary staffs, all had their roles to play - and most

important they were - but essentially, the capacity of the Commission to handle investigations depended upon the

capacity of those three men.

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11.011 It was not until the last 14 months of the

Commission that a third counsel was appointed (Mr. Lasry),

and that permitted some expansion of the number of

investigations being undertaken. It was accompanied by an

increase in the number of solicitors, which was as necessary.

11.012 The point of these observations is that the

identification of a new matter for investigation was of

little moment unless room could be made for it to be

undertaken. That could be done in one of several ways. It could take the place of a completed investigation, or one which was waning. Thus when the Hamidan matter was reported

upon in 1983, Mr. Wild, who had been working upon it, had time becoming free to allow a fresh investigation to be

undertaken. A second course was to accept the new

investigation at a low level, instructing certain initial

enquiries to be undertaken which were known to take some

time, and which would result in the material being

accumulated on the data base awaiting more active

investigation later. This course was taken in a number of

matters. The third course was to drop, or reduce the intensity of, an existing investigation allowing the new

investigation to take its place. The fourth course was to engage more counsel - which was done on only one occasion.

11.013 Hence the selection of a new target had an

effect on the existing workload of the Commission. It could mean the less intensive investigation of an existing target

or a low intensity investigation of the new. If too many targets were selected the force of the Commission's

investigations would be spread too thinly and their opportunities for success reduced.

11.014 Thus some discretion had to be exercised on

the selection of targets. Not everything could be

investigated no matter how attractive it may appear. Some criteria had to be identified by which prospective (and current) targets could be compared and an often unattractive choice made. Volume 2 -96- Chapter 11

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11.015 Four factors appealed to me as the

significant, so far as the effect on the Commission was concerned. They were the likelihood of success ; the degree

of seriousness; and the effect on resources ; and whether the subject fell within the terms of reference.

11.016 The likelihood of success was an important

factor. I was concerned not to investigate matters which

could be successfully investigated by normal police methods.

This factor operated in two ways. Sometimes I declined

investigations because I could see no reason why they could

not be done entirely by ordinary police work. On other occasions I restricted the level of investigation to those parts which warranted attention by the Commission, leaving to the police investigators the remainder. Thus in some

cases some of the computer programmes and staff were employed in assistance of a police investigation and no

more. An example was the use of the financial programmes to

handle some large cheque accounts and produce reports. In other cases I employed my powers to subpoena to procure

documents and examine them so as to give what was

substantially a police investigation some assistance. This was very much a role adopted by me towards the end of the

Commission when several law enforcement agencies were

working in close conjunction with the Commission. It was

not merely the power of subpoena; legal advice and

commercial experience were also made available.

11.017 The lack of any potential for success was

equally important. In one case there was no information of

any credible nature which supported some allegations

notwithstanding their widespread currency. Whilst the general notoriety of an individual may warrant some form of investigation, it weighs light when there is no credible support. There are ample matters for investigation where

there is credible supporting information.

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11.011 It was not until the last 14 months of the

Commission that a third counsel was appointed (Mr. Lasry),

and that permitted some expansion of the number of

investigations being undertaken. It was accompanied by an

increase in the number of solicitors, which was as necessary.

11.012 The point of these observations is that the

identification of a new matter for investigation was of

little moment unless room could be made for it to be

undertaken. That could be done in one of several ways. It could take the place of a completed investigation, or one which was waning. Thus when the Hamidan matter was reported

upon in 1983, Mr. Wild, who had been working upon it, had time becoming free to allow a fresh investigation to be

undertaken. A second course was to accept the new

investigation at a low level, instructing certain initial

enquiries to be undertaken which were known to take some time, and which would result in the material being

accumulated on the data base awaiting more active

investigation later. This course was taken in a number of

matters. The third course was to drop, or reduce the intensity of, an existing investigation allowing the new

investigation to take its place. The fourth course was to engage more counsel - which was done on only one occasion.

11.013 Hence the selection of a new target had an

effect on the existing workload of the Commission. It could mean the less intensive investigation of an existing target

or a low intensity investigation of the new. If too many targets were selected the force of the Commission's

investigations would be spread too thinly and their opportunities for success reduced.

11.014 Thus some discretion had to be exercised on

the selection of targets. Not everything could be

investigated no matter how attractive it may appear. Some

criteria had to be identified by which prospective (and current) targets could be compared and an often unattractive choice made. Volume 2 -96- Chapter 11

Targetting

11.015 Four factors appealed to me as the

significant, so far as the effect on the Commission was concerned. They were the likelihood of success ; the degree

of seriousness; and the effect on resources; and whether the subject fell within the terms of reference.

11.016 The likelihood of success was an important

factor. I was concerned not to investigate matters which

could be successfully investigated by normal police methods.

This factor operated in two ways. Sometimes I declined

investigations because I could see no reason why they could

not be done entirely by ordinary police work. On other occasions I restricted the level of investigation to those parts which warranted attention by the Commission, leaving to the police investigators the remainder. Thus in some

cases some of the computer programmes and staff were employed in assistance of a police investigation and no

more. An example was the use of the financial programmes to

handle some large cheque accounts and produce reports. In other cases I employed my powers to subpoena to procure

documents and examine them so as to give what was

substantially a police investigation some assistance. This was very much a role adopted by me towards the end of the

Commission when several law enforcement agencies were

working in close conjunction with the Commission. It was

not merely the power of subpoena; legal advice and

commercial experience were also made available.

11.017 The lack of any potential for success was

equally important. In one case there was no information of

any credible nature which supported some allegations

notwithstanding their widespread currency. Whilst the general notoriety of an individual may warrant some form of investigation, it weighs light when there is no credible support. There are ample matters for investigation where

there is credible supporting information.

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11.018 One issue which did not weigh heavily with me

was that the investigation may prove extremely difficult.

That had significance only for the purpose of persuading me

that ordinary police investigation would not be likely to

succeed. Otherwise I regarded the difficulty as warranting

the application of the unique investigatory systems

developed in the Commission.

11.019 The second factor was the degree of

seriousness. Here I opted, as might be expected, for the more serious of targets. Seriousness was judged not so much

by the nature of the crime, but rather by the nature of the perpetrators. Where a choice was available between roles

played in crime I chose the more significant. Thus I was not concerned with the investigation of drug offences

relating to possession or trafficking; but I was concerned with financing. In the taxation area I was not concerned so

much with an individual defrauding the revenue as I was with the promoter who attracted many taxpayers to his fraudulent

schemes.

11.020 The third matter to be considered was the

effect on resources. I have already reported on this

aspect. There remains one more observation. Some

investigations had the potential for consuming all of the

resources of the Commission. The choice, occasionally, was between one major all-consuming investigation and perhaps

two or three major concurrent investigations. This would have been the most difficult choice of all but in practice

the choice was avoided. The resources were never

concentrated upon merely one line of enquiry, though given the limitation of time perhaps they should have been in one

case. My reluctance so to concentrate resources was born

partly out of my experience that every investigation touched upon every other investigation. In the matter in question

that proved to be the case to a marked degree. The shedding of the other investigations would have led to a loss of information that touched upon the major matter. That would have been a significant constriction. Volume 2 -98- Chapter 11

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11.021 Any investigation affects or has the potential

to affect adversely the persons who are investigated. When a

taxation investigator or a corporate affairs investigator examines a bank account the bank manager hears about it. He

may treat the client as being innocent of any wrongdoing

until established otherwise; but more likely the effect

will be a less favourable attitude towards the continued use

of banking facilities. It may result in the client being

told his business is no longer valued and he should look

elsewhere for accommodation.

11.022 In recent times there has been a display of

concern for reputation and the damage likely to be suffered by reason of some report in the public media that

allegations have been made against a person; that a person

has been called as a witness (perhaps before my

Commission) ; or that a person is the subject of some

investigation. Public reports of such matters occur

regularly, be it a police investigation, the report of some court hearing, or the operation of some Commission of

Inquiry. From what I have observed such reports have little effect on reputation. They may hurt the feelings of the

persons concerned but they are soon forgotten in the turbulence of daily affairs. They pale into insignificance

when compared with the effect of private enquiries made by law enforcement agencies of bankers, financiers and others

about the affairs of a person. Those enquiries have a far more lasting effect because they are carefully noted and

retained by the banker or financier for years ahead. Indeed the effect of the privacy of the enquiry seems to give added

impact.

11.023 In the concluding months of the Commission I

was not able to conduct public sittings of the Commission

and proceeded only in private sittings. Yet such enquiries

are not truly confidential. The witness subpoenaed knows

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why he is called and there is no keeping it from his

employer. He and his employer know it relates to a

particular person or event and damage is done. It would be naive to believe that the word is not passed on despite the

strictures of the law that such matters are to be kept confidential. I believe in many cases more damage is done by private sittings than public, when the whole matter is

out in the open and all may see the limits of the enquiries

ma de.

11.024 No passing of laws on privacy will lessen the

impact of such enquiries. No admonition that a witness should not suffer as a consequence of being called will have

much effect. No brake on such enquiries, other than of the type I shall mention shortly, can be imposed. For without

such enquiries the laws could not be enforced.

11.025 Thus it is the fact that the enquiry is made

which damages the reputation, especially that of credit. The critical factor is to determine the circumstances in which such enquiries should be made. When is it justified

and when is it not ? When is the targetting of a person

justified in view of the likely damage to his credit and

reputation that will result?

11.026 I leave to one side the question of the

malicious enquiry. Of course an enquiry which the

investigator makes simply for the purpose of harming the

person is malicious and if done ostensibly pursuant to some

authority it is mala fide. In the latter event the

investigator is deprived of any protection which may otherwise accrue by reason of his legal authority to make

such enquiries. However there is no law prohibiting the making of enquiries and provided the enquirer takes care he may cause the harm by asking penetrating questions. If he

does not take care, he may be sued in defamation.

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11.027 Consider the honest investigator who believes,

bona fide, that the enquiry should be made. What standard

is to be applied; what test? Is it enough that the

investigator is acting honestly or should more be required? In discharge of my task I required more. There was a number

of occasions where, in the exercise of my judgment, I declined to issue subpoenas notwithstanding my full

acceptance of the bona fide nature of the investigator's

request.

11.028 The problem of targetting has become acute in

the course of my Commission because of the type of

investigations undertaken. Most law enforcement in this

country acts upon an allegation of a specific offence. Often there is ample evidence of that offence - such as the

body of a murder victim. In other cases, where the

manifestation of the offence is not visible there is a

specific complaint that the offence has been committed. The police forces and other agencies react to the allegation

and investigate.

11.029 In these cases targetting relies heavily upon credibility perceived by the law enforcement agency in the

complaint. It is treated either as a serious complaint or

as frivolous; a decision to investigate depending upon the

view taken. Thus for there to be an investigation there

must be a complaint of substance. How often is the cry heard to "put up or shut up"? This reflects this type of law enforcement where the onus is on the complainant to

justify an investigation by the State. It is known as

reactive policing.

11.030 This is a popular understanding of law

enforcement. It pervades many decisions of Government,

especially those in which lawyers participate. It is

understandable from the point of view of most lawyers, given

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their training and experience. They are accustomed to a client approaching them with a problem and seeking advice

and remedy. Their work is stimulated by the complaint. They do not, in their careers, step out to find problems of

which no one has complained. The whole of their work is

reactive.

11.031 Nowhere is this more so than in the case of

those lawyers who engage in prosecution work, whether as counsel or solicitors. They react to the presentation of a

police brief. The investigatory phase is over. An

allegation (being that contained in the police brief) is

made that some specific offence has been committed. The lawyer's training and experience is brought to bear on the

problem of establishing the guilt of the offender. It is true that he may require further work to be done, and this

may be styled an investigation but in reality it is merely preparation for a trial. It is not true investigatory work

at all.

11.032 Thus when lawyers attend to the administration of justice or the drafting of laws they tend to see it in terms of their own background and do not see the much wider

scope required for effective law enforcement. They are not

alone in this regard. The history of law enforcement in the

common law countries has been to concentrate upon reactive

law enforcement. In the United States, for example, a

change in approach did not occur until as recently as the

1970 decade. It is instructive to examine the position of federal law enforcement in that country because it has

lessons for Australia and serves to illustrate the difference in approach adopted by me in targetting from that

adopted in general policing.

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11.033 The FBI was established as the principal

investigative arm of the United States Department of Justice

in 1908. From its earliest years it relied heavily upon confidential informants for its investigations. It shunned the use of undercover agents, and had none of the powers I hold to gain access to records of the suspects. If it

wished to do that, it had to procure a search warrant in the same fashion as is required of police in Australia.

11.034 In the early 1920s under the directorship of

William J . Burns the FBI extended its operations to require

its agents to place suspects under surveillance, to open

their mail and search their files. In 1924 this led to an outcry, and Burns was replaced by J . Edgar Hoover with instructions "to clean house so that the Bureau would

operate independent of 'political pressure'". (Mason, 1956,

150)

11.035 Hoover set about his task by terminating the

use of undercover agents and resisting attempts to use his

agency for intelligence investigations of subversive

activities, he so advising in 1932. (In 1936 however, he was directed to do so by President Roosevelt.) The

investigations continued to rely heavily on confidential informants and sources. This meant they did not penetrate

criminal organisations, a consequence recognised by Hoover, but justified. During the 1930s he stressed that the

primary responsibility for the investigation of racketeers

(as he described them) lay with State authorities. His

organisation concentrated upon enforcement where criminal

acts had occurred. (Nevertheless, despite Hoover's

reluctance, there were a few occasions where he did use

undercover agents but these occasions were exceptional.)

Political scientist Professor James Q. Wilson has explained

that FBI agents usually performed their law enforcement

functions as detectives who investigated crimes after they

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had been committed and had been reported to the

authorities. By contrast, the Drug Enforcement

Administration and its predecessors more often used

undercover operations to create the opportunity for the

commission of crimes by suspects. (Mathias et a 1, 1983, 37 .)

11.036 FBI accomplishments were measured by case-load

and money savings statistics that were sometimes almost

meaningless, a system that discouraged detectives from initiating more complex investigations of sophisticated

organised or white collar crimes. (Wilson, 1978, 26-7,

39-40, 95-100.)

11.037 In 1972 the FBI resumed undercover

operations. The FBI was employed in a limited fashion to

investigate suspects who were seeking outlets for stolen property, gambling and extortion cases. In 1975, under

Director Clarence M Kelley, the FBI changed direction. FBI offices were reorganised to give higher priority to

"proactive investigations". Professor Wilson has described the effect of this in one FBI office:

"Twenty-two agents were assigned to two 'general crime1 squads charged with responding to victim complaints regarding the traditona1 crime classifications - theft, robbery, kidnapping, bad checks, and fugitives. The remaining ninety-one

agents doing criminal work were assigned to eight "target" squads concerned with consenua1, extortionate, and disparate crimes. The assignment of each target

squad was not based chiefly on types of crimes but on types of offenders -

businessmen, local government officials, labor leaders, the business affairs of the federal government, and organized

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crime groups. Each squad was instructed to search out cases involving such

persons by cultivating informants and pursuing leads from other government agencies as well as by responding to

citizen and victim complaints. Each was to employ whatever federal laws seemed appropriate in building a case rather than being confined to a single crime

category. The reorganization involved a massive shift of resources; more than seventy agents who once were doing

reactive or security work were put into proactive work. As a supervisor later explained to an interviewer, 'The SAC said, 'get rid of the crap and work the big cases’."

(Wilson, 1978)

11.038 This coincided with a change in emphasis in

the operations of the Drug Enforcement Administration and

another Federal agency, the Law Enforcement Assistance

Administration. It was recognised, as indicated in the

passage just cited, that more effective law enforcement was

achieved by concentrating on all of the activities of a

suspect or a group rather than concentrating on one criminal activity. If active criminal organisations were chosen concentration on the group held the prospect, should the investigation be successful, of its effective suppression

and the prevention of many criminal activities which

otherwise would take place. Further, although evidence may be difficult to procure in respect of some criminal acts,

other activities by the same people were possibly more

easily proved and the group thus attacked. Concentration on

a specified criminal act reduced the possibilities for

success, and if evidence was not forthcoming, the effort was

wa sted.

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11.039 As stated earlier, this is known as "proactive

policing". It focuses on the individual suspects and all their activities, not just on the single criminal act. It

is a significant difference and one which is not appreciated widely in Australia. The National Crime Authority Act, for example, focuses upon the offence and not the group. It

follows an outdated strategy that has now been discarded in the United States (and most other western countries for that matter).

11.040 The new strategy did create problems of

targetting. They were raised to an acute level in the United States because of the methods of investigation employed. There is an acceptance in that country of the use of undercover agents to entice suspects into the commission of offences. Thus an undercover agent may offer a criminal

scheme to the group being attacked and, if accepted, the execution of the scheme is closely monitored so as to

produce the evidence required to allow the group's

prosecution. Some refer to this as a process of

entrapment. Its supporters seek to justify it on the basis

that honest citizens would not be enticed by a plainly dishonest scheme, so no harm is done. However, there are

many who prefer the view of a group of distinguished jurists expressed in the 1920s:

"We do not question the right of the

Department of Justice to use its agents in the Bureau of Investigation to

ascertain when the law is being

violated. But the American people have never tolerated the use of undercover provocative agents or 'agents

provocateurs' such as have been familiar in old Russia or Spain."

Roscoe Pound, Felix Frankfurter and Zechariah Chaffee, Jr., JJ. (1920)

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11.041 The entrapment debate is incidental to this

discourse. It is mentioned merely to reveal how it

concentrated the minds of those in government in the United

States. If entrapment were used in proactive policing (and it is not much use in reactive policing) target selection

became a matter of considerable importance. It was one thing to tempt villains; another to tempt citizens free of

any stain. In 1976 the United States Attorney-General issued guidelines, described by the use of his name as the

Levi Guidelines. These dealt with the use of informants. In 1980, and again in 1981, further guidelines were issued

dealing with targetting and the use of undercover

operations. An extract from the 1980 guidelines heads this

chapter.

11.042 It was later declared by a United States

Senate Committee that undercover operations were as

intrusive as telephone interception or search warrants:

"The contention that the use of

informants does not affect the same

privacy interests as do physical searches and wiretaps cannot withstand scrutiny. Advocates of that position have argued that, because a disgruntled friend or

colleague can always disclose an

individual's words or acts to law

enforcement authorities after the fact, informants and government undercover agents, too, should be permitted to

disclose such words or acts after winning the individual's confidence. That argument assumes that precisely the same factors are at work when a private party

informs on a citizen as are involved when a government undercover agent extracts the incriminating information himself. But a parallel argument can be made as to

searches or wiretaps: If a third party searches a defendant's home or taps a defendant's telephone and provides any information thus obtained to the

government, the government is free to use it in a subsequent prosecution. It never has been suggested, however, that the

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government may for that reason itself tap an individual's telephone or search his residence without first obtaining a warrant on a showing of probable cause

that a crime has been, is being, or is

about to be committed. Similarly, the risk that an individual's confidence might subsequently be betrayed by a

disloyal associate is greatly magnified when it is made to include the additional risk that the listener to whom the

individual reveals his confidence is a disguised government agent whose

prearranged mission is to elicit

incriminating information. (See FBI Undercover Guidelines: Oversight Hearings Before the Subcomm. In Civil and Constitutional Rights of the House

Comm.on the Judiciary 97th Cong., 1st Sess 4(1981) (statement of Geoffrey R . Stone); cf. United States -v- Lopez, 373

U.S. at 449 (Brennan J, dissenting) .)

Accordingly, it is beyond reasonable dispute that undercover operations can and often do invade legitimate privacy interests in significant ways. Aside

from sting and decoy operations,

undercover investigations generally progress by having an agent or an

informer first win the confidence of the target and then obtain incriminating information. In the course of that

mission, the undercover technique is likely to be fully as intrusive as a

conventional wiretap. As the Abscam tapes reveal, for example, undercover agents almost invariably will learn significant amounts of information about

the personal lives and political views of targets, including targets who ultimately are revealed to be innocent. This danger is compounded by the fact that virtually

everything the target says and does will be captured by cameras and tape recorders and will be subject to the risk of being leaked. More generally, as Justice

Harlan noted in a somewhat different context, the widespread, unregulated use of informants and undercover agents inevitably will inhibit public discourse by 'undermining that confidence and sense

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of security in dealing with one another that is the characteristic of individual relationships between citizens in a free society.'

(United States -v- White,401 U.S. at 787 (Harlan J dissenting) .)

Undercover operations that include offers of inducement to commit crimes are

intrusive in other ways, as well. While the practice of making clear the illegal nature of such inducement is an important safeguard, the FBI Undercover Operations

Guidelines nevertheless clearly permit undercover operatives to offer

unrealistically large inducements and to tempt individuals who otherwise would be unlikely ever to become involved in

criminality. As is elsewhere noted, convictions obtained by such practices serve almost no sound law enforcement purpose. Moreover, as events in Abscam

dramatically demonstrate, the mere offer of a criminal temptation, even to a

citizen who refuses it, can, when

memorialized by hidden cameras and microphones, be very intrusive and harmfu1."

(Mathias et a 1, 1983, 381)

Need less to say, the use of a subpoena to gather personal

information is intrusive and is just as intrusive as the

methods discussed in those passages.

11.043 Thus the issue of targetting an individual or

a group arose in my Commission in the same critical fashion as it had in the United States some five years earlier. It was unique in Australia. There had been other Commissions of

Inquiry whose breadth equalled mine but this question was

not given much attention. Mr Justice Moffit's Inquiry in

1973 into licensed clubs involved an examination of many individuals suspected of criminal activities. Mr Justice

Woodward's Inquiry into drugs in New South Wales and Mr

'

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Justice Williams' Inquiry into drugs throughout Australia

also involved an examination of many individuals. So too did the Woodward Inquiry into the meat industry. What

resulted, however, was not a public debate about when such Inquiries are warranted but rather an unease at the naming

of individuals in those Inquiries without their first being convicted. Similar concerns were expressed in respect of a

number of Inquiries conducted in New South Wales during the course of my Inquiry. To direct attention at considerations

of publicly "naming" people was a very superficial and rather insubstantial approach because, as I have indicated

earlier, such people are likely to be harmed far more by the

private investigation of their financial affairs.

11.044 The United States At torney-Genera 11s

guidelines covered two distinct situations. The first was where there was information suggesting an offence had been, or would be, committed. This causes no difficulty at all. It is the prime basis upon which all policing had

traditionally acted and certainly I had no problem of authorising investigations where this was the case.

11.045 The second situation in the guidelines is the

more difficult. Here the reference is to "information concerning possible illegal conduct". A typical example

frequently encountered in my work is where a criminal has dealt with another person who has no criminal record but the

dealings call for explanation - for example the transfer of a house at half its value. This led to a request that the

other citizen be investigated in some depth or at the very least, his financial affairs be examined. (They were with

dramatic results for the revenue of the country and with criminal charges later being laid for fraud.) At the time

the request is made all that can be said is that the

information is of "aberrant" conduct and warrants

investigation.

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11.046 The United States Attorney-General's

guidelines suggest that in such cases there be a preliminary

"Inquiry". It was to be limited in two ways - one by being less intrusive and the other by being short in duration.

Neither of these limitations appeals. A financial investigation, which is usually the first step, is always

intrusive. It cannot be less intrusive than any other financial investigation. Nor does the time taken matter.

It has no greater effect because it takes the staff a few weeks more to process the data.

11.047 On the other hand it would be a considerable

handicap on law enforcement if investigations could not commence on less than evidence that a specific offence has been committed. Shackled to such criteria it would not be

possible to target criminal groups and launch investigations

with eventual suppression of their criminal activities. The

difficulty with the test is the requirement that the

evidence show specific offences rather than general

criminality .

11.048 In determining the issue of summonses I opted

for a less stringent test. As it happens it is well

articulated in the recommendation of the Senate Committee

Inquiring into Undercover Activities, albeit that it was describing the test in terms of such investigations. The

material parts of the recommendation for future guidelines

were:

"..(no undercover operation shall

occur) .. .except:

(a) when the operation is intended to obtain information about an

identified individual, or to result in the offer to an identified

individual of an opportunity to engage in a criminal act, upon a

finding that there is reasonable suspicion, based on articulable facts, that the individual has

engaged, is engaging, or is likely to engage in criminal activity.

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(b) when the operation is intended to obtain information about specified types of criminal acts, or generally to offer unspecified persons an opportunity or inducement to engage

in criminal acts, upon a finding that there is reasonable suspicion, based on articulable facts, that the operation will detect past, ongoing, or planned criminal activities of that specified type (dealing with very specific types of operations not relevant to this discussion)."

(Mathias et a 1, 1983, 377)

11.049 If in these two tests there is substituted

"the initiation of an investigation" for the "offer of an

inducement to commit criminal acts" then they capture the principle I have applied in the course of the Commission and

I believe it to be correct. There is required reasonable suspicion "based on articulable facts" of past, present or future criminal activities. I required no specification of the offences. There was no requirement of evidentiary

proof, because gaining that was the purpose of the

investigation. What was required was an articulation of the

facts warranting the suspicion.

11.050 I believe this test to be as good as can be

devised and one which should be adopted by law enforcement

agencies throughout Australia and by the National Crime Authority. Anything greater than this, or more stringent,

would in my view be too restrictive on criminal

investigations of a proactive type. It draws the proper

line between the interest of the State (and the common weal) in the enforcement of law, and the interest of the

individual in privacy and freedom from harassment.

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11.051 One final matter on targetting remains to be

said. It is the vexed question of who should make the

decision that a person or group of people or other entity

should be targetted. The Senate Committee of the United States gave this matter long consideration and its

conclusion warrants close study:

"As noted in the opening pages of this report, many informed individuals and organisations, including some of the FBI's staunchest advocates, have argued

that a judicial warrant should be

required before an undercover operation is initiated or an informant is used, at least in sensitive circumstances. The arguments they have presented are

undeniably compelling. First, undercover operatives and informants are law

enforcement weapons that as a general rule are at least as intrusive as

searches and wiretaps, for which warrants are required. It therefore seems logical to impose equivalent safeguards on the use of each of these investigative

techniques .

Second, in undercover operations, no less than in other cases involving attempts to obtain information about private parties, privacy interests are more likely to be given their due when crucial decisions are made by a neutral magistrate. Thus,

the Supreme Court's Fourth Amendment decisions are based squarely on the

proposition that "unreviewed executive discretion may yield too readily to pressures to obtain incriminating

evidence and overlook potential invasions of privacy and protected speech." (United States -v- United States District Court,

407 U.S. 297, 317 (1972) . FBI and

Justice Department officials are, after all, professional law enforcement

personnel; their primary responsibility lies in catching criminals and preventing crime. No matter how well-intentioned or sensitive to other societal interests

such officials may be, their judgments inevitably will be weighted in favour of their law enforcement mission. This common sense judgment has been recognized

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by the Supreme Court in its

interpretation of the Fourth Amendment and by Congress in the recent enactment of the Foreign Intelligence Surveillance Act.

Despite the appeal of these arguments, however, the Select Committee is not persuaded that a warrant requirement would solve more problems than it would

create. It is not at all clear that

imposing a warrant requirement on the use of informants and undercover agents would be manageable. There is little nuance to conventional searches or wiretaps; those

law enforcement activities either do or do not take place; and, after the search or wiretaps has been undertaken, it

generally is easy enough to determine whether police officials complied with the the terms of any previously obtained warrant. In marked contrast, there is a wide range of possible informant -

government relationships, and the

evolution of any given relationship may be extremely difficult to predict. Thus, for example, it is impossible to obtain a warrant before making use of a one-time

informant who comes forward to volunteer information after the fact. It seems almost as difficult to see how a

meaningful warrant application could be made for permission to use a part-time or occasional informant who intermittently learns of and voluntarily offers

information about criminal activity.

An undercover warrant requirement is impractical for other reasons, as well. The decision whether to qse an informant often of necessity will be made on the

spur of the moment, since - unlike the decision whether to conduct a search or to install a wiretap - the informant's willingness to provide information may not be a product of the government's

initiative; rather, the co-operating individual may simply appear with an offer of useful information. In a

related vein the necessity of going outside the law enforcement agency to obtain judicial approval for the use of an informant might well inhibit private

parties from providing information to the

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authorities, for fear that their

identities will be divulged. (See FBI Statutory Charter: Hearings Before the Subcomm. on Admin. Practice and Procedure of the Senate Comm. on the Judiciary,

95th Cong., 2d Sess., Pt. 2, at 47-48 (1978) (testimony of James Q . Wilson) .)

Perhaps more importantly, both the role of an informant who must regularly

interact with suspects and the general course of an undercover operation are inherently less predictable than are

searches or wiretaps. Thus, it often would be impossible to establish the terms and limits of an undercover warrant with sufficient clarity to make the

judicial approval process meaningful. This, in turn, would make judicial

supervision - and even an ultimate

determination about compliance with the warrant's requirements - extraordinarily difficuIt.

There also are more basic institutional reasons for rejecting an undercover warrant requirement. The Select Committee has some reluctance to mandate the

placement of a pre-operation judicial imprimatur on undercover operations that may later culminate in claims of

entrapment or due process violations that must be judicially reviewed. Also,

enacting a judicially enforceable warrant provision would surely lead to a

substantial increase in litigation, court congestion, and delays in the

administration of justice, because it would encourage defendants to make suppression motions not only on

traditional Fourth Amendment grounds, but also on the basis of noncompliance with undercover warrant legislation.

The Select Committee emphasizes, however, that its conclusion on this point is

conditional: it rests on the belief that law enforcement authorities can be expected to comply in good faith with the reasonable suspicion and probable cause

requirements proposed elsewhere in this section, if those requirements are stated as the will of Congress. Accordingly, the Select Commmittee's position should

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not be read as an unconditional rejection of the warrant requirement for all time and in all circumstances. If experience under the proposed legislation were to

show that federal law enforcement

agencies are unable or unwilling to

regulate themselves effectively, the establishment of a judicially enforceable warrant mechanism, at least in limited and precisely defined circumstances,

might well be wise. For the moment,

however, it is the Select Committee's conclusion that the drawbacks of a

warrant requirement outweigh the

a dvantages ."

(Mathias et a 1, 1983, 387)

11.052 I agree with that conclusion. Judges are not in a position properly to adjudicate on such matters. In

conducting my Commission I chose a different course. I took

on myself the task of determining the matter, but kept myself clear from the day-to-day management of operations.

I left that to my assisting counsel. Thus I was in a

position to bring to bear a mind not conditioned or biased

by the thrill of the hunt. This is an important role in the

conduct of Commissions of Inquiry; and it will be as

important in the conduct of the National Crime Authority. In police investigations and in other law enforcement

agencies that role should be adopted by senior police officers and similar investigators who can then keep

themselves at arm's length from the daily operations. The

role does not require anything more than an experienced,

reputable and reliable senior officer who gives proper consideration to the balancing factors involved and appreciates the necessity of energetic investigation of sophisticated crime and the consequences for an innocent

person of that investigation. I have great confidence in the senior officers of police properly discharging this

role, as I have of senior officers in other law enforcement agencies.

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11.053 It would be desirable, and I so recommend,

that guidelines be issued to law enforcement agencies which

encourage proactive law enforcement but subject the

targetting procedures to the constraints I have indicated.

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CHAPTER 12 - ANALYSIS

"Man is still the most extraordinary computer of all."

John F. Kennedy (1963)

12.001 The work done after selection of a target has

been loosely described as an "investigation" in preceding

chapters. This is apt to be confusing because the term

"investigation" has different connotations depending upon the matter in the mind of the speaker. To some it is

intended to convey a procedure similar to that done by a detective in examining a criminal event. Those concerned with the preparation of a prosecution often use the term to

describe that process. It is, of course, appropriately used in both cases. Accordingly, I shall not use it in this chapter but speak rather of the operations of the staff of the Commission.

12.002 The operations were under the overall control

of the senior counsel assisting me, and under him were the

two junior counsel. Every operation against an approved

target was under the control of counsel. They were

supported by legal officers and of course a considerable number of other staff, many of whom were qualified in fields

other than the law. Whilst a counsel and a solicitor were specifically allocated targets the remaining staff were available as support and were not generally allocated to specific targets.

12.003 The work involved in an operation was

demanding. The counsel was presented initially with mere

shreds of information which he was required to master so as to be able to give directions for the collection of further

material. The key, as I explained at the start of Chapter 8, was always financial aspects.

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Analysis

12.004 The financial schemes examined were often

complex, involving little understood laws and elaborate

financial manoeuverings. For example, one matter which was the subject of a previous report was basically a fraud on

the Revenue involving dishonest deductions under the Income Tax Act. It also involved breach of the provisions of the

Companies Act relating to the sale of interests, and breaches of the mining laws of a State. Incidental offences

against the Foreign Exchange Regulations were involved. The

financial transactions were of an international character.

12.005 This was not a unique case. Some of the

matters described in this report involve sophisticated

frauds on the banking system, frauds again perpetrated on

the Revenue, machinations within the law of copyright, and

international financial transactions.

12.006 When an operation is completed and a report

written, the criminal scheme appears straightforward and

readily understandable. This is not the case at the

beginning of an operation. There is no information

describing the scheme in detail and all that may often be

seen are shades here and there. In that situation the operational staff do not know what they may be looking at.

To investigate it expeditiously, or at all, requires an

operational head with imagination, intuition and a good

grasp of general law (especially that dealing with financial

matters). Almost every operation conducted within the

Commission has made great demands of this nature upon the

heads of operations.

12.007 In a 1971 publication dealing with the

selection of operational personnel for intelligence work

relating to organised crime, it was said:

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"Intelligence is a mind-stretching business, its targets change, its

methodologies are improving constantly and require more and more innovative ideas to cope with the growing

sophistication of organised crime."

(Godfrey and Harris, 1971, 61)

12.008 This is an accurate description of the task.

The operations of the Commission have overwhelmingly been in

the area of financial manipulation and have involved an understanding of many diverse laws little understood or

encountered by most people.

12.009 What is more, the criminal organisations have shown a willingness to engage the very best advisers, paying

large sums of money to devise schemes of the greatest

complexity for the sole purpose, so far as I can see, of

defying normal law enforcement agencies to understand them. To this is added every opportunity to disguise the very

existence of the scheme.

12.010 The operation embarking upon exposure of such schemes has no less need of the best available to do it, but

a greater need. It is to reconstruct from sparse material

that which is complex and hidden. It is far from easy work, and is very demanding of the intellect. The difficulty of

the task cannot possibly be judged from a reading of later reports. By that stage the scheme has been exposed and

simplified for the purpose of a report. It is often of some difficulty to absorb even then, but that is nothing when compared to the difficulty at the start of an operation.

12.011 One of the problems is that often it is not

known what the true purpose of the aberrant behaviour may

be. In the early life of the Commission, it became possible

to draw a chart showing the distribution of a large amount

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Analysis

of money to twenty or thirty people. There was no apparent

commercial reason for it. Views differed about what it may be. Some thought it was a distribution of illegal proceeds being "washed" through several companies. Others thought it

was some taxation scheme. There were other views. The task

was to determine what it was. To those who say, "Ask the participants", I point out that if it were a washing

operation none of them would be likely to admit it. Further

enquiries of a different kind were required. The direction

of those enquiries required an operational head with some

feel or intuition for the ultimate answer.

12.012 More is required than just intuition. Some of

the qualities required were stated in the same publication to which I referred earlier:

"This (motivation) is especially

important for intelligence work where the rewards are more often the satisfaction of unravelling a problem than they are monetary or direct participation in pursuit of the criminal. There are,

also, other qualities to probe for that few people willingly and openly display. Foremost among these is meticulous or scrupulous attention to detail. Without

this quality, good intelligence

discipline can quickly dissipate,

analytic studies can founder and cases may be rejected..."

(Godfrey and Harris, 1971, 61)

12.013 The counsel assisting me displayed these

qualities at a high level, and confirmation of this is to be

found in the analyses they prepared.

12.014 The analysis was the working tool of the

Commission. It comprised a document directed at a target in which all that was known was described, supported by

credible and reliable information. Every fact stated was sourced and if used in a hearing of the Commission the

sources were assembled to match the analysis.

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12.015 An operation proceeded by the gathering of

every item of information that could be collected concerning

the target. The objective was to examine the target (which may comprise a number of people) in the most minute detail.

Explanations were sought for every aberration. The operation did not stop with the exposure of a criminal

venture. It continued on, exploring all other ventures undertaken by the same group. Thus the analyses grew as investigations proceeded and ultimately some became huge documents comprising hundreds of pages and contained in many

chapters and volumes.

12.016 This procedure proved remarkably successful. The murder of Carroll at Mount Martha, Victoria, on 3

January 1983 was one such target. The investigation of his affairs led to the exposure of a number of criminal schemes

of every type or description being conducted along the eastern seaboard. There were robberies, smuggling, armament

dealings, drug dealings, financial fraud, bankruptcy fraud, liquidation fraud, pornography and so on. The resulting

list of criminality was extensive and the operation is still not complete.

12.017 This style of operation is not the

traditional police investigation. Most of the time of the operational head was spent at his desk drafting the analysis

or at a hearing procuring documents from a witness. It was a writing task demanding considerable intellect, and an

ability to interpret complex commercial transactions. It was very much a lawyer's task, not detective's work.

12.018 In a sense an operation is never completed.

It waxes and wanes giving birth to new targets and fresh

operations. Frequently it was difficult to draw the

boundaries because many were found to encroach on others.

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Analysis

This happened even with other Commissions of Inquiry. For

example I often found my operations encountering the Nugan

Hand Bank and the Royal Commission into it.

12.019 The objective of the operation was to identify

the criminal organisations and, at the very least, to

identify some of its operations. As this was done a second objective came into focus. This was to develop a plan of

suppression. In this the first objective was to disrupt and

stop any current criminal activity; the second was to plan

some form of redress. A manual was drafted for use by the operational staff, and that is to be found in Appendix 2-H.

12.020 The identification of criminal organisations is a difficult task. They do not publish organisational

charts nor do they readily admit to command structures.

There is no annual return listing directors, shareholders

and the like. The task of identifying each person within

the organisation was hard enough; the determination of his

position relative to others was even more difficult. ■

12.021 The best approach was found to be in an

historical study of the group. There are many who scorn the

historical study, proclaiming they are more interested in

what is happening today rather than yesterday. Emphasis on

the current activity is proper in front line law enforcement

agencies. They have to discharge a duty which requires the

maintenance of the peace today and perforce they must

concentrate on the situation as it is today. But in the work of my Commission current activities were not deserving

of such emphasis. They were, of course, important; but not

to the exclusion of the history.

12.022 A feature of criminal organisations is that

they continue in existence conducting criminal enterprises

like a business. Today's criminal activity follows on

yesterday's, and that on the day before. The constancy of

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the organisation and the repetitive nature of its activities

allows the operational staff the opportunity, by their study, to identify the principals in the group. This is often impossible if the operation is confined to the current venture.

12.023 I have found in my enquiries that the same

people who were identified in the Moffit Inquiry in 1973, in

the Williams and Woodward drug Inquiries of 1979-1980, the

Stewart drug Inquiry of 1981, the Nugan Hand Inquiry still

being conducted, and also in the Woodward Inquiry in the

Meat Industry, have become prominent in my enquiries.

Regrettably, the information collected by those Inquiries

(except Nugan Hand) was not in an easily retrievable form

and consequently 1 was unable to benefit from the work done

on those occasions to the extent desirable. It meant traversing some of the ground again. Because of this I successfully pressed for the Nugan Hand Inquiry to place its data on the same data base as my own; and I arranged within

my Commission for the names in some of the reports of the other Inquiries to be recorded on the data base so that my operational staff would appreciate that those names had arisen in early enquiries.

12.024 It would be highly desirable for all of the

data of the three drug Inquiries, the Moffit Inquiry and the

Woodward Inquiry into the Meat Industry to be placed on the

data base. It would expedite the work of law enforcement

agencies who might have access to the data and would allow greater profit to be derived from the excellent work done by

the Commissioners who conducted those Inquiries. It would obviate the need for today's operational teams to retrace the same paths as have already been trodden. In recording

the data it may be useful if the reports of the various Commissioners were first collated; but ultimately it would be best if the raw material collected by them and still held by Governments was itself collated.

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12.025 This would take some time and there will be

those not understanding the value of the historical

perspective who will question the worth of the undertaking. Operations of the kind I have conducted find their greatest

value in the detection of the most important persons in the criminal group. It is not possible to take action against

every person who commits an offence. Even if a person belongs to a criminal group it will rarely be possible to mount an operation which snares every member of the group. Resources do not allow it. What is necessary is to identify

the most important so that limited resources may be

concentrated on those rather than on the minor

functionaries. The result maybe fewer individuals prosecuted or dealt with otherwise, but the attack will be far more effective.

12.026 There is considerable emphasis in the

Australian debate on procuring convictions. Constantly I

have been asked to state the wrong approach. Quality should prevail over quantity. In 1975, the review of the FBI

operations led to this conclusion:

"Under Director Clarence M. Kelley, the FBI undertook a full-scale reassessment of its law enforcement operations. As described by James Q. Wilson, this review

led in 1975 to a new policy of "quality over quantity" that abandoned previous statistical accomplishment measures and emphasized new objectives:

Each SAC was to set priorities as to the kinds of cases that were

important in his area and to

concentrate resources on them. Statistics were to be down played. Within a year, the results were

being felt. The total number of

pending cases declined by 23 percent and the average caseload per agent fell from 26.1 to 19.1....

There was no immediate decline in the number of prosecutions or any significant decline in the number of convictions....

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The pressure on agents to keep up a certain caseload for statistical purposes was lessened and

accordingly the paperwork and

diversion of energy necessary to process "junk" cases became smaller."

(Mathias et al, 1983, 39)

12.027 Similar approaches were adopted in England and Canada at about the same time. The change in approach,

unfortunately, has not been perceived by most of those

participating in the Australian debate. It was certainly

the approach in operations conducted in my Commission.

12.028 Thus the drafting of an analysis required a

study of historical events and the study of relationships between criminals which had existed, in many cases, for some

years. The result was not a concise statement that criminal organisation number 123 had been uncovered, comprising A, B and C. In legitimate business such specific details of organisations may be provided because the law encourages, if

not requires, the registration of details of proprietorship (be it a business name) , or details of officers (be it a company). Commercial ends are well served by the open declaration that certain named people are in a venture

together, and there is nothing to be lost and everything to

be gained by the disclosure of the identity of principals in

the conduct of the business. But even in legitimate

business there is considerable movement of individuals.

Organisations gain a life of their own with new personnel taking command without destroying the entity.

12.029 In criminal ventures there is no open

declaration of the identity of the group, except in some rare cases where the declaration is thought to convey some

advantage. There is no need for the group to give itself a name. It does not seek to advertise and as a rule it shuns

publicity. Thus there is no pressure to establish a

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corporate identity. Sometimes one finds Bureaus of Criminal

Intelligence overcoming this problem of identity by ascribing some description to the group which is believed to convey quickly the identity to others. Thus one hears of

the "Calabrians" or the "local Mafia". These are

descriptions given by investigators; they are rarely

descriptions adopted by the criminals themselves. They have

no use for a title and so have none. The fact they do not

internally use a title does not mean, of course, that there

is no validity in the description.

12.030 Thus the description of the criminal

organisation is difficult. Within the Commission I eschewed the naming of such groups. Instead operations were

described by a code word. This was done merely for

convenience within the Commission allowing the more rapid

transmission of information between operational staff. The

"Carroll Analysis", which described one major operation, was

named after the murder victim. By the end of the

Commission, the "Carroll Analysis" covered several criminal groups, all highly interactive. I doubt whether anyone

could draw an organisational chart showing the respective places of each person in the various groups; but the

analysis did permit decisions to be made about who were the important participants and thus allowed a concentration of

effort on those people.

12.031 There have been constant cries from many who

have little experience in such operations for there to be a

public description of the criminal organisations and the

activities in which they were engaged. To some extent, this

is possible and was done by my senior assisting counsel in

papers he delivered to the ANZAAS Conference in Perth in May 1983. To some, that was not enough. They demanded names,

and called for the "evidence". The names are known in many

cases, and the evidence does exist. If those critics care

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to attend the many criminal trials taking place around

Australia where those criminals are being tried they will be

able to satisfy their curiosity. But many such criminals,

of course, are not yet on trial. The material identifying

them together with the "evidence" has allowed the

concentration of police investigations and it may be that

some time in the future they will be apprehended, not for the criminal ventures of the past but for the fresh ventures

which they have undertaken while law enforcement agencies

were on the alert. To disclose the information to the

curious in advance of successful operations would merely prejudice those operations without there being anything

gained except the satisfaction of the clamorous critics.

12.032 In order to draft an analysis the operational head required an excellent understanding of a wide range of

information. The computer systems allowed the reduction of the information to the greatest extent possible without losing its substance. The systems allowed the sorting of the information in the many ways described. They allowed

its immediate and comprehensive retrieval; they did not replace the brain of the person in charge of the operation.

There are no computer systems which can do that. The human

brain can draw analogies, can "jump" to new levels of

understanding, and it can provide insights denied to a mere machine. Such interpretative capacity is required for this

work; I was indeed fortunate in having three counsel well endowed in this respect.

12.033 There is a lack of appreciation, I have found, in the necessity to have first class operational heads. The systems which have been developed are seen by many as doing the whole job; they do not do it. What they do is to allow

greater - far greater - productivity from the operational

staff· They do not replace or render any less necessary the highest skill in the analysis of the information.

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"The humorous man recognises that

absolute purity, absolute justice, absolute logic and perfection are beyond human achievement and that men have been able to live happily for thousands of years in a state of genial frailty."

Once around the Sun (1951) Brooks Atkinson.

13.001 The operations of the Commission revealed day

by day the criminal ventures of a number of organisations.

The question arose what I should do about it.

13.002 The general tenor of the Letters Patent of a

Royal Commission is to enquire and report to the Crown. Thus the task is seen in terms of completing investigations,

drawing conclusions and reporting so that Government may

determine what should be done. This is capable of

relatively easy achievement where the subject of the Inquiry is of small compass and wholly in the past. When it is of

wide compass and includes current matters the task is not so readily done. The writing of a report takes time and can be

done properly only when investigations are completed. The latter state, in an Inquiry such as mine, is never

achieved. The criminal ventures continued to be planned and

executed even as I questioned their perpetrators. Further, the delay necessarily occasioned by the time taken to write

a report would often prove fatal to any remedial action that

may be taken by an appropriate law enforcement agency.

13.003 Fortunately, the Royal Commissions Act 1902 foresees this situation and permits the referral of matters

directly to law enforcement agencies or the Law Officers of

tne Commonwealth or any State at any time. The Victorian

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Act (Evidence Act 1958) was silent on this matter but in any

event the Commonwealth legislation was more than

sufficient. By resorting to these provisions a practice was

developed within the Commission by which matters were

referred to appropriate agencies at the earliest moment.

13.004 Evidence of the commission of a crime, or of

general criminal activity, emerged slowly in the course of

operations. I can recall no case where suddenly, in the

space of a day or a few days, there was evidence where

before none had existed. Hence I was always in the position

of being able to give advance warning of the likely exposure

of a criminal matter. As a result I came to adopt two

stages in a referral: the first was where warning was given of the matter; the second was where a specific referral took place. The difference lay in both form and substance.

Warnings were constituted by an oral briefing and encouraged joint action in the investigation. A referral involved

transmission of the written analysis with the relevant agency taking full control of the matter and the Commission

withdrawing to a point where it merely supported the agency with material.

13.005 The issue of warnings was facilitated by the

periodical operational conference. When the Commission was fully operational they occurred weekly or fortnightly. They were attended by liaison officers from the Victorian Police, the Australian Federal Police, the Australian Bureau of

Criminal Intelligence, the Australian Taxation Office, the Reserve Bank, the Special Prosecutor's Offices of Messrs

Gyles and Redlich, and an officer of Customs. Their initial purpose was to ensure that the Commission's operations did not unconsciously intrude upon police operations. However,

it was quickly perceived that far greater value was achieved in a free exchange of information between all present on matters of mutual interest and that occurred. The

conference began with a resume from my senior assisting

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counsel of current operations, with the situation being

updated since the last conference. Then each agency in turn

reported on matters within its purview which touched upon those operations and any other matters which they believed

required my attention. The conferences were marked by

complete frankness and this contributed to their success.

13.006 No agenda was published for the conferences

but most agencies had junior officers posted to the

Commission and they were given full access to the operations

and the data base of the Commission. They were encouraged to communicate freely with the liaison officers, who were

stationed with their own forces and such others as were

conducting operations within those forces touching upon the Commission. This enabled a daily flow of information between the Commission and those forces, to the very great

benefit of both them and my operational staff. There may be some who fear the lack of security such arrangements allow.

To them I would say this: Of course, if there were a breach

of security it may be some operations would be prejudiced.

But when it comes to suppression it can sometimes be

achieved more efficiently by trusting the existing law

enforcement agencies to do the job. This has been my

experience and it is well worth the risk of any supposed

breach of security. I add that in my view most of the

concern about security is far too great and not warranted.

It is a matter of little importance compared to the

advantages of free dissemination of information to all

concerned. It is here that my views depart from those held

by a number of other people prominent in this field.

13.007 The issue of warnings became such a feature at

these conferences, and the briefings so thorough, that gradually the specific referral of matters to other agencies

became a thing of the past. The breakthrough achieved by my operational staff would be taken up by the appropriate

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agencies and my personnel would move to another part of the

operation. This was very efficient and most rewarding.

13.008 It is desirable, at this stage, that I define

the objectives I was seeking. The terms of reference

required me to enquire into the criminal activities of the members of the Union, and their associates, and to report to the Government. The purpose of any such report was clear. If the publicity concerning the Union and its members

involvement in crime was true the Government wished to do something about it. I was to ascertain whether it was true

and to recommend what should be done.

13.009 It did not take long to confirm that the

constant publicity of the involvement of members of the

Union in crime was accurate. Moreover those enquiries

revealed that the criminal activities were frequently

performed on behalf of others. When I turned my attention

to what should be done I found that whilst the perpetrators

of the crimes (Unionists) were apprehended and convicted

with some monotonous regularity, their principals were not. It followed that as long as the principals remained

untouchable there would be a regular and never-ending occurrence of crimes committed by these men. Thus the principals were the ones against whom the enquiries had to

be directed to identify them and to allow some suppressive action to take place.

13.010 I emphasise that the objective was

suppression, not something else. Once a criminal

organisation is found the authorities have a formidable task in taking action against it. To the academic or

theoretician it may seem simple enough: gather the evidence

and prosecute. In practice however that is not easy. There are many crimes which have been, and are being, committed in

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respect of which the authorities never gather sufficient

evidence to allow successful prosecution. This does not mean, as some critics seem to suggest, that there is not

enough evidence to establish the occurrence of the crime.

To take a simple example, Carroll was undoubtedly murdered at Mount Martha on 3 January 1984. I came to that view on

indisputable evidence even though no person has yet been

charged and convicted of the murder. The reason is obvious

enough. There may be ample evidence of the occurrence of

the crime, yet insufficient evidence to prove that the

perpetrator did it. Anyone with experience of litigation would know that the two matters are often quite different

and that one may be satisfied and the other not.

13.011 Thus the position was often reached where

there was ample evidence of criminal activity and sufficient

information to allow a reasonable suspicion to be formed

about who was responsible, but not enough evidence to allow

a successful prosecution.

13.012 The maintenance of law in society demands more

than mere prosecution of offenders. First it requires the

prevention of its breach; and further, where the breach is occurring, it requires it be stopped. If it is allowed to

continue notwithstanding scrutiny by authority, not only do

those offenders arrogantly defy the law but others soon follow suit. Nowhere was this more poignantly demonstrated

than in respect of taxation fraud now known as "bottom of

the harbour" schemes. The early perpetrators well knew of the interest of law enforcement authorities (they were

interviewed by the police as early as 1975) and were also aware that no action of any sort followed. They increased the range of their unlawful business a hundredfold and soon others promoted similarly unlawful schemes. This occurred

because it was believed they could not be successfully

prosecuted.

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13.013 The second requirement to maintain law and

order where a criminal scheme is identified is to take steps

to avoid its repetition in the future. That may be achieved by prosecution but only if it is successful. It is only

then that it may have effect as a deterrent. Prosecution takes time and that may not be soon enough to act as a

deterrent to others. Other means of deterring recurrence

should be explored and employed if they be available. It may be that recurrence of the scheme can be deterred by

exposure of its criminality or by changing laws which are

being exploited or by changes in administration of public

affairs.

13.014 The next requirement is to punish the

wrongdoer. He should be deprived of the fruits of his criminal venture and then be punished for having

participated in it. Too often the punishment aspect is given pre-eminence with little thought to the profits that

have been made. Starting Price bookmaking is a good

example. It is primarily a scheme of tax evasion, the tax being turnover tax. Yet the law allows only the punishment of the wrongdoer; it makes no provision for the recovery of

the evaded tax. Thus a bookmaker who doubles his profit by paying no turnover tax may find no more than a relatively

small fine being imposed. This makes nonsense of the law. The same applies in other areas. A bank robbery with perhaps

several hundred thousand dollars being stolen is dealt with

by a gaol sentence of, perhaps, ten years. With remissions

the offender is out of custody within five years or less to enjoy the fruits of his crime. This is not satisfactory.

13.015 The final requirement is to compensate the

victim. Far too little attention has been paid to this, it

usually being left to the victim to look to his rights alone

and without assistance. This is changing with criminal compensation schemes becoming common. It needs to go

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further. It is time for the state to take an active role as part of its responsibility in the enforcement of laws to

ensure the offender compensates the victim for the harm he

has done him. Nowhere is this more important than in the

operations of criminal organisations because the number of

victims may be large and the harm to each so small not to

warrant the cost to each individual of taking action.

13.016 These were the considerations influencing me

when I considered what should be done as the operations progressed. I looked for efficient and speedy methods of

achieving these goals but with particular emphasis on the first two - the inhibition of current criminal schemes and the prevention in the future. Arrest, charge and conviction

have a satisfactory ring to them and certainly are beyond

criticism. Even where possible, however, they take considerable time during which the criminal organisation

prospers. Those methods may not be possible, however, in

which event the schemes continue. Even where they are

successfully completed, if no other action is taken, experience shows the criminals continue even from within the

walls of a gaol. I searched in each case for remedial

action which was quick and which effectively stopped the

activity. I left to later the task of ascertaining whether

it was a case in which prosecution could succeed.

13.017 It is to be kept in mind that the operations

by my staff were not at any one time directed at a single criminal enterprise. Each operational team was examining a target which involved ascertaining the identity of the principals of a criminal organisation and uncovering a number of the criminal ventures perpetrated by that group.

Thus the task of suppression, if it was to be done

efficiently, could not be focused upon any particular

scheme. Many schemes being examined had already been

completed and often little was known of what the group was

then doing or may be planning to do, other than it was

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almost certainly criminal. In these circumstances logic

compelled a concentration on suppression of the group as individuals rather than seeking to disrupt and stop a

particular scheme. Of course, if a current scheme were found, action could be taken against it. There is certainly nothing novel in doing so. The Commonwealth Secretariat division relating to commercial fraud has often taken such

action in respect of international frauds where prosecution

is out of the question.

13.018 Action directed against individuals may be

planned and executed to disrupt the activities in a

commercial manner, often rendering them unprofitable if not

impracticable for lack of capital. Such action is

predicated on the circumstance that the individuals will have left themselves open to such an attack by their failure to comply with certain laws which may be useful to the

attacker. One such law is the Income Tax Act, but it is not alone.

13.019 I suspect that my Commission earned a

reputation for the use of taxation laws in this area. I was

not the first to see their potential. It had been realised fifty years ago in the United States. But I was the first

to make substantial use of it as a weapon against criminal

organisations in this country. The principals of criminal

organisations, so far as I have seen, do not pay a proper amount of tax if any at all. Many of them do not even

submit taxation returns. The methods of operation adopted

by my staff were directed at the financial wealth of these

principals. The assessment of tax, and penalty, was

relatively straightforward in such circumstances. It was also quick. An assessment could be issued within a matter

of a week of the initial warning being given. Since the operations also identified the properties and other assets of the criminals, it was possible for Mareva Injunctions to

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be obtained to prevent the disposal of those assets and

ensuring the payment of the tax. Thus the criminal

principals could be relatively quickly relieved of much if

not all of their wealth. This had a major effect on their

operations, depriving them of capital which they needed as much as does any legitimate businessman. It also removed

the profits of their crimes and demonstrated to their associates that they did not enjoy the vulnerability they

previously claimed.

13.020 The Commission staff and the tax investigators worked hand in hand on many assessments. In my previous

report I included an amount of tax which had been assessed

pursuant to this attack, and it will be recalled that the

amount directly assessed as a result of the Commission's work was in the order of $25 million. That work has

continued. I am not sure how much the figure may now be,

but only recently the tax liability of a very active

criminal perpetrating many frauds in several States was assessed at $1.9 million. His properties have been

identified though they have been concealed behind company facades and nominee proprietors. There is no doubt the money

will be collected. It may be that sufficient evidence will soon be gathered to allow his criminal prosecution. In the

meantime however some substantial suppressive action has been taken which ought to impede further major criminal

ventures. There is a large number of examples I could

give. I have found that from the most violent to the most

debonaire criminals the action that has hurt most has been the taxation attack.

13.021 I was disappointed to note that, in the

National Crime Authority Act, insufficient access was given to taxation records to allow the Authority to use this

weapon with the same freedom as I have done. There will be those who will say that the Authority may allow taxation

officers in to examine the records and take such action and

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surely the same end will be achieved. I think not. The Act

prevents the Authority accessing taxation records except in very limited circumstances - there having to be a "tax

related investigation" - and so denies a free exchange of information and ideas in cases where the operation does not

touch on taxation crimes but access is sought merely to invoke suppressive measures. I have seen no explanation for

this omission other than some plaintive cry that in some fashion to allow greater access would impinge on "privacy".

All that is denied to the Authority is access to information

by a quicker route than it will otherwise have to take, and at a cost of an impediment in the free interchange of

information between officers of the Authority and the

Taxation Office.

13.022 A further unnecessary impediment in the path

of those charged with these operations is to be found in the legislation establishing the office of the Director of Public Prosecutions. In the course of my inquiry I

recommended the establishment of offices of lawyers to assist in the suppression of criminal activities. As a result the offices of the Special Prosecutors were

established. Mr Redlich accepted one such appointment and it was through his office that the taxation assessment and

Mareva injunction technique was brought into practice. In

these cases it is usually intended that criminal prosecution

would follow; but first the properties had to be enjoined

because experience showed that if they were not the assets

were soon lost. Other Inquiries have found the same result as the Stewart Report into the Clarke Group revealed. It made sense for the same officers as those who were to mount the prosecution should, usually at a much earlier stage,

also take the necessary civil action. It operated extremely

well in the cases where it was done. Naturally, it preceded prosecution. The action was taken far earlier than the time when evidence was gathered together sufficient to allow a

successful prosecution. That is the way of things.

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Evidence allowing tax assessment and Mareva Injunctions,

which are civil actions, is much easier to find than

evidence permitting criminal proceedings. Yet despite the experience gained in these matters, when the Act

establishing the Director of Public Prosecutions was framed and passed,the Director's staff was denied the right to mount civil actions until after the prosecutions were

completed. A more disastrous limitation is difficult to

imagine. The Government may be sure that if this is to be

the approach there will be no assets left to seize by the

time the prosecutions are completed. Time and again that

has been the case; surely it needs no further

demonstration. It is my recommendation, notwithstanding the

youth of the legislation, that this impediment be removed as a matter of urgency and on the ground of common sense.

13.023 Recovery of taxation is but one remedy

available for use in the early stages of identification of

criminal organisations. A second and very important remedy

is the employment of the several law enforcement agencies

who may be concerned. These include the State and

Commonwealth police forces, Customs, the Corporate Affairs Offices, liquidators, the Registrar in Bankruptcy and his staff, the Reserve Bank, and many other regulatory

agencies. There is a tendency in those unacquainted with this order of criminal endeavour to fail to appreciate the catholic tastes of the criminal organisation. This lack of

appreciation is reflected in the great emphasis placed upon

co-ordination and use of police forces. In their

enterprises criminal organisations do engage in activities

which fall within the province of police forces; but a very

high proportion of their ventures is in areas which are not

within the purview of police forces. Many of those ventures which fall within police jurisdiction also involve other

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non-police jurisdictions. The great need I have perceived for any successful suppression operation is not the mere

invocation of police operation (be it of task force

dimensions or otherwise) but rather the dissemination of

information to all agencies and the stimulation of their

response.

13.024 In the Noosa area there is a group of men

engaged in the smuggling of drugs. This is an activity within the purview of the police and as it happens it

warranted, and received, a joint operation of the Australian Federal Police and the Queensland Police. Because the same

men are engaged in smuggling drugs into Australia it involves Customs. There is little unusual about a joint

State Police-Federal Police-Customs task force. But those same men are engaged in taxation fraud warranting (and

receiving) close attention by taxation investigators. They are also involved in bankruptcy fraud involving close

attention by officers of the Office of the Registrar in Bankruptcy in at least two States. They have also committed

company offences with resulting frauds which are the subject of investigation by an official liquidator (who, of course,

is an accountant in private practice), and staff of the

Office of Corporate Affairs. Thus this same group is

receiving the attention of a number of different law enforcement agencies all making very similar enquiries and

taking different types of suppressive action. This is done more effectively and far more efficiently if all enforcement agencies are fully informed about what the others know, and

their actions are co-ordinated. I saw this as an

opportunity for me to influence the attack on the group by assembling the information from the various places and disseminating it.

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13.025 This is not an isolated incident. I took the

view that my Commission could not duplicate or replace the various law enforcement agencies that are available to

supply officers experienced in their work, and who are

equipped with appropriate powers. Customs, for example, has the power to give special attention to importations

suspected of being illegitimate. Once warned, Customs can

act effectively to make such importations much more difficult, if not impossible. In one area an operation by

my staff identified certain characteristics suggesting

illegal importations of drugs. Customs was informed and future importations bearing those characteristics were

placed under surveillance. The same was done in respect of

persons suspected of being couriers. This is the type of action that may be taken where the evidence reveals the

operations of the criminal group to an extent where there is

little doubt that the activity is taking place but the information is insufficient to sustain a successful prosecution.

13.026 It is not merely Customs. With Corporate

Affairs and Bankruptcy there is available two agencies well equipped with powers matching my own to investigate matters

occurring within their areas. If informed of the nature of

the wrongdoing Corporate Affairs may appoint a special

investigator who could be briefed fully by my staff and use

his own powers to complete the investigation under his Act.

This was done on several occasions. Likewise, if the matter

should concern a listed company, Corporate Affairs, or the NCSC, may take action such as suspension or delisting. All

that is required is for information to be passed allowing normal remedies to be implemented. This is possible on

evidence falling well short of that required for a criminal prosecution. Yet the effect on the criminal organisation

can be devastating. Likewise with action by the Registrar

in Bankruptcy.

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13.027 Just as I had recourse to several Departments

of State, so too did I find it valuable to call upon

financial institutions such as banks for assistance. In the

course of operations a number of bank managers were

identified as being corrupt. These men usually attracted many criminals (not necessarily associated with one

another). The senior management of the relevant bank was always advised when such a manager was to be examined by me

even if the examination was in private. If the examination

revealed corrupt practices, the banks, almost always,

arranged for examination of the accounts of that branch by

their auditors and, as might be expected, substantial

deficiencies were found leading to removal of the manager. In due course these managers will be charged with offences;

but in the meantime the criminal organisations have found

the doors of the banks, at least to that extent, closed.

The banks were grateful for the identification of such people as the banks themselves suffered as much as the rest

of society from the wrongdoings of their staff.

13.028 In similar fashion, where the material

warranted it, I referred professional men to their

professional bodies for action. There are cases of

accountants and solicitors. Once again the material was more than sufficient to warrant this type of action though it often was quite insufficient to allow criminal

prosecution.

13.029 The criteria I adopted in taking action of

this kind was that the information had to be verifiable and

the means of verification had to be made available to the

body which was to take action. Thus I did not demand

remedial action; I merely acted as informant, supplying the

evidence and allowing the appropriate body to act in accord with law exercising its powers to effect the appropriate

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remedy. In this fashion I was able to invoke all of the resources available in the community and to concentrate

their attention on the groups and organisations my

operations revealed.

13.030 This, of course, was not enough. It did have

an effect on the criminal organisations. It disrupted their operations and required changes of plan, allocation of new

resources, use of new and inexperienced people. This increased the chances of effective police operations. As my

operations proceeded I called upon the various police forces

(and other law enforcement agencies that I have mentioned)

to supply personnel to conduct surveillance and other suppression operations. In discharge of this task I abstained from seeking to control the police operation. That was left in its entirety to the usual and experienced

police officers. All I asked was to be informed about progress and to receive any intelligence that was seized.

My staff enjoyed close relationships with many officers from

all police forces in Australia. They briefed them fully and

frankly and stood back allowing the police forces to take

the praise for the arrests that followed. It will be noted

that despite many demands made that I enumerate the arrests

brought about by the activities of this Commission, I have

until this report refused to do so. In a sense I may claim credit for many that have been made as a result of these

operations; but had I done so it would have deflected the

credit from the police officers concerned and may have had a

deleterious effect on future relations with them. It would have served no useful purpose other than to quieten some

carping critics. I chose to bear the carping in silence and

maintain the effectiveness of the operations.

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13.035 I have used previous reports, as I do this

report, to portray the activities of organised crime. In

some instances I have reported upon identities and have explained the criminal pursuits in some detail. There are

several reasons for this, one being a perceived need for public awareness of the extent of the problem. I expand on this in the next chapter. Another reason is to allow

administrative action to be taken to remove a public

servant; and a final reason is to explain, confidentially,

the magnitude of the problem to Government. This is an

essential power. It is disappointing to find that the National Crime Authority is denied such power. It is likely

to prove a fatal omission.

13.036 All of the remedies employed have had a

considerable effect upon criminal organisations within

Australia. It would be difficult for me to single out any particular remedy as having been more successful than others. It all depends on the case. Certainly prosecution, even when successful, does not stand out as being more

successful than any other when measured against the test of the effect it had on suppressing criminal operations. One

case, which was monitored, revealed the imprisoned men being visited by people from all over Australia who gave false

names and were believed to have been discussing further

illegal drug transactions while they were in gaol. No doubt

imprisonment hampered their operations to some extent though

it would be a moot point whether it was as handicapping as

the taxation assessments, collectively totalling millions of dollars, levied upon them. I am not suggesting there be no

prosecutions; rather I am suggesting they be regarded with due care for proportion. They are not the sole remedy nor

necessarily the most effective of the remedies available.

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There is one other remedy which I believe is far more

effective in certain circumstances: that of publicity.

However, it is so vexed a problem and so much has been made

of the manner in which I have employed it in my Commission

that I have reported upon it in a separate chapter.

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CHAPTER 14 - EXPOSURE

"There is not a crime, there is not a

dodge, there is not a trick, there is not a swindle, there is not a vice which does not live by secrecy. Get these things out in the open, describe them, attack them, ridicule them in the Press, and sooner or later public opinion will sweep them away. Publicity may not be the only thing that is needed, but it is the one thing without which all other agencies will fail."

Joseph Pulitzer

14.001 In Australia today there is an extolling of

the virtues of silence with a consequent demand that all be kept secret and not revealed. It is to be found in two

areas which impinge upon criminal investigations. The first is a strong feeling by law enforcement agencies that the work they do should be kept secret not only from the public but also from other agencies engaged in the same work. The

public, and especially the press, is treated with suspicion

bordering upon enmity. Other agencies are treated not as

colleagues but as competitors. There is a withholding of

information and even a failure to share techniques.

14.002 The second area is in Government. There is

increasing criticism of the exposure of criminal activities, and criminals. It is stridently protested that criminal trials, though years in the future, will be fatally

prejudiced and that reputation should remain intact unless

and until such trials have taken place. I suspect that the

revelation of major criminal activities are seen by some as

a reflection upon Government administration. This is nonsense. There will always be criminal schemes no matter

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how efficient the administration. Yet the perception that

exposure of those schemes may reflect on Government leads

some to seek to minimise the occasions it occurs.

14.003 Both of these trends run counter to modern

legislation which gives greater access to information held

by Governments. In the past ten years, there has been a strong and successful drive to enact freedom of information

legislation in most Parliaments in Australia. It may be that as the new rights given by that legislation are

enforced it will be appreciated that the freeing of such

information may prove uncomfortable.

14.004 Another form of accessing information,

exposing it and allowing the public to see what has

occurred, is the Commission of Inquiry. There has been a

plethora of Inquiries during the past four years and, as has

been the case ever since this country was settled, most of

the hearings of those Inquiries have taken place in public.

They have revealed all forms of unsociable activity. The

public has been informed by wide coverage in the media. One consequence has been for some to challenge publicly the

propriety of this course and to argue it should cease. My Commission has been the object of some of these criticisms.

14.005 In dealing with this matter it is necessary to

examine various actions taken by me in the running of the Commission. I shall spend a considerable part dealing with

the public hearings of the Commission and the public reports. However it is desirable I record another

dissemination technique used by the Commission with some

success and explain its purpose.

14.006 I have written about the frank and free

disclosure of information that has taken place between my staff and appropriate law enforcement agencies. This was

done with some deliberation. I was anxious to demonstrate

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by example to many law enforcement agencies that a free

sharing of information could take place without the

consequences feared by many and that I and my staff were

quite prepared to engage in it. In other words, I desired

to give the lead. It had advantages for my operations; but

I hoped the advantages would be readily perceived by others

and they would be seen to outweigh any disadvantages. Of course, there were occasions when some disadvantages

occurred - or at least events occurred which some may have

regarded as disadvantages. On occasions, some of the information was revealed in public hearings, with consequent

release to the public. Some may have felt this may have hampered investigations. I am not aware of any case where that proved to be so. Nevertheless, the advantages far

outweighed any disadvantages of that kind. I hoped the

process would have won support but I have found in recent

times that the urge to keep matters secret is as dominant as

before. It will be abated only by continued leadership by Commissions such as mine and by the National Crime Authority.

14.007 The sharing of information was only one aspect

of disclosure in which my Commission engaged. More

important was the need to disseminate knowledge of the

advanced operational systems. The operational support for

law enforcement agencies in Australia is poor. They operate

in accord with administrative practices of the last century

- or rather, they did. I sought to rectify this situation.

The investigation and suppression of organised crime could never be achieved by my Commission alone nor by the National Crime Authority alone. It needed the support, if not the main attack, by efficient and well-equipped law enforcement

agencies. I resolved to do something about their parlous state.

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14.008 The first step was to expose the inadequate

nature of their support by a public report. This was

necessary because, unless public opinion was in favour of increased resources being allocated to such matters there

was no hope of Governments, no matter how well motivated, giving the matter sufficient priority to allow it to be

done. The case had to be made out and be done so publicly.

Once that was achieved the funding by Governments would

follow. Some success has been achieved and the installation

of modern information management equipment is now occurring

in a number of law enforcement agencies.

14.009 Public opinion was only one matter requiring attention. Another was informing responsible politicians and senior administrators in law enforcement of the

advantages, both financial and operational, of the modern

techniques; and no less important was the demonstration of those advantages to operational investigators in the various agencies. To achieve this my senior assisting counsel

prepared a series of lectures initially of four hours' duration, but, as the system grew, of a day's duration

suitable to brief Ministers, other politicians and heads of departments. These briefing sessions took place on many occasions to politicians of all persuasion and to many

administrators and other significant people in the

community, including academics. A manual outlining the

nature and content of the briefings is Appendix 2-1.

14.010 A second series of briefing sessions

comprising some three days were designed by Mr Wright,

Director, A.D.P., and a large number of investigators and

others attended these courses. A typical programme of these

briefing sessions is contained in Appendix 2-J.

14.011 A list of all those briefed by one or other

method is to be found in Appendix 2-K. Those briefed

included people involved in law enforcement from other countries and, on the occasion my senior counsel visited

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officers of the I.C.A.C. and the Royal Hong Kong Police.

Enquiries about the methods have come from Canada, the

United States, England and New Zealand, with occasional personal visits by people from those places. However the

true value lies in the work done within Australia. The demonstration of the systems gave, at the very least, an

awareness of the power of the techniques and stimulated innovative thought. This was important for people from all levels and was as important to national leaders as it was to junior detectives. It constitutes one of the more valuable

functions performed by my staff and possibly is the most effective single measure taken in the life of the

Commission. It is not to be measured by the number of

authorities who now adopt this particular system but by the

enthusiasm with which the technology is now embraced by law enforcement agencies which previously doubted its worth.

14.012 Another important task discharged by the

briefings was the acceptance of the scrutiny that it

permitted. There is a profound tendency within Australian

agencies to deny access to significant people in the community, to discourage scrutiny and to avoid the

dissemination of information which might result in criticism. The security blanket thrown over operations is

justified on the ground that otherwise those operations may be prejudiced. I believe that, in almost all cases, to be nonsense. There should be a far greater awareness,

particularly by members of Parliament, of how the agencies

in law enforcement work. Members of Parliament, although operating in a Westminster system should insist, through their committees, on briefings and should subject the operational techniques to the closest scrutiny and demand

the highest standards. This is an important control lacking

in Australia, but found to be working effectively in the United States.

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14.013 In the course of my Commission I have welcomed members of Parliament of all political hues and have not

hesitated to explain and justify the operational systems to them. This has never prejudiced operations nor ever seemed

likely to do so. I welcomed it notwithstanding that it was

in a sense a distraction from the work of the Commission

because it required my staff constantly to consider the

effectiveness, and propriety, of what they were doing. This self-examination is a great advantage to law enforcement agencies, and any distraction from active operations is a

small penalty to pay. There have been members of Parliament from most Australian Parliaments, the crowning visit being

that of the Senate Standing Committee on Constitutional and Legal Affairs investigating the National Crime Authority legislation. I have also briefed some State Parliamentary

Committees on criminal activities where those activities

have fallen within their purview. This has been to our

mutual benefit. I urge law enforcement agencies generally

to adopt a much freer attitude and a more positive approach

towards our elected representatives; and I urge the latter

to take the initiative and develop a strong interest in the

operations of law enforcement agencies.

14.014 It is not merely those in authority who are

entitled to be aware of matters. In a democracy the general

public has the same right. There are two aspects to it.

The citizen cannot exercise his democratic rights unless he

is informed. If the systems I adopt, for example, are not

acceptable in our community, I should not employ them: and, if I do, the public has a right to know and to exercise its

authority to stop me. That authority is brought to bear through its elected representatives. This can occur only if the public knows what I am doing. That is the first aspect.

The second is that any suppression of criminal activities

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requires public support. It cannot be effective if the

general public does not condemn the impugned behaviour. The

public can express no opinion on the behaviour unless and

until it is made aware of it.

14.015 This disclosure of the systems employed by my

Commission carried with it, of course, the risk that the criminals, on learning of them, would employ means to defeat

them. I gave this anxious consideration. In the final

result I came to the view that it was more important to make

known what was being done, and how, than it was to protect those systems from defeat. This was not an easy decision

but it was influenced by the circumstance that I do not

believe the systems can be so readily defeated. Even had it been otherwise, I am of the view that exposing the

techniques to public scrutiny is far more important than not doing so.

14.016 The importance of doing this was driven home

when, in the course of a challenge in the Courts by people

seeking to prevent my examination of their affairs, it was falsely . alleged I had wrongfully intercepted a telex message. The allegation was later withdrawn when it was conceded publicly that the message had been obtained

lawfully. The point is that, where sophisticated techniques

are employed which are little understood, an assumption is made that illegal methods must be being employed. How else, it is argued, could the matter be known?

14.017 My senior assisting counsel with my

encouragement accepted a number of engagements to make

public addresses and publish accounts of the systems. Thus the public was made aware of what was being done, and how.

I have not observed any change in criminal behaviour designed to frustrate the new systems.

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14.018 The second area, the informing of the public

of criminal enterprises so that there may be public

condemnation, is of a different order, and poses more

difficulties than mere disclosure of technique.

14.019 I have sought to achieve the goal of creating

public awareness by several techniques. One was the employment of the public examination of witnesses where the

schemes were exposed by direct examination of the

principals. A second was by the report submitted to

Government detailing the scheme and its consequent publication. The third was by public addresses in which the

general nature of criminal activities was disclosed and the unlawful aspects examined. All of these methods proved

effective. The first and third were entirely within my control: but the second depended upon decision of

Government.

14.020 An illustration of the advantages of

disclosure, and the disadvantages of non-disclosure, was

provided by the differing treatment accorded to my fourth and fifth interim reports. In the fourth report I detailed,

without identifying the participants, the "bottom of the harbour" taxation schemes. Notwithstanding that the report

also criticised heavily the Attorney-General1s Department it

was published. The effect on the promoters of these

fraudulent schemes was dramatic. There was public revulsion and whereas before people boasted of their participation now

they became ashamed of it. The clientele of the promoters of these schemes was destroyed. The clients took their

custom elsewhere recognising the promoters for what they were. Two years later it was possible to bring those

promoters, or some of them, before the Courts on criminal charges. Those trials will not be completed for possibly

another twelve months or more. In the meantime the activity

has been effectively stopped.

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14.021 A different approach was adopted in respect of my fifth report. In Volume 2 of that report I explained another taxation scheme, fraudulent in its operation, and

prevalent in Australia. Whilst only one example was given in that report, similar fraudulent schemes are to be found

operating today. On this occasion, despite the omission of names in the same fashion as had been done in the fourth

report, the volume was not published. There was no public

exposure of the scheme, no awareness of its criminality and no cessation of its practice. Some months later the

principals were committed for trial and the committal

received some publicity. It was not to the same extent and did not have the same impact as would have been the case

otherwise. The suppression has not occurred.

14.022 The explanation given for not publishing

material of this type is that it may affect reputations or

may prejudice the criminal trials that result. I shall deal with the latter proposition now, leaving the other for later. In the examples I have given, the names were omitted thus precluding any direct effect on reputation. The only way in which reputations would be harmed was if the person could be associated by extrinsic material to the criminal scheme. Surely that is not a concern.

14.023 The alleged effect publication may have on

criminal trials is a matter receiving much attention in

public debate today yet it is a matter to which the Courts

have given attention for many years. It is often put as a matter which should result in a trial being adjourned for

some months, or a conviction being set aside at a trial where there was offending publicity.

14.024 Perhaps the trial of recent times which has

attracted the greatest publicity was that of Chamberlain.

The publicity arose as a result of the Inquests held into

the death. It occurred without any Commission of Inquiry

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publicising the matter; and it is often the case that

pre-trial publicity does occur through an Inquest. In the

case of my fifth report, there has been pre-trial publicity

arising from the committal proceedings. Nobody is

suggesting those proceedings should have been held in secret

for fear of prejudicing the trial. The publicised

information differs in no respect from what it would have

been had my report been released, other than the source

being different. It is very difficult to accept that a

variation in source of this nature should be the critical

matter.

14.025 The Chamberlain trial was moved to Darwin from

Alice Springs. The publicity was intensive. The jury was directed to attend only to the evidence, and to put the

publicity out of its mind. There is no reason at all to

suppose that it did not do so. No complaint was made after

the trial and during the appeals that such a direction had

not been effective.

14.026 It is rarely suggested that a Judge or

Magistrate will be affected by pre-trial publicity. It is

only the jury. Usually it is a lawyer who argues that a

jury, and therefore the trial, may be affected. Of course, publicity during a trial may affect a jury, swayed by the emotions and passions inflamed by the manner of reporting or the disclosure of information not admissible on a trial. It

is one thing to be concerned about such publicity concurrent with a trial; it is quite another thing to be concerned

about such publicity months or even years before the trial

commences. That a jury of twelve citizens cannot be trusted to put out of its mind some recollection of publicity long since past, and return a verdict on the evidence adduced in

a Court is a belief not displayed by Judges of our Courts .

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14.027 Perhaps the most significant and recent

example of a much more generous view of a jury's capacity to

restrict itself to the evidence in hand is that shown in the trial of the Zampaglione brothers in Melbourne in 1980.

They were charged with serious drug offences. In the course of their trial The Age newspaper published an Insight

article which suggested a witness critical to that trial had been murdered by the Zampaglione brothers. Being published

while the trial was in progress and containing material not admissible in the trial, it was held to be a contempt of the

Court and a fine of $75,000 was imposed. But an application

to discharge the jury failed. An appeal to the Court of

Criminal Appeal also failed, even though taken on this very matter. The Court of Criminal Appeal refused to reverse the

trial judge's conclusion that the jury was attentive to its duty, was applying itself in an intelligent manner and had

both the capacity and willingness to act on his direction - if any member had read the article (which was in doubt). As

the Court observed, this did not lessen the mischief of such articles nor undermine the correctness of the penalty

imposed for contempt; but it did not mean the jury was

adversely affected and there was a miscarriage of the

trial. It seems these Judges had a stronger regard for the

integrity of juries than do some of the commentators today.

14.028 It would undoubtedly be wrong for a Report of

a Royal Commission to be published when a trial is pending or in progress where the contents of the report concerned

matters before the Court. It would be a contempt. But no contempt is committed when publication takes place at an

earlier time. It has never been suggested otherwise. To extend notions of contempt back in time to occasions long

before trials commence is to embark on an exercise which

lacks judicial support and is contrary to common sense. Such an extension could be justified only if it were

accepted that the publication may be read by a potential

juror, retained in his memory and applied in determination

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of guilt of some person at a trial long in the future and in

conflict with judicial directions to the contrary. If in

the Zampaglione trial (and there are many other like

instances) it was not accepted that the jury would be so deflected from its duty when publication took place during the trial, it is impossible to understand how it could be suggested it would be likely to occur that in the lesser

case of publication distant in time. The suggestion that publication should not take place on such a ground lacks judicial support, and is not in accord with a proper

understanding of the diligence with which jurors attend to their task in criminal trials.

14.029 The second consideration advanced against the publication of reports of Royal Commissions is that they may

adversely affect the reputations of citizens, with there being little redress. That they can affect reputations is

beyond question, and certainly there is no redress. But

reputations are not entitled to absolute protection. A

reputation is something to be earned and retained by the individual; it is not a right such as liberty or property.

Its protection in law is limited:

"The law recognises in every man a right to have the estimation in which he stands in the opinion of others unaffected by false statements to his credit.1 1

per Cave J in Scott -v- Sampson (1882) 8 Q.B.D. at p.503

14.030 This should be treated with the qualifications

now found in the law of libel and I do not propose a

discourse on that subject here. The point I make is that

the right to reputation is limited to protection against

untrue attack, not against any attack.

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14.031 Commissions of Inquiry are constituted by

people in whom the Government presumably has confidence will discharge their duty in a proper manner. If their findings

affect reputation it will normally be deservedly so. It

would be an extraordinary thing to find a Royal Commissioner

embarking on a campaign of libel or slander. The complaint

that reputations are harmed by Reports of Commissions is

empty of relevance or materiality unless by such a complaint

it is suggested that the reports contain untrue slanders.

If the reputations are harmed by a report which is based on

fact, the harm is done by the exposure to public view of those facts. It is the facts that hurt; not the report.

But there are many avenues by which reputations may suffer harm without any right of redress being available. Further,

if a Commissioner acts responsibly, there is a great public

interest in his being free of threats of legal action thus allowing a fearless report on matters of public

significance. Such reports have an effect far beyond the

limits of the administrators to whom they are delivered.

There is a substantial public interest in their publication.

14.032 Let me return to the fifth interim report as

an example. In that case, the fraudulent promoters were actively promoting an investment scheme which would fail.

Investors were being attracted from all around Australia by

a number of salesmen only some of whom were identified. The scheme was such that the investors would not learn of their

loss until some year or so had passed. By that time the

promoters would have vanished. On the discovery of such a

scheme and the uncovering of the fraudulent aspects there was an urgent need for publication throughout Australia.

Some investors were committed to time payment, and were continuing to pay oblivious of the fraud being perpetrated,

and investigated. Others were being attracted to it for the first time.

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14.033 On my report being submitted there was an

opportunity to publish the scheme widely, warning all of

those tempted by its lure to avoid it, and informing them of their plight. For this purpose, the second volume excluding

names was the one to publish. The report was not

published. On referral to the Queensland Police more

resolute action was taken. That Force wrote to every investor it could identify informing him of the fraudulent

aspects and thus limiting the loss. This was a more

responsible attitude notwithstanding that by doing so the

reputation of the promoters was severely damaged as the word spread of the fraud. The enforcement of law is constantly a

balance between the interests of those suspected of criminality and their victims. The balance should always be

heavily weighted in favour of the victims.

14.034 The reputation of the promoters was short

lived; they were soon arrested and committed for trial.

The failure to publish the report preserved their

reputations for merely a few weeks.

14.035 I have written of the report stage of the

Commission. I should mention, also, the public hearings of tne Commission. All the criticisms directed at the

publication of reports are directed equally at public hearings. It is desirable that I indicate the procedures I

employed at those hearings and in determining whether they

be private or public. '

14.036 Criticism of public hearing is often made but

rarely with precision as to fault. It is said, somewhat glibly, that all forms of calumny are permitted and that

outrageous allegations are made which would not be allowed in a court of law and which subsequently prove to be false.

In this manner, it is alleged, the reputations of

individuals are destroyed.

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14.037 Few examples of this have been given. There

is usually some general reference to "Royal Commissions"

without any being specified. The clamour is increasing,

though noticeably the critics, though vocal and prominent,

are few in number. It may be questioned whether the reasons

given for the criticism are based on fact or on pique at the

injury perceived to have been done to the critic or friends of the critic.

14.038 In the course of my Commission I have

attempted to ensure that at public sittings the evidence is

restricted to matters on which the witness spoke from his

own knowledge. I do not use the description "admissible evidence" because that is empty of any meaning in an Inquiry

where there are no issues.. But I do speak of direct

evidence and it was that type of evidence that was sought and usually obtained.

14.039 There has been public criticism cloaked in the words that I should not have allowed "the naming of Kerry

Packer". He was in fact identified by witnesses who, from their own knowledge, said he was the man to whom they

personally delivered large sum of cash. I deal with Mr

Packer in a separate volume and shall not explain here why I

enquired into the movement of that cash. But I do point out

that any criticism of his identification based upon a supposition that it was by anything other than direct

evidence - evidence which, if the payment of cash was in issue, would be admissible in a court - would be misguided.

14.040 The public sessions of the Commission

comprised the lesser proportion of the total sittings. Out of 444 sitting days only 168, or 38%, were public sittings.

One reason for this was to ensure that before matters were put in a public sitting there was a high degree of

confidence that they would be material to my enquiries and

the expected answers would be likely to be correct.

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Frequently matters were explored in private sittings,

especially by a documentary search, in order to achieve this state.

14.041 In preparation for public sittings an analysis was written and copies of all documents on which it relied

were prepared. The amount of preparation was very

considerable. No matters were put by way of question which

were not warranted by the documents or by evidence already

taken in private session and tested by comparison with other

information. There was no wild allegation made nor was a

witness invited to speculate or speak of matters of which he was not believed to have direct personal knowledge. No more could be asked than this and yet allow the enquiry to make progress.

14.042 The conduct of public sittings was an occasion when the reputations of a number of people were harmed. The

harm was done in some cases by the manner in which they

answered questions but in most cases by the answers they gave. In truth, not even the answers were the real cause of

damage. Rather it was the conduct in which they had engaged which was disreputable and well deserving of a loss of reputation. The public session was merely the occasion of

its exposure and the date on which the harm was suffered.

The cause was their behaviour.

14.043 There are those who say that the only manner

in which matters should be redressed is by the criminal

trial of the accused, and his conviction. If that were the only way many citizens would fall victim to unscrupulous yet

clever criminals against whom the evidence may never be amassed which allows their trial and conviction. The opportunity afforded by the conduct of a Royal Commission

where the clever and evasive criminal may be brought to account in public, or have his schemes exposed and his

criminality made public, often is the only protection

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available to the honest citizen who may otherwise fall victim. This is another case of balance being struck

between the criminal and the victim. The words which the criminal utters in such process cannot be employed against

him in any attempt to deprive him of liberty or property, but may be held against him in public so that his reputation

suffers. His injury is modest yet the gain to the public interest is great.

14.044 As the opening citation to this chapter

suggests, there is no swindle, crime, dodge or trick which will survive when it is exposed to public view. The

criminal trial is a poor medium for exposure. It is limited in the manner in which it may portray the criminal scheme,

being restricted to the elements of the charge required by law to be laid. Further it takes place years after the

event. The matter described in the fifth interim report, a scheme devised in 1981, perpetrated in 1981-2, investigated

in 1982 and reported upon in 1983, led to a committal for

trial in 1984 and a trial, if all goes well, in 1985. It is

too late. The interest of the public wanes, the publicity

is slight and the public exposure is minimal. Other like

schemes, conducted by the same or other promoters, profit greatly at the cost of innocent victims all because of

tender concern for the reputation of the perpetrators.

14.045 The change of public opinion in respect of

taxation fraud would not have occurred, and the frauds would have grown, had the attitudes I perceive today been the attitudes of 1982. It is not merely taxation fraud which

should be of concern. All forms of sophisticated crime, be

it corporate fraud, white collar crime, major illegal

gambling, drug rings, or, most of all, corruption, will

thrive in secrecy. The occasional arrest will not impede

their success by more than a minor dint. I have little doubt that major criminal organisations would accept

increased police efficiency provided it was accompanied by

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strict prohibition on the publication of their activities

and the prohibition of public commission of inquiry. If all

is done out of the public gaze, the corruption of the

administrators of law enforcement agencies, law officers and

the judiciary itself is far more easily achieved and

criminal operations more readily sustained.

14.046 I believe that the public sessions of the

Commission have been justified and that my reports, except where I have requested privacy for operational reasons, are

properly the property of the public domain. Public

exposure, as practised in the course of my Commission, has served this country well.

Volume 2 -165- Chapter 14

Volume 2 -166- Chapter

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ATTACHMENT 2.9A (page l b )

REFERENCES FOR VOLUME 2

Godfrey, E.D. and D.R. Harris. (1971) Basic Elements of Intelligence (U.S. Department of Justice)

Mason, A. (1956) Pillar of the Law (Harlan, Fiske and Stone)

Wilson, J.Q. (1978) The Investigators: Managing FBI and Narcotics Agents (New York, Basic Books)

Australia

Stewart, D.G. i.e., Royal Commission of Inquiry into Drug Trafficking (The Honourable Mr Justice D.G. Stewart - Royal Commissioner). (1983) Report: February 1983 (Canberra, AGPS)

Williams, E.S. i.e., Royal Commission of Inquiry into Drugs (The Honourable Mr Justice E.S. Williams - Royal Commissioner). (1980) Report (Canberra, AGPS)

Woodward, A.E. i.e., Royal Commission into Australian Meat Industry (The Honourable Mr Justice A.E. Woodward - Royal Commissioner). (1982) Report (Canberra, AGPS)

Australia: New South Wales

Moffitt, A.E. i.e., Royal Commission into Allegations of Organised Crime in Clubs (The Honourable Mr Justice A.E. Moffitt - Royal Commissioner). (1974) Report (Sydney, NSW Government Printer)

Woodward, P.M. i.e., Royal Commission into Drug Trafficking (The Honourable Mr Justice P.M. Woodward - Royal Commissioner). (1979) Report (Sydney, NSW Government Printer)

--- . (1980)

Further Report of the Royal Commission into Drug Trafficking (Sydney, NSW Government Printer)

United States of America

Mathias, Jr Charles Me. C. et al. i.e., Senate. Select Committee to Study Law Enforcement Undercover Activities of Components of the Department of Justice (Senator Charles Me. C. Mathias Jr - Chairman). (1983) Final Report (Washington D.C., USGPO)

Volume 2 -167- References