Title Federated Ship Painters and Dockers' Union - Royal Commission (Mr F.X. Costigan, Q.C.) - Report - Final, dated October 1984 - Volume 1
Source Senate
Date 21-02-1985
Parliament No. 34
Tabled in Senate 21-02-1985
Parliamentary Paper Year 1984
Parliamentary Paper No. 284
System Id publications/tabledpapers/HPP032016007890


Federated Ship Painters and Dockers' Union - Royal Commission (Mr F.X. Costigan, Q.C.) - Report - Final, dated October 1984 - Volume 1

The Parliament of the Commonwealth of Australia

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

Commissioner: Mr Frank Costigan, Q.C.

Final Report

Volume 1

Pursuant to Resolution of the Senate of 22 October 1984-(l) Deemed to have been presented to the Senate, and publication authorized, on 1 November 1984,

and

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

Parliamentary Paper No. 284/1984

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

FINAL REPORT, Volume 1

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 1

Ord ered to be printed by the Legislative Assembly Victoria 1982-84

No. 175

ISBN for set: 0 644 03746 6

ISBN for Final Report -Volume 1: 0 644 03747 4

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

26 October 1984

Your Excellency,

In accordance with Letters Patent dated 10 September 1980, I had the honour to present in March, July and December

1981, July 1982 and July 1983, Interim Reports of the Royal

Commission into the Federated Ship Painters and Dockers' Union.

I now have the honour to present to you my Final

Report of the Royal Commission and I return herewith my Letters Patent.

I have the honour to be sir,

Your Excellency's most obedient servant,

A- 1 f I --2

.-·

I

Costigan

Commissioner

His Excellency the Rt. Hon. Sir Ninian Stephen, A.K., G.C.M.G., G. C. V .0., K.B.E., Governor-General, Government House,

CANBERRA A.C. T. 2600

26 October 1984

Your Excellency,

In accordance with Letters Patent dated l October

1 980, I had the honour to present in March, July and December

1981, July 1982 and July l9tl3, Interim Reports of the Royal

Commission into the Federated Ship Painters and Dockers' Union .

I now have the honour to present to you my Final

Re port of the Royal Commission and I return herewith my Letters Patent.

I have the honour to be sir,

Your Excellency's most obedient servant,

FJ ank Costigan Commissioner

His Rear Admiral Sir Brian Murray,

K.c.M.G., A.O., Governor of Victoria, Government House, MELBOURNE Vic. 3000

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COMMONWEALTH OF AUSTRALIA

ELIZABETH THE SECOND, by the Grace of God, Queen of Australi a and Her o t her Realms and Territories , Head of the

Commonwealth:

TO FRANCIS XAVIER COSTIGAN,Q.C., LL.B.

GREETI NG:

WE DO by these Our Letters Patent issued in Our name by Our

Governor -Gene r al of the Commonwealth of Australia on the advice

of the Federal Executive Council and in pursuance of the

Co nstitution of the Commonwealth of Australia, the Royal

Commissions Act 1902 and other enabling powers, appoint you

t o be, on and from l October 1980, a Commissioner to inquire ,

f o r t he purpose of the exercise and performance of the powe r s

and functions of the Parliament and Government of the

Commonwealth , whether the Federated Ship Painters and Dock e r s

Unio n (hereinafter referred to as "the Union") or any of f ice r

o r member of the Union has engaged in illegal activities in

rela tion to Shipping engaged in trade and commerce between

Aus t ralia and places outside Australia or among the States o r

sh i p s o perated by, or on behalf of, the Commonwealth or in

relation to any naval establishment within the meaning of the Na v al Defence Act 1910:

AND, without restricting the scope of your inquiry, We direct

you, for the purposes of your inquiry, to give particular

attention to the following questions :

(a) whether any executive, administrative or other body

forming part of, or established by, the Union ha s

been used, or is being used, for the purposes of

/'7

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2.

illegal activities, other than activities involving only breaches of laws, whether of the Commonwealth

or a State, relating to trade unions;

(b) whether the Union or any of its officials ormembers

has been or is engaged in demanding or receiving

payments (other than payments of an ordinary

commercial nature or payments in accordance with an

industrial. award or agreement in respect of work actually performed or to be performed) from

employers or other persons in relation to ships

engaged in trade and commerce between Australia and

places outside Australia or among the States, in

relation to ships operated by, or on behalf of, the

Commonwealth or in relation to any naval

establishment within the meaning of the Naval

Defence Act 1910 and, if any such payments have

been made -(i) the persons by whom and to whom any such

payments have been made;

(ii) the reasons for, or the purpose of, any such

payments;

(iii) subsequent or proposed use or disposal

of any such payments;

(c) whether the Union or any officers or members of

the Union have engaged in illegal activities in

relation to the election or appointment of officers of the Union or the conduct or purported conduct

of the Union's affairs;

(d) if the Union or any officers or members of the

Union have engaged in activities of any of the kinds

y . / .. / 3

3.

referred to in this or the preceding paragraphs, wh e ther the e mployme nt conditions applying

t o the wor k o f ship painters and dockers have

contribute d to the de velopment of those activities : AN D We d irect you t o make such recommenda t ions arising out

o f your inqu iry as you think appropriate, including

recomme nd a tions r e g a rding the legislative or administrative

changes, i f any, that are necessary or desirable:

AND W e f urther direct that any finding that the Union or any

off ice r o r member o f t he Union has engaged in conduct

amou n ting to a crimina l offence be made only o n e v idence,

adm i s sibl e i n a Court o f Law, sufficient t o place the Union,

off icer or member on trial for that offence.

AN D W e further direct that, in making your recommendations,

you h a v e regard to t he announced intention of the Government

of t he Co mmonwealth t o introduce a s y stem of reporting of

d em ands for, and pay me nts of, monies following the report

of t h e Royal Commissi o n into Alleged Payments to Maritime

Un i o ns by the Honourable Mr Jristice Sweeney:

AND We declare that you are authorized to conduct your inquiry

into any matters under these Our Letters Patent in combination

with any inquiry into the same or related matters that you are

d ir e c ted or authorized to make by any Commission issued,

o r in pursuance of any order or appointment made, b y any of

Our Governors of the States:

AND W e require you as expeditiously as possible to make your

inquiry and -

.. I 4

By His

4.

(e) not later than 31 March 1981, to furnish

to Our Governor-General of the Commonwealth of

Australia an interim report of the results of

your inquiry; and

(f) not later than 30 September 1981, or such

later date as We may be pleased to fix, to

furnish to Our Governor-General of the

Commonwealth of Australia a report of the results

of your inquiry and your recommendations.

WITNESS His Excellency Sir Zelman Cowen, Knight of The Order of Australia, Knight Grand Cross of The Most Distinguished Order of Saint Michael and Saint George, Knight Grand Cross of The Royal Victorian Order,

Knight of The Most Venerable Order of the Hospital of Saint John of Jerusalem, one of Her Majesty's Counsel learned in the law , Governor­ General of the Commonwealth of Australia and Commander-in­ Chief of the Defence Force.

Dated this day of 1980.

Excellency's Command

M· n Trade and

R urces for and on behalf of the

Prime Minister

COMMONWEALTH OF AUSTRALIA

ELIZABETH THE SECOND, by the Grace of God, Queen of Australi a

and Her other Realms and Territories, Head of the Commonweal th:

TO

FRANCIS XAVIER COSTIGAN, Q.C., LL.B.

GREETING:

WHEREAS by Letters Patent issued in Our name by Our Go vernor-

General of the Commonwealth of Australia on 10 September 1980

We appointed you to be a Commissioner to inquire into and

report upon certain matters relating to the Federated Ship

Painters and Dockers Union and the officers and members of

that union:

AND WHEREAS by those Letters Patent We required you to

furnish to Our Governor-General of the Commonwealth of

Australia, not later than 30 September 1981 or such later date

as We may be pleased to fix, a report of the results of your

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inquiry and your recommendations:

NOW THEREFORE We Do, by these Our Letters Patent issued

in Our name by Our Administrator of the Government of the

Commonwealth of Australia on the advice of the Federal Execut ive

Council, fix 31 December 1982 as the date on or before which

We require you to furnish to Our Governor-General of the

Commonwealth of Australia a report of the results of your

inquiry and your recommendations.

By His Excellency's Command,

WITNESS His Excellency the Honourable Sir Stanley Charles Burbury, Knight Commander of The Royal Victorian Order,

Knight Commander of The Most Excellent Order of the British Empire, Knight of The Most Venerable Order of the Hospital of Saint John of Jerusalem, Administrator of the Government of the Commonwealth

of Australi-a.

Dated this twenty fifth day of June

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./Admin

Minister of State for Industrial Relations for and on behalf of the Prime Minister

1981.

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COMMONWEALTH OF AUSTRALIA

ELIZABETH THE SECOND, by the Grace of God, Qu e en of

Australia and Her other Realms and Territories, Head

of the Commonwealth:

TO

FRANCIS XAVIER COSTIGAN, Q.C., LL.B.

GREETING:

WHEREAS by Letters Patent issued in Our name by Ou r

Governor-General of the Commonwealth of Australi a on

10 September 1980 We appointed you to be a Commiss i oner

to inquire into and report upon certain matters

relating to the Federated Ship Painters and Docke rs Union (qereinafter referred to as "the Union") and

the officers and members of that Union:

AND WHEREAS it is desirable that your inquiry

include certain matters that may not fall directly

within the matters to be inqui red into under t h e

Letters Patent issued on 10 September 1980 :

)

J I

NOW THEREFORE We do, by these Our Letters Patent

issued in Our name by Our Governor-General of the

Commonwealth of Australia on the advice of the Federal

Executive Council and in pursuance of the Constitution

of the Commonwealth of Australia, the Royal Commissions

Act 1902 and other enabling powers, vary the Letters

Patent issued on 10 September 1980 so as t o require

that, to the extent that you are not required to do so

by those Letters Patent, you inquire -(a) whether the Union or any officers or members

of the Union have engaged in illegal

activities, other than activities in relation to shipping or any naval establishment;

(b) whether any person, group of persons or body

established by, or associated with, the Union

or its members is engaged in illegal

activities; and (c) whether any person is using the Union or its

members for the purposes of illegal activities:

AND WE DECLARE that, for the purposes of these Our

Letters Patent, "illegal activities" means -(d) activities involving any breach of a law of

the Commonwealth or a Territory;

(e) activities in, or in relation to, trade and

commerce between Australia and places outside

Australia, among the States or between a State

and a Territory, being activities which are

contrary to a law of the Commonwealth, a State

or a Territory; and

\ /1 ' :/ I , I '

(f) activities that have the effect of, or are

directed to, impeding, preventing or defeating,

or that tend to impede, prevent or defeat, the

operation, implementation or enforcement of a

law of the Commonwealth or a Territory:

AND WE FURTHER DECLARE that, for the purposes of

the Letters Patent issued on 10 September 1980, without

limiting the meaning of the expression "illegal activity " ,

that expression includes any activity that is an illegal activity for the purposes of these Letters Patent:

AND WE FURTHER DECLARE that, for the purposes of

the Letters Patent issued on 10 September 1980 and of

these Letters Patent -(g) a reference to officers or members of the

Union includes a reference to persons purporting

to be officers or members of the Union; and

(h) a reference to illegal activities engaged in

by officers or members of the Union is a

reference to illegal activities engaged in by

officers or members of the Union, whether by themselves or in association with any other

person:

AND WE FURTHER DECLARE that the Letters Patent

issued on 10 September 1980 shall have effect as if the

words -AND We further direct that any finding that

the Union or any officer or member of the Union

has engaged in conduct amounting to a criminal

offence be made only on evidence, admissible in

a Court of Law, sufficient to place the Union,

officer or member on trial for that offence. 11 be omitted and the following words substituted -II

AND WE FURTHER DIRECT that a finding that the

Union or a person has engaged in conduct amounting

to a criminal offence be made only on evidence,

admissible in a Court of Law, sufficient to place

the Union or that person, as the case may be, on

trial for that offence. 11

WITNESS His Excellency the Right Honourable Sir Zelman Cowen, a member of Her Majesty's

By His Excellency's Command,

Most Honourable Privy Council, Knight of The Order of Australia, Knight Grand Cross of The Most Distinguished Order of Saint Michael and Saint George, Knight Grand Cross of The Royal Victorian Order, Knight of The M6st

Venerable Order of the Hospital of Saint John of Jerusalem, one of Her Majesty's Counsel learned in the law, Governor-General of the Commonwealth of Australia and Commander-in-Chief of the Defence Force.

day of 1982.

f)Pnme Minister

.

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COMMONWEALTH OF AUSTRALIA

ELIZABETH THE SECOND, by the Grace of God, Queen of

Australia and Her other Realms and Territories, Head

of the Commonwealth:

TO

FRANCIS XAVIER COSTIGAN, Q.C., LL.B.

GREETING:

WHEREAS by Letters Patent issued in Our name by Our

Go vernor-General of the Commonwealth of Australia on

10 September 1980 and 1 April 1982 We appointed you t o

b e a Commissioner to inquire into and report upon

certain matters relating to the Federated Ship Painters and Dockers· Union and the officers and members of tha t

Union:

AND WHEREAS it is desirable that new provision be

as to the time within which you are to furnish a repor t

of your inquiry and your recommendations:

NOW THEREFORE We do, by these Our Letters Patent issued

in Our name by Our Governor-General of the Commonwealth

2.

of Australia on the advice of the Federal Executive

Council and in pursuance of the Constitution of the

Commonwealth of Australia, the Royal Commissions Act 1902

and other enabling powers, declare that the Letters

Patent issued on 10 September 1980 (as varied by the

Letters Patent issued on 1 April 1982) shall have effect

as if for sub-paragraph (f) of the concluding paragraph

of the first-mentioned Letters Patent there were

substituted the following sub-paragraph: "(f) not later than -

(i) the expiration of the period of

6 months commencing on the day fixed

for the purpose of section 2 of the

National Crimes Commission Act 1982;

or

(ii) if the day so fixed is later than

1 July 1983 - 31 December 1983·,

to furnish to Our Governor-General of the

Commonwealth of Australia a report of the

results of your inquiry and your recommendations.".

WITNESS His Excellency the Right Honourable Sir Ninian Martin Stephen, a member of Her Majesty's Most Honourable Privy Council, Knight of the Order of Australia, Knight Grand Cross of the Most Distinguished Order of Saint Michael and Saint George,

Knight Grand Cross of the Royal Victorian Order, Knight Commander of The Most Excellent Order of the British

3.

Empire, Knight of the Most Venerable Order of the Hospital of Saint John of

Jerusalem, Governor-General of the Com mo nw ealth of Australi a and Commander-in-Chief of the Defence Force .

Dated this day o f

By His Excellency's Command

twenty fifth December

Governor-General

1982.

Minister of State for Trade and Resources for and on behalf of the

Prime Minister

COMMONWEALTH OF AUSTRALIA

ELIZABETH THE SECOND, by the Grace of God, Queen

of Australia and Her other Realms and Territories,

Head of the Commonwealth:

TO:

FRANCIS XAVIER COSTIGAN, Q.C., LL.B.

GREETING:

WHEREAS by Letters Patent issued in Our name by Our

Governor-General of the Commonwealth of Australia on

10 September 1980 We appointed you to be a

Commissioner to inquire into and report upon certain

matters relating to the Federated Ship Painters and

Dockers Union and the officers and members of that

Union:

AND WHEREAE those Letters Patent were varied by

Letters Patent issued on 1 April 1982 and

25 December 1982:

AND WHEREAS it is desirable that those Letters Patent

be further varied:

NOW THEREFORE We do, by these Our Letters Patent

issued in Our name by Our Governor-General of the

Co mmonwealth of Australia on the advice of the

Federal Executive Council and in pursuance of the

Constitution of the Commonwealth of Australia, the

Royal Commissions Act 1902 and other enabling powers,

declare that the Letters Patent issued on

10 September 1980 (as varied by the Letters Patent

issued on 1 April 1982 and 25 December 1982) shall

have effect as if, after sub-paragraph {f) of the

concluding paragraph of those Letters Patent, there

were added the following paragraph:

" AN D We further declare that the Commission established

by the se Our Letters Patent is a relevant Commi s sion

for the purposes of sections 4 and 5 of the Royal

Commissions Act 1902." WITNESS His Excellency the Right Honourable Sir Ninian Martin Stephen, a member of Her Majesty's Most Honourable Privy Council, Knight of the Order of Australia, Knight Grand Cross of The Most Distinguished Order of Saint Michael and Saint George,

Knight Grand Cross of The Royal Victorian Order, Knight Commander of The Most Excellent Order of the British Empire, Knight of the Most Venerable Order of the Hospital of Saint John of Jerusalem, Governor­ General of the Commonwealth of Australia and Commander-in-Chief of the Defence Force. Dated this second day of February 1983 .

By His

Attorney-General L the Prime Minister

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COMMONWEALTH OF AUSTRALIA

ELIZABETH THE SECOND, by the Grace of God Queen of Aus t ral i a and Her other Realms and Territories, Head o f the Commonwealth:

TO

FRANCIS XAVIER COSTIGAN, Q.C., LL.B

GREET I NG:

WHEREAS by Letters Patent issued in Our name by Our

Governor-General of the Commonwealth of Australia on 1 0

September 1980 We appointed you to be a Commissioner to

inquire into and report upon certain matters relating to

the Federated Sh i p Painters and Dockers Union and the

officers and members of that Union :

AND WHEREAS those Letters Patent were varied by Letters

Patent issued on 25 June 1981, 1 April 1982, 25 December

1982 and 2 !ebruary 1983

AND WHEREAS it is desirable that further time be allowed

for the completion of your inquiry and the submission of

your report :

NOW THEREFORE We do, by these Our Letters Patent issued in

Our name by Our Governor-General of the Commonwealth of

Australia on the advice of the Federal Executive Council and in pursuance of the Consitution of the Commonwealth o :

2.

Australia, the Royal Commissions Act 1902 and other

enabling powers, vary the Letters Patent issued on 10

September 1980, as affected by the Letters Patent issued

on 25 June 1981, 1 April 1982, 25 December 1982 and 2

February 1983, so as to require that your report of the

results of your inquiry and your recommendations be furnished to Our Governor-General of the Commonwealth of

Australia not later than 30 June 1984.

WITNESS His Excellency the Right Honourable Sir Ninian Martin Stephen, a member of Her Majesty's Most Honourable Privy

Council, Knight of the Order of Australia, Knight Grand Cross of The Most Distinguished Order of Saint Michael and Saint George,

Knight Grand Cross of The Royal Victorian Order, Knight Commander of The Most Excellent Order of the British Empire,

Knight of the Most Venerable Order of the Hospital of Saint John of Jerusalem, Governor-General of the Commonwealth of Australia .and

Commander-in-Chief of the Defence Force.

Dated this twenty first day of December 1983.

Governor-General

By His Excellency's Command,

W-1- Prime Minister

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COMMONWEALTH OF AUSTRALIA

ELIZABF.TH THE SECOND, by the Grace of God Queen o f Australia and Her other Realms and Territories, Head of the Commonwealth:

TO

FRANCIS XAVIER COSTIGAN, Q.C., LL.B

GREETING:

WHEREAS by Letters Patent issued in Our name by Our

Governor-General of the Commonwealth of Australi a

on 10 September 1980 We appointed you to be a

Commissioner to inquire into and report upon

certain matters relating to the Federated Ship Painters and Dockers Union and the officers and

members of that Union:

AND WHEREAS those Letters Patent were varied by

Letters Patent on 25 June 1981, 1 April 1982, 25

December 1982, 2 February 1983, and 15 December

1983:

AND WHEREAS it is desirable that further time be

allowed for the completion of your inquiry and the

submission of your report:

NOW THEREFORE We do, by these Our Letters Patent

issued in our name by Our Governor-General of the

Commonwealth of Australia on the advice of the

2.

Federal Executive Council and in pursuance of the

Constitution of the Commonwealth of Australia, the

Royal Commissions Act 1902 and other enabling

powers, vary the Letters Patent issued on 10

September 1980, as affected by the Letters Patent

issued on 25 June 1981, 1 April 1982, 25 December

1982, 2 February 1983 and 15 December 1983, so as

to require that your report of the results of your

inquiry and your recommendations be furnished to

Our Governor-General of the Commonwealth of

Australia not later than 30 September 1984.

WITNESS His Excellency the Right Honourable Sir Ninian Martin Stephen, a member of Her Majesty's Most Honourable Privy Council, Knight of the Order of Australia, Knight Grand Cross of The Most Distinguished Order of Saint Michael and Saint George, Knight Grand Cross o£

the Royal Victorian Order, Knight Commander of The Most Excellent Order of the British Empire, Knight of the Most Venerable Order of the Hospital

of Saint John of Jerusalem, Governor-General of the Commonwealth of Australia and Commander-in-Chief of the

Defence Force.

Date this twenty seventh day of June

By His Excellency's Command,

Prime Minister

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COMMONWEALTH OF AUSTRALIA

ELIZABETH THE SECOND, by the Grace of God Queen of Australia and Her other Realms and Territories, Head of the Commonwealth:

TO

FRANCIS XAVIER COSTIGAN, Q.C., LL.B.

GREETING:

WHEREAS by Letters Patent issued in Our name by Our

Governor-General of the Commonwealth of Australia

on 10 September 1980 We appointed you to be a

Commissioner to inquire into and report upon

certain matters relating to the Federated Ship Painters and Dockers Union and the officers and members of that Union:

AND WHEREAS those Letters Patent were varied by

Letters Patent on 25 June 1981, 1 April 1982, 25

December 1982, 2 February 1983, 15 December 1983

and 27 June 1984:

AND WHEREAS it is desirable that further time be

allowed for the completion of your inquiry and the

submission of your report:

NOW THEREFORE We do, by these Our Letters Patent

issued in Our name by Our Governor-General of the

Commonwealth of Australia on the advice of the

Federal Executive Council and in pursuance of the

Constitution of the Commonwealth of Australia, the

Royal Commissions Act 1902 and other enabling

powers, vary the Letters Patent issued on 10

September 1980, as affected by the Letters Patent

issued on 25 June 1981, 1 April 1982, 25 December

1982, 2 February 1983, 15 December 1983 and 27 June

1984 so as to require that your report of the

results of your inquiry and your recommendations be furnished to Our Governor-General of the

Commonwealth of Australia not later than 31 October

1984.

WITNESS His Excellency the Right Honourable Sir Ninian Martin Stephen, a member of Her Majesty's Most Honourable Privy Council, Knight of the Ordei of Australia, Knight Grand Cross of The Most Distiguished Order of Saint Michael and Saint George, Knight Grand Cross of

the Royal Victorian Order, Knight Commander of the Most Excellent Order of the British Empire, Governor-General of the Commonwealth of Australia.

Dated this of

Governor-General

By His Excellency's Command,

Prime Minister

CONSOLIDATED TERMS OF REFERENCE

(other than variations to reporting dates)

COMMONWEALTH OF AUSTRALIA

ELIZABETH THE SECOND, by the Grace of God, Queen of Australia

and Her other Realms and Territories,

Commonwealth:

Head of the

TO FRANCIS XAVIER COSTIGAN, Q.C., LL.B

GREETING:

WE DO by these Our Letters Patent issued in Our name

by Our Governor-General of the Commonwealth of

Australia on the advice of the Federal Executive

Council and in pursuance of the Constitution of the

Commonwealth of Australia, the Royal Commissions Act

1902 and other enabling powers, appoint you to be,

on and from l October 1980, a Commissioner to

inquire, for the purpose of the exercise and

performance of the powers and functions of the

Parliament and Government of the Commonwealth,

whether the Federated Ship Painters and Dockers

Union (hereinafter referred to as "the Union") or

any officer or member of the Union has engaged in

illegal activities in relation to Shipping engaged in trade and commerce between Australia and places

outside Australia or among the States or ships

operated by, or on behalf of, the Commonwealth or in

relation to any naval establishment within the

meaning of the Naval Defence Act 1910:

10.9.80

10.9.80

- 2 -

AND, without restricting the scope of your inquiry,

We direct you, for the purposes of your inquiry, to

give particular attention to the following questions: (a)

(b)

whether any executive, administrative or other

body forming part of, or established by, the

Union has been used, or is being used, for the

purposes of illegal activities, other than

activities involving only breaches of laws, whether of the Commonwealth or a State,

relating to trade unions; whether the Union or any of its officials or

members has been or is engaged in demanding or

receiving payments (other than payments of an

ordinary commercial nature or payments in

accordance with an indus tria 1 award or

agreement in respect of

performed or to be performed)

work actually

from employers

or other persons in relation to ships engaged

in trade and commerce between Australia and

places outside Australia or among the States,

in relation to ships operated by, or on behalf

of, the Commonwealth or in relation to any

naval establishment within the meaning of the

Naval Defence Act 1910 and, if any such

payments have been made -(i) the persons by whom and to whom any such

payments have been made;

( i i) the reasons for, or the purpose of, any

such payments;

10.9.80

10.9.80

Varied

1.4.82

1.4.82

(c)

(d)

- 3 -

(iii) the subsequent or proposed use or

disposal of any such payments ;

whether the Union or any offi cers or members

of the Union h ave engage d in illegal

activities in relat i on to t h e e l ect ion or

appointment of officer s o f t h e Uni o n or the

conduct or purported conduc t of t h e Union ' s

affairs; if the Union o r any o fficers or me mbers of the

Union have engaged i n activi ties o f a n y of the

kinds referred to i n this o r t he preceding

paragraphs,

applying to

whether t he e mp l oyment c onditions

the work of ship painters and

d o ckers have contributed to the deve lopme n t of

tho se activities :

NOW THEREFORE We do, by these Ou r Le tter Patent

issued in Our name by Our Go v e rnor-Gen eral of the

Commonwealth of Austral ia on t h e adv ic e of the

Fe deral Executive Council and in pursuance o f t h e

Co nstituti_ on of the Commonwealth of Australia, t h e

Royal Commissions Act 1902 and other enabling

powers, vary the Letters Pa t e n t issued o n 10

Se ptember 1980 so as to require that, to the e xt e nt

that you are not requ i red to do so by those Le tters

Patent, you inquire-(a) wh e ther the Un i on or any officers or member s

of the Union have engaged i n illegal

activities, other than activities in relat i on to shipping or any naval establishment ;

1. 4. 82

1. 4. 82

1. 4. 82

1.4.82

1. 4. 82

1.4.82

(b)

(c)

- 4 -

whether any person, group of persons or bod y

established by, or associated with, th e Uni on

or its members is engaged in i lleg a 1

activities; and whether any person is using the Union or i t s

members for the purposes of illegal acti vities:

AND WE DECLARE that, for the purposes of the s e Our

Letters Patent, "illegal activities" means-(d) activities involving any breach of a law of

the Commonwealth or a Territory;

(e)

(f)

activities in, or in relation to, tr ad e and

commerce between Australia and places outside

Australia, among the States or between a Sta t e

and a Territory, being activities wh i ch a re

contrary to a of the Commonwealth , a State

or a Territory; and

activ i ties that have the effect of , or are

directed to, impeding, preventi ng or

defeating, or that tend to impede, prevent or

defeat , the operation, implement at i o n or

enforcement of a law of the Commonwealth or a

Territory :

AND WE FURTHER DECLARE that , for purposes of the

Letters Patent issued on 10 September 1980, wi t h o ut

limiting the meaning of the express i on "i llegal

activity", that expression includes any acti vity

that is an illegal activity for the pur p oses of

these Letters Patent:

1.4.82

1.4.82

10.9.80

10.9.80

Varied

1.4.82

10.9.80

- 5 -

AND WE FURTHER DECLARE that, for the purposes of the

Letters Patent issued on 10 September 1980 and of

these Letters Patent -(g)

(h)

a reference to officers or members of the

Union includes

purporting to be

Union; and

a reference to persons

officers or members of the

a reference to illegal activities engaged in

by officers or members of the Union is a

reference to illegal activities engaged in by

officers or members of the Union, whether by

themselves or in association with any other

person:

AND We direct you to make such recommendations

arising out of your inquiry as you think

appropriate, including recommendations regarding the

legislative or administrative changes, if any, that are necessary or desirable:

AND We further direct that [any] finding that

the Union or [any officer or member of the Union] a

person has engaged in conduct amounting to a

criminal offence be made only on evidence,

admissible in a Court of Law, sufficient to place

the Union[, officer or member] or that person, as

the case may be, on trial for that offence.

AND We further direct that, in making your

recommend at ions, you have regard to the announced

intention of the Government of the Commonwealth to introduce a system of reporting of demands for, and

10.9.80

Varied

25.6.81

2 5. 12.82

21.12.83

27.6.84

20.9.84

Varied

2.2.83

- 6 -

payments of, monies following the report of the

Royal Commission into Alleged Payments to Maritime

Unions by the Honourable Mr Justice Sweeney:

AND We declare that you are authorized to conduct

your inquiry into any matters under these Our

Letters Patent in combination with any inquiry into the same or related matters that you , ar.e directed or.

authorized to make by any Commission issued, or in

pursuance of any order or appointment made, by any

of Our Governors of the States :

AND We require you as expeditiously as possible to

make your inquiry and -(e) not later than 31 March 1981, to furnish to

Our Governor-General of the Commonwealth of

Australia an interim report of the results of your inquiry; and

(f) not later than 30 September 1981, or such

later date as We may be pleased to fix , to

furnish to Our Governor-General of the

Commonwealth of Australia a report of the

results of your inquiry and your

recommendations.

AND We further declare that the Commission

established by these Our Letters Patent is a

relevant Commission for the purpose of

sections 4 and 5 of the Royal Commissions Act

1902.

T J trusty and vell-belo ved

XAVIER COSTIGAN, Q. C.,

ELIZAl!ETH THE SDXJND BY THE GRACE OF GOD UEEN OF AUSTRALIA AND HER OTHER REAil4S AND TERRITORIES QUEEN, HEAD OF THE COMHON'JEALTH .

IJHEREAS the Governor-General of the Commonwealth of Australia o n the advice o f the Federal Executive Council and pursuan t t o the Constitution of the Common .... eal th of Australia, the Royal Commissions Act 1902 and other enabling powers, has appoi nted you FRANCIS XAVIER COSTIGAN , Q. C., t o be a Commissioner t o inquire into , and report upon certain matters rel ati ng t o the Federated Ship Painters and Dockers Union and its officers and members

AND WHEREAS the Go vernor of the State of Victoria, in the Commonwealth of Australia, by and v i th the advice o f the Execu tive Council o f the said State, hath deemed it expedi ent that a Commission should f orthwith issue t o y ou i n the tel"'IIB set out below

NO\/ XN YE that We, repos i ng great trust and c onfidence i n your knowledge and ability, have constituted and appointed and by these presents do constitute and appoint y ou FRANCIS XAVIER COSTIGAN , Q. C., t o be Our Cou:missioner t o inquire whe t her the Federat ed Ship Painters and Dockers Union (hereinafter referred t o as ''the Union" ) or any officer or member of t he Un ion in the course of or i n relation t o the affairs of the Union , has eng&e'ed in any illegal a c tivi t i e s

( o ther than activities invo lving only breaches o f the law whether of the Commonveal th or a State relating t o trade uni ons)

AND, wi th t reatrictin& the s cope o f your i nquiry, we di rec t you, f or the purposes of your inquiry, t o gi ve particular

a ention t.he f ollowing questions:

(a)

(b)

whether any executive, adm.i.nistrative or o ther body f ormin& part of, o r established by, the Union has been used, or is

bei ng used , f o r the purposes or illegal a c tivit.ies , o ther than activities involving only breaches of laws , whether of the Commonwealth or a State , relating t o trade Wlions;

whether the Union or any of its officials or members has been or i s engaged in demanding or receiving payment (other than payments of an ordinary c ommercial nature or payments in accordance with an industrial award or agreement in respect of work actually performed or t o be performed) from

employers or other persona and, if any such payments have been made -( 1} the persons by whom and t o whom any such payments have been made;

(ii ) the reasons f or, or the purpo se of,

any such payments;

(iii) the subsequent or prop osed use or disposal of any such paymentsi

(c) whether the Onion or any officers or members of the Oni on have

engaged in illegal activities i n relation t o the election or appointmen t o f officers of the Onion or the conduct or purported conduct o f the Union's affairs;

(d) i f l.ht:! Uu1 vn or an,y o fficers o r members o f the Uni on hAve er'l88«8d

in a c tivities o f any of the kinds referred t o in this or the

preced.i08 paragraph, whe ther the employment c ondi tiona applying t o the work o f ship painters and dockers have c ontributed t o the development o f those activities:

AND WE direc t you to make such recommendations arising out of your inquiry as you think appropriate, inc luding recommendations regarding the legislative or administrative changes, if any, that are necessary or desirable:

!HD W .further direct that any finding that the Union or any officer or member of the Union has engaged in conduct amounting t o a criminal offence be made only on evidence, admissible in a Court of Law, sufficient t o place the Union, officer or member on trial for that offence:

AND WE .further direct that, in ma.ki.ng your recODIDendations, y ou have regard to the annoWlced intention of the GovenllD.ent of the Commonwealth to introduce a syetem of reporting of demands f or, and payments of, monies f ollowing the report of the Royal Com.isaion into Alleged Payments to Maritime Unions by the Honourable Mr. Justice Sweeney:

AND WE do by these presents give and grant unto you full power and authority to call before you such person or persons as y ou shall judp likely to afford you any information upon the subject of this Our Cou:mission, and t o inquire of and conceming the premises by all other lawful ways and means vhatsoever1

.AND WE declare that you are authorized to conduct your inquiry into the matters mentioned aforesaid Wlder these

our Letters Patent in combination with aoy inquiry into the matters that you are directed or authorized to make by any CollllLission or Coumissiona issued, or in purauance of aoy Order or appointment made, by the Gove:rnor-General of the Commonwealth of Australia or the Govemor of any State of the Commonwealth of Australia.

AND WE will and coamand that this Our COIIDission shall continue in full f orce and virtue and that you shall and ma,;y from time to time and at any place or places proceed in the execution thereof, and of every matter and thing therein contained although the same be not continued from time to time by adjolll.UIIlent:

AND WE require you as e:q>edi tiously aa possible to make your inquiry and -

(a)

(b)

n ot later than six months from the date hereof to turniah to Us under yrur band an interim report of the results of your inquiry; and

not later than twelve months from the date hereof or such later date as We may be pleaae4 to fix, t o report to Us under your hand &3id seal a report of the results of your inquiry and 7011r recommendations.

IN TESTIMONY WBERJX)F We have caused theee Our Letters to be made Patent and the seal of our said State t o be hereunto affixed.

By His hcellency 1 s CoDD8lld,

His Excellency the · Honourable Sir Henry Winneke, Knight Commander of the Mo et Diatinguiabed Order of St. Mi chael and Saint George, Knight Con:mander of the Royal Victorian Order, Officer of the Most Excellent Order of the llri tish .&pire, Knight of the Most Venerable

Order of the St. John of Jerusalem, One of Her Majesty• s Counsel Learned in the Law, Governor o f the State of Victoria and its Dependencies in the Commonwealth of Australia, etc ., etc., etc., at Melbourne this first day of October One thousand nine hundred and eighty

in the twenty-ninth year of Our reign.

Entered on record by me in the Register of Patents Beak No. 36 Page 366 on t he 1st

day of October One thousand nine hundred and eighty.

/

I f

"! · A ·

'1't> our Trusty and Well-beloved

GREETINGS:

ELIZABETH THE SECOND, BY 'l'HE Qt.ACE OF 000 (2UEEN rR AUSTRALIA MD HER OTHER REALMS AND TERRITORIES, HEN> OF TilE CXJIIMONWEALTH.

FRANCIS XAVIER OOSTIGA.N, Q.C.

WH.EREAS the Governor of the State of Victori a , in the Collaonvealth of AUstralia, by and vi.t:h the advice of the Executive

Council of the said State, i ssued to you on the 1st day of October 1980 a Cc::&lliseion to i nquire into and report upon

certain tMtters relati ng to the Federated Ships Painters and Dockers union or any officer or member of the union and

you were directed expeditiously as possible and not later than twelve months fraa the 1st day of October , 1980, to

report under your hand and seal a report of the results of your inquiry and your recoa.endations.

AND WHER.EAS it i s considered expedient to extend the latest date upon wh i ch you shall report aa aforesaid .

NOW KNOW '!E that We hereby extend the lateat date upon which you shall report as aforesaid to not later than the )let

day of oeceaber, 1982 .

IN TESTIMONY WHEREOF We have caused these OUr Letters to be aade Patent and the Seal of OUr State to be hereunto

affixed.

WI'mESS, His Excellency the Honourable Sir Henry

Winneke, tcnight commander of the Moat Distinguished Order

of Saint Michael and Saint George , Knight Coauu.nder of

the Royal Victorian Order, Officer of the Moat Excellent

Order of the British Fapire, Knight of the Most Venerable

Order of the Saint John of Jeruaal•, ODe of Her

Majesty's Counsel Learned in the Lav, Governor of the

State of Victoria and its Dependencies in the

COIUK)nvealth of AUstrali a, etc. etc. etc. at Melbourne

thia thirtieth day of June one thousand nine hundred

and eighty-one in the thirtieth year of Our Reign ·

ENTERED on record by .e in the Reqiater of

Patents Book No . 37 Page 9 on the

thirtieth day of June one

Thousand Ni ne Hundred and Eighty-one •

. ..it..' "--

To · our Trusty and We 1 1 - be 1 overl

GREETINGS:

ELIZABET H THE SECONO, BY THE GRACE OF GOO QUEEN

OF AUSTRALI A ANO HER OTHER REALfo!S ANO TERRIT OR IE S ,

HEAO OF THE COMfoONWEALTH.

FRANCIS XAVIER COSTIGAN, Esquire, Q.C.

WHEREAS the Governor of the State of Victoria, in the Conmonwealth of Australia, by and with the advice of the

Execut i ve Council of the said State, issued to you on the ninth day of September, 1980 a CoiTI11issi on to i nquire i nt o and

report upon certain matters relating to the Federated Ship Painters and Dockers Union or any officer or member of the

Union and you were requ ired as exped it i au s 1 y as pass i b 1 e and not 1 ater than twe 1 ve months from the 1st day of October, 1980

or such later date as we may be pleased to fix to report under your hand and sea l a report of the results of your inquiry

and your recommendations.

AND WHEREAS a Coomission i s sued to you on 30 June, 1981 fixed the latest date upon which you shall report under your hand

and seal as aforesaid at the 31st day of December, 1982.

AND WHEREAS it is considered expedient to fix a later date upon which you shall report under you r hand and sea l as

aforesaid.

NOW KNOW YOU that We hereby fix the 31st day of December, 1983 as the latest date upon which you shall report under your

hand and seal as aforesaid.

IN TESTIMONY WHEREOF We have caused these Our Letters to be made Patent and the Seal of Our State to be hereunto affixed.

By His Exc ell ency's Command.

k

;f

/ ATTORNEY -GENERAL

WITNESS, His Excellency Sir Brian Stewart Murray,, Knight Conmander of

Our Host Distinguished Order of Saint Michael and Saint

George, Officer of th e Order of Austra l ia, Governor of the

State of Victor ia and it's Dependencies in the Conrnonwealth

of Australia, etc. etc. etc. at /l'lelbourne this NoJ£14.£."-JTJI

day of Oc.lo 8EC.. One thousand nine hundred and eighty-two and

in the thirty-first year of Our Reign.

ENTERED on Reco r d by me in the Register of Patents Book. No. 3 7

Page 142 on the 19 day of Octo ber One Thousand,

Nine Hundred and Eighty-two.

AND CABINET

THE SECON D, BY TNE GRACE OP GOO QU EEN

OF AN D HER OTHER REALM S TERR ITOR I ES,

HEAD OF THE

To ou r Trusty and Well-beloved

FR1tNCIS XAVIER Esquire, O· C.

GREET I NGS:

WHFR EA S t h e of the State of Victoria, in the COII!.eonvealth of Australia, by and vith the advi c e of the Executive

Council o f t h e s a i d State, i ssued to you on the 9th day of Septe111ber 1980 a Cc.Jnission to inquire i nto and report upon

certain matters relating to the Federated Ship Painters and Dockers Union or any officer or of the Union and you

r equi red as expeditiously as possible and not later than twelve months fro11 the 1st day o f October 1980 or such later d a te

a s ve may be pleased to fix to report under your hand and seal a report of the results of your inquiry and y our

r e cocnRndations.

AND WPEREA. S a Cc:.-.issio n issued to you on the 30th day of June 1981 fixed the latest date upon vhi c h yo u shall repor t u nder

your hand and s eal as afo resaid as the 31at day of Decel'tber 1982.

AND WHERF.J.. S an Order dated 6th October 1982 fixed the latest date upon which you shall report under your hand and s e al as

afores a id a s the 31st day of December 1983.

AND WHEREA S i t i s considered expedient to fix a later date upon vhich you shall report under your hand and s ea l a s

a f oresaid .

YOU that We hereby fix the 31st day of DeceMber 19£14 as the latest date upon vhich you shall report under your hand

and seal as aforesaid.

I N TESTIMONY WHEREDF We have caused these OUr Letters to be Nde Patent and the Seal of Our State to be hereunto a ffixe d •

WITN!SS, His EXcellency Rear Mllliral Si r Br i an Stewart Murray, Knioht

Ca.Nnder of Our Moat Distinquished Order of Sa in t Michael

and Saint George , Officer of the Order o f Australia, Kn ight

of the Moat venerable Order of Saint John o f Jerusalem,

Governor of the State of Victoria and its Dependencie s i n the

Ca.lhOnvealth of Auatralia, etc. etc. etc. at Melbourne this

M"'v day of thousand nine hundred a nd

i n the thirty-second year of Ou r Re i9n .

ATTORNEY-GENERAL !.lft'ZitED on Record by .. in R•qiU:er of Pat.enta, Book No. 37

20th day of December One 'ftloua•nd,

SP.CRETARY 1 DZP 'ftt!ll'l' OP' '!'HE PRI'JtJER AND C""'NP!f

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

FINAL REPORT

VOLUME 1

NOTE

Certain names of individuals and companies have been from this published Volume upon the advice of the Commonwealth and Victorian Directors of Public Prosecutions These deletions have been made to avoid prejudice to pendin and current prosecutions. As a result, blank spaces appear

in parts of the Volume.

CHAPTER

l.

2 .

3.

4 .

5.

6.

7.

8.

9.

10 .

References

VOLUME 1

Table of Contents

PAGE NO.

Introduction 1

Natural Justice 16

Mr Packer's Complaint 43

Administration of the Commission 66

Operational Overview 81

The Commission and the Courts 119

Previous Recommendations 135

Reference, Prosecutions & Results 163

Transfer to NCA 204

Summary of Current Recommendations 265

276

Introduction

filing system could sensibly cope with them, and they would be impossible to analyse without the use of modern

management systems. Accordingly, immediate steps were taken to make use of computer facilities under the control of the

Department of Administrative Services. In addition, it

became clear that special computer programmes would need to be written to enable the material to be accessed and

manipulated in a way which would assist in the answering of the questions which flowed from the Terms of Reference.

This was put in hand and computer consultants were engaged. They have continued to be engaged by the Commission since

that time. Senior Counsel assisting me, Hr Douglas Meagher, Q. C., provided detailed specifications to the consultants

setting out the precise needs of the Commission. The

development of the programmes continued throughout the life of the Commission and enhancements to the system occurred almust on a weekly basis.

1.005 The first four months of the Commission were

devoted exclusively to an examination of the Union, its

membership, criminal background and practices, and its

activities at the Williamstown Naval Dockyard. In March

1981, as I was required to under my Letters Patent, I

delivered Interim Report No. l. This was a confidential

report. For the reasons set out in it, I sought an

extension of my Commission until the end of 1982. That

request was granted. In the course of the Report I said,

11 It is clear that the task 'imposed on me is far more

formidable (and probably far more significant) than was

initially realized. 11 paragraph 1.13. Nothing which has

occurred since March 1981 has caused me to alter that view.

1.006 The work of the Commission continued and its

investigations expanded. Indeed, in July 1981 I delivered a second Interim Report to Government. This report likewise was confidential. I made some comments which reflected my state of thinking at that time and it is useful, I believe,

to refer to them again.

Volume l -2- Chapter l

Volume 1

Introduction

11 1.12 The Commission has concentrated

on Victoria. The criminal organisations found there have their operations outside that State and it may be that there are

no others operating interstate. Or it

may not. If there are similar criminal

organisations at work in other States

then the work of this Commission will

take a very long time. It will become

akin to a Crime Commission and less a

Royal Commission investigating one

particular Union. 1.13 This should not come as a

surprise. This Union has a positive

policy of recruiting hardened criminals, at least in Victoria. Such people

normally are unattractive to honest

people, including the many honest and

hard working trade unionists in this

country. But to this Union such

criminals are desirable. It is probably

in order to make use of their dubious 1 talents' . It certainly has as the consequence that any dishonest person requiring criminals to carry out his project has a 'central employment agency' at which he can recruit them. If one adds the facility offered by the Union to equip a criminal 'on the run' with a false identity and to find him work interstate whilst the 'heat 1 is on, one finds a sophisticated organisation posing as a Union but having as a major purpose an enterprise of a most evil kind. 1. 14 In order to concentrate on the more significant, the Commission has shortened the examination of lesser matters and has taken steps to place the completion of the investigation and prosecution of those matters in the hands of the appropriate police authorities. For example, the unemployment fraud described later in this report will not be the subject of further extensive examination by the Commission. It will make its data base available to the Australian Federal Police for its use in the detection of the fraud, and will stand aside to allow that Force to get on with the job of its prosecution. The most that the Commission will do in the future is to ensure the public revelation of the extent of the fraud in -3- Chapter 1

Introduction

anticipation that this will make it more difficult to be perpetrated in the

future. Likewise at the Williamstown

Naval Dockyard where the Naval Police

discovered a number of forged medical

certificates and Management consequently dismissed a number of painters and

dockers, the Commission will refrain from making further enquiry other than of the briefest kind. So too will the

Commission 'hand down' other areas of

detected crime once they have been

explored to a point that will enable the

traditional forms of police investigation to be undertaken."

(Interim Report No. 2, p. 8-9)

1.007 By the end of 1981 the investigations had

developed pace. Their extent was consistent with the views I expressed in both my earlier reports but had, in fact,

moved into the area of income tax evasion in a way not

anticipated in mid-1981. So serious was the situation that on 18 December 1981 I delivered Interim Report No. 3. This

was a public document.

1.008 When I delivered

Memorial Lecture I recounted the the 1983 Sir

circumstances John Barry

in which my

attention was first directed to this area.

appropriate to repeat what I then said.

.Volume 1

"It was in the early months of the

Commission that the extent of the task

became apparent. Perhaps the first

moment of real light occurred one morning at the Fitzroy Court. A witness was

giving evidence in relation to the

activities of a company said to be

engaged in ship repairing. Subsequent

investigations showed that not one dollar had ever been earned in that activity;

nonetheless it was full of interest,

involving classic racketeering and on any view right in the centre of my Terms of

Reference. The witness had some

documents, he said; not in court but

back at the office. Would he mind, I

politely asked him, if I adjourned for a

-4-

It i s

Chapter 1

Introduction

short time while he returned to his

office to collect them and bring them

back to the court. I offered him the

assistance of one of my solicitors and a

Federal Policeman. He could hardly

decline such an offer. The documents

were provided just before lunch. I

should tell you that prior to that

morning I had not seen of money

exceeding five thousand dollars or

thereabouts. Imagine my surprise to find in the files a cheque for one million,

five hundred thousand dollars. Two or

three minutes later I found an

application by an associated company to the Reserve Bank to bring into this

country from Lebanon, four million, five hundred thousand dollars. It didn't

really seem to fit in with ship

repairing. I decided to look more

carefully at this associated company. It had a bank account in a distant suburb in

another State. The bank vouchers were

subpoenaed. I found that in three months

some two hundred and fifty million

dollars passed through that account. It

was one of dozens of such accounts around Australia." 1.009 The prime purpose of Interim Report No. 3 was

to alert Government to the seriousness of the situation and to request an amendment to Section 16 of the Income Tax

Assessment Act allowing Taxation Office. This

amendments were passed

me access to records held by

recommendation was accepted to Section 16, though not

the and in

precisely the terms suggested.

l.OlO I made use of the access immediately it was

granted. As a result I delivered a Fourth Interim Report on

2 7 July 1982. It was in three volumes, but only Volume l

was made public. This was in accord with my

recommendation. Volume l dealt with a number of matters of which by far the most significant was Chapter 3 entitled

"Fraud on the Commonwealth Revenue". This chapter produced a good deal of public discussion, as well it might, because

it confirmed what was already outlined in the

McCabe-LaFranchi Report and disclosed a scandalous fraud.

Volume 1 -5- Chapter l

Introduction

An intriguing feature was the use of painters and dockers.

In Volume 2, which remains confidential, I dealt with

various areas of organised crime and in Chapter 10 I dealt

with the strategies needed to deal with this problem.

Chapter 10, suitably edited, was subsequently made public. In Volume l (paragraphs 3.133 and 3.134) I recommended the

establishment of a Task Force of lawyers (both Counsel and solicitors), Taxation investigators and Corporate Affairs investigators and others. The Government accepted the

thrust of the recommendation and chose to realise it by the

establishment of Special Prosecutors. Two were appointed: Mr Roger Gyles, Q.C. to deal with the bottom of the harbour

problems, and Mr Robert Redlich, a member of the Victorian Bar, to deal with other criminal matters arising out of the confidential report. Both these appointments were an

appropriate response to my recommendation.

l.Oll For the balance of 1982 and the first half of

1983 I concentrated the resources of the Commission on the

investigation of a major fraud based in Brisbane but with

implications throughout Australia and extending into

Singapore and Hong Kong. I reported on this matter in

Interim Report No. 5 which I delivered on 25 July 1983. By

the time of its delivery the major conspirators had been

charged with criminal offences and for this reason two

substantial volumes were not made public.

1.012 In April 1983 I conferred with the newly

elected Prime Minister, and briefed him as

investigations. It was

the Honourable R.J. Hawke, AC, MP , to the general nature of the

his desire that I should direct the

remaining months of my Commission into drug trafficking and the involvement of the members of the Union in that

enterprise. When I had camp leted the investigation which

formed the substance of Interim Report No. 5, I concentrated my attention on that area. That investigation has a long

way to go and should be taken up and camp leted by the

National Crime Authority.

Volume 1 -6- Chapter l

Introduction

1.013. report.

This report is properly described as a final

It is "final" in the sense that it is the last

report I shall submit. My interim reports contained "final" conclusions on the matters addressed by them. In preparing t his report, I read again the interim reports. There i s

nothing in them which I wish to vary. Investigations since

their delivery have confirmed the views expressed in them. As part of this "final" report I , incorporate the interim

reports, and they should be considered part of my "final"

conclusions on the matters investigated over the entire life of my Commission.

l. 014 For this reason, it is unnecessary to retrac e

matters set out in those earlier reports. In the fourth and

fifth reports, for example, I defined the operations of

criminal organisations. I did so for a purpose. It was t o

support a recommendation for the establishment of a crime

authority, resources. and for an upgrading of law enforcement

Since those reports I have seen a great deal

more evidence of criminal organisations at work. Some are examined in parts of this report, though in the main they

are the confidential volumes. The situation is as I

explained in those earlier reports, and remains as demanding of remedial action as I then recommended. Some remedial

action has been taken. A Crime Authority has been

established; there is a greater awareness of the need for

additional law enforcement resources, and steps to provide it are in train. No useful purpose is served by further

definition of the problem. A description of the several

criminal organisations may tittillate the public

imagination, but it would serve no other purpose if done for that alone.

l. 015 When the time came to prepare this report, I

gave consideration to its purpose. It is desirable I

explain my conclusion. My staff were attending to a number of matters, each being at a different stage of development.

Volume 1 -7- Chapter 1

Introduction

Had the termination of my Commission meant the cessation of

those investigations, it would have been necessary to report upon each so that it could be continued (to the extent

possible) by ordinary law enforcement agencies. Such a task would have been formidable and would have taken a great deal o f time. With the creation of the National Crime Authority , and its decision to investigate all matters referred by my Co mmission, a comprehensive report was no longer necessary. The task of identification of the matters was completed in July 1984 when they were defined and forwarded to the

National Crime Authority. Since such action would have been my recommendation in a final report, their disposal some

three and one half months before the end relieved me of that task.

1. 016 The result is that the purposes to be served

by this final report are restricted to relatively few. In

the case of some matters, the investigations have reached a point where I am able to draw conclusions and make

recommendations beyond merely referring the matters to the Crime Authority. As I had been deeply involved in

those matters, and as it would necessarily be many months

before the Members of the National Crime Authority could

attain the same degree of understanding, it is incumbent

upon me to report on those matters. They touch upon areas

in which I believe there is need for changes of laws, or

administrative action of a kind beyond that which is

normal. This report is limited to such matters, at least so

far as investigations are concerned.

1.017 There is a further purpose of lesser moment .

Any person commissioned to discharge a public duty is

obliged, at the end, to give an account. In some cases this

may be satisfied by little more than a report on the

administration. public interest In my case,

in the work

however, there has been much

I the

manner in which it has been done. have been doing, and

This added a further

Volume 1 -8- Chapter 1

Introduction

r equirement. It is necessary to record how the work wa s

done in my Commission so that all may know and may discuss

i t s ramifications.

l . 018 With these two purposes in mind, this report

has been prepared and is submitted. Although the principles applicable to what s hould or should not be included are

s i mp ly stated, it has not been an easy task to distinguish

between those investigations ready for report and those not.

1 . 0 19 There are a number of investigations omitted

f r om this report which, to many, may seem a curious

omission. One example is that which commenced with the

mu cder of Ian Revell Carroll at a Mount Martha house on 3

January 1983. Inspection of the house where his body wa s

found revealed a cache of weapons greater than ever found

before in Victoria. It included high powered rifles,

machine guns, police radio scanners, balaclavas, bank bags, security officers' uniforms, a surveillance van, safes,

telephone codes, cash and documentation - the paraphenalia of "professional" robbers. Carroll had been a member of the Federated Ships Painters and Dockers Union; indeed he

s erved on its executive and at one time claimed to be branch secretary. The man suspected of his murder is recorded as a me mber of the Queensland branch of the Union. Following his

death, whilst the police searched for his murderer, my staff commenced an investigation of his financial affairs and

t hose of his associates. It revealed a group of violent

criminals operating along the eastern seaboard and engaged in all manner of crimes. They range from taxation fraud,

insolvency fraud, robberies, drug importation and

distribution, to violence and murder. From an analysis of

some 1,500 pages a draft of 284 pages was prepared for this

report I gave attention to whether it would fulfil any

proper purpose to deliver it to Government. Each chapter

within the volume contained recommendations as to remedial action; yet on close analysis all recommendations were for

Volume 1 -9- Chapter 1

Introduction

further and continuous investigation. In my view, it was

properly the task of the National Crime Authority to pursue or supervise the pursuit of those matters. That end would

be achieved by delivery of the draft volume directly to the

Authority, and this I have done. There are a number of

other investigations where my decision has been to follow a similar course, though in their case no draft was prepared

for the report.

1.020 My report is in excess of 2,000 pages. It is

divided into eleven volumes and a number of appendices. I

recommend that six volumes (6-ll) be not published. In many ways, it is regrettable such a recommendation is made. They deal with a number of matters which have been the subject of public debate; some contain the

supporting recommendations for changes factual of laws.

background In both

cases, there is an interest in publication. However, there is an even stronger competing interest. Some matters in

those volumes relate to current investigations of great

importance which, if publication occurred, would be gravely prejudiced. Others deal with people now charged with

serious criminal offences. This is the more frequent reason for non-publication.

1.021 At the time of delivery of the fourth interim

report, I formed the view that it was undesirable that the

law enforcement process should await a formal report to

Government. That is why I requested support of the kind

later given by the Special Prosecutors. The result was that as my investigations proceeded many

initiated. This was much in the public

prosecutions were interest. However

it has had the consequence, such is the time taken for

prosecutions to proceed through the Courts, that at the time of submitting this report those prosecutions are still in

progress. Even though my reports are written not for the

purpose of publicly demonstrating the criminality of the accused but rather to achieve legislative or administrative

Volume 1 -10- Chapter l

Introduction

change, there is little that can be done to disguise those

involved so that they would not be recognised on

publication. Thus the publication of the parts of this

report dealing with those people would interfere with t he

judicial process. I have some doubts whether juries would

be so influenced as to render the trials unfair; but my

reservations are of little account when there exis ts t he

s trong expressions of opinion by members of the High Cour t

in Hammond -v- Commonwealth (1982) 42 ALR 327, and in other recent decisions such as News Ltd -v- NCSC (1984) 5 2 ALR

4 17. These decisions compel the recommendation I make t hat certain of the volumes be not published, at least until t he

criminal proceedings have come to an end. f e ar, some years hence. That will be, I

1.022 I will

Volume l contains

Commission over its

summarise the structure of the Report . an overview of the o perations of t he

life. I also address such ma tters as

natural justice and the transfer

Authority. Volume 2 sets out the

employed by the Commission. The

to the National Crime

investigatory techniques manner in which the

Co mmission has done its work is a matter of l egitimate

public debate and such debate will be uninformed unles s

t hose techniques are explained . Volume 3 is concerned with the Union. Volume 4 deals with SP bookmaking. Volume 5

deals with an aspect of the drug trade.

1.023 It is my recommendation that these five

v olumes be made public.

1.024 In relation to Volumes 6 to ll, it is my

recommendation they remain confidential. The reasons vary with each volume. In some

o n trial. In other cases

cases it is because persons are

it is because the volume deals

with highly sensitive, current investigations which could be impeded, if not destroyed, by disclosure. Volume 6 deals

with uonald Lockyer and his associate David McCarthy. To

Volume 1 -ll- Chapter 1

Introduction

publish this problem may prejudice the trial of current

charges laid against Lockyer. Volume 7 deals with a highly sensitive current drug investigation. It should under no circumstances be published as it would gravely prejudice that investigation. Volume 8 deals with the activities of several Melbourne men who are committed for trial. Volumes 9, 10 and ll are very substantial. They deal, in fact, with

some of the activities of Ian Beames, Brian Ray, Phillip

Carver and a number of their associates all of whom have

been charged with and several of whom are committed for

trial on serious criminal charges. I am compelled to

recommend that they not be published. In addition the

further investigation of some of the matters would be

prejudiced by publication though this is not so in respect

of all of the matters. Ultimately, when all investigations are completed and all charges disposed, the public interest may require their publication. These volumes, as it

happens, include reports on investigations in to the rna t ters disclosed by Mr Packer in his statement of 28 September

1984. My personal preference was to answer his allegations publicly, but I could do so only by the fullest account of

each matter. I am prohibited from publishing such an

account for the reasons I have given. There are

considerations affecting people other than merely Mr. Packer which produce that result.

l. 025 It is therefore my strong recommendation that

Volumes l to 5 of this Report be published, but that Volumes

6 to ll be kept confidential.

l. 026 Within a few weeks of the Commission starting

in October 1980 it grew to a size of about 25. It gradually

increased over the next three years to between 50 and 60.

Towards the end of 1983 the Government approved of a

doubling of the staff and further investment in equipment. For most of its life Mr George Hutton was its Secretary. He has now moved from the Public Service to the private

Volume l -12- Chapter l

Introduction

sector. Unused as I was to the ways of the Public Service,

I was heavily dependent upon the administrative skills of

the Secretary and his guidance and advice. He gave full

measure and I am deeply grateful. When he retired his place was taken by Mr Roger Webb. Though he was with the

Commission for only three months, that period was not easy

as he assisted in the transition to the National Crime

Authority and the preparation of the Final Report as well as his normal administrative duties. His work was of a very

high standard and his assistance and advice was invaluable. It would be invidious for me to select names from the rest

of the staff. I have nothing but praise for their devotion

and hard work. A spirit of involvement and goodwill

towards the work of the Commission was present throughout its life. Those who came to the Commission in its last

months fitted into the community quickly. The Public

Service is often the subject of criticism or the butt of

jokes in the community. It is proper I should record that I

was well served by their dedication and efficiency. I

believe my Secretary, Ms Donna-Maria Clay, deserves a

special mention. Without her ability cheerfully to maintain some kind of order in my office the job could not have been

done. That she is staying on with the National Crime

Authority will be very much to its benefit.

1.027 I have been well served by Counsel and

solicitors attached to the Commission. Mr Douglas Meagher, Q.C., has been a source of enormous assistance. His advice, which I have frequently sought, has been wise. His energy

and direction of the investigations has been of the highest quality . He was primarily responsible for the development of the systems and techniques used by the Commission. Not

only the Commission, but also the Australian community

should be forever grateful for his work. He was very ably

assisted by Rex Wild, who was Counsel throughout the life of the Commission, and Lex Lasry who was Counsel for the last

fifteen months. Both of these men gave of their all at a

Volume 1 -13- Chapter 1

Introduction

high level. I am grateful indeed to them. The solicitors,

seconded from the Attorney-General's Department and from the Victorian thanks. Law Department, deserve my appreciation and

They worked long hours and beyond the call of duty.

1.028 I wish to record my appreciation of the great

help given by other Departments of State. The Australian

Federal Police and the Victorian Police seconded men from their Forces on a full-time basis. Their work was

invaluable. Each Force provided a senior liaison officer; from time to time such officers were replaced whilst on

vacation or on other duties but substantially Detective

Chief Inspector Frank Green of the Victoria Police and

Detective Chief Inspector Mike Phelan of the Australian

Federal Police occupied these positions. I cannot speak too highly of the work they did. The Taxation Office and the

Customs Service responded to every request in an efficient and speedy manner. In addition, the Customs Service

seconded to the Commission a full-time officer. His work

was invaluable. Regular conferences at the Commission

included representatives of the Taxation Office, the Special Prosecutors' offices, Customs Service, Victorian and Federal Police, and the Australian Bureau of Criminal Intelligence. Their presence was essential and valuable.

1.029 Although on occasions I worked closely with

other Government departments, I had a special relationship with the Department of Prime Hinister and Cabinet,

Department of Administrative Services, Department of the Special Minister of State and the Attorney-General 1 s

Department of the Commonwealth and with the Premier's

Department, the Attorney-General's Department and the

Corporate Affairs Office of Victoria. I am grateful for

their ready, willing and competent assistance. In Interim Report No. 4 I was critical of the performance of the

Commonwealth Crown Solicitor's Office. It is fair to

record, as indicated in Chapter 6 of this volume, that I

Volume 1 -14- Chapter 1

Introduction

have on many occasions used the services of the Australian Government Solicitor (as he is now known) in a series of

c ourt appearances. On every occasion the performance of his

officers was of the highest professional standard and I was ver y grateful for their care and attention.

l. UJO As appears in Chapter 4 of this volume, I

visited Hong Kong on one occasion and Singapore on two

occasions. In Hong Kong I received great assistance from

the Royal Hong Kong Police Force, the Independent Commission Against Corruption, the Corporate Affairs Office and the

Official Receiver's Office. In Singapore the

Atto rney-General's Office, the Singapore Police and the

Corporate Affairs Office were of great assistance. For this I was truly grateful. It is of great importance in the

a reas of criminality which I was investigating, and which

t he National Crime Authority will be investigating, that

these contacts be maintained and developed.

1.031 Finally, I should record the united efforts of

the staff in the compilation of this Final Report. It has

been a massive and demanding task. Long hours have been

wo rked including Saturdays and Sundays. It will be apparent

I could not have written this Report on my own. To have

done so would have involved an extension of at least another six months. Thankfully that was not necessary. However,

notwithstanding this great assistance, I have read and

e d ited every section of the Report. I take sole

responsibility for what appears in it.

Volume l -15- Chapter 1

CHAPTER 2 - NATURAL JUSTICE

2 .001

"A good parson once said, that where

mystery begins, religion ends. Cannot I

say, as truly at least, of human laws,

that where mystery begins, justice ends?" A Vindication of Natural Society Edmund Burke

rna de against

c ha 11 eng e it ;

A right to counsel; a right to know the case

you; a right to know the evidence and to

a right to an opportunity to persuade; a

right to be informed of the reasons for a decision:

are the rights allowed where natura 1 justice is given. these

2.002 rights, with my several

From time to time I was urged to allow these

to afford this "natural justice". Dissatisfaction failure to accede to the extent demanded

suits in the Federal Court of Australia.

led to

I have

reported upon them elsewhere. All failed.

2.003 Amongst those concerned with the liberty of

the subject the concept of natural justice is valued highly, and at times raised on a pedesta 1. It imposes a high

standard of conduct on those who seek to interfere with the

person, property or rights of others. Thus it is a

preserver of liberty and a protector of the citizen from

imposition. It curtails the State especially; for usually it is only the State which has the overt power and authority

to attack liberties and property. With the growth of

statutory bodies and their power to confer licences allowing otherwise prohibited conduct to occur, there has been an

e x tension of the strictures of natural justice. Likewise,

where private institutions are given power and authority to grant or refuse a licence or to remove a right, the law has

again required natura 1 just ice to be done.

Volume l -16- Chapter 2

Natural Justice

2.004 just ice not

The law

because requires compliance with of the i nherent worthiness

na tura 1

of the

concept, high sounding though it may be, but because it is

seeking to preserve the independence and freedom of the

individual citizen . The fundamental premise is that a

citizen is free to do as he chooses save as the law

proscribes . This is the major tenet of democracy and

distinguishes it from other systems of government . It

certainly distinguishes the free man from the slave . In the

latter case, all that is permitted is that which the master

allows . Putting aside restraints of law, there is n o

freedom to do as you will.

2 . 005 of ways .

the most

A restriction on freedom may arise in

It may be through action of Government . observable form because Governments

a number

This is

act in

accordance with proclaimed laws and regulations. The a ction is over t because there is no need for secrecy. It is not

the only way freedom may be restricted if not destroyed. It

can happen in private business , under civil law, wher e

restrictions on freedom of action are constantly being

imposed, that this is as observable but only in recent times has it led to concern. Another way in which freedom can be

affected , often disastrously, is by those who are willing to b rea k the law : the c r imina 1 s .

2 . 006 The reaction of the State to these several

forms of oppression has been different. In respect of the

State seeking to oppress, there have been important

changes . The most fundamental was some centuries ago when, at the cost of a crowned head, it was accepted that the law

applied to all, including the State. In more recent times

additional measures have been introduced . The requirement of natural ju stice is but one; the righ t of access to

information under freedom of information legislation is

another; as is the rig ht to challenge· administrative

Volume 1 -17- Chapter 2

Natural Justice

decisions; and the provision of an Ombudsman. All of these innovations seek to achieve one end - the preservation of

liberty.

2.007 In the commercial world similar steps have

been taken. Laws now proscribe certain forms of contract.

They allow the setting aside of onerous provisions. They

provide, in legislation such as the Trade Practices Act,

means by which private citizens or the State may prevent the absolu te domination by aggressive men of business. There has been, as evidenced by the passage of this legislation, a

rea 1 i sa t ion t ha t , in the activities of law fu 1 bu sines s ,

situations may be created where there is as much oppression of the individual's liberty as there may ever be by

author ities exercising powers of the State.

2 .008 respect of

individual

In similar fashion, laws have been enacted in

trade liberty unions, where was thought

a

to

similar threat to

be emerging. Thus

unionists now have granted to them various means of recourse to the Courts to safeguard their liberties within the trade u nion movement. It may be expected that this will attract

more a ttention as union power becomes more dominant.

2 .009 The State has also acted in respect of the

criminal. It has pro-vided laws proscribing conduct and has es tablished law enforcement agencies to monitor and to ta k e a ction against criminals who seek to interfere with the

liberties of others. There is a recognition that this

cannot be left to the individual citizen. He has not the

resources to investigate and initiate action. Thus it is

accepted by the State, and expected by the citizens, that it will act to preserve their liberties when they are

threatened by people who defy or ignore the law and seek to

impose upon citizens without lawful authority.

Volume 1 -18- Chapt "' 2

Natura 1 Justice

2 .010 To preserve the integrity of the person and

the 1 i bertie s of citizens from the ravages of the crimina 1

the State must exercise powers which interfere with the

person and liberties of the transgressor. This produces a

conflict, well recognised in the debate that has occurred in the past two years on the establishment of the National

Crime Authority. It is importan·t to note, however, that the

ultimate objective is the same no matter which form of

transgression (by the State, private business, unions or the criminal) is considered. The object is to preserve civil

liberties. At times this laudable object has been

overlooked.

2 .Oll the powers There has been remarkable of the State to interfere

success in chaining in the life of the

citiz en. It has had and is still receiving intensive

atten tion from influential parts of the intellectual

community . There is a healthy wariness of official power

a nd authority; a constant challenge to its action; and

constant debate about the wisdom of its decisions. Likewise in other areas of overt power and authority. There is

noth ing like same alertness and concern about the

illega l oppression of civil liberties by criminals and their organisat i ons.

2 .012 In western democracies in general, and in

Aus tralia in particular, the major oppressor of civil rights

and liberties is the criminal. He injures the person,

steal s the property and invades the privacy of the innocent without remorse or compunction. He affords no warning,

gives no opportunity to be persuaded otherwise and does his bes t to ensure there is no sanction.

2 .013 If the crimina 1 in genera 1 is an oppressor,

To all the the criminal organisation is a tyrant. attributes mentioned is added a remorseless over the honest and law abiding and treating

Volume 1 -19-

rna rch trampling

them with

Chapter 2

Natural Justice

contempt. It comprises people motivated by profit,

contemptuous of the law, careless about their victims,

ruthless in their determination and remorseless in their

endeavours. They profit on the immature, the gullible, the naive. They are unscrupulous in their endeavours to avoid a pprehension. They have the wealth and intelligence to make

unlikely any recourse by their victims or the State. The

result is a tyrannous domination.

2.014 The victims, and other citizens, look to the

State for protection, and for redress when injured. They

receive scant attention. It is demanded they take steps to

protect themselves. Should they be victim, it is required

that they subject themselves to the ordea 1 of the witness

box where often they are mocked and scorned with little

protection offered by the Court. Only in recent times has

provision been made to compensate them for their losses and that compensation is of meagre proportions. They are given no assistance or encouragement to pursue their rights to

compensation at law. They are not fed information gleaned by law enforcement investigators even though it may be vital to their success.

2.015 On the other hand, the oppressor is given

every advantage. with the result

confident they

The resources of law enforcement are sma 11 that wi 11 eight

escape out of ten

detect ion. offenders Those may

who

be are

detected are given every protect ion. The investigators are subjected to every form of restriction that the human mind

can devise short of absolute prohibition. The offender is

given the protection of the general civil rights and

liberties in full measure. He is equipped, often at State

expense, with lawyers and allowed the benefit of all

reasonable doubts and the advantages of every procedure. Not for him, if he does not wish, the trauma and uncertainty

of the witness box. The victim may be as inarticulate, and

as nervous, as the accused; but to the witness box

Volume l -20- Chapter 2

he must march where he is

whilst the accused sits back, such ordea 1 need befa 11 him.

Natural Justice

to suffer intense questioning safe in the knowledge that no

2 . 016 The bala nce could not without some difficulty

be tilt e d further i n favour of the criminal. La w

enforcement a g encies are subjected to constant cr it ica 1

examina tion. They are mocked, scorned and ridiculed. The

cr i mi na l is given every means of attack. The rate of

unso l ved crimes climbs dramatically with situations arising where c i tizens neglect to report thefts, housebreakings,

even personal assaults, out of a feeling of helplessness.

2 . 017 The only source of vocal complaint about this

sta te of affa irs is the Police Force. Its spokesmen

con stant l y draw attention to i t and call for redress. They

ask f or the a dditional powers and resources they require.

Th ei r cry is treated with suspicion. There is an inference

t ha t their demands are for malevolent purposes; that they

s eek the powers for their own self aggrandisement, so they

may a dopt an authoritaria n position in the community. I do

no t think this is the reason for their cry. They are the

ones constantly in touch with the many victims. They

observe f irst hand the appalling consequences for people

i nnocent of any wrongdoing and who are often victim as a

rna tter of chance rather than deliberation. The attending

police officer sees for himself an utter contempt for civil r ights that far exceeds, in its incidence and effect, any

off i cial or government contravention that has yet occurred in Australia. Yet the understandable cry of the policeman

goes unheard. Those not in contact with the victims but who s i t in councils proclaiming concern at civil liberties never

mention the greatest oppression of all.

Volume 1 -21- Chapter 2

Natural Justice

2 . 018 The plight of the victims did strike a

responsive chord in one a rea. In recent times women have

resolved to correct the imbalance between the sexes o f

previous times. Her complaint policeman and

One such imbalance was the victim of rape.

was treated with suspicion by both the

the law. Having suffered the dreadful

degra dation of her person - an intrusion of civil rig hts and

liberties of the most violent nature- she was required to g ive evidence on at least two occasions and suffer the

invasion of privacy of the most personal kind. Being so

well organised to achieve other correct ions the women's

g roups were well placed to demand this be corrected. And so

it wa s. But the imbalance extends far beyond sexua 1 cases.

2 .019 The law enforcement procedures in this country

a re quite inadequate to deal with the intelligent and

determined crimina 1. The stat is tics of those apprehended bear it out. Most are first offenders -amateurs caught, no doubt, because of their lack of experience. Many are of low

intellect and poor circumstance. They have neither the

intelligence to understand how they may exploit their rights to defeat law enforcement nor the money to pa y for others

better informed to assist them. Few intelligent and

experienced criminals grace the gaols. The justification for such a system is often found in the saying that it is

better nine guilty men go free than one innocent man be

convicted. The nine guilty men being allowed to go free

will include the intelligent resourceful criminal rathe r than the unintelligent amateur.

2.020 The reason for this state of affairs lies in

the ultimate objective being forgotten. The enforcement of law is ultimately concerned with the preservation of the

liberty of citizens. It is understandable, perhaps, that in a criminal trial this is forgotten. Such a trial appears to

be concerned with destroying the liberty of a citizen, the

accused. Since he is the focal point, and the concern

Volume l -22- Chapter 2

Natural Justice

dwells upon him and what it is said he did, it is overlooked

that if he was the culprit he was the oppressor, not the

o ppressed. It was he who took upon himself, without lawful

pow er or a uthority, the unjustifiable interference with th e

civil liberties of an innocent and law abiding citizen. The purpose of the trial is to redress the balance, to put rig h t

wha t has been done wrong. The · investigation that preced e d

t he trial is designed to inform the State of the facts so

t ha t the wrong that was done to the victim may b e

redressed. The punishment that is visited upon the

conv icted is on account of the wrong that has been done,

usu a l l y to a fellow citizen and not to the State.

2 .021 Hence the police investigation and resulting

tr ia l are fundamentally concerned with the preservation o f liberty, not its destruction. Undoubtedly there is a

serious conflict because a system which necessarily al l ows the liberties of a citizen to be infringed does give rise t o

a potential for abuse. There must be available a checking

of the process to ensure that it is not abused. But, in the

imposition of such checks and balances, sight must not be

lost of the principal and fundamental ob j ective, namely t o

pr eserve the civil liberties of l aw abiding cit i zens fr om

destruction by those contemptuous of the law. Restriction s imposed on the system of administration of justice must b e

c a refully constructed so that the ultimate objective remain s

a ttainable.

2 .0 22 A basic requirement in the administration o f

ju stice is the a cq u is it ion of information. Without

information about abuse the State cannot take action to

redress it. When those sensitive to civil liberties

con s idered the remed i es to be a l lowed against the State,

th ey quickly a pprec ia ted that a right to information wa s

e ssential. Without information the rights conferred were

empty of substance. Hence the Freedom of Information

legislation. The position is no different in the

Volume l -23- Chapter 2

Natural Justice

enforcement of criminal law except that the information is held not by the State but by private individuals. Without

information, the whole apparatus of law enforcement fails.

2.023 Where it is alleged a person has offended

against the law and transgressed another's person or liberty it is important that certain protections be available to

ensure that the charge is warranted. It is equally

important, where the charge is warranted, that there be a

means by which it can be established. The freedom of nine

guilty men to avoid the imprisonment of an innocent man may appeal to the sentimental; but the preferable result would see the conviction of at least eight of the nine with the

innocent remaining free. from the liberty of a

The community derives no pleasure criminal to impose himself on it

without fear of the consequences.

2.024 The gathering of information must involve an

invasion of privacy. Where a citizen seeks to keep

information secret, its gathering invades not only his

privacy but also his freedom to keep it secret (which is a

different and greater invasion). If he must personally

disgorge that which he knows he is subjected to an

imposition on his freedom to do what he will with his

person. Just as some governments and public servants

dislike the interference they may see in Freedom of

Information rights, so too does the private citizen. Yet

without that interference the State cannot enforce its

laws; and if it cannot, the civil liberties of law abiding

citizens, flagrantly transgressed as they may have been, are left unprotected against future transgress ion, and are not remedied by any punishment visited upon the transgressor.

2.025 The operation of a Commission of Inquiry is

directly concerned with gathering information, since that is its prime task. Perforce it must intrude on privacy and

compel the disclosure of what some seek to keep secret. It

Volume 1 -24- Chapter 2

Natural Justice

transgresses privacy and to the extent described in the last pa ragraph it restricts liberties. Looked at from the

perspective of the subject of its enquiries, it is a

transgressor of liberties. Where, such as in my instance

and that of many other recent inquiries, it is concerned

with criminal activities, from the perspective of others it is concerned with upholding civ.il liberties because by its enquiries it will allow redress of grave transgressions. It does this by gathering information and informing those

charged with the duty of correcting the abuse.

2 .026 As I mentioned earlier, those believed to have

transgressed have a right to

liberties . It is not absolute.

protection of their civil

If they have infringed the

liberties of others the State is entitled to infringe their

rights so as to redress the situation and hopefully prevent its recurrence. Thus there is no principle that they are

entitled to every remedy or device which would permit the

checking of the law enforcement process. They are entitled to some rights but only such as are consistent with the

successful application of the law. If rights and privileges ar e granted of such an order as to prevent law enforcement

being effective, then the transgressors are placed outside th e law, and become tyrants. If they are contemptuous of

the law, the tyranny will not be benevolent.

2 . 02 7 The time and place for concern for the c i vi 1

rights of those allegedly offending the law is at the point

where they are at risk of losing their rights. The basic

and mos t important rights are those relating to liberty of

the person and possession of property. There are, of

course, many other rights but they are of lesser

significance and their protection is not as important as is that of liberty and property.

Volume l -25- Chapter 2

Natural Justice

2.028 The law identifies the means by which the

State may interfere with liberty and property. Generally it is in judicial proceedings though many forms of

administrative action may now allow it. The procedures are well established and that is the time when the principles of natural justice should be applied . At that point they may

be given effect without causing an imbalance between the

grant of rights to the alleged transgressor and the redress of the damaged rights of the victim.

2.029 Prior to effecting redress much work needs to

be done in gathering information. Natural justice does not have a role to play; it is to have its effect and to impart

its fairness at a later time. The subject of the

investigation is certainly entitled to justice but only in moderate measure at the proper time. The community is

entitled to its measure of justice which would be denied if

attention is paid only to the interests of the alleged

offender.

2.030 There is a need for rules regulating the

manner of investigation. These are designed not to

frustrate the investigative process because its success is vital to the protection of the civil liberties of the

law-abiding community. Rather they are to ensure that the

means selected impose least intrusion upon civil liberties . But this cannot be carried so far as to prevent the

investigation as that would frustrate the overall protection being sought.

2.031 Hence there are regulations

search of premises, requiring deposition requisite state of mind, and a pprova 1 of a

search occurs without regard collected may still be used

to propriety though the

governing the on oath of the

ju s t i c e . Wh e r e

the information searcher may be

punished. This is because the law is as concerned with the

intrusion on civil liberties demonstrated by the evidence,

Volume 1 -26- Chapter 2

Natural Justice

a l beit illegally collected, as it is with the transgression

of the searcher. A wrong committed by another does not

excuse the first wrong. Both should be punished. In the

United States for many years a different view prevailed,

allowing the principal wrongdoer to escape where the

in vestigator erred; but that is now changing as the

importance of the ultimate objective is given greater weight.

2 .032 r equested In

daily the to

conduct of my

authorise the

Commission process by

I was

which

i n f ormation may be gathered; that is the issue of summons.

This always intruded on privacy. My approval was sought,

not merely to do that, but also to discover that which many

preferred to keep secret . From the very beginning I was

compelled to grapple with the balance that had to be struck b etween the intrusion on civil rights of the subject of the

investigation and the correction of his intrusions on the

c ivil rights of others .

2.033 On one view, if natural justice applied at

this point, I was obliged to permit representation, advise of the evidence, allow argument and deliver my reasons. I

took the view that this was neither necessary nor

desirable . It was not necessary because the right to

privacy was not absolute; it had to give way in favour of

those charged with enforcement of the law. It could not

stand in their path; for without information the law could

not be enforced. My task and duty was limited to ensuring

that the request for access was born out of proper motives. The subject would have his opportunity at a later time, at a

time when his liberty or

immediately at risk .

property was directly and

2 .034 Nor was it desirable that I permit the subject

to know what was being gathered and the opportunity to seek t o prevent it . I was dealing with people many of whom were

willing to take any steps, legal or illegal, to prevent the

Volume 1 -27- Chapter 2

Natural Justice

gathering of the information. reached, or the direction I

Knowledge of the stage I ha d

was travel ling, would be of

assistance to them in preventing my success. This was no

empty fear. Later I report upon a blatant removal of

documents out of my jurisdiction for the purpose of

preventing me studying them. To facilitate those endeavours would be to permit those responsible for blatant

transgression of the civil rights of fellow citizens to

escape the consequences.

2.035 When my enquiries moved from the issue of

summonses to their return, I did allow a witness to be

represented. I did this so that the witness could seek

advice on his position in answering questions. Generally I did not allow the representative of a witness to be present

when other witnesses were examined; nor did I allow all

information I witness. Nor,

had gathered at the end,

to be made

did I allow

available to any

submissions to be

made on behalf of any person or institution. There were

some exceptions to this which I report upon shortly.

2.036 My reason for not allowing the effective

implementation of the principles of natural justice was that in almost every case the result of my deliberations was the

referral of the matter to ordinary law enforcement

agencies. Once in their hands, and following their

initiating process, the full requirements of natural justice would be met. In none of the matters did I expect that an

opportunity would not be presented at some point, albeit

long after I had completed my part of the task. It was

therefore unnecessary to give an opportunity; and it was

inimical to the success of the investigation both as done by me and as to be done by the law enforcement agency to which

I intended to report the matter.

Volume 1 -28- Chapter 2

Natural Justice

2 .037 My adoption of this approach gains support

from the words of the Chief Justice of the High Court in

Chu rch of Scientology Inc & Anor -v- Woodward & Ors (1982)

43 ALR 587 at 594-5, where he said:

Volume l

"It is obvious that intelligence which

falls far short of establishing that a

person is a risk · to security may

nevertheless be relevant to security. A scrap of information which, in itself,

may seem to have no bearing on security

rna y, when put together with other

information, assume a vital

significance. An officer seeking

intelligence will not always start with a hot trail but may need to begin by

collecting information in the hope that

it may ultimately prove to be of

importance. The necessary concession

that ASIO is entitled to make initial

inqu 1r1es reveals the difficulty in the

suggested construction. It is impossible to suggest any rational test by which one could determine the point of time at

which one should ask the question whether the inquiri es so far made have

established that the intelligence is

relevant to security. Today's

intelligence may seem to establish that a suspected person is a loyal citizen;

further information obtained tomorrow may show that he is engaged in espionage or

subversion. There is nothing in the Act

of 1979 that leads to the unlikely

conclusion that ASIO must cease to obtain intelligence about a particular person

unless its initial investigations are

successfu 1· in establishing that he is a

security risk. Moreover, intelligence

gathered in the honest belief, or in the

hope, that it will be relevant to

security may, in the light of further

information, prove to be valueless.

Finally, it should be remembered that it

may be relevant to security to establish

that a particular person is not a

security risk."

-29- Chapter 2

Natural Justice

In that case the Court was concerned with a

submission that it had the power to declare that the

activities of ASIO in collecting intelligence about an

organisation were unlawful; and an injunction was sought to prevent them continuing. The Court, with the dissent of the Chief Justice, held that ASIO was subject to judicial

review. However, notwithstanding the departure of the other four Judges from the Chief Justice on this issue, there was

considerable unanimity as to the proper collection of

information by ASIO. Mr Justice Mason, at page 602, said:

Volume 1

" ..• it would be absurd to suppose that

Parliament intended by s 17(l)(a) to

confine ASIO to the obtaining of

intelligence which on ultimate analysis in the light of a 11 established facts,

whether known to ASIO or not, related to a

person who is a security risk. In the very

nature of things a security intelligence

organization from time-to-time receives information, not always reliable, tending to suggest that an individual is a

security risk. The information has to be

checked out and followed up. This may,

and probably will, involve the obtaining of intelligence relating to the alleged

suspect. The end result of the inquiries

may establish to the satisfaction of ASIO or even objectively, that the suspect is

not and never was a security risk. But

this does not mean that the intelligence

which ASIO obtained was not relevant to

security. Intelligence is relevant to

security if it establishes or tends to

establish that a person suspected of being a security risk is, or is not such a

risk. Moreover, it may well be that

intelligence is relevant to security, so

long as it is obtained for the purpose of

determining whether a person alleged or

thought to be a security risk, is such a

risk. Despite this, in some cases it may

be possible to infer from the character

and reputation of the Plaintiff that ASIO could have no information in its

possession suggesting that he is a

security risk or that if it has, that

information could not be credible, simply because the suggestion that the particular plaintiff is a security risk must be

regarded as fanciful."

-30- Chapter 2

Natural Justice

Mr Justice Brennan at page 614 noted that:

" ... it may be necessary to evaluate rumour

or suspicion as well as proof. It may be

reasonable, even necessary, to determine the gravity of a risk by intuition, rather

than by deduction."

2 . 0 38 This view was later supported by the views

expressed by the High Court in News Ltd. -v- N.C.S.C. (1984)

52 A.L.R. 417. In that case the NCSC was conducting a n

i nvestigation employing powers not unlike mine, with a

s i milar exclusion of News Ltd. from the enquiry except when its witnesses were giving evidence; and a denial to News

Ltd. of access to information it had gathered. The Chief

Justice of the High Court said at page 429:

Volume 1

"The Fu 11 Court of the Federa 1 Court

accepted that the Commission might, as a

result of its hearing, make a report

adverse to the respondents and placed

considerable weight on that circumstance in reaching its conclusion that the course proposed by the Commission did not satisfy the demands of natura 1 just ice. Although, as I ha ve indicated, I do not agree that

the publication of adverse findings,

conclusions or evidence after a hearing

such as the present is normally, and

without more, one of the functions of the

Commission, that does not, in my op1n1on, make a critical difference to the result.

Let it be a ·ssumed that as a result of the

hearing the reputation of the respondents may in some way be affected. The question

would then be what natural justice

requires when a hearing, publicly

announced but held in private, is held

only for the purpose of investigation, the hearing being one in the course of which

no issue can be determined, and as a

result of which no right, interest or

legitimate expectation can be affected, although the reputation of the respondents may be damaged. That question has to be

answered in the light of a statutory

framework which expressly recognizes the need for expedition and gives the

-31- Chapter 2

page 439:

2.039

Natural Justice

Commission power to decide who may attend and who may intervene at the hearing. If

the Commission were to accord to a 11 the

persons whose reputation might possibly be affected by the hearing a right to

cross-examine the witnesses and call

evidence as though they were in a court of

law, the hearing might become so

protracted as to render it practically

futile. In these circumstances, with all

respect, I find it quite impossible to say

that the rules of natural justice require

the Commission to proceed as though it

were conducting tria 1. It seems to me in

no way unfair that, at a hearing of the

kind which I have described, the

respondents should not be entitled to

cross-examine such witnesses as the

Commission may call, or to call evidence

of their own. If proceedings are

subsequently brought in the Supreme Court against the respondents, they will, of

course, be able to test by

cross-examination the evidence adduced, and to call evidence themselves.

Mason, Wilson and Dawson JJ said at

"In our op1n1on the Commission will comply with the statutory mandate to observe the rules of natural justice in the present

case if it proceeds to allow each witness

who is called to give evidence to the

legally represented, with freedom for that representative to participate in the

examination of the witness, and for the

provision of a transcript of his

evidence. The conduct of an investigation in such a manner is fair and nothing more

is required."

In the News Ltd. -v- NCSC case there was

discussion about allowing representation and argument at a point where the NCSC was proposing to make a final judgment on the merits and to publish that judgment. The High Court

questioned whether publication would be allowed. That is not a consideration affecting me as I clearly have no power to publish my report. Indeed, to the extent that I gather

Volume 1 -32- Chapter 2

Natural Justice

evidence of crimina 1 activity, that evidence is provided to law enforcement agencies and the only publication is that

found in the initiation and conduct of proceedings in Court.

2 . 040 I do report to Government. This report does

contain a number of accounts concerned with the conduct of a number of people. The report · is made for the purpose of

informing Government of the magnitude of the problem and

certa in difficulties perceived in the enforcement of law. It is not made for the purpose of depriving those named of

their liberty or possessions.

2 .041 It may well be that my actions will have an

adverse effect upon reputation. That cannot be avoided. It is accepted that the administration of justice would be

frus trated if citizens, believing a situation existed, could not report without first permitting the accused a right of

audi ence and hearing submissions. Even the law of libel and defama tion excludes from its operation a bona fide report in su ch circumstances. Again the explanation in principle is

no t difficult to find. Such a report may initiate

redressive action but it does not preclude at a later time

full measure of fairness being extended to the accused.

Tha t an opportunity will be given later is sufficient to

en s u r e ju s t i c e .

2.042 The course I have taken I believe to be

correct in principle. It was also the only practical way.

To allow full representation as if it were a committal for

trial , or the trial itself, would have taken a great deal of

time. Not only would I have not advanced in my

investigations to the extent I did but it would have given

countless opportunities to those anxious to avoid their

crimina 1 activities being exposed to disrupt the

investigations by fruitless, but time consuming,

applications to the Courts.

Volume 1 -33- Chapter 2

Natural Justice

2.043 I ha ve reported elsewhere on the time occu p i e d

in answering a pplicat i ons to the Federal Court . It wa s

fortuna te that only the Federa 1 Court had jurisdic tion . In

one cas e that has come to my a ttention, being a n instanc e

where a State Ombudsman has jurisdiction, an investiga tion over two years was punctuated by no fewer tha n 1 80

complaints to the Ombudsman . Every complaint was found "not p r o ven", this be i n g the farthest the Ombudsman cou ld proceed

in sayin g it had no foundation . Th e disruptive effect o f

cons t a nt investiga tion of the investigators and the

prejudice to the outcome needs hardly be state d and no doubt wa s the prime objective of the subjec t s of the

inves t i ga tions.

2 .044 The preserva t ion of civil liberties requ i res

a s much attention when the trespassers are criminals a s when

it is the Sta te . Whilst the investigators of the Sta te

requi r e regulation they should not accept nor should the r e

be i mposed such restriction s or means of redress that in the

han d s o f the unscrupulou s the investigations may be

f r us tra ted. It should be born e in mind that the a mateur

crimina l, the criminal of low intellect or scarce· reserve s of wea lth, takes no adva n tage of the protective measures.

In my ca se, I wa s not subje ct to cha llenge in the Courts by

the Union or its members , notwithstanding their

dissa ti s f a ction with the prog ress of my enquiries . I wa s

taken to Court, as is almost always the case, by the wealthy

a nd i ntelligent; by t he type of person wh o is potent i ally

the g rea test threat to c ivil liberties o f the citizen. Such

a person is no strang e r to the legal system nor is he shy of

e mploying the very best tha t money can command to erect a

formi dable barrier aga inst investigation .

2 . 0 4 5 My e x perience is no different from that of law

e n f orcement a g encies. It simply reflects the power o f

wea lth and privilege . Such people have enoug h advantag e

wi thout placing more in t heir hands.

Volume 1 -34- Chapt er 2

Natural Justice

2.046 I mentioned earlier that there were some

exceptions. In one case I came to the conclusion that no

harm would be caused by informing the subjects of the

investigation of the evidence and that I would be assisted

by submissions. The matter was of small compass. I took

submission s and they were helpful. In this case I adopted

this course not so much out of a belief that natural justice

compelled me to do so but rather out of my conviction that

it would be of assistance to me.

2 . 047 The other case was the representation of the

Union, both the Federal body and the Victorian branch. They were represented separately. Their counsel attended

substantial parts of the public sittings of the Commission. Since my inquiry was directed at the Union, I initially

believed I would be assisted by the representation. I was

anxious to determine whether a case could be made that the

union was powerless to prevent the intrusion of criminals in to the controlling executives and whether there was a body of men within the Union anxious to expel them or to diminish thei r influence.

2.048 In the first few months I believed I would

receiv e this a ssistance. It then became apparent that those instructing the representatives of the Union wished their representatives to protect the individual unionists who appea red as as much as they did the name of the

Union itself. This was the situation for as long as Mr

Galbally appeared for the Union. When his retainer finished and Mr Spenc e r appeared for the Federal Union the attitude

changed. However this coincided with the death of Mr

Nichol l s and a resolution of the Victorian Branch accepted

at a meeting at the Council Club Hotel. The resolution

called on all members to refuse to "cooperate" with my

enquiries. This was interpreted by all unionists thereafter called before me as an instruction to not answer questions.

Volume 1 -35- Chapter 2

Natural Justice

It was upheld by unionists in every State notwithstanding tha t it was merely the Victorian Branch which purported to

pas s it.

2 .049 I gave the Union and its members many months

to reconsider this position. a ttention of the Union's

On many occasions I drew the

Counsel, Mr Spencer, and the

a ttention of the Victorian Branch's Counsel, Mr McDermott,

t o the result of adopting that position: it was that I was

compelled to draw my conclusions unassisted by evidence from t he Union. It also meant that the Union was publicly

d emonstrating to me, and to the country, the policy of

n on-cooperation with lawful authority in the examination of crimina l matters. Despite many opportunities to meet this conclu sion, to reconsider after the heat generated by Mr.

Nicholls' death had vanished, the whole Union steadfastly

maintained its position.

2 .050 Finally, after some executive members of the

Victorian Branch had been dealt with by the Courts for their refusal to comply with the law, and had been punished, I

a gain called some unionists who, so it appeared, had

threatened another non-unionist who was before me as a

witness. The executive members were asked for their

e x planation; they responded in a contemptuous manner for

which they were later punished in the Courts. Once a gain,

Mr. Ga lba lly' s hand was observed as being present; and by

the submissions he made to the Court on the occasion of

their tria 1 for their contempt of me he took advantage of

the privilege given to legal representatives in Court to

utter slanderous and contemptuous remarks directed at me and the counsel assisting me. It i s plain enough that the

Union, at least in the Victorian Branch, was either

counselled or incited by Mr Ga lba lly in its attitude of

non-cooperation directed at me, or was at least assisted by him. However that may be, the Federal Union and the

Volume 1 -36- Chapter 2

Natural Justice

Victorian had separate counselling from other lawyers

and notwithstanding the common sense and sound advice I

believe those other lawyers gave, chose to adopt the

at titude they did.

2 .051 In the absence of evidence from the Union, and

in face of the contemptuous attitude it was displaying, I

saw no benefit to be derived from submissions on its

behalf. For there to be effective submissions it would have been necessary to reveal a great deal of information given

confidentially by witnesses who professed a fear for their lives if

evidenc e their before identity became

me to justify

known . There

those fears. was ample

Neither the

Federal Branch nor the executive of the State Branch was

making any attempt to stand apart from the well-known

criminals who held significant office or had substantial

influence on the Union's deliberations. I did not believe

it would serve any useful purpose to reveal to the Counsel

appearing for the Union the vast amount of confidential

information when I would be compelled to request assurance he did not reveal it to his client. Indeed, no useful

purpose could be served unless and until the Union released its members from the direction not to cooperate.

2 .05 2 In all of these circumstances I made it clear

to the Counsel appearing for the Union that I would not take

submissions from him. I did so on many occasions and on

each occasion drew his attention to the major obstacle, the Union resolution and its effect. Notwithstanding this,

there was no variation to the resolution nor any withdrawal.

2.053 A final consideration was a relatively early

decision on my part that de-registration was not an

appropriate answer to the problem of a Union dominated by

criminals . I have explained my rea sons for that in Volume

3. Once I had come to that conclusion, the continued

existence of the Union was no longer in issue; but that was

Volume 1 -37- Chapter 2

Natura 1 Just ice

not a matter to concern the Union as much as the particular

office holders. Thus on a major matter of concern I did not

require argument to persuade me that the existence of the

Union should not be terminated.

2.054 There was one rna tter of industria 1 concern,

that being the extortion practised on the wharves at Port

Adela ide. It was suggested that an answer may lie in the

permanent employment of the painters and dockers. This was a matter on which I expected the Union to have a legitimate

view and I was anxious to hear it. Mr Spencer, on behalf of

the Union, was invited to make submissions to me provided I had the benefit of evidence from Union members in Adela ide

on this important matter. No such evidence was offered.

2.055 I did allow some cross-examination of

witnesses by the Union representatives since this was

helpful to me in extracting all the information relating to certain topics. Generally, however, the representation of the Union was not helpful either to it or to me. I absolve

completely the excellent service which Mr Spencer and his instructing solicitor, and Mr. McDermott and his instructing solicitor, sought to give the Union both federally and in

Victoria. It was not their fault that the Union took the

course it did and refused to accept their advice about a

different course.

2.056 There were a number of occasions when I

promised to allow an opportunity to Counsel appearing for witnesses to recall their witnesses or to call other

witnesses or to cross-examine certain other witnesses. My illness, the difficulties in transition, and the pressures of time have prevented me from honouring those

undertakings. From a personal viewpoint I am sorry this has occurred. However, in every case they will have, at

committal proceedings and at trials, the opportunity to

conduct that examination. It is all that is normally

Volume 1 -38- Chapter 2

Natura 1 Justice

provided to an accused. I see no reason why a

opportuni ty is required merely because there is a

Commission.

third Roya 1

2 . 057 There is a final consideration which affected

me greatly in respect of individuals of whom I suspected

criminal behaviour. As I have explained, I had little

hesitation in employing the compulsive powers granted to me in order to collect information which otherwise would not be procurable, or if there are other means, they were not

economica 1. The collection of this information was an

essential element in achieving effective law enforcement.

2 .058 However, often I reached a further stage of

the investigation where the information had been procured and I had formed a strong suspicion that criminal offences

had been committed. At this point, the question arose as to what I should do. There were two paths I could follow. One

was to act like a Court and allow the matters to be put to

the subject of the investigation, and hear his answer. The

other was to place the matter in the hands of law

enforcement agencies and permit them to follow their normal course . I chose the second course.

2.05 9 It was tempting to adopt the first course. I

have been engaged in the law for many years, and am very

familiar with the operation of the judicial system. The

concept of acting like a Judge, allowing Counsel assisting me to act like a prosecutor, and permitting the "defence" to

act as they would in a Court, was professionally

attractive. However, there were inherent difficulties in the application of this style of proceeding.

2.060 Before matters are prosecuted in a Court, the

accused is usually apprehended and questioned. He is

normally given the opportunity to answer the allegations made . This is a basic and fundamental principle of

Volume 1 -39- Chapter 2

Natural Justice

fai rness. If it is left until the criminal court

proceedings are initiated, an innocent man would be put to a g rea t deal of expense and anxiety in circumstances where he

ha d a straightforward explanation. Now, it was open to me

to afford the same right. After a 11, I was in a posit ion to

compel the a ccused to enter the witness box and answer

questions. Plainly I could offer that without compulsion. But i f I did, and if the accused was not innocent, then the

a nswers he gave me from the witness box would not be capable

of being used against him in criminal proceedings. Thus

whi lst the course would serve well the interests of a man

ultima tely found innocent of the matters, it would not serve t h e interests of the community should he be guilty. The

o pportunity presented to law enforcement agencies of

q u e st i oning the suspect and employing his answers against

h i m would be lost.

2 .06 1 A second aspect of this which weighed heavily

wi th me concerned the rights of the guilty man . If

q u e stioned by normal law enforcement agencies, he had the

r i g ht to refuse to answer questions and remain silent. Such

a rig ht did not exist before me. Whilst I am adamant that

s u c h a right ought not to stand in the way of the collection

of information revealing criminal activities, once that

ma terial is collected and serious consideration is being

g i ven to the initiation of the criminal process, I am not

per suaded the subject of the proceedings should be compelled to g ive evidence. This would lead, if nowhere else, to his

de f ences being explored and brought to the attention of the a uthorities well before the trial commenced. One day the

la w may countenance such a development, as it has already in r e s pect of alibis. But it has not yet reached that stage,

a nd I was not prepared to employ my powers as Royal

Commissioner to achieve it. Of course , had a charge been

la id, the law as propounded by the High Court in Hamidan -v­

Woodward clearly denies me the use of those powers.

Volume 1 -40- Chapter 2

Natural Justice

2 .062 An alternative course was to request the

questioning of the accused by law enforcement agencies and then conduct a proceeding like a hearing at which the

al legations were put and argued. Any "confession" could

have been adduced at these proceedings. However, this is to equa te the Royal Commission with a committal. Whilst from time to time it was suggested to me that I should determine

ma tters as if I were a Magistrate presiding at Committal

proceedings, the fact was that I was not endowed with

committal powers. I could not commit any person to trial;

I could not grant bail; I was not empowered to determine

guilt or innocence; nor did I have any authority to make a

judicial pronouncement that a prima facie case had been

established. A Royal Commission is simply a fact gathering a uthority , and its powers are limited to transmitting those

f a cts to Government or Governmental agencies . Indeed, I did

no t even have power to initiate a prosecution. All I could

do, a nd have done, is recommend action by those who are

e mpowered to discharge such tasks.

is a mistake to equate a 2 .063 with It

judie ia l off ice, or even with

Royal Commission law enforcement

a gencies .

a bsence ·of

An examination of powers granted to it reveal the

any appropriate powers for either function.

Where such powers are granted, there is also imposed a wide

range of duties evolved over many years. Just as it is a

mistake to assume the Royal Commission is endowed with such powers, so it is a mistake to assume that duties appended to

those powers are also imposed upon a Royal Commission.

Those duties are incidents of the powers; without the

powers there are no such duties.

2.064 The result of these considerations was a firm

belief on my part that I

provide natural justice in to be put and argued by

was not subject to any duty to

the form of allowing allegations the person accused. I took my

investigations to a point where reasonable, indeed firm,

Volume 1 -41- Chapter 2

Natural Justice

suspicion arose that criminal activity had occurred. I then referred the rna tters to ordinary law enforcement agencies for the apprehension and questioning of the accused, the

preparation of briefs for prosecution, and the initiation of

the judicia 1 process. Whilst my office offered assistance t o those agenices, the powers of my office were not employed

aga inst the accused once referra 1 had occurred. At that

point it was a matter to be completed in the normal manner.

To ensure as fair a trial as possible, I eschewed any public

decla ration that the matter had resulted from my work for

f ea r that it may adversely affect a jury.

2 .065 I believe this course to have been proper, and

to b e one which accommodated with fair balance the competing i nt e rests of the accused, the victim and the interests of

th e public.

Volume 1 -42- Chapter 2

CHAPTER 3 - MR PACKER'S COMPLAINT

3.001 On 28 September 1984, merely four weeks before

I submitted this final report, Mr Kerry Packer issued a

public statement complaining about his treatment by, and of his sufferings as a result of the activities of, my

Commission. By that date the greater part of the drafting

o f my report had been completed. In particular, the

drafting of the previous chapter dealing with natural

justice was finished, as was the whole of Volume 2 dealing

with investigatory techniques. A close examination of those writings, together with my account of the history of the

transition to the National Crime Authority, would reveal my answer to his criticisms. However since his statement

received wide publicity, it is desirable that I answer those aspects of it dealing with concepts of natural justice in a s ection of my report devoted solely to that task.

3 .002 I do not attempt in this chapter to deal with

all aspects of Mr Packer's statement. Where he has dealt

with factual matters that are the subject of this report, I

have extracted the relevant passages of his statement and commented upon them in the appropriate chapters. Nor do I

deal here with the inference that could arise from the

public statement that I have acted in collusion with the

Fairfax Press to denigrate Mr Packer so that it could

achieve some commercial advantage. That is dealt with in

Chapter 6 of this volume. In this chapter I deal with the

natural justice argument alone.

3.003 In the public statement Mr Packer complained

that I had acted "grossly unjustly and improperly", and

denied him "the most basic civil liberties any Australian should be entitled to expect". He identified himself as the

Volume 1 -43- Chapter 3

Mr Packer's Complaint

person whose code name in articles published by the National Times was 11 Goanna' 1 , and said it was common knowledge he was that person. He complained that I had omitted to declare

publicly that the article in the National Times was a

11 j ournalistic fraud11 ; and that although I did take action

in respect of another matter to be published in that

newspaper, I took no action in respect of Goanna. This, he

said, was an

a result, he

had suffered.

11 implicit endorsement11 of its publication. As .. said his reputation was damaged and his family This had started, he claimed, with the public examination of him before my Commission, and culminated in

the publication of the National Times. He denied each of

the allegations he was able to identify in the article.

Further, he claimed the making of the allegations was

reckless or deliberately false - that is malicious.

3.004 In developing the matter Mr Packer complained

that he had been denied representation before the Commission as witnesses affecting him were called, despite his anxiety to be present. He had not been directly challenged on the

matters in the witness box or otherwise. The hearings, he

complained, were secret. He had been denied access to

transcript of those witnesses and knew not what they had

said. This he likened to the Star Chamber or the practices

of the KGB trials conducted in the Soviet Union. In a

supplementary document he relied upon the Salmon Royal

Commission Report, and what he perceived were six 11 cardinal principles 11 for the conduct of a Royal Commission, and

asserted that I had not complied with them. He set them out.

3.005 The complaints of Mr Packer were made

vehemently. He sought, so he said, no greater or lesser

rights than a 11 house burglar11 • But he did want those rights

in full measure. He believed he had been denied them.

Volume 1 -44- Chapter 3

Mr Packer's Complaint

3 .006 These are serious allegations. There was

c onsiderable pressure applied on me by the media to make an immediate response. Had it not been that my report was

rap idly approaching finality, I would have responded other than in this report. However, since the report already

deal t with many of the complaints, it was more appropriate

fo r there to be a measured answer, not one produced in the

heat o f the attack. For this reason I have not concerned

my sel f to answer until now.

3 . 0 07 It was highly regrettable that a copy of the

ma tters referred by me to the Attorney General, who

forwarded them to the National Crime Authority, should have f ound their way into the National Times. At the time of

their preparation and delivery, I took steps to ensure that t h e security of the document was classified highly, and I

mys elf delivered the original to the personal representative of t h e Attorney-General. It was not my intention that it

should be published; to the contrary I sought to ensure it

would not be published. Having made enquiries of my staff, I am satisfied that its publication was not as a result of

a ction taken by any of them. Information has come to my

a ttention that the source was at another place. I have been

told by the person responsible for that other place that it

wo uld have been impossible for it to have been released from

t here. I have no power to investigate the matter further.

3 .008 I

merely because

regard the publication as of the inevitable harm

regrettable not to Hr Packer's

r e putation by a means other t h an that which is proper. That

is, of course, a very serious matter. Throughout my

Commission, but especially in the last two years, I have

endeavoured to ensure that where wrongdoings are alleged, they are dealt with by ordinary process of the Courts of

Law. So successful has this been that the prosecutions and

civil actions resulting from my work have not been publicly

Volume 1 -45- Chapter 3

Mr Packer's Complaint

identified. In the past twelve months there have been many false allegations that no court proceedings ever resul t from my work. It has been tempting to publish the very

considerable list of such matters in an answer to those

critics, fashion I

but I

have have refrained from endeavoured to ensure doing so.

that a trial

In this

of the

accused takes place without there being any suggestion that the accused is a criminal identified by me. Naturally, I

wished the same to apply without favour to all such people I

i dentified. If there were to be proceedings taken against

Mr Packer, I would and do have precisely the same view of

the proper approach . I had not wished to see him labelled

as a product of my enquiries.

3 .00 9 An equal consideration, however, for my

seeking to maintain a high level of security on the matters referred to the Crime Authority was the prejudice likely to be done to the investigations should they be publicly

revealed. Of course, since I was disposing of the

i nvestigations by transferring them to the Crime Authority, this consideration was one of more direct concern to it than to me. Nevertheless, I was concerned as a citizen that the

t ransfer should be effected in such a manner that those

i nve stigations proceeded without interruption. A glance at the contents of the chapter dealing with the transition, and t h e correspondence between myself and others, will indicate

t he depth of my concern. I certainly did not wish to see

the investigations destroyed by the public revelation of the progress that had been made, and the comcomitant warning to

those who were the subject of investigations.

3.010 There were a number of people subject to those

i nvestigations who I feared, if they knew the extent, would

seek to frustrate them. Mr Packer is one such person. In

t he course of my investigations I am satisfied he caused

documents to be removed from the jurisdiction so as to deny

Volume 1 - 46- Chapter 3

Mr Packer's Complaint

t h em to me. I report upon that matter in detail in Volume

9 · I intended not to give him any further opportunity to

take such action by keeping from him the extent of my

i nvestigations. His suggestion that in such circumstances I

wou ld countenance the public revelation of my investigations int o h i m, thus equipping him with the latest information on

p r ogress, is not acceptable.

3 . 0 11 Likewise it is nonsense to suggest, as he

does, that in the formulation of matters for investigation by the National Crime Authority I would act maliciously, or with a reckless indifference for the facts. Nothing would

be gained by such a course, other than the destruction of my own reputation in the eyes of those on the new Authority.

As they examined the material they would quickly ascertain

i ts defects, and reject it. This would result in other

r e ferrals being regarded with disapproval and readily put

as ide too. There is no advantage to me in taking such a

c ourse. Indeed, the preparation of the material was an

arduous and time consuming task. I certainly would not have wasted the energies of myself or my staff on matters of no

concern. Mr Packer's allegation is baseless, and foolish, for it merely compels me to make these observations, which

wi ll do him no good.

3. 012 I turn away from the intemperate observations

o f Mr Packer to th-e matters which are of greater concern

a nd, I suspect, are the least understood in the community.

Th ese are the criticisms founded upon the alleged denial of

civil rights .

3 .013 The progress

affected Mr Packer (and he o f enquiry nor the major

following segments:

Volume l

of my Inquiry, so far as it

was by no means the only subject

one), may be divided into the

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1. Public examination of Mr Packer's

associates in which they declared

they delivered cash to him or his

chauffeur ,

2. Federal Court proceedings brought by Mr Packer to stop my enquiries.

3. Public and private examination of Mr

Packer.

4. Private examination

affecting Mr Packer. of witnesses

5. Preparation and delivery of

summaries of relevant criminal

activities to the Attorney-General, and their delivery to the National

Crime Authority, identifying Mr

Packer as the subject of current

investigations. 6. Preparation and delivery of this

report containing sections

describing the status of

investigations into matters touching upon Mr Packer, and recommending

further investigations by various law enforcement agencies.

I will deal with each stage in turn, giving consideration to the complaints by Mr Packer of the asserted lack of civil

rights.

l. Public Examination of Associates

3.014 This occurred in September and October 1983 in

Brisbane. The associates were represented, and once Mr

Packer's name was mentioned, his representatives were

present too. The transcript was available, and was taken by them.

3.015 The ''naming" of Mr Packer was not by Counsel

assisting me putting the name to the associates, but was by

the witnesses identifying the person to whom they delivered

Volume 1 -48- Chapter 3

Mr Packer's Complaint

s ubstantial sums of cash which I was investigating.

evidence, for they

It was not hearsay. It

The

had witnesses were giving direct de livered the cash themselves. was

admissible in any Court. It was the undisputed truth.

3 . 0 16 Accordingly, the ''naming" of Mr Packer was by

properly admissible evidence, and was a legitimate step in my enquiries. Immediately the naming occurred I gave the

opportun ity to Mr Packer's representatives (who were

p r esent) to proffer an explanation so that if there was an

i nnocent account, it could be revealed without delay. They

d e clared that there was an innocent account, and as soon as

Mr Packer returned from overseas, it would be given.

Arrangements were made for this to be done.

3.Ul7 There is no room for legitimate complaint in

t h ese arrangements. Many witnesses have been called before my Commission and have explained matters which, if left

unexplained, could give rise to suspicion of wrongdoing. I a m not conscious of any case where a legitimate explanation has been given, and harm to reputation has been suffered.

Had Mr Packer delivered his explanation immediately, and had it been acceptable as an innocent explanation both by me and the public, he would have suffered no harm.

2. Federal Court Proceedings

3 . 018 h e would do,

wh o initiated

fold all of

Instead of doing what his Counsel had promised he attempted to stop my enquiries. It was he

the Federal Court action, drawing into the

the associates who I had been examining. By

this action, which he chose to take without any

encouragement from me, he accentuated the difficulties he was in. He was entitled to take such a step. But having

exercised the right, he cannot complain if the result

adversely affected his position. It certainly did.

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Mr Packer's Complaint

(a) By seeking to stop my enquiries

before giving his explanation, he

allowed the inference to arise that

his explanation was not one of

innocence. The explanation later

given was that he had simply

borrowed the money. That had

already been said by one of his

associates. His unwillingness to

enter the witness box and confirm

it, but instead to engage in costly

Court proceedings had the effect of heightening my suspicions that the explanation was not true. No doubt

many in the community shared my

suspicion, and his reputation

suffered accordingly. (b) By taking the proceedings he delayed the giving of the explanation, and

permitted speculation to arise as to what he would say. This, again, no

doubt affected his reputation and he has only himself to blame.

(c) In the proceedings he challenged my

bona fides in pursuing an

explanation. I was engaged on a

drug enquiry, but had taken

considerable care not to mention

that fact. I had two reasons. One

was to ensure that reputations were not harmed without cause. The other was to maintain the security of

those investigations. But by

challenging my bona fides, he

compelled disclosure of the nature of the investigations. Even then, I

took great care to maintain

confidentiality. The solicitor to

the Commission on mt instructions

wrote to Mr Packer s solicitors.

The letter was marked 'confidential' and set out the basis for the

enquiry which I was making. I took

this course as I was determined that

no disclosure of these matters would be forced on me in the Federal Court

proceedings and also to let him know as a matter of fairness. To my

horror, in open court, Counsel for

Brian Ray read the letter in full

and thus announced the nature of the enquiry to the world. I had no part

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Mr Packer's Complaint

in that; I did not seek it to be

done; I did my best to avoid it.

There is little doubt that its

revelation has harmed Mr Packer's

reputation; but the responsibility lies other than on my shoulders. (d) The final matter was one entirely

attributable to Mr Packer 1 s own

Counsel. He chose to make the

baseless allegation in the Federal Court that I or my staff had

wrongfully intercepted a telex

passing between Australia and Hong Kong . The telex had in fact been

handed to my staff by a solicitor in

Hong Kong who had acted as agent for

Mr Packer's own solicitors. The

allegation was humiliatingly

withdrawn. It had wide publicity.

Its irresponsible making reflected no credit on Mr Packer, and revealed he was prepared to say anything to

denigrate my Commission. I expect

this caused further loss of

reputation.

3 . 0 19 I make each of these points to emphasise that

these problems were all of Mr Packer's own making, not

mine. By taking such action, and conducting it in such a

manner, he merely drew greater attention to his difficulties with me. I had not sought to do this, and played no part in

i t other than that insisted upon by Mr Packer or his legal

advisers.

3 .020 The Federal Court proceedings were

unsuccessful and as a result, arrangements were made for his appe a rance before me. They had, however, one adverse

result. By bringing them Mr Packer had imposed substantial delay on my enquiries preventing me from calling him prior to Christmas 1983. In the result, I was compelled to call

h im in February 1984. At this time the Federal Government, be ing concerned to establish the Crime Authority, had

i mp osed time limitations on the completion of these

enquiries. By the terms of a letter I wrote at about this

Volume 1 -51- Chapter 3

Mr Packer's Complaint

time, it will be seen that I was worried that this would

p r e clude the proper completion of my enqu1r1es into Mr

Packer. The delay was entirely attributable to Mr Packer's a ction in the Federal Court.

3. Public Examination of Mr Packer

3.021 The public examination of Mr Packer took place

a t Hawthorn, Melbourne. He was represented. Again, being

sensitive to damage that may have been occasioned to his

reputation by matters being put whilst their development was s till in its infancy, most of the examination of Mr Packer

was done privately. The only part done publicly was that

r e lating to the cash payments of which his associates had

s poken the previous year. All other matters, including a

d rug matter, were done in private. Mr Packer and his legal

advisers made no objection to this course being followed. There was no legitimate objection.

3 .022 In his statement Mr Packer complains of the

s uffering of his family arising "for nearly a year". I have

little doubt that the explanations he gave in the public

sittings did allow speculation to arise in the public's mind as to their truthfulness. The explanations were

e x traordinary, and defied rational belief. But those

e xplanations were his own. They were not put by leading

questions or suggestion. Indeed, he was handled in a most

gentle manner, and merely asked to say what he wished about v a rious matters. The failure to advance acceptable

explanations was entirely due to their lack and in no ·way

attributable to the manner in which the proceedings were

conducted.

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4. Subsequent Private Hearings

3 · 0 23 Immediately after Mr Packer's examination, I

conducted private examinations of his lawyers concerning the removal of a file from their offices to Singapore and Hong

Kong . Mr Packer, of course, is fully aware of what took

place in those hearings. I report upon them in Volume 9.

As I have said in that volume, I conclude that the removal

of the file was deliberate, and was for the purpose of

frus trating my enquiries and was at the specific

ins tructions of Mr Packer. Thus I was dealing with a person

(Mr Packer) who, in my concluded view, was seeking to

frus trate the enquiries. I drew the further conclusion that he may take steps in further enquiries to frustrate those as we ll. Naturally I determined to inhibit his ability to do

so.

3 . 024 The enquiries into Packer-related matters

quickly expanded, taking into their breadth a number of

c omplex land transactions, and the death of Mr Coote.

These, and other matters, are reported upon in detail in

Vo lumes 9, 10 and 11. A perusal of those matters quickly

r evea ls their great ambit. Any one of them warrants a major

inquiry. None of them has been finally completed. All

require further investigation. Upon completion I expect

t here to be proceedings in the Courts for some or all of the

persons involved.

3 . 025 Mr Packer, through his lawyers, often sought

l eave to attend at the hearings during which witnesses were examined about these matters. He was consistently refused by me . Many of the matters were sensitive, with witnesses

e ither exhibiting fear, or expressing fear that their

e vidence may become known. Any person with experience in

t he conduct of such investigations well knows that

persuading witnesses to give evidence in the presence of

Volume 1 -53- Chapter 3

Mr Packer's Complaint

those who may be affected adversely is extremely difficult. The presence of Mr Packer or his associates would have led

to extraordinary difficulties in the successful pursuit of my enquiries. This is quite apart from the conclusion I

r e ached that I had good reason to fear he would seek to

i mp ede my progress by the removal of documents and so on.

3 .026 I fell ill immediately after Easter 1984, and

was hospitalised. I remained in hospital until the

beg inning of June. on 30 June 1984.

My investigatory function came to an end

Thus the number of witnesses examined

dur ing this time was, in any event, minimal. They would

have been fewer still had Mr Packer been present, and if he

had the opportunity to slow down the proceedings further by extensive cross-examination and submissions. Most of the investigatory work consisted of the systematic examination of vast numbers of documents relating to Packer which

v a rious witnesses had produced.

3.027 Mr Packer has drawn the analogy with the

common burglar, and sought the same rights as he receives.

The police investigate burglaries without there being

present the suspected thief or his lawyers. They question

witnesses and gather evidence free of such monitoring. They may seek some explanation from the suspect, and, at that

t i me only, he may have present his lawyer. Mr Packer

received precisely the same rights; he was treated in the

same fashion as the common burglar. By seeking to be

present during the investigation, he sought greater rights. I refused them. He is in no different position to anyone

else in the community, at least so far as I am concerned.

5 . Summaries of Relevant Criminal Activities

3.028 The catalyst for Mr Packer's complaint was the

revelation in the National Times that he had been the

subject of a summary of criminal activity prepared by me for

Volume 1 -54- Chapter 3

Mr Packer's Complaint

transmission ultimately to understand the complaint, he the Crime Authority. suggests that before

As I

he was

included in such a summary, there should have been a hearing at which the matters were put to him, that I should have

listened to submissions, and ruled upon the matter in the

same fashion as a court of law. It is difficult to believe

that any rational person would suggest such a course; but, since he proclaims it so loudly, it is desirable that I deal

with it.

3.U29 It is to be born in mind that Mr Packer is no

different in this regard from anyone else. His argument

mu s t mean that every person the subject of the 42 summaries

should first have been given a hearing. There are vast

numbers of people involved. The process would have taken

many months - time which was not available. Still, if that

is a correct appreciation of the law, then the lack of time

is a matter of no moment. If there is insufficient time,

the summaries would not be submitted, and that would be the end of the matter.

3.030 The proclamation of the National Crime

Authority Act in June 1984 allowed the Government to proceed with its plan to put the Authority in place of my Commission so that the work of my Commission could continue once I had

finished. Accordingly, towards the end of June the Prime

Minister requested that I prepare the material for the Crime Authority to take over 11 the investigations".

3.031 I have analysed the National Crime Authority

Act in the chapter dealing with the transition. I will not

repeat it all here. It is sufficient to note that under its

provisions, and under the provisions of the Royal

Commissions Act, I could pass material to the Crime

Authority only if it was conducting matters to which the material related.

Volume 1 -55-

an investigation into In July the Crime

Chapter 3

Mr Packer's Complaint

Authority was conducting no investigations. It had to find a starting point. Nor could I properly permit it to look at

my investigations, for transmission of information was

specifically regulated by the statutory provisions. There had to be compliance with those provisions; and they

required the Authority to be conducting an investigation before transmission occurred.

3. 032 The answer to the impasse lay in me advising

the Attorney-General of the nature of the investigations, and he referring those investigations to the Authority. It would then be able to consider whether it should conduct an investigation into those matters. Once it decided to do so, I was entitled to transmit information to it.

3.033 The Crime Authority is not entitled to conduct

any investigation it likes. It must fall within the

criteria provided by its Act. Yet only my staff and I knew

sufficient of the investigations to say whether the criteria were satisfied - or at least to advance arguments explaining why they were satisfied. Accordingly, on receipt of the

Prime Minister's request, my staff prepared, and I accepted, the summaries of relevant criminal activities prepared in the terms of the criteria of the Act.

3.034 Thus, in the drafting of those summaries, the

language of the National Crime Authority Act was employed. It was not language of my choosing. This is important to

appreciate. The Act speaks of there being "allegations" or "suspicions" that relevant criminal activities ·have taken place or are taking place. That is the issue addressed by

the summaries; not conclusions that they have occurred.

Volume 1 -56- Chapter 3

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3.035 Being satisfied by mere allegation or

s u sp icion, the summaries encompass all possible enquiries on which I hold material. It will be appreciated that

investigations may be at varying stages. Some may be just

aris ing, where there is no more than a vague suspicion.

Othe rs may be well advanced, and may be approaching a stage where firm allegations by way of criminal charges may be

made . The summaries encompass matters which are at

differing stages, and this applies as much to the

Packer-related matters as it does to others. Therefore it

is wrong to assume, as Mr Packer has done, that the

summaries reflect final conclusions. They do not.

3.036 The

Au t hority because

investigation by vas t number have

summaries were forwarded to the Crime

they related to matters which need further it. Not all matters were sent there. A

been sent to various law enforcement

agencies over the past four years. These are the more

advanced matters. Many never grace a formal report such as this. A number of the matters in the summaries will not be

found in this report. This is because there is no purpose

in reporting upon them. There is no change of law required, nor any special administrative measures. Thus it is an

error to believe that merely because matters are found in

the s ummaries, I have reached conclusions and am reporting upon them. I am reporting on a number of the Packer-related

matters, but by no means all of them.

3.037 Since the matters being transferred to the

Cri me Authority require further investigation, it would be ini mical to the success of the investigation if the subject of i t was warned, and told what was known. There is no

principle of natural justice which requires such warning. Inde ed, the High Court has determined the matter in the

cont r ary fashion, as appears in the previous chapter. Mr

Packer has no proper cause for complaint that he was not

Volume 1 -57- Chapter 3

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allowed to argue against referral. Quite apart from

disclosing the investigator's hand, plainly there would be nothing he could say which would prevent a referral taking place.

3 .038 It is wrong and unjust that the summaries of

relevant criminal activities should be published in the

newspapers as if they were concluded opinions of the

subjects of the investigations. As I have explained, that

was not sought by me, nor approved. It having occurred, it

raises in sharp contrast a major difficulty in the operation of the Crime Authority. Such summaries are to be submitted to the Inter-Governmental Committee. This will mean their distribution to eight Governments, and their law enforcement agencies. Despite the precautions taken, my summaries found

their way to the Press with only one Government involved.

It seems inevitable that such a system will not be able to

impose certain security on the transmission of such

matters. This may well be a serious obstacle to the

effective operations of the Crime Authority.

3.039 Thus I reject Mr Packer's complaint that he

was not given a hearing prior to the summaries being

prepared and delivered. The second aspect of this part o f

his complaint was that I failed to do anything about the

publication although I did act in respect of another

publication coded "Flesh". The omission, says Mr Packer, constitutes an endorsement of the publication of Goanna.

3.040 observation It is a

Mr Packer pity that

did not take

before the making time to

such read an the

reasons I advanced for making the order in respect of

"Flesh". I will set those reasons out in this chapter

shortly. Before doing so, however, it is necessary to

provide some account of the events.

Volume 1 -58- Chapter 3

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3. 041 As soon as the material was published in the

Na tional Times, discussion took place as to what could be

d o ne in law. The summaries, technically, were no longer

mine but belong ed to the Attorney-General and the Crime

Authority. I was merely the source. Their publication did

no t affect my future investigations but theirs . After all,

b y delivery of the summaries I was disposing of much of

t hose investigations .

3.042 In

cir cumscribed in these circumstances, my powers. A close

I was

examination heavily of the

Roya l Commissions Act revealed that there were only c e rtain c i rcums tances permitting an order prohibiting publication.

As I exp l a ined in my ruling, had my powers been wider, I

wo uld have prohibited all of them. But my powers were not

of that width. I was supported in this view by the opinion

o f the Solicitor-General. I exercised my powers to the

f ull, which was merely in respect of one matter, ''Flesh". My

reasons were:

Volume l

In early July this year at the request of

the Prime Minister I had put together a

number of summaries of investigations

which were the concern of my Commission. Part of the task was to ascertain those

investigations which met the criteria of the National Crime Authority Act . Their number was originally 40 but was shortly increased to 42. It was not possible under the Royal

Commissions Act, in particular Section 6P(2A), to communicate information or

furnish evidence, documents or things to the National Crime Authority until such time as that Authority was conducting an appropriate investigation . I sought the assistance of the Commonwealth

Attorney-General who in turn obtained the opinion of Sir Maurice Byers Q.C., the

immediate past Solicitor-General. Sir Maurice advised that I could refer these

4 2 summaries to the Attorney-General who could, if he wished, pass them on to the

National Crime Authority.

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Mr Packer's Complaint

I did so. The Attorney referred them to

the National Crime Authority.

Thus there came into existence and into

the hands of the National Crime Authority a document which has been constantly and inaccurately referred to as "the 42

References". They were not references; they were summaries for the assistance

and consideration of the National Crime Authority. So they have been treated by

it and by me.

I have set out this history briefly so

that the action I propose to take can be

understood.

Last Friday the National Times Newspaper published what it said were extracts,

with alterations, of some of those 42

summaries. More are promised in

succeeding weeks.

Let me say at the outset that no

concession is made that the National

Times does have a true copy of the

document. If it does have such copy then

it was obtained surreptitiously, without authority, and probably illegally. I do

not know what material it has or how it

got it.

If the National Times does have a copy of

the document and proposes to publish its contents, it is a matter of concern to

me. It can only harm the successful

outcome of the investigations.

I have given consideration to whether I

am empowered to prohibit further

disclosure. I have sought and received

advice from the Attorney-General, the

Solicitor-General and the Australian

Government Solicitor.

If I was satisfied that I had the power

to do so, I would direct that no

publication of the matter contained in

the document be permitted. The only

possible power is that found in Section

6D of the Royal Commissions Act.

Sub-section 3 of that Section reads as

follows:

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(3) The Commission may direct that -(a) any evidence given before

it;

(b) the contents of any

document, or a description of any thing, produced

before, or delivered to,

the Commission; or

(c) any information that might

enable a person who has

given evidence before the Commission to be

identified,

shall not be published, or shall not

be published except in such manner, and to such persons, as the

Commission specifies.

The power can be exercised only in the

circumstances there prescribed. A power to prevent publication of material is an interference with the freedom of speech. It should be construed strictly.

I have considered whether the 42

summaries or any of them fall within the

provisions of Section 6D. I find only

one such summary. It is that numbered

0008 and bearing the coded title

"Flesh". For that to be made

public would be a ser1ous detriment to

continued investigation and may result in physical harm to a person or persons. It

falls within Section 6D. My restrictive interpretation of the

power given by Section 6D has been

supported by advice given by the

Solicitor-General, who, I understand,

sees difficulties in a wider

interpretation.

Times was

by the

that I

today.

The Editor of the National

yesterday afternoon advised Solicitor for the Commission

proposed to prohibit publication

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Mr Packer's Complaint

If the National Times is in possession of a copy of the whole document, I trust it

will bear in mind that there are

occasions when the public interest is not well served by publication of material

which should remain confidential, as was intended.

For these reasons I give the following

direction:

"Pursuant to Section 6D of the Royal Commissions Act 1902 I direct that

the contents of the part of the

document described above, being that part identified by the number 0008

and code name 11 Flesh11 not be

published. 11

3. 043 The National Crime Authority, which was also

very concerned, had its own powers. In the opinion of the

Solicitor-General, it could have issued a wide order

prohibiting publication of all of the material. But the

Commissioners took a different view. They concluded that the power to prohibit related only to matters adduced at

hearings of the Authority, and despite the

Solicitor-General 1 s view to the contrary, they took the

narrower view and decided they did not have power to make

such an order. They pressed for an injunction to be sought

by the Attorney-General. As I understand it, he took the

view that if they would not make the order, he should not

seek an injunction.

3.044 I mention these matters to disclose the

serious consideration that was given to the matter at a time when Mr Packer claims I was giving "implicit endorsement" of

the publication. Nothing could have been further from the truth. As for public disassociation, which Mr Packer also suggests I should have done, this was a difficult question; in my considered view the best I could do consistent with

honesty was neither to affirm nor deny the accuracy of the

publication. It is to be remembered that at that time there

Volume 1 -62- Chapter 3

Mr Packer's Complaint

wa s nothing in the publication which identified any

i ndividual, and particularly, nothing which identified Mr Pa cker. I took no step which would allow the verification

o f the source, nor the identification of the person

invol ved. In the end, it was Mr Packer who made the public

adm ission, just as it was he who previously disclosed the

nature of my investigations into him.

3 . 045 To suggest, in these circumstances, that I am

acting in a fashion similar to Senator Joseph McCarthy (now decea sed) of the United States is patently ridiculous. At

no time have I publicised Mr Packer's name, or suggested

tha t he be dealt with by public denigration in preference to t he ordinary course of the law. I still do not do so. To

t he extent that he warrants investigation, I recommend it be done; to the extent he warrants prosecution, I urge that it

be done.

6. Final Report

3. 046 The last matter requiring consideration is his

complaint that I am writing a final report which he

a nticipates will deal harshly with him, and that I have not

proffered him any opportunity to explain matters away. This position is the closest analogy to that dealt with by the

Salmon Royal Commission Report.

3.047 There are many different types of Royal

Commissions. Some are requested to investigate calamities a nd provide a report detailing publicly those responsible.

Other Commissions are not expected to go so far. There have been many Royal Commissions in Australia where criminal matters have been investigated. The Commission is not

expected, nor empowered, to ascertain the guilt or

innocence, but rather to determine who should be prosecuted a nd how. There are often ancillary duties whereby the

Volume 1 -63- Chapter 3

Mr Packer's Complaint

nature of the criminal operations is publicised so that the community is better informed. In the past, in the discharge of this function, Commissions have often given detailed

accounts of many criminals, or persons suspected of b eing criminals. It is rare, in Australia, for more than a few to

be represented before the Commission and to make submiss ions on those so identified, although it does happen.

3.048 frequently In the

identified course of my Commission I have

people suspected of criminal

activity. Their names and details of their activities h ave been despatched to police forces and they have been

prosecuted. They have received natural justice by the

provision of committal proceedings and by the operations of t he criminal courts. That is sufficient.

3.049 There have been occasions when I have reported

upon major criminal activities. My fifth report was o ne

such report. The offenders have been committed for tri a l.

They know full details of the charges and the evidence.

This was achieved by the ordinary processes of the criminal law. I did not seek to discharge that task myself.

3.050 In my current report I deal with ma ny

individuals. None of them have received the rights tha t Mr

Packer seeks for himself. It would be a task of impossible

length. Most of them are presently committed for trial, or

awaiting committal, having been charged. They will receive justice at that point. They are included in the various

chapters of this report as an account of their activities is necessary to sustain my various recommendations.

3.051 Matters touching upon Mr Packer occur in three

principal volumes, in other volumes. there be a further

Volume 1

and to a lesser degree i n some chap ters

In one volume my recommmendation i s t hat murder investigation followed by an

-64- Chapter 3

Mr Packer's Complaint

Inquest. Mr Packer may attend that if he wishes, and he

will there learn all he wishes to know. In another volume I

recommend the matter being placed in the hands of the

Director of Public Prosecutions. Should he decide to take civil or criminal proceedngs, and should they involve Mr

Packer, he will receive his full measure of rights. The

remainder are subject to recommendations that there be

investigations conducted by certain law enforcement

agencies. Should these result in civil or criminal

proceedings, again he will receive his full rights. At no

point have I recommended that his liberty be restricted,

that his property be forfeited, that his name be publicly

denigrated. Nor have I recommended that these volumes be

p ublished, other than by transmission to the Governments

concerned.

3. 052 In these circumstances, I do not believe the

Salmon rules are appropriate for the circumstances affecting Mr Packer. In truth, he seeks more rights than those to

which the ordinary citizen is entitled, and I see no reason

why his request should be granted. He has not been denied

any basic civil liberties, and I see no reason to suppose he

will be denied them in the future.

Volume 1 -65- Chapter 3

CHAPTER 4 - ADMINISTRATION OF THE COMMISSION

'The horror of that moment,' the King

went on, 'I shall never, never forget! 1

'You will, though, 1 the Queen said, 'if

you don't make a memorandum of it.'

(Lewis Carroll, Through the Looking-Glass)

4.001 There is a popular picture of the Australian

Public Service, or any Public Service for that matter, being bogged down by paperwork. There are applications to be

made, forms to be completed, letters to be written,

submissions to be prepared, decisions to be communicated. And there are the ubiquitous memoranda.

4.002 All of this is daunting to the public

generally and no less so to a new Royal Commissioner

unfamiliar with the ways of the Public Service. Within a

finite, and usually short, time limit in which to report

there is not room for a Commissioner to attend both to the

subject matter of his inquiry and to the myriad of Public

Service requirements which need to be processed to establish proper financial, personnel, administrative and operational management. For him to try to do so will result in neither

being done properly.

4.003 The Commonwealth Letters Patent which

appointed me Commissioner on l October 1980 required me to present an interim report on later chan 31 March 1981 and the results of my inquiry,

later than 30 September 1981.

the results of my inquiry not

to present a further report on

with my re·commendations, not

Volume l -66- Chapter 4

Administration of the Commission

4. 004 To achieve such a requirement one must, as I

did, rely heavily on two things: first, a Commission

Secretary of the highest order, and secondly the

establishment and maintenance of good working relationships with the Department of State which is responsible for the

servicing of Royal Commissions.

4.005 The importance of a capable and efficient

Secretary cannot be overstated. Not only is he responsible for the overall management of the Commission but he is in

many respects the linch-pin of the organisation, both

internally and with the Public Service generally. Ideally he should be a public servant of some years' standing,

should be drawn from what is now the Senior Executive

Service, should have a sound background in both management and policy advising (though not necessarily related to the subject area of the Commission), and should be able to bring to a Commission a high degree of Public Service

professionalism. I was fortunate to have the services of

such a person in Mr G. Hutton. He commenced with the

Commission on 31 October 1980 and remained with it until 3

August 1984 when he resigned from the Public Service.

4.006 Under the Administrative Arrangements Order

the responsibility for the servicing of Royal Commissions is given to the Department of the Special Minister of State

(SMOS). Prior to that Department's creation in March 1983 responsibility rested with the Department of Administrative Services (DAS). There is within SMOS, and DAS before it, an expertise which has been acquired over some years of

servicing of Inquiries. More importantly, SMOS is the

conduit between the Commission and the Government, including the Public Service generally: and recognition of that

conduit is a critical factor for the overall successful

administration of any Inquiry.

Volume 1 -67- . Chapter 4

Administration of the Commission

4.007 Therefore it is essential to have a very close

working relationship with the servicing Department. For my Commission that was made a little difficult because of its

geographic isolation from the SMOS Central Office. But

there were regular vis its to Melbourne by SMOS (and DAS)

officers and by Commission staff to Canberra. And there was almost daily telephone contact between the two. That close contact is essential: otherwise there is a danger of an

Inquiry drifting too far from the machinery of government of which it is, necessarily, a part, though an independant part .

4.008 A capable Secretary and close relations with

the servicing Department, coupled with the expertise which resides in that Department, removed from my shoulders the

worry of my negotiating the labyrinthine Public Service

processes. Nevertheless those various processes have to be observed and involve the kind of paperwork I referred to at

the start of this chapter. I should like to pay tribute to

the Canberra Central Office of SMOS, and before it DAS, for the way in which they have handled, with sympathy and speed, the very many requests which the Commission has placed

before them over the years.

4.009 From 1980 to 1983 the location of the

Commission in Melbourne did not present major servicing

difficulties because DAS, then the servicing Department, has regional offices in each State and meeting the Commission's needs was mainly a matter of central office/regional office liaison. When the servicing responsibility passed to SMOS

(which does not have regional offices) · it was decided to

continue the past arrangements of DAS in Melbourne providing personnel and financial services under delegation from

SMOS. Because that provides a drain on DAS resources and

because of the difficulties of maintaining proper channels of responsibility I can understand why that arrangement is to be phased out progressively on cessation of my

Volume 1 -68- Chapter 4

Administration of the Commission

Commission. I should like to place on record, however, my

appreciation to the officers of DAS in Melbourne for the

services they have provided over the years.

4 . 010 The Commission was also assisted by other

Commonwealth agencies, notably the Commonwealth Court Reporting Service. Officers from that Service attended and transcribed all 447 hearings I held in all States and in the

Au s tralia n Capital Territory involving 1054 witnesses and 20260 pages of transcript. I am particularly grateful for

t he services they provided so willingly and cheerfully.

4 .011 Officers of the Department of Housing and

Construction and the DAS Property Division have also

provided assistance, especially in the relocation of the Commission to its present premises a move which was

undertaken only on the specific understanding between the Prime Minister and me that the new premises, involving as

they did a substantial outlay in fit-out costs, would

ultimately be taken over by the (then proposed) National

Crimes Commission. That has been the case.

Staffing

4.012 At the commencement of my Commission on 1

October 1980 the staff comprised Ms M Newport, interim

Secretary, Mr D. Meagher (now of Queen's Counsel), Mr R.

Wild of the Melbourne Bar, Mr J. Buxton an officer seconded from the Attorney-General's Department, and a handful of support staff. It soon became apparent that a second

legally qualified officer was needed and in November 1980 Mr B. Harkin of the then Deputy Crown Solicitor's Office in

Victoria mentioned took Mr

up G.

duty with the

Hutton commenced

Commission on 31 October 1980.

Volume 1 -69-

Commission. As as Secretary I

to

have the

Chapter 4

Administration of the Commission

4.013 In those early months, and especially given

the need for an interim report by 31 March 1981, the

workload of the Commission was enormous. By January of that year, only four months after I had commenced, the staff

numbered 31 - much greater, I believe, than many Inquiries

now reach during their lifetime. It was indicative,

however, of the resources which ultimately would be needed to make investigative inroads into the type of criminal

activities which, even at that time, had come to light.

4.014 By a process of evolution, especially

involving the development of analytical techniques described elsewhere in the Report, the staff of the Commission grew to a peak of 103 in July 1984. The investigation of links

between painters and dockers and the tax avoidance industry, which occupied the Commission during the second half of

1982, added greatly to an already heavy workload. In

October 1982 the staff numbered 64 and in the following

month two more legally qualified advisers were engaged.

4.015 the

Towards the end of 1982, in the context of

dovetailing of my organisation with the then

Government's proposed National Crimes Commission, the size and structure of the organisation was reviewed and a

proposal put to DAS in January 1983. The main features were the formation of a cell of Collators, the expansion of the

Analysts cell and an upgrading of the ADP area. In May

1983, Mr L. Lasry of the Melbourne Bar was appointed as an

additional counsel to assist me.

4.016 Broadly, that is the organisation which

existed at the end of my Commission. As at 1 September 1984

it numbered 102 people who, by general categorisation, were broken into:

Volume 1 -70- Chapter 4

Administration of the Commission

40 Operations (including 5 qualified legal officers) 32 ADP

16 Registry 10 Administration

plus, of course, the Commission Secretary, three counse l assisting and officers seconded from other agencies.

4.017 It must be said that the staff of the

Commission, both present and past, whether permanent public servants or temporary, have provided that dedication ,

application, support, assistance, knowledge and

professionalism which is demanded of public servants in this country. Without staff of that calibre my task would have

been almost impossible.

4.018 I should mention that throughout my Commission

many temporary staff were engaged, mainly because public servants are simply not available for

permanent long-term a difficult release from their home departments. This is task for administrators who are trying to meet the pressing demands of an Inquiry constrained by tight deadlines. Often

little is known of a person's background; there may be few,

if any, references; judgements about suitability must often be made on first impressions; and problems abound in quickly assimilating a large number of people from diverse

backgrounds into a public service working environment .

Apart from a few instances, however, the people who have

worked in the Commission over the years both permanent

public servants and temporary staff - have welded themselve s into a team which has provided me with unqualified support in the discharge of my task. In itself that is tribute to

the Administration of the Commission, particularly in recent times when staff concerns about their prospective movement to the National Crime Authority gave rise to a certain

degree of industrial unrest.

Volume 1 -71- Chapter 4

Administration of the Commission

Ac commodation

4.019 My Commission commenced its operations at

premises at 14 0 Bourke Street - above a picture theatre! It

soon became clear, however, that the number of staff would ve r y quickly outgrow that office space and in March 1981 the Commission moved to premises at 636 St Kilda Road. Because of the nature of matters under investigation it was

nece s sary to provide an appropriate level of security for

both staff and documents on the premises.

4. 020 Lack of office space again became a pressing

problem in 1983 and an additional half floor was leased at

St. Kilda in May of that year. However, considerably more

space was required; but clearly another move would only be economical if in the long term the premises so acquired or

leased could be internally structured and secured to enable the then proposed National Crimes Commission to take over the premises on cessation of my Commission. It was with

t hat in mind, and on a clear understanding of such with the

Prime Minister, that the Commission moved to its present

p r e mises . That move took place in November 1983 although it wa s a further six months before the fit-out work on the

Commis s ion's entire premises was completed.

4.02 1 Therefore it is worth mentioning that the

overal l cost of the Commission in 1983-84 contains this item of extraordinary expenditure. It is a cost which the

t a xpayer will not have to bear in the establishment of the

Nat i onal Crime Authority (apart from whatever modifications t o the premises it needs to make itself).

4 . 022 Similarly, all furniture, fittings and other

assets will be passed from my Commission to the NCA at no

cost to the Authority. Principal amongst these is the

hardware of the extensive computer installations which have

Volume 1 -72- Chapter 4

Administration of the Commission

b e en acquired over time. In the normal course the

De partment of the Special Minister of State - which has had

to justify those acquisitions to both the Government and the Parliament - would have expected their return so that they

c ould be re-allocated to new Inquiries as they arise and so

lessen the costs of those Inquiries. That will not now be

t he case and I expect that SMOS will in future need to seek

funds for comparable equipment as each new Inquiry is

established.

Finance

4 .023

$1,153,343 in 1982-83 and

Expenditure on the Commission amounted to

1980-81, $2,358,130 in 1981-82, $2,963,805 in $5,956,723 in 1983-84; the last amount

includes, as I have indicated, an extraordinary item of

$940,860 being expenditure incurred in the fit-out of the

Commission's current premises. An amount of $1,468,000 is included in the appropriations for 1984-85. Further details of each year's expenditure are set out in Annex 1.

4 .024 Some people have sought

identifiable costs of the Commission with to compare the

a notional concept to do so. Is it o f benefits obtained. It is specious possible to quantify the gain to Revenue the bottom-of-the-harbour tax avoidance

from disclosure of scheme? Is it

possible to measure in money terms the benef"it which might accrue from the 600 prosecutions which the Special

Prosecutor Mr Redlich says he has launched as a result of my investigations? Much of the benefit lies merely in the

disclosure of criminal organisations and their activities: and that is a benefit to society as a whole which cannot be

quantified.

Volume 1 -73- Chapter 4

Administration of the Commission

4.025 With the exception of salary costs and items

met by Departments other than SMOS (such as property costs) the Commission has operated under a one-line vote. Officers of the Commission do not exercise any financial delegations and there are arrangements between the Commission, SMOS and DAS Melbourne for payment of accounts.

4.026 There has also been consultation between SMOS

and the Commission about forward estimates and much reliance has been placed upon SMOS

budgetary needs throughout Department of Finance.

to negotiate the Commission's each financial year with the

4.027 It is in the nature of any Royal Commission

that many of its expenditures are not entirely predictable. For example, it was necessary for me to hold 150 hearings

interstate and staff of the Commission and seconded officers undertook many interstate visits for the purposes of

investigations. Each visit is a costly exercise and the

expenditure cannot be foreseen with accuracy.

4.028 It does appear, however, that improvements

could be made in three areas. Firstly, a Commission

Secretary should be equipped with an appropriate financial information and management plan. Despite the sophisticated computer facilities at my Commission 1 s disposal it was not until the closing months of my Commission that an internal

financial information plan was developed. I understand that most new Inquiries are provided with some form of personal computer capacity and it would seem to be a relatively easy task to provide each with a financial management plan

package, whether it is developed in-house or is commercially available.

Volume l -74- Chapter 4

Administration of the Commission

4.029 Secondly, ideally Commission Secretaries

should have some knowledge of financial management and

particularly government financing. I recognise, however, that this cannot always be achieved and in that case it is

essential to have on a Commission's staff someone drawn from t he finance area of a Department who has a sound background in government financing. This is particularly important once the staff size of a Commission reaches more than, say,

25.

4. 030 Thirdly, and as something of an overlay, SMOS

should continue to develop, whether on personal computer or mainframe, its own estimates and financial information and management plans for all Inquiries. In the final analysis

it is that Department which must negotiate with the

De partment of Finance, and its Minister with Government, for scarce money resources and it is inhibited in doing so by

not having a detailed financial information system for each Inquiry it services.

Overseas Visits

4.031 During the course of my the need

arose on three occasions for me to travel overseas to pursue my inquiries. The dates and reasons for these visits and

the personnel who accompanied me are listed below. During each of these visits I took the opportunity to discuss with

members of governments and senior officers of regulatory agencies a number of broad issues pertinent to the conduct

of my inquiries, and to the recommendations for legal and

administrative action that I have made.

Hong Kong (22-29 May, 1982) Documents received from Ward Knight and Dunn Pty Ltd

revealed connections between that company and Hong Kong banks, companies and individuals. Accompanied by Messrs

Volume 1 -75- Chapter 4

Administration of the Commission

Hutton, Meagher and Buxton, and the Victorian Chief

Commissioner of Police, Mr S.I. Miller, I travelled to Hong Kong to consult with Hong Kong Government authorities,

notably the Independent Commission Against Corruption.

Singapore (30 November - 5 December 1982) Investigation of the Hamidan scheme indicated significant financial movements between Australia and Singapore and Hong Kong. I travelled to Singapore, accompanied by Messrs

Hutton, Wild and Harkin and Chief Inspector Green of the

Victoria Police, to gain access to records that would

further my inquiries. I returned direct to Perth for a

hearing connected with the purpose of my visit. Messrs Wild and Harkin also travelled to Hong Kong in the course of this visit. They returned to Australia on 6 December.

Singapore and Hong Kong (26 - 31 October 1983) On this visit I was accompanied by Messrs Hutton, Lasry and

McDonell of my office, and Chief Inspector Green of the

Victoria Police. The purpose of the visit was to conduct

interviews and to access documents relating to certain

Singapore and Hong Kong companies and to liaise with

relevant Singapore authorities. In the course of the visit it became desirable to investigate certain matters in Hong Kong. Accordingly, three members of the party returned to Australia via Hong Kong. Mr Hutton and I returned direct to Australia from Singapore.

Other Administrative Matters

4.032 At Annex 2 are statistics of the hearings I

have conducted, witnesses heard, exhibits presented, and transcript. Details of witnesses, their legal

representatives and exhibits are contained in Appendices 1-A, 1-B and 1-C, respectively, for public hearings, and in Appendices 1-D, .1-E and 1-F, respectively, for confidential hearings.

Volume 1 -76- Chapter 4

Administration of the Commission

4.033 At Annex 3 is a list of reports I have

presented to government, and other publications.

Volume l -77- Chapter 4

Administration of the Commission

EXPENDITURE

ITEM APPROPRIATIO

1980-81 1981-82 1982-83 1983-84 l984-85(a

Comm i ssioner ' s

Fees and 195,615 377,782 388,149 374,398 129 ,oo

Expenses

Staff Expenses 30,356 61,254 135,545 85,085 7 ,oo

Office 292, 239 686,264 708,773 1,665,458 508,00

Expenses

Consultants 2 ,825 4,481 3,235

Witness' 4, 277 9,402 15,587 24 ,907 2 ,001

Expenses

Instruc ting 7,869 25,709 38,992

Solicitor s

Counse l Fe es 146,579 360,253 481,936 755,008 221,00

and Expenses

Union Co unsel 127,357 50,716 103,563 95,123 1, 00

Salarie s & Allowances 292,970 681,866 981,252 1,335,925 480,00

Overt ime 41,791 5,00

Property Costs 33,738 70,499 106,420 1,480,676 115,00

Furniture 19,518 29,904 353 98,352

TOTAL $1,153,343 $2,358,130 $2,963,805 $5,956,723 $1,468,00

( a) Subject to revision on expiration of the Commission. Volume 1 -78- Chapter 4

ANNEX 2

STATISTICS OF HEARINGS, TRANSCRIPT, WITNESSES & EXHIBITS

AS AT 12 OCTOBER 1984

PUBLIC HEARINGS:

CONF IDENTIAL HEARINGS:

NUMBER OF TRANSCRIPT PAGES:

NUMBER OF WITNESSES:

De tails of Hearings

VICTORIA

NEW SOUTH WALES

QUEEN SLAND

SOUTH AUSTRALIA

WESTERN AUSTRALIA

Public Hearings Confidential Hearings

Public Hearings Confidential Hearings Public Hearings Confidential Hearings

Public Hearings Confidential Hearings

Public Hearings Confidential Hearings

AUSTRALIAN CAPITAL TERRITORY

TAS MANIA

TOTAL PUBLIC HEARINGS

Public Hearings Confidential Hearings

Public Hearings Confidential Hearings

TOTAL CONFIDENTIAL HEARINGS

TOTAL HEARINGS

169

278

447

Volume 1 -79-

169

278

20,260

1,054

101 190

31 38

17 18

8

3

10 24

0

4

2

1

Chapter 4

ANNEX 3

REPORTS AND OTHER PUBLICATIONS

Interim Reports

Interim Report No 1 (Delivered on 30 March

Interim Report No 2 (29 July 1981)

Interim Report No 3 (18 December 1981)

Interim Report No 4 (27 J uly 1982 )

Interim Report No 5 ( 25 July 1983)

Other publications

Research Staff:

D.R. Meagher.

Volume 1

On the membership, control and criminal background of the Union and its members . (Confidential)

On Macbell Minerals, SP Bookmaking, Unemployment Fraud and the use of false names by Union members. (Confidential)

On recommended changes to the law regarding access to taxation records. (AGPS Canberra, 1982)

Vol 1. On taxation fraud and

criminality within the Union. (AGPS Canberra, 1982) Vol 2. On organised crime

suppression.

and its

(Confidential, with the exception of an edited version of Chapter 10, which was presented to the Senate on 7 September

1982) Vol 3. On the activities of a number

of Commission targets. (Confidential)

Vol 1. Discussion of the Crime

Commission proposal. Outline of Report. (AGPS Canberra, 1983) Vol 2. An abridgement of Volume 3. (Confidential) · Vol 3. On the Hamidan fraud.

(Confidential)

Discussion Paper: Media Bias and the

Victorian Branch, AGPS Canberra, 1982 Organised Crime, AGPS Canberra, 1983

-80- Chapter 4

CHAPTER 5 - OPERATIONAL OVERVIEW

INTRODUCTION

5 . 001 The purpose of this chapter is to give a

scope of the operations of my

year life. It demonstrates how

general picture of the

Commission over its four ''one thing logistical leads to another".

analysis specifying It is not intended to be a

the number of days in

hearings, documents tendered and the like. can be obtained elsewhere in this Report. Those details Nor will it be

concerned with the investigatory techniques developed during the course of the Commission. Those are the subject of

comprehensive discussion in Volume 2. At the commencement of my term there was a choice of about twenty areas from

which to select subjects for intensive investigation. With hindsight, it is apparent that some of· them would have led

the Commission to the same point. But ·at the time they

appeared very different.

5.002 By my appointment, I was directed to enquire

whether the Union or any officer or member (or person

purporting to be a member) or their associates has engaged in illegal activities. It became a primary task of the

Co mmission to ascertain the identity of those persons. In earlier Reports I had set out the manner in which that task

was to be accomplished. It was a task that required

considerable application of time, resources and analytical techniques.

5.003 I found quickly that many of the Union members

had assumed names; in some cases they were of deceased Union members. Thus although I received evidence that there were

some 1600-1700 members of the Union as at October 1980, an

Volume 1 -81- 5

Operational Overview

examination of t h e records of t h e branches revealed many

mo re names on the register. My preliminary analyses showed

in excess of 2,200 men in the branch records and a separate

examination of employment records showed 2,093 names although many of the names in the two separate listings were not common. It followed that the task of identifying those

in respect of whom I was enquiring was difficult and

I am quite certain that I time-cons uming.

identified all the members of the Union. To do

have not

so would

have been quite impossible. Nevertheless, it has been

necessary to remain aware of the task, critical as. it is to

my terms of reference. It followed that some allocation of

resources has had to be set aside on a semi-permanent basis

o n this issue.

5.004 My earliest operational target was the

Wi lliamstown Naval Dockyard. I was anxious to become a s

we ll- informed as possible about the employment of painters

and dockers at that establishment. I found many matters to

be critical of, and I set out some of those criticisms, in

my first Interim Report. I have since received in evidence

assurances from the present management of the Dockyard (as at mid-1983, in any event) that those problems have now to a large e xtent disappeared and the relevant procedures have been streamlined. For that reason I have made no further

recommendations in respect of the methods of employment of Union members at Williamstown.

5. 005 By the time of the first Interim Report I had

obtained a glimpse of the work confronting me.

Ma rch 1981 : -

I said in

Volume 1

"It is clear that the task imposed on me

is far more formidable (and probably far

more than was initially

realized. ' (Interim Report No. 1, p. 10)

-82- Chapter 5

Operational Overview

What I was to become aware of was the strength of

organised crime throughout the country and the manner in

which its participants interlocked and inter-reacted at

every level.

5.006 By July 1981, when I submitted my second

Interim Report, the magnitude of the task facing me and my

staff had been reinforced. By then I had little doubt of a

"large criminal organisation" availing itself of the Union for the supply of labour for its criminal activities. I

anticipated there might be more than one such organisation and my next task was to identify the organisation(s). I had

until then concentrated my operations in Victoria. It was likely there would be other such criminal organisations that is, those utilising the 11 services11 of the Union or its

members - in other States. I said in my Report:-

"If there are similar criminal

organisations at work in other States

then the work of this Commission will

take a very long time. It will become

akin to a Crime Commission and less a

Royal Commission investigating one

particular Union." (Interim Report No.2, p. 8)

5.007 It is trite comment, but the work of my

Commission has taken a "very long time11 and has, according

to ministerial statements and public and media opinion,

become "akin to a Crime Commission". This was not something that I consciously set out to achieve. It happened because

of the connections and associations which were discovered as I probed beneath the surface. I was astonished, and have

continued to be so over the years, by the intricacy of the

pattern of connections by which members of the criminal

underworld operate in this country. Moreover, the manner in which the traditional blue collar criminal has become

Volume 1 -83- Chapter 5

Operational Overview

a ssociated with the white collar criminals has given great

impe tus to my investigations. It was because of the use by

"executive" criminals of the Union services that I was able t o investigate criminal activities of a kind far more

s ophisticated than those in which the lower level members of

t he "organisation" would normally become involved.

5.008 I was determined I should not waste money and

resources on an investigation into street level crime which could adequately be dealt with by police forces. I was told

repeatedly by police officers with whom I came into regular contact that they could only police at "ankle" or "shin"

level; they rarely got to the "knee" level. Clearly enough, this meant they investigated, arrested and prosecuted (as a g eneral rule) the underlings. My aim was to concern myself

with major targets albeit ones in respect of whom my

interest was justified by my terms of reference.

5.009 Thus, by way of example, when substantial

s ocial security frauds were uncovered by Australian Federal

Police - operating with the assistance of my Commission - I encouraged the continuing investigation of those frauds but did not supervise it. The employment and union records

obtained by me, and the computer data resulting from its

collation and analysis by my staff, became available to the Social Security Department operating in conjunction with the police. I was able to divest myself of close interest in

the matter. Likewise, in respect of the

Police at Williamstown Naval Dockyard certificates used by Union members I

discovery by Naval of false medical

was happy for the

police to investigate the matter and prosecute the same to

successful conclusions; and they did. I said at the time:-

Volume 1

" ..• the Commission (will) 'hand down'

other areas of detected crime once they

have been explored to a point that will

enable the traditional forms of police

investigation to be undertaken . " (Interim Report No. 2, p. 9)

-84- Chapter 5

Operational Overview

I have observed· that direction throughout the period of my Commission and, thereby, have divested myself of the less

significant operations allowing concentration on what have appeared to be matters of greater moment.

5.010 But these "significant matters" did not merely

fall into my inv estigatory lap. Rather, their existence

became known associations. through a series of unimaginably odd

I will deal with some of those in the

remainder of this chapter.

MACBELL MINERALS

S.Oll In the middle of 1976 an undertaker Giuseppe

Giannarelli, called a meeting at which painters and dockers, Johanson and Lennon, and an estate agent Campbell attended. The purpose of the meeting was to form a company to operate

the business of lagging ships' pipes. Those present at the

meeting agreed to such an enterprise and a company known as Macbell Minerals Pty Ltd was selected as the corporate

entity to undertake the same. That company had been

operated by Campbell previously but had fallen into disuse. It was agreed that these four men together with a man Bone,

who was an ex-prison officer, would each have a 20% interest in the business. Johanson and Lennon were to provide

expertise in lagging, Giannarelli and Campbell were to

provide financial support and Bone was to provide some other unidentified support. Later it appeared that another man, Durston, also was to have a role with the company. In due

course, I inspected a business card showing him to be the

executive director of the company. Campbell sought to

minimise the relationship between Durston and Macbell. He claimed Durston was no more than a "liaison officer" between the company and the Union. As Durston was a land developer

with no other connection known at that time to the Union

this seemed surprising.

Volume 1 -85- Chapter 5

Operational Overview

5.012 It was an odd group of men. A funeral

director who often drank a t the same hotel as the executive

of the Union; an estate agent and justice of the peace; a

land developer who was in prison in the early days of the

company's new business; two painters and dockers, one of

whom was based entirely in New South Wales; an ex-prison

officer. In the circumstances suggested by that peculiar

association of men I determined it was necessary to

investigate more fully the nature of the business activities of each of these men and of the company Hacbell .

5.013 In due course Campbell, who was the secretary

of the company, was called to produce the company books. At first he claimed they had been destroyed but after a visit

to his office by members of my staff in his company they

were f ound. An examination revealed that the company,

contrary to what was said to prospective employers of their lagging skills, had neve r done any work at all. The books

contained only expenditure, never income. Some capital had been supplied by Giannarelli but most of it came from a

generous branch of the Commercial Bank of Australia. The

closer inspection of the affairs of the directors suggested by all these matters has dominated the Commission's

activities for the past four years. Each man in turn has

led to many other associated criminal organisations and

ac t ivities. In this sense, the company Hacbell was at the

hub of the wheel representing all my varied investigations.

5.014 Examination of the company 1 s accounts showed

it was paying money to a man called

had at different times assumed the name of

Under the latter name he had practised a fraud

on land purchasers in the Ballarat area. He was convicted

of fraud charges following a lengthy trial in Sydney and was imprisoned in New South Wales in 1981. He has since been

Volume 1 -86- Chapter 5

Operational Overview

released. The land in question had been bought from or in

conjunction with corporate dealings

had complicated

in New South Wales which during the

course of his trial necessitated the calling of evidence by

connection between the Mac bell Group, The and then

became of considerable importance in my investigation. It was the connection with this group that lead to the tax

avoidance industry and the 11 bottom of the harbour•• companies which were to figure so prominently in my work in the middle years of the Commission.

5.015 I s hould indicate that I conducted very

detailed examinations into the affairs of Giannarelli,

and the other men. As far as Giannarelli was

concerned bank records were obtained. Subsequently

Giannarelli and his brothers appeared before the Commission and because of evidence given were referred to the

Attorney-General for the State of Victoria. Subsequently they were prosecuted for perjury, convicted and sentenced to periods of imprisonment. On appeal to the High Court, those convictions years to

examination

were set aside. Those proceedings took three

be resolved, effectively preventing further

of the Giannarellis. It was discovered on

examination of the banking records of members of the

Giannarelli family there were a number of accounts in false names conducted with the knowledge and apparent approval of the family 1 s banker. This was a tactic which I found time

and time again when obtaining banking records. It reflected no credit on the banking system in Australia.

5.016 The man had been convicted in 1976 on

a charge of false imprisonment. Not only was

Volume 1 -87- Chapter 5

Operational Overview

he a direct or of Macbell Minerals but of a further company

A very

detailed investigation of his activities was conducted. An

ana l ys i s was p repared which dealt in minute detail with his

business and personal activities. This analysis comprises f ive volumes and approx imately one thousand pages of text.

He has been committed for trial on some charges arising from

tho se investigations and accordingly I will not detail

further those matters .

5.017 I turn next to the company

because its activities in

1978 and 1979 were crucial to my developing interest in tax

e v a sion, was another of Campbell 1 s disused

companies which was resurrected. In this case, the purpose wa s f or tax evasion. Its "executive" included Campbell ,

and Johanson; again, an odd mix of differing levels of expertise. Amongst the papers obtained

from Campbell was found an application to the Reserve Bank o f Australia to bring into this country the sum $4.25M.

Th e application said that it was to be a "loan" secured by

certain properties. One of those properties did not exist

and in respect of the other the current owners knew nothing of the proposed sale. The application was false. Yet the

source of the funds was real enough - it was a man

from Lebanon, This man was said to be representing

oil sheiks from that country and was offering multi-million dollar loans at 9% per annum interest for periods up to 15

years. To obtain these loans it was necessary to lodge

"up-front" fees of $10,000 and travel with that sum to

Beirut. A number of Australian businessmen (not only the

group) made the trip. No loans ever came

through and many "deposits" were lost. It transpired that

was at the time wanted in West Germany on charges of

Volume 1 -88- Chapter 5

Operational Overview

f raud arising 6ut of similar activities . He apparently

appointed age nts in Sydney to act for him in connection with the se various loans.

5. 0 18 was one of the other

applicants for funds and $20,000 was " invested" with i n ant i cipation of loans which were never forthcoming ( i n

his case it is unlikely that he suffered personally as the

mon ies came from a company which controlled

and milked, and which subsequently went into liquidation). The company which acted as agent for was

Among its directorate and executive were included men with convictions for forgery and indecent exposure. One o f t hem was deeply involved in pornography and vice and was

a s s ociated with a drug trafficker. The l atter , who must

r emain unidentified because of outstanding drug trials,

s ought professional and financial advi ce from the same in 1978 and again in 1979. I was to discover much

l a ter in my enquiries an association of this group with an

Australian man The latter was involved

with the Meinerhagen gang in Germany. Last year he was

e x t radited from South Australia to serve a seven year term

of imprisonment on drug charges in Canada. I am remi nded of

the "internationality" of many of our leading criminals, as I '1\rrite this.

5 .019 The most important discovery about

, however, was its bank accounts. In the space of a

f e w weeks in 1979 over $9M passed through it. It was a $2

company. directors. Mi nerals

Campbell, Further itself was

Johanson and

investigations paying small revealed amounts

were the

that Hacbell of

Campbell, when asked who was,

money to

said he was

a carpenter from Mornington. In fact he was the same

No satisfactory explanation was ever given for

these small payments.

Volume 1 -89- Chapter 5

Operational Overview

5.020 The $9M passed through or from an account at

Bl acktown, New South Wales. When examined, that account and

others showed a small suburban bank handling hundreds o f

millions of dollars. The firm orchestrating this money

movement was Thus I had arrived at the settlement room

of one of the "bottom of the harbour" taxation schemes.

5 . 021 From this point the situation became rather

more complex. After much prevarication by and

(the man had by this time retired from the company and

was never called as a witness) the records of were

f ound. The records themselves were enormous in quantity and

even at this stage I have not been able to fully examine

t h em . They detailed much of the taxation fraud which had

been undertaken by and identified clients and others

a lso involved in the fraudulent activities.

5.022 had been involved in other

companies of doubtful reputation. had been concerned with In the early 1970's he

and in 1975 was a

director of He had left that company in

1977 to take up a directorship in

had been with in

the early 1970's. This followed convictions in Hobart in

1968 for false pretences. He later worked with

and was closely associated with in

1975-76. He became a barrister in New South Wales during

t his period although he never formally practiced as such.

I n applying for admission to practice as a barrister in the

New South Wales Supreme Court he failed to disc lose his

prior convictions from Tasmania. He joined at

in 1977 and they subsequently, with

formed had in the mid-1970's been a

director of at the time that

Volume 1 -90- Chapter 5

Operational Overview

company crashed. · He was later ordered to pay $100,000 to

cre ditors in respect of the failure of the company. The man

was also involved in the promotion and execution o f the tax schemes.

Section 16

5.023 So, by October 1981, I was aware of the

connection between the group and the

per s onnel. It became apparent that I had been introduced to

a massive tax avoidance industry. I might say that I was

a wa re that during that same period an investigation was

being conducted by Inspectors appointed by the Government of the State of Victoria pursuant to the provisions of the

Unif orm Companies Act 1961 (Vic). This investigation was c onducted by Messrs McCabe and LaFranchi and was in respect o f the group of companies which were involved in tax schemes p r omoted by Brian Maher and his associates. I became aware,

informally, that members of the Union had participated as dummy directors in the companies involved in those schemes.

However, the members of the Union involved appeared to be

d i fferent to the ones I was investigating with

Un fortunately, I was not able at that time to avail myself

of all the information garnered by those inspectors because t heir report was not tabled by the Victorian Government

until well into 1982. I was aware that the inspectors had

some difficulty in pursuing their enquiries because of the problems associated with Section 16 of the Commonwealth

Income Tax Assessment Act. I was shortly to be confronted

by the same difficulty myself. Because of that difficulty I

made recommendations in Interim Report No. 3. I detailed my observations to that stage involving the participation of painters and dockers in schemes. I said:-

Volume 1 -91- Chapter 5

Operational Overview

" ... the Commission is in possession of

comprehensive evidence that significant members of the Union have found themselves appointed directors of companies with

'paper' assets amounting to tens of

millions of dollars. Their use of false

names and false addresses seems to have

been effective in hiding their identity

from the authorities and thus achieving

the object of the scheme' . 11

(Interim Report No. 3, p. 11)

5. 024 I went on in that Report to indicate that my

continuing investigations were frustrated by an inability to obtain access to Taxation records and to results of

investigations carried out to that time by officers of the

Tax Department. I cast the situation in the following

terms:-

Volume 1

"The situation has now been reached by

the Commission in this area of its

investigation where firstly access is

essential to the records of the

Commissioner of Taxation and secondly

there is a need for the closest

co-operation between this Commission and the Taxation Office in the furtherance of its investigation. The Commission

requires the active assistance of

Taxation Investigation Officers. I

require access to taxation records.

Joint action of this kind is as necessary

in this area as it has proved to be where

the Commonwealth and the States have set up joint task forces to investigate

criminal organisations whose activities cross State borders. Provided there is

this joint co-operation, there is good

reason for believing that the

Commonwealth will be able to take

concerted action in this area of tax

avoidance with the countless financial benefits not only in respect of past

schemes but also in the deterrence of

future frauds. 11

(Interim Report No. 3, p. 16)

-92- Chapter 5

5.025 The Government was

recommendation, Section 16 of the subsequently - and have continued appropriate records when necessary.

Operational Overview

prepared to accept my

Act was amended and I was

so to be - able to obtain

5.026 Lest it be thought that all of my

i nvestigative resources were involved in this area of tax

a voidance let me record some other matters which were then t h e subject of active operations.

DEAD MEN

5.027 In the March 1981 Interim Report, reference

was made to the apparent provision of false identities by

Union branches for their members. To that stage the major

enquiries had involved the branch of the Union in Victoria. A comparison of the membership records of the Union in that State with those at the Williamstown Naval Dockyard

indicated that in eight separate instances men who had died were subsequently transferred from Victoria to other

branches of the Union in Australia. Death certificates for those men were obtained. Confirmation was thereby

established of death, presuming the death certificate itself was legitimate and that it referred to the person correctly identified as the deceased in that certificate. Thus, it

was improbable that the Union's records indicating the man was alive and transferring his membership were accurate. I was interested to establish the basis of these "transfers". It was not until April of 1981 - despite my earlier interest

in the phenomonen - that I was able to identify one of these

"dead men" working in another State using the identity

assigned to him.

Volume 1 -93- Chapter 5

Operational Overview

John Knight

5.028 The man identified was "Allan Bees". This man

was said to be working in Sydney in November 1980 where he

suffered an injury for which he claimed workers'

compensation. This was notwithstanding that "Allan Bees" had died in Melbourne in December 1979. Not only had he

died but Jack Nicholls, the former secretary of the Union, had attended his funeral and delivered the eulogy. As Bees' transfer had been arranged through the Victorian Branch of the Union it seemed certain it had been done fraudulently

for the purposes of providing Knight with a false identity.

5.029 A subpoena was served on the man masquerading

as "Allan Bees" in Sydney to appear on 11 May 1981. He did

not attend in answer to the subpoena and it was necessary to

issue a warrant for his arrest. He was examined as to his

correct identity and promptly agreed that his correct name was "John Andrews". He said the name Bees was one provided

to him by someone in the Victorian Branch of the Union but

failed, or refused, to identify that person.

5.030 The interest in this man was that he had used

the nom-de-plume. In due course it was ascertained that his correct name was John Knight. Under that name he was then

required in Victoria to serve sentences totalling in exces s of four years and in respect of which warrants for his

apprehension had been issued. He had also absconded from

bail in London where he had been charged with larceny. He

was facing two separate theft

activities in New South Wales in

was treated reasonably leniently

charges 1980. by the

arising out of

In due course, he

New South Wales

courts in respect of those charges

offences were not alleged). He was

(before whom his prior charged with perjury as

a result of his evidence before me and in 1983 was sentenced

to two months imprisonment. I understand that extradition proceedings in respect of the outstanding Victorian warrants

Volume 1 -94- Chapter 5

Operational Overview

are presently extant. He has absconded once again, this

time in New South Wales (where he was allowed bail

notwithstanding his history) thus avoiding the extradition.

5.031 It became clear during the course of examining

Knight's bank accounts that he had a close association with Leo McDonald the welfare officer with the Victorian Branch of t he Union. I will refer to that association below.

Tony Bissett

5 . 032 The case of Anthony Michael Bissett was of

greater Union significance as it involved Union branches i n other States which must have been privy to the false

i dentity created in Victoria. In respect of the Knight

ma t t er there was no evidence which implicated the Ne w South

Wa l e s Branch in the deception being practised.

5 . 033 As I have reported in my Interim Report No. 4

when dealing with "the facilities offered by the Union",

Bi s sett was the son of Douglas Sproule the vigilance officer of the Victorian Branch. Late in 1978 Bissett was charged

wi th theft and drink driving offences and was due to appear

in court in January 1979. He was then employed as a painter

& docker at the Williamstown Naval Dockyard.

5 .034 Apparently Bissett did not wish to appear in

c ourt in January. A man Rhodes who was a member of the

Union had died in September 1978. Despite his "death", on

25 January 1979 he was granted an open transfer of his union

:nembership by the Victorian Branch. Bissett took up that

t ransfer and thereafter removed himself interstate to Port Kembla, Queensland, Newcastle and eventually Sydney. By a clo s e investigation of records of Union employers in those var i ous centres I was able to follow the movements of

Bissett around Australia. I have commented previously on t he methods of "breaking aliases". It is not uncommon for

Volume 1 -95- Chapter 5

Operational Overview

men when using aliases still to use their correct dates of

birth (or at least birthdays) together with names of various

Of their families. By a detailed analysis using the computer facilities I was able to identify Bissett's

movements and the various aliases assumed;

5.035 Subsequently he was located in Tasmania and

appeared as as witness in June 1981, both in Hobart and

Melbourne. He would not admit the identity of the member of

the Union Executive ill Melbourne who had facilitated his change of name. He did agree that it was either Jack

Nicholls, the secretary, or Doug Sproule the vigilance

officer. He admitted using the different names during his

movements around Australia.

5.036 His presence in Hobart was brought to the

attention of the Victorian police authorities and he was extradited to Victoria to face the charges which had been

pending since January 1979. He was thus unable to avoid the

consequences of that previous criminal conduct.

Guido Spiller

5.037 A. separate fraud using false names (but not

involving ”dead men”) was exposed in hearings in June 1981. This involved one man making two separate claims for

compensation against different employers but covering overlapping periods of employment. The man involved was

Guido Spiller. He used the assumed names of John Joseph Spiller and Peter John Wilson when m8king workers.'

compensation claims in the period 1976-1980. I have

referred to this matter in a previous Report (as I have with

the matters of Knight and Bissett) and will not repeat the details here.

Volume 1 -96— Chapter 5

Operationaeverview

Phillip Scott

5.038 There was one other assumed identity which

caused me some difficulty during 1981. This was in respect

of a man Phillip Scott. I was aware of a1 member of the

Executive of the Victorian Branch of the Union by that name. I was also made aware of another man using the same

name and date of 'birtll but who 'was clearly not identical with him. During the course of 1981 a substantial effort

was made to identify this man. Eventually, as the result of

the work done by my staff, I was able to identify him as

Frank Kinsella. Kinsella was wanted for attempted murder in Brisbane; He had absconded from bail in 1975 and had

transferred a Union membership of a man called ”Johnson” from: Queensland to ‘Victoria. Since 1975 he had lived in

Victoria under various aliases and had worked from time to time as a member of the Union. He was working as a member

of the Unidn in November 1981 when served with a subpoena to appear. He gave a false name and he failed to answer

questions. As a result of information given by my

Commission to the Queensland police, extradition proceedings

took place shortly thereafter.

5.039 I was unable to ascertain the precise nature

of the association between Scott and Kinsella. Scott was to claim, informally, (he never -gave evidence) that Kinsella

must have adepted his identity by 'Etealiné” it. Nor has Kinsella given any explanation as to the source of his

identity. He refused to give evidence on any occasion on which he has been called. Both men have subsequently been

fined for failing to answer questions pursuant to the provisions of the Royal Commission Act.

Volume 1 -97- I Chapter 5

Operational Overview

5. 040 The point, again, of this operation was to

ascertain the basis on which false identities were being

provided. That is, was it purely with a view to shielding

them from apprehension by the authorities? Were any "fees"

payable for this particular service?

5. 041 There was another remarkable coincidence, if

that is what it was, in relation to the man Kinsella. Under

the name of Phillip Scott he was

the director of Macbell

in conjunction with

one of the dummy Johanson,

directors

the tax

for the bottom of the harbour companies used in

avoidance schemes. On the other hand, the "real''

Phillip Scott figured prominently in my investigations into

the SP bookmaking area. I also record that Kinsella was

acquitted on his trial in Brisbane some time during 1982 and

thereafter returned to Victoria. It was not until May 1983

that he was called back to appear before the Commission

(whereupon he again failed to answer questions). He has

since figured prominently in other investigations in respect

of which criminal charges have been laid against his

ass ociates.

SP Bookmaking

5.042 I have referred to the identification of the

dead man "Bees" as Knight. When analysing Knight 1 s bank

accounts I found that $38,000 passed through his accounts in

eleven months up to May 1981. He claimed the source of

these funds to be gambling winnings. I ascertained that

amounts in excess of $5,000 were paid from accounts

conducted by Leo McDonald in Melbourne. I conducted a

examination of McDonald 1 s banking and discovered that an

amount of $5,200 had been paid to him by a bank cheque from

the ANZ Bank Malvern. Separately, he had received a cheque

in excess of $2,000 from an account conducted by the defacto

Volume 1 -98- Chapter - 5

Operational Overview

wife of Charles Wootton. I was unable to establish the

basis for these payments save that in both cases they

appeared to involve gambling activities.

5.043 The account at Malvern was identified as being

that of Patricia Lorraine Fox. Her husband is Donald Andrew Fox who is and was known to be a very heavy gambler. An

analysis of her account showed that in the three years up to

April 1980 an amount just under $2M was deposited to it.

5.044 This amount seemed to be unusual for an

unemployed housewife. As a result I caused to be carried

out a fairly extensive analysis of her banking

arrangements. In the course of that it appeared that many

transactions had been conducted between the operator of the Fox account (who it subsequently appeared was the husband Donald) and a company Ecrip Pty Ltd. This company was

identified as the corporate entity pursuant to which Harold Price operated his Australia-wide SP bookmaking activities.

5.045 A preliminary inspection of the banking

records of Ecrip and Price indicated a huge money flow from the early 1970's onwards. As it became apparent that a

number of his customers were painters and dockers or

associates I resolved to carry out a long term investigation into Price's activities. This was to culminate in November 1983 with Price's appearance in Melbourne. He did not give evidence on that occasion in the circumstances which are set

out in more detail in Volume 4 of this Report. My

investigations into that volume and I

except that they

SP bookmaking generally are covered in

propose to say little else about them

assumed a fairly low profile in my

investigations on a day-to-day basis. large amount of analytical work has

Nevertheless, a very been done which is

demonstrated by the matters set out in the detailed volume. It will be apparent that Price was not the only major target

Volume l -99- Chapter 5

Operational Overview

of that operation. Certainly the painter & docker Scott -

who was identified as a medium level SP bookmaker - also

figured prominently in that part of my work.

Tax Evasion

5.046 With access to taxation documents - following

the amendment to Section 16 of the Income Tax Assessment Act and with a clarification of

reference enlarging the area

my

of

Commonwealth criminality terms to

of

be

investigated - I continued my investigations into that area in early 1982. It was then, for the first time, that

Federal Court proceedings were taken against me in respect of my terms of reference with a view to stopping the tax

investigations. I selected an example of a particular set

of company transactions to investigate thoroughly. It

involved the J.S . Heap group. Proceedings were taken in the Federal Court to prevent me

They were defeated both at

conducting this first instance and examination. on appeal.

They delayed the course of my work, however, for some little time.

5.047 This tax investigation became a headspinning

exercise. Just as had taken me to that

company in turn took me to

This company was another one

operated by Johanson, this time with a Selwyn Wallace both operating under false names. painter & docker and criminal. Johanson was well known as a

Wallace was a man who had

served a period of imprisonment for a

the 1930's, although he had been out

mid-1950's. He had been involved

murder committed in of prison since the

in other criminal

activities since his release prior to coming to my notice.

It appeared that these two men had set up as a vehicle

for delivering companies directly to the "bottom of the

Volume 1 -100- Chapter 5

Operational Overview

As the registered officer of was a flat in

Yarra11 was more apposite.

5 . 048 The company

investigations during 1982. promoters of the 11 harbour themselves of the services

the expresssion 11 bottom of the

was to figure in much of my

It appeared that many of the

schemes 11 were anxious to avail

so expertly provided by Johanson

and his friends. They were to figure in companies 11 treated 11 by and and a Queensland accountant

It was the connection with the latter that

was to the starting point for another major

investigation towards the end of 1982.

5.049 But that is jumping ahead. Throughout the

first half of 1982 the major thrust of my investigations was into the tax evasion area. With access to taxation records

I was able to ascertain the difficulties which had been

encountered in attacking the basis of the tax avoidance

industry.

5.050 McCabe and LaFranchi had been critical of the

lack of assistance given to them by the Tax Department. was able to obtain copies of legal advice given to

Commissioner of Taxation during the period from

I

the the

mid-1970 1 s onwards.· It was apparent from that advice that

action could have been taken to expose a particular tax

promoter, in particular Brian Maher. Nevertheless, because of what I found to be the gross inefficiency of the Perth

office of the Commonwealth Deputy Crown Solicitor no

proceedings were taken. My investigation into those matters formed a substantial part of volume one of my Fourth Interim Report. It is hardly necessary to repeat those matters here save to indicate the time taken operationally in

ascertaining the facts.

Volume 1 -101- Chapter 5

Operational Overview

5.051 The major thrust of the Fourth Interim Report

was that there be appointed a "task force" (by whatever name called) whose function would be to prosecute the promoters of what I regarded as fraudulent tax evasion schemes. That

force would also be charged with the responsibility of at

least coordinating the recovery outstanding tax. My view was, and it existed at all relevant times

by civil proceedings of

still is, that the law as

was sufficient for the

purpose of both criminal and civil proceedings. recommend retrospective legislation.

5.052 The result of that Report was

I did not

that the

Government accepted my recommendations and created the

office of Special Prosecutor. It thereafter appointed Mr R. V. Gyles QC of the New South Wales Bar and Mr Robert

Redlich of the Victorian Bar as Special Prosecutors pursuant to the new Act. Mr Gyles' brief was to:-

5.053 accorded

" .•. assume overall responsibility for the handling of the prosecutions for the

alleged taxation frauds referred to as

"bottom-of-the-harbour" schemes and for. coordinating the recovery by civil

remedies under existing law of the amounts thereby lost to the Commonwealth •.. "

(Special Prosecutors Office, Report by R.D. Gyles QC, 30th June 1983)

I was delighted by this initiative as with my recommendation and took from

responsibility of further investigating this area.

it

me the

I have

subsequently liaised with Mr Gyles on a regular basis.

There has been a complete exchange of relevant information in respect to matters coming under his charter. It was not

necessary for me to actively pursue this particular area

after mid-1982.

Vo l ume .1 -102- Chapter 5

Operational Overview

5.054 Of course, at the same time the appointment of

Mr Redlich facilitated the handover of other areas which

were then the subject of continuing investigations by me. I do not intend to detail those matters here as they are the

subject of discussion in other parts of this Report and, in

particular, in chapter seven of this volume.

Station Hotel

5.055 Notwithstanding

investigating the tax area

my major

during 1982 involvement there were with

other

continuing enquiries. One of these which was relatively low key was into the Station Hotel. Following the publication of media articles in February 1982, Loris Cooper, the owner of this hotel, appeared to give evidence. Those matters are

referred to in my Fourth Interim Report. I do not propose

to canvas them again save to say that there appeared to have

been gross intimidation of Mrs. Cooper both before and after she gave evidence before the Commission.

5.056 Whatever the merits of the matter were - and I

was unable fully to investigate the painter & docker point of view because of the refusal to give evidence - there were

a number of disturbing features in relation to this matter

which I listed in my previous report:-

11 Firstly there would seem to be an

assumption by the painters and dockers

that they were entitled to act without

regard to the law. Secondly that

assumption would seem to be based on the

ability of the painters and dockers to

rely on the fact that other citizens would not report their activites to the police

because it was well-known that the

painters and dockers were a group of whom ordinary people should be terrified.

Thirdly there was the reality of violence as demonstrated in the hotel. Fourthly

there was the threat of additional

violence of a major kind. Fifthly there

was the imposition on the hotel of an

illegal activity.''

Volume 1

(Interim Report No. 4, Vol 1, p. 107)

-103- Chapter 5

Operational Overview

I was unimpressed with the attitude of the Union. This was

an area, like many others, where I would have been much

assisted by evidence from Union members.

Further Taxation Fraud

5.057 During the year

and men)

I became aware of another

dockers. This fraud was fraud involving perpetrated by painters a man (or collecting unclaimed group

certificates from employers of painter and docker labour and then submitting those to the Taxation Department as his

own. By this means, he was able to obtain refunds for

himself in respect of a number of different men. This

matter became the subject of a full investigation by members of the Australian Federal Police with whom officers of my Commission cooperated. In particular, access was granted to our database and a coordinated approach to the matter was

achieved.

5.058 In due course, Special Prosecutor Redlich took

over the conduct of this matter and Peter Wilfred · King was charged with offences. He was convicted at the Melbourne

Magistrates Court in December 1983 and sentenced to a term of imprisonment. This is an example of an operational area

where the contribution required of me after initital

identification of the offence became minimal although

there was a continuing liaison and,

coordinating role involved.

5.059 In January 1982, whilst

activities of the men associated with

to some extent,

investigating the I obtained

access to some interesting banking records. This was part

of a complicated investigatory process during which I sought to identify the directors of by their correct names.

Volume l -104- Chapter 5

Operational Overview

This I was able to do. But as with other operationa l areas ,

it in turn widened the scope of my enquiries. I became

(subsequently

Special Prosecutor Gy l es) This was a so-called

a ware of the tax evasion promoter t o be the subject of charges by

and of a company

" merchant banker" (this appellage was so often u s ed by

companies involved in tax evasion as me aningless) the major r ole of which

provision of "finance" for the

to render the title

appeared to be the

round-robin banking

transactions which were part and parcel of tax evasion

settlements. Having obtained certain of that company's

records and formed a certai n view of its activities I have

referred it to the appropriate bodies for conti nuing

investigation . Personnel o f had played , and were

then playing, a major role in the project wh i ch was

as at the time of my initial interest in it being promote d

a round the country.

5 . 060 An accountant

Brisbane contact of the men.

was identified as a was promoting

various tax schemes to client s. I sought banking documents which were produced from a Brisbane branch of the Co mmercial

Bank of Australia. I was intrigued that a $2 c omp any

( ) the directors of which were , I

d i scovered, the men (under their correct names) was to

be involved in oil drilling and was to borrow overseas from Singapore - and from a leading overseas bank - many mill i ons o f dollars supposedly for such oil drilling . The sum of

$400 million was mentioned. It was not merely of interest

to me but of concern as it seemed there might be

international monetary repercussi ons with a transaction of this size . But why was it these men who were known to me

merely as tax company directors - of no particular business expertise - were to be the directors of this company?

Volume 1 -105- Chapter 5

Operational Overview

5.061 I was not able to develop my interest in this

particular matter at that time. I became aware shortly

after my public exposure of the directorate in February 1982 that the men were summarily "dismissed". I had

expected that the professional people who were apparently behind the company would then work within the law. Such was not the case. By July 1982 I had completed the major

Interim Report to Government dealing with the tax avoidance industry and many other matters. By September 1982 I was

able to look again at Hamidan. I was not impressed with

what I found.

5.062 into this

activities.

During the next

company played a A total of 56

six months, major role the investigation in my operational

were called, 2,300

pages 42,000

witnesses

of transcript recorded, 450 exhibits tendered pages of documents examined. (During tha t

and same

period, incidentally, I took evidence from another 130

witnesses and received tens of thousands of pages of

documents relating to other matters of on-going concern. The desirability of my maintaining the impetus . of other

investigations necessarily curtailed the time available to devote to the investigation of the oil drilling company.)

5.063 During the period of the operation I liaised

closely with the Queensland Fraud Squad, the Special

Prosecutor's Office conducted by Mr Redlich, the Tax Office and other Government Agencies. Charges were laid by the

Queensland Police against the principals. Subsequently charges were laid against various men in Perth. The

Queensland charges resulted in committal for trial of four men on charges of Fraud; committals in Western Australia in respect of charges laid by the Special Prosecutor - but now supervised by the DPP 1 s Office - have

Queensland trials are expected to take

1985 ..

Volume l -106-

not concluded. place sometime The in

Chapter 5

Operational Overview

I submitted Interim Report No. 5 in July 5.064 1983. It contained a complete history of this matter (in

and a shorter sanatized summary of 126

Any reader seeking further details of

Volume 3 therefore) pages (in Volume 2). my investigation should seek access to such documents from

Government. The recommendations I made were many. They

concluded with a recommendation that the Report have a wide circulation agencies. occurred.

5.065

within Government Unfortunately, tha't and among does not

law enforcement seem to have

I should state that in the course of this

matter interviews were conducted by my staff with resident s of Singapore and Hong Kong and assistance sought from

Government agencies in those countries. With members of my staff, I visited Singapore for four days in December 1982

for the purpose of establishing liaison with those

agencies. Separately, a team visited in March

1983 in an endeavour to complete the .. es. I again

record my gratitude to the Attorney General of Singapore and to the Singapore Police for the assistance and co-operation shown to me and my staff. I also thank the High Commission

representatives in Singapore who facilitated that visit. Two members of my staff also visited Hong Kong for one day

in December 1982 and I note my appreciation to the member s

of the Royal Hong Police who assisted them with their

enquiries and provided information.

5.066 Notwithstanding the commitment of time and

resources to the Hamidan investigations other matters were proceeding apace. I had had the assistance since 1 October

1980 of two counsel, Mr Douglas Meagher QC and Mr Rex Wild. By Easter 1983 it was obvious because of the workload

already carried by those men and the need to give some

attention to 11 fresh 11 targets as they arose week by week

Volume 1 -107- Chapter 5

Operational Overview

- that further counsel was required. In May of that year Mr

Lex Lasry was appointed as a further counsel assisting . I

have described separately the role undertaken by counsel in my Commission. It is only necessary to say here that t h e

operational demands of the Commission have certainly

justified the briefing of three counsel.

Carroll

5.067 On 3 January 1983 Ian Carroll was shot dead.

He had been a member of the Victorian Branch of t h e Union

a nd of its executive from 1974-78. He had last worked as a

painter and docker in 1976. In 1974, for some very short

time, he was acting secretary. Police since his death have been seeking to interview one Russell Cox, a criminal and

escapee who at various times has been "number one" on the

"most wanted lise'.

5.068 into whom

There

the are is

I have conducted an exhaustive investigation

activities of Carroll and his associates (most of alive and of great current operational interest) . little point in identifying those associates in

of my report. A summary of their activities

appears as Volume 6. I say summary - an analysis has been

conducted of the affairs of these people. That analysis is

exhaustive and is the result of many hours of labour by

members of my staff and in particular of senior assisting

counsel. It contains, approximately 1165 pages and results from consideration of the evidence of 38 witnesses, 395

exhibits and 33053 pages of documents. The analysis has

been made available to appropriate bodies to assist in the continuing policing of various areas of criminality. There is no doubt that the former associates and friends of

Carroll will continue to create work for those entru sted

with the enforcement of the criminal laws in Australia .

this part

Volume 1 -108- Chapter 5

Operational Overview

5.069 I should indicate that the Carroll

investigation and the extended links wh ich have b een

e s tablished have led the Commission to a wide v a riety of

other criminal activities and, in some cases, organisations or networks. These have been both in and without Victoria . A solicitor used by Carroll in Melbourne has b een

investigated, in conjunction with the Victorian Police Fraud Squad; that man has been referred to the Special Prosecutor

a nd I understand that charges have now been laid.

5 .lJ70 Furthermore, it was as a result of t he

e x tended links with the Carroll Group that I visited

Queensland in early 1984 and received information which l ed to my investigation into drug dealers residing in the No osa a r e a of that State. I will refer again to those matters

below. As to other associates I refer to the matte r s

contained in volume six.

Lockyer

5.071

"It is only by not paying one 1 s bills

that one can hope to live in the memory

of commercial class." Oscar Wilde, Phrases & Philosophies For the use of the Young

Another matter arose in the summer holiday

period of 1982/83 which was

investigations. By this time, commenced operation. In the

a rranged for a warrant to be

to lead to a new range of

Special Prosecutor Gyles h ad course of his work he had

executed in respect of the

Lockyer. Lockyer in his leading tax evader, Donald activities had used a variety of "dummy'' directors and had acted as a sub-promoter for Hamidan.

Volume 1 -109- Chapter 5

Operational Overview

5.072 I obtained documents from Lockyer's Melbourne

office and evidence was given by members of his staff. I

discovered he was bankrupt and had committed numerous

offences against the Bankruptcy Act in different States of Australia. His wife, Suzi Lockyer, was living in

California. Between them they had assets of some

substance. A estimate of $12M has been made. I liaised

very closely with the two Special Prosecutors, Messrs Gyles and Redlich. The latter initiated civil proceedings against Lockyer and his wife

issued against both of

obtained. Prosecutions

consequent to taxation assessments them. "Mareva" injunctions were were launched by Mr Redlich for

Bankruptcy Act offences. Lockyer was He has since been charged by Mr

conspiring to defraud the revenue

convicted and gaoled. Gyles 1 office with

of the Commonwealth.

Those matters remain incomplete. I made available documents obtained by me from Lockyer's offices in various States to the Special Prosecutors. I have encouraged their continuing and separate investigations and proceedings, not that much encouragement was needed.

5.073 I believe that the particular "joint"

operation involving Lockyer has been an illustration of a very successful undertaking by the investigatory body - with a selective and proper use of its powers liaising with

prosecutorial and civil recovery agencies. The action taken by Mr Redlich 1 s group was speedy, efficient and effective

for the purpose. Other targets suggested themselves during the course of my investigation into Lockyer's affairs and I will refer to them below. Once again, the networks extended into other areas.

The Fight Against Organised Crime

5.074 Insofar as it has had some effect on

operational matters I repeat here that I and my senior

counsel had a considerable involvement at different times

Volume 1 -110- Chapter 5

Operational Overview

during 1983 in proposals relating to a national crime

agency. The Liberal Government had enacted its National

Crime Commission Act at the end of 1982 but this h a d no t

been proclaimed by the time of the March 1983 election and

the change of Government. After the election, . considerable discussion ensued as to the direction which crime prevention should take in this country. Douglas Meagher presente d a

series of papers to the 53rd ANZAAS Congress held in Pe r t h

in May 1983. Those papers were entitled ORGANISED CRIME. I chaired the session at which they were presented. Both of

us were invited subsequently to attend and speak a t the

seminar convened by the Federal Government in Canberra i n July 1983. Volume one of my fifth Interim Report which was delivered in the same month was, in part, directed again t o

the issues involved at that seminar. A considerable amou n t of time was taken in the middle of the year in responding to

these issues which were of some moment.

5.075 I had, of course, already dealt with the

problems, as I saw them, in the fight against crime in

Interim Report No. 4 delivered in the previous year . As I

have said elsewhere in this Report, I believe t h e ma j or

impetus for the previous Government's legislation for a

Crimes Commission had come from that Report and the work of my Commission.

5 . 076 There were to be much greater demand s on my

time and that of my senior staff at the end of 1983 and i n to

the new year. This followed the reference by the Senate of

the pending legislation introducing the National Crimes Authority to the Standing Committee of the Senate o n

Constitutional and Legal Affairs. I will not repeat a

description of the work undertaken save to indicate that it was time consuming and,

of the operations of my the personalities in

to some degree at least, disruptive Commission. I turn, now, to one of

respect of whom enquiries and

operations were able to proceed during 1983.

Volume 1 -111- ·chapter 5

Operational Overview

Ian Beames

5 . 077 As an offshot of my collation of material in

r espect of Lockyer I was directed to the activities of a

Queens land accountant Ian Be ames. This man already had a

criminal history following his involvement in what might be termed white collar crime . At the time I commenced my

investigation into his activities he was still in prison. I knew already something of him. He had been Brian Maher's

"representative" in Singapore in 1978 and in that capacity, had been involved in dealings with the Nugan Hand

organisation.

5.078 Beames gave evidence in regard to a company P .

& S. Meats Pty Ltd. This company, despite its name, had

nothing to do with the butchery trade. Its major activity

was in the field of tax minimisation through film schemes. The dir ectors of this company were Beames, Lockyer (at one

stage) and a man called Brian Ray. A great deal of money

passed through the accounts of this company despite the fact that it was of no substance .

5 . 079 My enquiries took me to a man called McCarthy

who was a financial adviser employed by Lockyer. He had

formerly been employed as a manager with the Comalco House branch of the Bank of New South Wales in Brisbane. He was

dismissed from the Bank for misconduct having allowed the bank to become a creditor of the Lockyer group of companies to the extent of $2M . He was dismissed in December 1980 and

thereafter sought and obtained employment with Lockyer. He was examined in a public session of the Commission in June

1983. His activities and the evidence given by him have

been referred by me to the Queensland Police Fraud Squad for its attention.

Volume 1 -112- Chapter 5

Operational Overview

Kerry Packer

5.080 From other information I had received, but

which it is not appropriate to detail here, I was anxious to

pursue the financial arrangements of P. & S. Meats. I

discovered that in February 1980 cash payments totalling $225,u00 were made by this company to Kerry Packer. I

received conflicting evidence in relation to Mr Packer's involvement with the company P. & S. Meats. Those matters are developed more fully in a separate volume of this

Report. All I need say here is that depending on which view

is accepted, Mr Packer was either a financier/investor or an investor in the film schemes promoted by P. & S. Meats. A

matter of separate interest is that Mr had borrowed the

sum of $925,000 from a company Progress Credits in Singapore at the end of 1979. This money was brought into Australia

pursuant to Reserve Bank approval. $800,000 of the amount received was invested, in a manner contrary to the advice

given to the Reserve Bank, in P. & S. Meats. I was anxious

to probe the film scheme. Because of my previous experience with the p·ersonnel involved in the Hamidan exercise I was

sceptical as to the legitimacy of this scheme. I was also

anxious to establish precisely what happened to what

otherwise appeared to be unexplained cash payments. There was a further cash payment of $120,000 from the accounts of P. & S. Meats later in 1980 in respect of which no

explanation has ever been received by me despite earnest enquiry. stated he had no knowledge of it although his

signature was on the cheque.

The Death of Coote

5.081 As part of my investigation into the

connection between Ray and Packer I was informed that these men had dealt in a number of joint land transactions in

Queensland. One of these was at Victoria Point. In the

course of looking at that development I became aware that

Volume 1 -113- ·chapter 5

Operational Overview

the manager of the branch of the Bank of New South Wales at

Capalaba had resigned and subsequently become employed by Brian Ray. This man was Ian Coote. This had a familiar

ring to it. Mr Coote's branch of the Bank was involved,

prior to his resignation, in lending money to purchasers of land at Victoria Point. The circumstances of those loans

were suspicious and, once again, they are dealt with at some length in the separate volume dealing with those matters.

5.082 wounds. suicide.

Mr Coote died on 16 December 1982 of gunshot

The view at the time was that he had committed

I am satisfied that it was murder. My views and

recommendations are set out in the separate volume.

5.083 The investigation into these matters was, from

time to time, interrupted by Federal Court proceedings taken by various of the parties involved. However, as at December 1983 all court proceedings were abandoned. I was therefore able to continue my investigations until 30 June 1984 when,

in keeping with my agreement with Government, I suspended operations. There are matters still to be investigated in

this area. They are of considerable importance.

SP Bookmaking

5.084 In Spring 1983 preparations were made for

public hearings . in respect of the SP bookmakers Price and Scott. The purpose of those hearings was to indicate the

level of income of these men and to expose those activities to public gaze. As it turned out, Price was not able to be

identified by name as he had been apprehended conducting an SP operation when served with his subpoena to attend before the Commission. As it was then thought that he would be

prosecuted and before the courts in a relatively short time I deemed it appropriate not to have his name released. It

Volume 1 -114- Chapter 5

Operational Overview

is now nearly a year since that time and he has only jus t

been served with his proceedings (and that because of the

efforts of members of my staff). As it is unlikely that

Price will be appearing before a jury I see little harm in

now identifying him.

5.085 quantified because of

During the course the loss in revenue

the operations of

of those hearings, c ounsel sustained by Governmen t s SP bookmakers.

related to the particular man appearing then, it

that, if these figures were extrapolated, the loss indeed. My intention was to concentrate the

Although was clear

was great minds of

Governments and the community on this problem. It was

important, as I saw it, for the community to decide its

attitude to the SP industry generally.

5.086 At the same time, evidence was also called

from a number of bank officers. This evidence aga i n

confirmed the indifference some officers maintained towards community standards and laws when looking to the interests of their customers. Very little regard appears to be paid

to the legitimacy of customers' operations; rather, it is a

question of whether the client has the dollars or the

11 associations 11 to justify his being given a favoure d

position by the banker.

5.087 Evidenc-e was also called in respect of a

11 pricing service11 operated by Ray Michael in New South Wale s and also interstate. The evidence was that Michael, a t

various times, supplied both Price and Scott (amongst a

great many others) with pricing information. This was vital to their business - without it an SP cannot operate. In the

course of those investigations I received information which led to the view that Michael may have been 11 nobbled11 in

respect of the evidence that he was to give. He had

received a visit from a number of painters and dockers

whilst his evidence was part-heard. The painters and

Volume 1 -115- Chapter 5

Operational Overview

dockers involved were called but, as did Mr Michael

eventually, referred to

prosecutions

they refused to answer

the Attorney-General followed. I refer to

questions. and in

They were due course

those matters elsewhere

in this Report. A considerable part of my time was taken up

these allegations which seemed to be

application to the role that a Royal

in investigating crucial in their

Commissioner plays.

S.A. Union Extortion

5.088 During the term of my Commission I had

received allegations of demands made by members of the South Australian branch of the Union against ship owners. I first took evidence of them, in confidential session, in Adelaide in 1981. Those allegations were very carefully investigated by members of my staff and, under their general direction, members of the Australian Federal Police based in South

Australia. This matter is the subject of a separate chapter in my Report. Those allegations were the basis of a week's

public hearings in Adelaide in October 1983. I returned to

Adelaide in April of this year to conclude those hearings. It was necessary to hear submissions from counsel assisting me and counsel instructed by the Union in respect of the

matters raised. I deal with these matters in chapter 2 of

volume 3 of this Report.

Drug Trafficking

5.089 In considering this operational report it will

be noted that there is no reference in it to drug offences.

It should not be thought, however, that this indicates I

have not in the course of my investigations been

interested in this area of criminality; quite the However, it is a sensitive area and one in which I have had

to exercise care in preparing this Report. In particular, I was anxious:-

Volume 1 -116- Chapter 5

5.090

Operational Overview

(a) Not to associate unfairly any person

with the trade in drugs;

(b) not to interfere with any current

operation mounted by law enforcement bodies;

(c) not to identify any drug offender

currently awaiting trial.

These restrictions have meant that it is

virtually impossible, in a public sense, to describe my

investigations. I can say that throughout the last two

years, I have been monitoring various drug offenders and

operations which have been run by different 11 task forces". Information has been transmitted to and from appropriate police and other forces. In this way, some loosely

coordinated role has been achieved. When I have been able

to obtain usefu l information following banking and/or other documentary records to make that available. A number

the acquisition of I have been anxious

of arrests and

prosecutions have resulted from information obtained,

analysed and disseminated by my Commission. Where possible, I have referred to those in Chapter 7 of this Volume.

5.091 In appropriate cases I have encouraged joint

action by those entrusted with drug enforcement and those with the responsibility for collecting revenue. Although Section 16 prevents investigators from distributing

information gleaned from tax offenders (who are also drug dealers) nothing in the law prevents the police officer from informing the Tax investigator of his suspicions as to the

undeclared income of the dealer. Thus, it may be that

although the dealer is able to escape the heavy penalties

imposed by the criminal law he may still fall foul of the

revenue law - which in turn, in some cases, may provide

penal sanctions for the particular misbehaviour. This is an area which should be explored by the authorities and is the subject of recommendations in volume 5 of my Report.

Volume 1 -117- Chapter 5

Operational Overview

5.092 There were a number of extant investigations

into drug related matters of criminality being investigated by me as at 30 June 1984. In respect of these matters

analyses had either been completed or were well advanced. Those matters have been made the subject of proposed

references to trust that

investigations.

Other Matters

the National Crimes Authority. the Authority will proceed

I sincerely

with those

5.093 In preparing this overview, I have not sought

to specify every "target" identified and/ or pursued by my Commission in the last four years. Instead, I have sought

to highlight the major ones and to demonstrate how each

developed from another. I have no doubt that if the

outstanding investigations are continued they will in turn lead to other and, quite possibly, bigger targets. Although I have specified what I have called "major" areas of

criminality in this chapter there are others of some

substance with which I have been concerned. These cannot be identified at this time in a public document. They must

remain for the time being the subject of confidentiality as between Government, the National Crime Authority and my Commission.

Volume l -ll8- Chapter 5

CHAPTER 6 - THE COMMISSION AND THE COURTS

I NTRODUCTION

6.001 court

My intention

proceedings which in this chapter is to detail the

have been bought against the

Commission during the last four years. Those proceedings -with one exception in the Federal Court - have sought to

challenge my investigations into particular subject matters. There have been various writs, summonses, notices, hearings and appeals taken by different parties but in each and every case they were to no avail in law. Each one of those

proceedings has resulted in a dismissal of the challenge to the Commission 1 s work. Nevertheless, they have been

effective in delaying my progress; in no case fatally to the operation but in some cases investigations incomplete. the length to which parties

in such a way as to leave some

Because it is important to see

will go in expense of both time

and money in seeking to prevent a close enquiry into their

affairs, I will summarise these court proceedings in the

course of this chapter.

6.002 These proceedings may be regarded, and I do so

regard them, as the legitimate expression of a citizen 1 s

right to challenge the activities that are perceived to

affect his interest adversely. I have no quarrel with this

legitimate and open conflict.

6.003 In each case where attempts have been made to

halt my investigation by the issue of proceedings I have

been represented efficiently by Australian Government solicitors or the Victorian Crown Solicitor, who in turn

have instructed .able counsel. That representation has in every case been successful. I acknowledge the service

Volume 1 -119- Chapter 6

The Commission and the Courts

provided in these matters through the offices of the Sydney, Perth and Melbourne Deputy Crown Solicitors (as the offices were then described) and the Victorian Crown Solicitor. I will summarise the three major actions in which I was

involved. In each case I indicate the general area of my

sought to be stopped by those investigation proceedings. which did not matters too.

Giannarelli

6.004

which was

There were other interlocatory proceedings proceed to full hearings. I will note those

In June and July of 1981 I issued subpoenas to

the managers of various branches of the National Bank of

Australasia Ltd. (as it was then known) to produce records

relating to Giuseppe Giannarelli and other members of his family. On 28th July 1982 an Order Nisi was sought on

behalf of the family before Mr. Justice Crockett, of the

Supreme Court of Victoria. An order was made that I show

cause why I should not be prohibited from enquiring into the banking activities of the applicants. The Order Nisi was

returnable on 31st July 1981.

6.005 Guiseppe Giannarelli stated in the affidavit

in support of his application for the Order Nisi that he had

had 11

nothing to do with the Federated Ship Painters and

Dockers Union11 • The State Crown Solicitors Office in

Melbourne undertook the defence of this matter. It was

sought to set aside the affidavit on the basis that it was

misleading. There was an abundance of evidence linking

Giannarelli directly with the Union . The matter came on for preliminary argument on 31st July when Crockett J. indicated it was apparent on the material there had been a lack of

candour on the part of Giannarelli. The matter was

adjourned for a substantive hearing to 3rd August 1981 when

Volume 1 -120- Chapter 6

The Commission and the Courts

Giannarelli withdrew the application. The delay to my

investigations caused by the issue of these proceedings was thus short.

Ross and Heap

6.006 By the end of 1981 I had commenced

investigating what were later shown to be "bottom of t he

harbour" tax avoidance schemes. In the course of those

investigations it was my intention to examine certain

transactions involving the J.S. Heap group of companies. In October and November 1981 subpoenas were issued requiring Mr. Heap to attend to give evidence and produce documents . During the course of his evidence Heap indicated that he had

relied heavily on the advice of his accountant Ross . Ross

then appeared to give evidence. A statement was made by

senior counsel assisting me that he was considering making submissions that Heap had been involved in a conspiracy, the effect of which was to breach Section 67 of the Companies

Act. This statement was made on 17th February 1982. On the

following day a submission was made on behalf of Ross and

Heap that such an enquiry would be beyond the terms of

reference . I rejected those submissions in a ruling made in

March 1982.

6.007 Thereup9n Ross and Heap sought under the

Administrative Decisions (Judicial Review) Act 1977 a review of that "ruling" and of my decision to summons and question various witnesses in relation to their affairs. They sought interlocutory injunctions to restrain me from proceeding.

The application for interloctury relief was dismissed in the Federal Court on 19th April 1982 by Ellicot J.. (This

matter has been reported as Ross -v- Costigan [1982] 41 ALR 319). The parties appealed that decision to the Full

Federal Court. That appeal was dismissed on 12th May 1982. (The appeal was reported as Ross -v- Costigan [No. 2] [1982] 41 ALR 337). Subsequently a notice of motion was filed on

Volume 1 -121- Chapter 6

The Commission and the Courts

30th July 1982 seeking special leave to appeal to the High

Court from the judgment of the Full Court. No further

action however was taken by the applicants.

6.008 The effect of the action taken by the parties

was to delay my investigation of their affairs from March

1982 until July of that year. By then I had submitted my

Fourth Interim Report which concluded my substantive

investigations into the tax fraud matters. The

investigation into the particular matter involving Heap and Ross was therefore not completed. As it was, however,

merely representative of a huge number of similar

transactions - as I was later to become aware - the delay

was not fatal to my investigations.

Faint

6.009 On 16th September 1982 Lloyd Errol Faint

appeared in sittings of the Commission held in Brisbane. It was intended to examine him in relation to various matters including Faint 1 s involvement in tax schemes which., in turn, were thought to involve members of the Union. A claim was

made on his behalf that he be entitled to refuse to answer

on the basis of the privilege against self-incrimination. I delivered a written ruling pursuant to which I ordered the witness to answer certain questions. On 26th October 1982 a writ was issued in the High Court by Faint seeking

declarations that I had no power to compel him to answer

questions because of the privilege against

self-incrimination and further that the questions were

outside my terms of reference. On 3rd November 1982 I

undertook not to require Faint to answer any questions until such time as pending criminal proceedings involving matters of similar compass had been finally disposed of. Those

proceedings are still pending and as a result my undertaking

Volume l -122- Chapter 6

The Commission and the Courts

still stands. Faint's claims for declarations reillain in

abeyance and will be rendered abortive on return of my

letters patent.

Boyden

6.010 On 21st October 1982 John Arthur Pridea u x

Boyden gave evidence before me in sittings in Melbourne.

This evidence related to his involvement in the Hami dan

matter and his employment

evidence was part-heard and by the company Transia.

adjourned to 26th October His to

Perth. On the latter day Boyden objected to answer further questions on the grounds that those answers might

incriminate him. I directed him to answer but adjourned t he further hearing of his evidence for 7 days to enable him t o

take whatever action he might be advised.

6 .Oll On 29th October Boyden sought from the Federal

Court in New South Wales an order for review of those

decisions. That application was heard ex-parte in t he

Federal Court by Mr. Justice Lockhart on 2nd November 1 982 and an interim injunction was obtained requiring Boyden to comply with his

restraining me from subpoena until 5th

November. On the adjourned date the court was advised t hat

I would not require Boyden to comply with the subpoena until 17th December 1982. . In early December Boyden was charged with various offences by the Queensland Fraud Squad. The

Federal Court proceedings came on before Lockhart J. on 17th December when I undertook not to require Boyden to a nswer

any questions or produce documents until the charges pending against him had been disposed of or other order made. Those charges remain pending. Boyden has since been committed f o r trial in Brisbane but the trial is not expected to take

place until l9b5. There has

and fatal delay in completing obviously been a substantial examination of Boyden. This

however was not caused by the Federal Court proceedings but

Volume 1 -123- Chapter 6

The Commission and the Courts

by the issue of criminal charges against Boyden in early

December 1982. I would have, in any event, ceased to allow

Boyden to be examined once charges had been laid.

Huston

6.012 Huston was a Brisbane accountant who was

examined in relation to his association with the company

Hamidan and the directorate thereof. He gave evidence in

Melbourne and Brisbane on various dates in October, 1982, concluding on 14th October. On 15th October 1982 he was

arrested by the Queensland Fraud Squad and charged with

various offences involving the matters that I was then

investigating. Following discussions between his solicitors and counsel and the solicitor instructing the Commission I undertook on 22nd November 1982 not to take any evidence

from Huston in relation to the charges being faced.

6.013 On 26th November 1982 the solicitors for

Huston requested an undertaking that I refrain from calling evidence from other witnesses involved in the Hamidan matter in any manner which might prejudice the hearing of the

criminal charges. On 29th November I indicated I would take no steps which would prejudice the fair hearing of charges against Huston but I did propose to take evidence from other witnesses on a number of matters, some of which related to

Hamidan. I indicated that that evidence would be taken in

private sittings of the Commission.

6.014 On 6th December 1982 hearings of the

Commission resumed in Perth. On 8th December 1982 Huston lodged in the Federal Court an application for an order to

review my ruling that I would be proceeding with the

hearings. In particular it was sought to restrain me from

which might have the effect of

guilty of any offence for which he

An interim order in those terms was

receiving any evidence proving that Huston was already stood charged.

Volume 1 -124- Chapter 6

The Commission and the Courts

made by Mr. Justice Toohey operative until 4.30 pm on 9t h

December. The matter came on before His Honour on the

following day. By then I had given an undertaking that it

was my intention to hear the relevant evidence i n

confidence. The court accepted this undertaking, argument to the contrary from Huston's counsel,

application was accordingly resolved. (This matter reported as Huston -v- Costigan [1982] 45 ALR 559)

despite and t he

has been

Peter Lloyd

6.015 Peter Lloyd was subpoenaed to appear to give

evidence and to produce documents. He appeared during

hearings in Perth on 26th-27th October 1982 but failed t o

produce all the documents in his possession as required.

Lloyd was a solicitor in practice in the firm of Dwyer &

Thomas in Perth. He was to be examined about the part

p layed by his firm in the affairs of Hamidan and others.

6.016 On lOth December 1982 Lloyd made application

under the Administrative Decisions (Judicial Review) Act 1977 for a review of my decision to require him to give

evidence and produce documents. That application was based on legal and professional privilege and the alleged

irrelevance of the evidence required. At a preliminary

directions hearing on 20th December dates were set for

mutual discovery, the filing of affidavits and the hearing proper. The order requiring discovery was subsequently

vacated and contested questions relating to discovery we r e litigated on 11th February 1983. The substantive

application was set down for hearing on 2nd March . l983.

6.017 In response to an affidavit filed by the

solicitor to the Commission on 7th February 1983 Lloyd file d a notice

affidavit of motion proposing that the Commissions' s

be struck out. This notice of motion wa s

dismissed by Mr. Justice Toohey in the Federal Court on 23rd February 1983.

Volume 1 -125- Chapter 6

The Commission and the Courts

6.018 On 12th April 1983 Lloyd was advised by the

solicitors acting on my behalf of a desire to have the final

hearing dates fixed. On 15th April 1983 a notice of appeal

was lodged in respect of the decision by Mr. Justice Toohey to dismiss the notice of motion. On 21st April 1983 Lloyd

gave notice of his intention to file a written submission in support of the appeal. The appeal was heard on 4th May 1983

by the Full Court of the Federal Court and was dismissed by

a judgment of 9th May 1983.

6. 019 On lOth May 1983 Lloyd requested a statement

under Section 13 (l) of the A.D.J.R. Act. I sought a date

for hearing on the issue of discovery and the substantive

matters. On 20th May such an application was made and the

final hearing was fixed for 14th July 1983. On 26th June

Lloyd applied to vacate the given hearing date and to set another date for argument on the question of

interrogatories. This interlocutory application was

dismissed by a judgment of Mr. Justice Toohey on 6th July

1983 (reported in a note at (1984) 50 ALR 665 at 681).

6.020 The substantive matters were heard on 14th and

15th July 1983 by Mr. Justice Toohey in the Federal Court.

(Lloyd -v- Costigan [1983] 48 ALR 241). Lloyd's application against me was dismissed, he appealed against this decision and the appeal was heard on ll th October 1983. On the

following day the appeal was dismissed. (The appeal was

reported as Lloyd -v- Costigan [1984] 53 ALR 402). On 26th

October 1983 I caused Lloyd to be advised that, in view of

the fact that charges had since been laid against him, the

Commission would not require his attendance until those

proceedings were concluded. As at the date of writing my

Report I understand that those proceedings are still

pending. The effect of Lloyd 1 s activities in the Federal

Court were such as to prevent his examination being

concluded at any time between October 1982 and October 1983

Volume 1 -126- Chapter 6

The Commission and the Courts

when he had exhausted the appeal process (save for the High

Court). The effective delay was of 12 month's duration

prior to becoming aware that proceedings had been issued

against him, thus negating the original subpoena.

Ray, Packer and Ors

6.021 On 4th and 5th October 1983 Brian Ray, James

Baker, Ian Beames and other witnesses gave evidence

concerning business dealings involving Kerry Packer. On 6th October 1983 Hr. A.B. Shand QC sought leave to appear on

behalf of Mr. Ray. the end of the proceedings on that

day Mr. Shand made a statement on behalf of Mr. Packer

indicating that . Packer was willing to assist me in my

enquiries and would appear without summons if required when he returned from overseas in approximately 14 days.

Subpoenas were issued for hearings to be held on 2nd

November 1983. These required the attendance of Messrs.

Baker, Ray and Beames. Subpoenas were also directed to Mr. Packer and Ian Harper a partner in the firm of Allen Allen &

Hemsley solicitors who had been acting for Mr. Packer.

6.022 On 18th October 1983 Allen Allen & Hemsley

wrote to the Commission confirming they would accept service of the summons which had been issued in respect of Mr.

Packer. They the relevance of a line of questioning

which involved the transactions of Mr. Ray and Mr. Packer. On 26th October 1983 they advised they would seek judicial

review of any decision of mine if "questions (were) put to

him (Mr. Packer) when he appears before the Commission .. that are regarded by those advising him as irrelevant." By

letter dated 27th October 1983 the solicitors were advised that my enquiries were broad ones relating to various

banking transactions and were not to be regarded as making allegations against any particular person.

Volume 1 -127- Chapter 6

The Commission and the Courts

6.023 By 1st November 1983 it appeared that the

letter dated 27th October written at my direction to the

solicitors had not been received by them. On that date they

wrote advising that their client Packer was aggrieved by the decision requiring him to appear and produce documents.

They therefore sought a statement pursuant to Section 13 of the Administration Decisions Judicial Review Act 1977

setting out the findings I had made and the basis on which

the subpoenas had been issued. A similar "application" was received from Mr. Ray's solicitors on the same day.

6.024 On 2nd November 1983 Mr. Hughes QC appeared

for Mr. Packer. An opportunity was

proceedings pursuant to Section 13 of

Decisions Judicial Review Act seeking

sought to issue

the Administrative the reasons and

material facts upon which the subpoenas had been issued. I adjourned sine die to consider the submissions put by

counsel. On 4th December I gave my ruling in relation to

these submissions. I refused to furnish a statement

requested under Section 13. I indicated that if proceedings the matter I would make a were issued in respect of "statement of fact" available in a sealed envelope to the

Federal Court.

6.025 On 7th November seven applications were filed

in the Federal Court of Australia (New South Wales Registry) for orders to review pursuant to the ADJR Act. The

applicants were Packer, Ray, Beames, Baker, Harper,

McWilliam and Jones. The latter three were partners in the firm of Allen Allen & Hemsley. The applicants sought orders for a statement pursuant to Section 13. The proceedings

commenced before Mr. Justice Morling on 8th November 1983. The judgment dismissing the applications was delivered on

16th November 1983. (See Harper -v- Costigan [1983] 50 ALR 665). The applicants thereupon appealed to the Full Court of the Federal Court. A hearing date for the appeal was fixed

Volume 1 -128- Chapter 6

The Commission and the Courts

as a matter of urgency for December but the appeals were

subsequently discontinued by the appellants.

6.026 I cannot leave this pa rticular topic without

referring to the further incident which occurred in December 1983 which was in my view an attempt to bring influence to

bear upon my investigations. I dealt with this matter in a

public session of the Commission on 21st December 1983. The following is portion of the statement I made on that day.

It speaks for itself:-" i·.y attention has been drawn to a question asked of the Queensland Premier and the

answer given, in the Parliament of

Queensland last Thursday and Friday, 15

and 16 December. For the sake of complete

accuracy I have arranged for copies of

each to be procured.

The Question was:

11

(1) Is he (that is the Premier) aware

that allegations have been made by Mr

Frank Costigan in recent Federal Court

proceedings in Sydney that the Comalco

House Branch of the Bank of New South

Wales (now Westpac) was used in 1980 and

1981 by the Painters 1 and Dockers 1 Union

to finance drug transactions in the State? (2) Has he made any enquiries regarding

these allegations and if so, what was the

result of such enquiries? 11 The Answer given by the Premier was:

"I am aware of these allegations and have

made inquiries of the Police Deparment.

Tne Queensland Police have no knowledge of any painter and docker involvement in drug trafficking in this State, nor do the

Queensland Police have any knowledge or information which would suggest that the Comalco House Branch of the then Bank of

New South Wales was used to finance drug

trafficking in this State. The Queensland Police have co-operated extensively with the Costigan Royal Commission. At no

time, however, have these allegations or matters relating to them been raised with

Volume l -129- Chapter 6

Volume 1

The Commission and the Courts

the Queensland Police.

concerned that the serious

concerning our State would be their first being raised

Queensland Police.

I am most

allegations made without with the

I do not wish to add to the public

controversy concerning several public

figures currently in dispute with Mr

Costigan, but I am concerned that

allegations which on their face appear to be without basis would be made by Mr

Costigan, particularly when they are

calculated to cause serious damage to the reputations of such public figures. 11 In the course of the answer the Premier

refers to 11 several public figures 11 • He

does not specify who they may be, but I

assume he speaks of Messrs Packer, Ray and their associates, all of whom are

witnesses currently before this Commission and who may be, at least in some cases,

regarded as 11 public figures 11 • I assume

further that the 11allegations 11 to which

the Premier refers is an understanding, on his part, that my investigations which led to the calling of those witnesses were

directed at exploring the avenues by which major drug importations are being financed.

The history of the matter is of short

compass. Whilst the object of the

investigation was to determine the

financing of the drug transactions, the

staff of the Commission went to some pains to conceal that purpose in the questioning of witnesses. This was achieved by

exploring cash transactions of a

substantial character at the relevant

branches of the Bank of New South Wales,

by seeking explanations for them and then checking those explanations. No

11 allegations 11 were put, for the Commission was investigating, not putting a case.

The situation was reached where certain

large payments of cash were found to have

been made at the request of Mr Ray.

Counsel sought an explanation for those

payments and found that the cash had been

paid to Mr Packer, and that there were two

quite different reasons given for it. Mr

-130- Chapter 6

The Commission and the Courts

Packer's version is now sought. It may

be, or it may not be, that the payments

are related to drug transactions: that

remains to be seen.

In the normal course, the purpose of the

enquiry would not have been publicly

revealed. Mr Ray's counsel made a private enquiry of the purpose from Mr Meagher QC, and was told privately. Then Mr Packer's

solicitors, in writing, sought the same

information. They were referred to Mr

Ray's counsel, but not being satisfied

with that, they demanded an explanation in writing. With reluctance, borne out of a

desire to maintain a low level of

publicity until the explanations had been given and examined, but not out of any

desire to deny knowledge of the nature of

the enquiry to the witnesses, a letter was forwarded to Mr Packer's solicitors

explaining the purpose.

Subsequently, Mr Packer, Mr Ray and a

number of other witnesses took proceedings in the Federal Court, attempting to compel me to explain not only the purpose of the

enquiry, but also to reveal all of the

information on which it was based. I was

not prepared to do that, for reasons I

have already given, and the Federal Court refused to intervene . In the course of

those proceedings, the Commission's letter to Mr Packer 1 s solicitors was exhibited.

It was unnecessary for it to be publicised in those proceedings, it being available for the Judge and all parties to read.

Indeed, throughout those proceedings,

although the letter was averted to

frequently, its contents were not read

until Mr Ray's counsel addressed the

Court. Even in his case, it was not read

until the second day. By tha t t i me all

present in the Court well k new its

contents. Notwithstanding that, Mr Ray 1 s counsel insisted on reading it aloud so

that it may then be publicised, as it

was. I had no part of this, and, indeed,

had indicated my desire that it not be

made public • The Premier is in error in

suggesting that I have made public

allegations in the Federal Court.

Further, he is in error in suggesting I

have made "allegations", whether public or otherwise. The letter indicates the

Volume 1 -131- Cnapter 6

6.027

The Commission and the Courts

purpose of the investigations. So far as

Messrs Packer, Ray and the other witnesses in that group are concerned, it makes no

allegations and I make none: I merely

seek explanations .... The Premier has not

written or spoken to me about these

matters. If his concern is not abated by

my remarks today, and he seeks further

information, then I would be happy to

explain to him, confidentially, for fear

of prejudicing my investigation, the basis of my enquiries. These are not matters

for public debate, nor are they matters

where I expect to be subjected to

uninformed comment in Parliament by the

holder of the highest political office in that state." (Transcript, p. 17672a-17675)

By the time the Federal Court proceedings had

concluded the Christmas period had arrived. I was unable to plan any further hearings in relation to this matter until

the new year.

Report I was

For reasons which appear elsewhere in this unable to call Mr. Packer for further

examination prior to the conclusions of my operational phase at the end of June 1984. The proceedings taken on behalf of

Mr. Packer and his associates had the effect of delaying the possibility of further hearings for some months.

6.028 On 28 September 1984, Mr. Packer issued a

press statement. In it,

said to be circulating

involvement in criminal

he canvassed various matters then publicly regarding his alleged activities. The contents of that

statement are discussed earlier in this volume.

course of it, he made the following statements:

"The allegations published about me in a

recent edition of the National Times are,

without exception, completely false. Their publication has been but another step in a

malicious and disgusting campaign of

vilification by my commercial rivals. In

In the

Volume 1 -132- Chapter 6

The Commission and the Courts

developing these allegations the Royal

Commission into the Ship Painters and

Dockers Union has conducted itself grossly unjustly and improperly ... . . . These innuendos and allegations

emanating from the inquiries of the Royal

Commission have caused immense suffering on the part of my wife and children for nearly

a year. They have been fuelled by what I

believe has been malicious rumour and

innuendo in newspapers controlled by

commercial rivals of mine, John Fairfax and Sons Limited •• o

.•. Far from there being any particular

closeness between my company and the

solicitor (who also had a substantial

shareholding in the listed company) there were serious disagreements about the

conduct of the company 1 s business 0 There

was a well publicised takeover bid in which Consolidated Press and the solicitor's

interest were on opposing sides. Whatever the Royal Commission 1 s relations with the National Times may be, it is clear that its

staff does not read its sister publication, the Financial Review."

The clear implication of these allegations is that I was

involved, in some clandestine way, with business rivals of Mr. Packer in a scheme to discredit him. I reject the

suggestion as absurd. I instance the suggestion as another attempt, on the face of it, to influence the manner in which

I conduct my Commission; in particular, to influence the

contents of my Final Report and recommendations.

The Result

6.029 Thus, the defences of the major actions have

been completely successful. Those who represented me are to be congratulated on the manner in which they conducted the proceedings. There has been in each case a vindication of

my stance, and an endorsement of my interpretation of the

terms of reference. But a price has been paid. Inevitably

Volume l -133- Chapter 6

The Commission and the Courts

there have long delays in matters being finally

resolved (in each of the three major matters appeals were

issued). Ultimately, it was good tactics for the various

litigants to test my rulings. In one case I was unable to

recall the principal witness as by the time he had exhausted the appeal process he had been charged with offences arising out of the matters I was investigating.

Volume 1 -134- Chapter 6

CHAPTER 7 - PREVIOUS RECOMMENDATIONS

7.001

"Say not the struggle nought a va i leth, The labour and the wounds are vain, The enemy faints not, nor faileth, And as things have been, they

• II

rema 1n.

A.H. Clough, Say not the Struggle Nought Availeth

In the course of earlier reports I made a

number of formal recommendations fo r legislative, executive and other action. In this Report I have made a number of

further recommendations, which are collected for ease of

reference in Chapter 9 of this volume. As some of these n ew

matters are extensions of previous proposals, it is us efu l

to set out in this chapter those early recommendations,

together with, where appropriate, some note of the known

response thereto. For the sake of clarity I have set out

the recommendations in bold type and underlined.

7.002 My first two interim re por ts delivered in

March and June of 1981 made no specific recommendati o n s

requiring legislative action . The reports did con tain

information relating to the state of my investigations a n d , together with discussions which took place with ministerial and departmental officers, presumably provided the ba sis for the extension of my term from the original 30 September 1981

until 31 December 1982 ; of course, that date was

subsequently extended until 31 October 1984. Add it ionally, from time to time informal recommendations have been ma d e which need not be the subject of discussion here. They wer e on day-to-day matters relating to administrative a nd

operational control. Naturally some of them were of g reat importance, particularly those dealing with the a cquisiti on and development of the computer facilities.

Volume l -135- Chapter 7

Previous Recommendations

INTERIM REPORT NO. 3

7.U03 By December 1981 I had commenced

investigations into the "bottom of the harbour" area. I wa s frustrate d i n my a tte mp t t o obtain i nformation from the

Taxation Office because of the provis i ons of s e ction 16 o f

the Income Tax Assessment Act. I detailed the stage which

my investigation had then reached in submitting Iterim

Report no. 3 in which I made the following recommendations:-

This was problem.

"That Section 16 of the Income Tax

Assessment Act be amended as follows:

That sub-section ( l ) be amended bl

inserting after the word "State":

tne words 'not oeing a Eerson

aEEointea to tne Rol':ai

Commissions ct.'

(b) That Section 16 (4) of the Income

Tax Assessment Act be amended bl

to it an additiona

a

I

suo-c ause {j) as foiiows:

(j) any Eerson to whom a Commission

has been issued by the

Governor-General Eursuant to the Royal Commissions Act where the terms of Reference in

sEecific terms to tnis Act . " (Interim Report No.J, p. 17)

limited amendment to deal with the particular noted that a consequent amendment would be

required to the

adding the words:-terms of my Commonwealth Commission b y

Volume l

"or has engaged in illegal activities in

relation to the Income Tax Assessment

ct.

(ibid)

-136- Chapter 7

Previous Recommendations

7.004 The Government of the day met the substance of

my recommendations. The terms of my Commission were

enlarged as from 1 April 1982. The definition of "illegal

activities" contained in the amended terms was considerably wide r than it had been. Clearly included within the

definition was involvement in tax frauds and the like.

7.005 I had recommended that all Royal Commissions

get access to tax documents. The actual amendment to the

Income Tax Assessment Act, which was to operate from 2 June 19H2, and to

Royal

restricted access to tax

the Stewart Commission. Commissions would get

documents to my Commission It envisaged that further the same access if a

"declaration" was made under the appropriate sub-section. The amended section use" that could be

severely restricted "the made of the information

communication obtained. It

could not, for example, be pas sed on to any person outs ide

the Commission save in limited circumstances. Despite these restrictions it was nonetheless a valuable response to my recommendation and greatly investigation which was to

successful conclusion of some subject of my next report.

INTERIM REPORT NO. 4

assisted in the continuing

lead, in due course, to the

of the matters which were the

7.006 In Interim Report No. 4, which was submitted

in July 1982, I referred to the use to which I had been able

to put the amendments made to section 16 as a result of my

previous recommendations. I also pointed out in Chapter 2 of Volume 1 of that report the limitations which I saw t o

the effective use of the new power. I set these out in some

detail to indicate the basis for the further recommendations which I regarded as desirable. The recommendations were in the following terms:-

Volume 1 -137- Chapter 7

Volume l

Previous Recommendations

l. That Section 16 be amended so as to

allow the Australian Taxation Office to brief the Treasurer and the

Attorney-General fully, and in such detail as may taxpayers,

and by them to

the Taxation Office. This mat be

readily achieved by the relea of

sub-section SA of Section 6, and

the addition of each Minister to the of authorised of

1n •

2. 16 be amended to

3. That all law enforcement agencies be

allowed access to information in

possession of the Australian

Taxation Office for the purposes of criminal investigation.

4.

This may be effected by the addition of Chief Commissioners of Police of each police force and the

Commissioners of Corporate Affairs in each State to list of authorised

recieients in sub-section 4 of

16.

That a taxpayer be entitled to

access to information he has

conveyed

to the Australian Taxation

This may be effected by the addition of taxpayers to the list of

authorised recipients in sub-section 4 of 16.

5. That information supplied by a

taxeayer to the Australian Taxation Off1ce be available on subroena

issued by ant Court in Austral1a on

it being re evant to any civil or

criminal proceeding before the

Court.

-138- Chapter 7

Previous Recommendations

This would require the repeal of

sub-section 3 of Section 16, and the addition of Courts of law to the

list of authorised recipients in

sub-section 4 of Section 16.

(Interim. Report No. 4, Vol l, p. 6 - 8)

As I understand the position, the basic thrust of these

recommendations has not been accepted by Government or, for that matter, the Taxation Office. As I said in my earlier

report it was no secret that the Taxation Office rejected my recommendations and resisted them. It was clear that the

subsequent and wider proposals received the same response. Nonetheless I commend them to Government

consideration.

for further

7.007 The same report had dealt with my findings in

respect of tax fraud. For reasons which I discussed in that

report I recommended that there be a task force with the

responsibility of enforcing the laws relating to the

perpetration of the tax frauds. I recommended that this

force have the responsibility of issuing civil where appropriate in respect of tax frauds.

recommendation was in the following terms : -

proceedings The precise

Volume l

{b) It is my recommendation that a Task

Force be formed consisting of

counsel, solicitors, investigators and administrative staff to act on

behalf of the Commonwealth and the

several States in the criminal and

civil actions available to punish

those who have perpetrated the

fraud, and to recover the revenue

ost. (Interim Report No. 4, Vol l, p. 8)

-139- Chapter 7

Previous Recommendations

The response by Government p as s legislation creating

Prosecutors and thereafter to

to this recommendation was to

the Office of the Special

appoint Mr R.V. Gyles Q.C. as

a Prosecutor

and prosecuting the

collecting the taxes. with STRATEGIES

with the responsibility for targetting perpetrators of the tax fraud and

Also in my Interim Report I dealt

Volume 2) for the fight against (see I organised crime. recommended although this was n o t

formulated in precise terms - that there be a "Commission"

with the responsibility throughout Australia for such a

fight. I recommended that body have a "prosecuting arm"

although preferrably slightly distanced therefrom. The Special Prosecutor legislation also was a response, as I

understand it, to that recommendation. The appointment of Mr Robert Redlich of the Victorian Bar as Special Prosecutor to prosecute matters arising from my investigations other than bottom of the harbour matters was consistent with that understanding. It is probably appropriate to say here that

the legislation introduced by the Federal Government in 1982 for a National Crimes Commission was also in response to the matters set

STRA:'EGIES. out in my reports and,

Although the legislation in particular, the

for the National

Crimes Commission was not entirely consistent with my

suggestions, nevertheless it was a positive response. The subsequent history of that legislation and the replacement of the Commission by the National Crime Authority have been examined in other reports and documents. those matters here.

7.008 In Interim Report No . 4

I will not repeat

I also made a

recommendation that a Royal Commissioner have power to issue a search warrant. The recommendation was as follows:-

Volume 1 -140- Chapter 7

Previous Recommendations

(c) It is my recommendation that a Royal

Commissioner should have the power to 1ssue a search warrant where he

bel1eves on reasonable grounds that a person has documents relevant to

the terms of reference of the

Comm1ss1on and there 1s a reasonable l1kel1hood of the destruction of the documents. There are cases where

the mt:;re service of a subpoena to

produce documents will, if the

person has something to conceal

result in the destruction and

non-production of the documents.

The subpoena in fact acts as a

warn1ng to such a person of the Comm1ssion's interest. I would

expect that such a power would be

exercised onlB on rare occasions,

but 1t should e there.

(Interim Report No. 4, Vol l, p. 8-9)

By the Royal Commissions Amendment Act 1982, which was

proclaimed to come into operation on l February 1983, the

Royal Commissions Act was amended to provide, pursuant to section 4 thereof, for search warrants. Hy recommendation had been that the Royal Commissioner be entitled to issue

the warrant. The response of Government was to make

available a process whereby the Commissioner could apply to a Judge of a prescribed court for the issue of such a

warrant on establishing appropriate grounds. procedure meant there would inevitably be obtaining a warrant, nevertheless it was

Although this some del ay in

regarded as a

favourable response to the recommendation. I have applied, through Counsel, on six occasions since the introduction of the legislation for the issue of warrants. In each c ase,

the application was granted and a total of eight warrants

issued. It has proved a valuable adjunct to the power o f a

Royal Commissioner.

Volume l -141- Chapter 7

Previous Recommendations

7 In the same report I made recommendations

relating to compulsion of witnesses . were in t he fo l l owing terms.

The recommendations

Compulsion of Witnesses

The Royal Commissions Act has quite

inadequate powers and penalties to enforce the attendance of witnesses and the

Victorian

Evidence Act in contrast provides

efficient and speedy methods. It; is my strong recommendation that the

Royal Commissions Act be amended to

provide procedures and remedies similar to those in the Evidence Act. Recourse to

the Federal Court would be appropriate. (Interim Report No. 4, Vol 1, p. 9)

The Royal Commissions Amendment Act 1982 amended the

dealing with the appearance of witnesses both to

g ive evidence and to produce documents. It included

a ppropriate penalties for failure to comply with the

subpoenaes.

INTERIM REPORT NO. 5

7.010 My Fifth Interim report was submitted to

Government in July 1983. It was the result of a lengthy

investigation into various volumes. detailed

officers. Volume analysis

the c ompany Hamidan The Report consisted Pty. of

Ltd. three

two parts, contained a

and its

separate full and 3 , in of the activities of the company,

the justification for recommendations,

It consisted of

and 450

being the

pages. recommendations themselves. Volume 2 of the Report was a shorter version, being a

summary of the same matters with the name of the company and

of the principal officers involved disg uised. The purpose of _his 11 sanitized11 version was to enable it to be

published. My own view was that Volume 3 could have been

Volume 1 · -142- Chapter 7

Previous Recommendations

published but I was conscious that differing views were held as t o the effect that publication might have on the

subsequent trial of the various offenders who were named. Volume l of the Report also contained a copy of the

recommendations, but stated baldly without any attempted j ustification of them.

7 . Ull The recommendations relating to the Hamidan

matter consisted of some 13 pages. I have had a little

response from Government Departments in respect of some of them. As at June of this year I was unsure as to t he

precise state of the recommendations and the progress of t he Government's reponse. I was concerned to include in my

final report a summary of my previous recommendations ,

setting out the action taken by Government to date. I had

not heard formally from Government in relation to these

matters although a statement had been made by the

Commonwealth Attorney-General in relation to them. He said:-

7.012

"The Government is examining the

recommendations that are summarised in volume l. Relevant Commonwealth

Departments, in consultation with the

states and the Northern Territory where necessary, will complete their studies of the report and make recommendations as to action on it within three months. If the

Government decides that legislative

action will be necessary, it will provide information· as to the reasons drawing on relevant information that has been

provided by the Royal Commission."

(Commonwealth Parliamentary Debates, Senate, 12th October 1983, 1470)

As I had not heard in respect of a number o f

those matters contained in Interim Report No. 5, I caused a

letter to be written by the Secretary of the Commission t o

the Secretary of the Department of Prime

Cabinet. This letter was dated l June 1984

parts omitted, read as follows.

Volume 1 -143-

Minister and and, formal

Chapter 7

7.013

Previous Recommendations

"The Royal Commissioner, Mr. Frank Costigan, will shor tly be compiling his

final report. Over the three and a half years of

the Commission 1 s life there has been a

number of interim reports containing

r e c ommendations to Government on various matt e r s that have arisen from the

Commission's investigations.

For the purpose of the final report,

it would be of great assistance to have

details of action taken by the Government in to the recommendations

containe in the earlier reports.

I would be grateful if you could

meet this refuest. An early response

would be greaty appreciat ed."

A reply was rece ived to that letter on 2 July

1984 from the first assis t ant secretary, Justice Division . This letter read as follows:-

Volume 1

"Your memorandum of l June 1984 sought

details of action taken by the Government to the recommendations 1.n containe in

Commission on the Activities of Federated the reports of the Royal

Ship Painters and Dockers Union.

In broad terms, those reports revealed

considerable deficiencies in the

machinery of government and the

administration of legislation, althoufth many of these matters were not t e

subject of specific recommendations by the Commission. Both this Government and its predecessor took well-publicised

action to deal with the major

administrative and letal problems

identified by the Commiss on, including the amendment of leg1.slation, the

a ointment of S ecial Prosecutors and

t e es ta s o y to

deal with complex,

organised crime.

-144- Chapter 7

Previous Recommendations

In addition, the Commission made a number of more specific recommendations. The

examination of these has

involved between

Ministers and departments, some of is and

Cabinet Any

provided to the Commission about these

matters should properly

endorsement and approval from who ultimately have the responsibility for action taken by the Government in

response to the Commission's findings.

For this reason, should it be wished to

obtain details of the action taken on the more specific recommendations made by the Commission, it would be for the

request to be addressed to the Prime

Minister by the Royal Commissioner. In

that event, of the

and

recommendations in respect of which

information is sought and a more specific indication of the proposed use of the

information would assist consideration of the request."

There was no further correspondence in respect of this

matter. Set out below are the recommendations in respect of the Fifth Interim Report with, where appropriate, my

c omments.

Recommendations From Interim Report No. 5

7.014

Volume 1

4.02 heading .

Prosecutions

-145- Chapter 7

Volume l

Previous Recommendations

Squad, the National Companies &

Securities Commission, the Special

Prosecutor and Corporate Affairs Offices throughout Australia. A larpe number of Reserve Bank offences, Taxat1on offences, Bankruptcy offences , Corporate Affairs breaches and criminal offences have been

identified. In most cases, I am informed

by the responsible agencies, charges will be preferred. It is likely that at least

15 men will face criminal charges. The

actual charges laid will depend, in the

exercise of a proper prosecutorial

discretion in each case\ on a proper use

of the resources avai able to prepare

briefs and to have matters

liste in an orderly fashion in the

different jurisdictions. 4.03 I need make no specific

recommendations as to prosecutions to be laid as, if I may so with respect,

these matters areeing catered for

in the course of liaison with

the Spec1al Prosecutor and the other

bodies. Indeed, one of the very

satisfying aspects of my Commission has been the close association which has

develo ed with law enforcement

of t e Comissions Act. I have

communicate information in my possession relating to an offence, or possible

offenced to aG,propriate authorities on an almost a1ly as1s.

4.04

T e conspiracy y

the Queens land

is a duplication of effort

time in overlapping areas. competition for access to the

documentary ev1dence held by th1s

Commission. In proposals for the

establishiiient of a ommonwealth Director of Cr1m1nal Prosecutions, I recommend

special attention be given to the role of

-146- Chapter 7

Previous Recommendations

coordination with State agencies. In

should be given

involved. This will, no doubt, depend

upon the level of cooperation that can be negotiated with the States, probably on a case-to-case basis. However, I believe

it will be an important function of the

Director to obtain, with appropriate

assistance, a proper degree of

cooperation.

Prosecutions are proceeding in Queens land where, following committal proceedings, four men will face trial. I

understand that proceedings are on foot in Western Australia in respect of various men identified as participating

generally in this scheme. These proceedings have been

subject to various interlocutory matters which have delayed the conclusion of committals. I understand that these

prosecutions are being conducted by the Office of the

Director of Public Prosecutions which has taken them over from Special Prosecutor Redlich. The only other matter I

would draw attention to under this heading is to the civil

recovery aspect of the . work of the Director of Public

Prosecutions. I

recommendations in Director should have recovery of civil

believe, consistently with

the Fourth Interim report, that

the capacity to take proceedings debts due to the Commonwealth.

my

the for The

structure of the Act as at present operating is such as to

severely limit his · right to take such action. It is

presently dependant upon the institution of a prosecution and the publishing of an appropriate instrument by the

Attorney-General dealing with the particular matter or a class of matters. This is clearly unsatisfactory. There

will be many cases, as there already have been, where the

Director needs to take civil action prior to being in a

position to initiate his criminal prosecution. The Act

should be amended to take account of this need. The work

done by Special Prosecutors Redlich and Gyles

demonstrates the justification for it. amply

Volume 1 -147- Chapter 7

7.015

Volume 1

Previous Recommendations

Exchange Controls

4. OS Under this heading I recommend

as follows:-(1.) A notice be issued by the Treasurer

to Section 39B (2) of the

ankinf Act adding Sinfapore to the schedu e of countries n respect of

which taxation clearances are

required.

Regulations be made under the

Banking (Forei\n Exchange)

Regulations prescri ing a form in

respect of applications to the

Reserve Bank for attroval of

agreements with non-resents. The form should make provision for the

information required

the Bank. T at information shoul

be verified in writing by the

applicant and, in the case of a

company, by an officer personal ly

responsible for its truth. The form

should contain a warning that

provision of incorrect information to the Bank is punishable by severe

penalty. The Regulations should

provide that no overseas agreement will be unless a written

document em the terms of that

agreement execute by the is

submitted, prior to any liabilities being incurred by the parties . This

agreement, of course, should be

stated to be subject to the Reserve

Bank approval.

(3.) The a licant should state in his

form whether he and or the company

borrowing the money is related in

any way to the offshore He

should state w ether

shares in the offs ore are

in an[ way beneficially hel on his

behal in a trust or nominee

situat1on.

-148- Chapter 7

Previous Recommendations

(4.)The· Reserve Bank should record in a central registry system the names of all overseas lenders, as well as the

Australian borrowers. When an

a*plication is lodged,

c ecks of previous applications respect of the same parties should

be made to similar

(5.) To facilitate the setting up of a

central registry, the Reserve Bank should install a computer system.

There should be access to the

central registry through the

computer from each of the branches

of the bank throughout Australia. All applications made to the Reserve Bank which are regarded as suspect

should be immediately referred to

the Office and, if

appropriate, to the Federal Police for further investigation. I recommend a minimum holding period from lodgement of an application

until approval for 7 days; no

application should beod ed between th and th June in any year.

These requirements were significantly affected by the

Government's abolition of restrictions on money flows out of the country.

7.016

Volume 1

Tax Controls

4.06 I recommend as follows:-

(1.) Where a scheme is being promoted

which is claimed to have, as any

part of its attraction, tax

advantages for the investor or

contributor then the following

provisions should apply:-

-149- Chapter 7

Volume 1

Previous Recommendations

(a) The promoter shall obtain from

the National Companies &

Securities Commission a

certificate which certifies

that the method of marketing

the scheme, in the form

submitted to the Commission

satisfies the requirements of the Companies Act and the

Securities Industries Act in

all States in of which

promotion is to ta e place.

(b) The promoter shall obtain from

the Commissioner of Taxation a certificate stating that -I Notice of the scheme has

been given to the Taxation

II Such notice was given on

or before the 31st day of

May in the financial year

in respect of which any

deduction is to be claimed. III Copy of the NCSC

certificate {together with all of the material relied

upon to obtain the same)

has been provided to the

Taxation Office. IV That it is likely that a

deduction will be granted in respect of the proposed scheme if it is

implemented strictly in

accordance with the

proposals put forward.

imited offer or otherwise and provide to every such person: I Copies of the material

submitted to NCSC and the

of Taxation.

II Copies of the certificates

obtained from those

bodies.

-150- Chapter 7

Volume 1

Previous Recommendations

ill The claim for the deduction by the taxpayer shall not be allowed unless. I The abovementioned requirements have been met. II The taxpayer states in his claim for the deduction that, 1n respect of his own participation, the proposals for the scheme and the promotion of it have been carried out by the promoter. The promoter, or any person with whom he is associated in the promotion of the scheme, shall not accept any funds from the investor unless copies of the materials set out in sub-paragraah (c) hereof have been provi ed to the investor prior to such receipt. Breaches of these provisions shall render:-I II III Any agreement entered into in ressect of a scheme null an void. The *romoters liable to refun in full any monies paid pursuant to such an agreement, together with interest at a rate of 5'%. greater than the bank rate arevailinf at the date of eposit o the monies. The promoter liable to heavy financial penalties and moderately severe gaol sentences. -151- Chapter 7

Previous Recommendations

(4.) Consideration should be given to the licensing of promoters of tax

schemes. Any such licensing should only be held b r1vate individuals

w o are Aust:ra ian nationals and or

residents. The class of people

eligible should be restricted to

persons with appropriate

qualifications and oi: good

reputation. (5.) Section 16 of the Income Tax

Assessment Act should be further

amended to allow notice to be given

by the Taxation Commissioner to an! appropr1ate law enforcement body o ant activities sustected to be

il egal of which theommissioner or his officers become aware during the course of his normal duties.

There has been no consultation between my Commission and the Taxation Office or any other Government Department in

respect of those recommendations. I am not aware of any

step taken to implement any of them. I have had some

contact with the National Companies and Securities

Commission in respect of my recommendations generally. Its officers understood sub-paragraph 3 to require the NCSC to become an arm of the Taxation Office. This was not in my

contemplation as I explained to senior officers of the

NCSC. I was pleased to read in the media in early September

1984 the decision of the Ministerial Council to include

details of tax correspondence or rulings in any prospectus issued by a company where tax benefits were claimed. I was

disappointed to find, when conducting those discussions, that the office of the NCSC had not had made available to it

a full edition of Interim Report No. 5. It meant that it

had considered my reports completely in isolation to the

Volume 1 -152- Chapter 7

Previous Recommendations

case history which had justified the recommendations in the first place . I might say that this situation was not

limited to the NCSC. In no case did it appear that any body

that was required to consider my recommendations had had

made available to it the full text of the report on which

they were based. This totally ignored the final

recommendation in that report (see below).

7.017

Volume 1

Corporation Controls

4.07 I recommend:-

(1.) ___

Affairs records on a national basis

(a) m TCJ (d)

should be implemented as a matter of uryency. The system adopted should al owfor access to the following

information:-Name of company officers. Address of comeany officers. Address of offices.

Listing of al companies with which a person is associated in any way.

Notice should be given to the

Corporate Affairs Commission by all company officers of all offices held by them in all companies, and all

companies in which they are

beneficially entitled to some or all of the issued shares. The names of shareholders of

comtanies should at all times be

adv sed to the Corporate Affairs

Office. This list should be

maintained up-to-date. Any change of shareholding should be notified within 14 days. Any later attempt

to notify a chanae of shareholding

should be reJected save on

to the court. The

register should show whether the

shares are held on a beneficial or

nominee basis. In the event that

they are held on a basis

-153- Chapter 7

(a)

(b)

Volume 1

Previous Recommendations

then the name of beneficial

shareholder should also be advised to the Corporate Affairs Office. I£ not so advised then that

shareholdin9 should not be

recognised 1n law for any purpose.

Each officer of a company be

required by law to provide a written statement contain1nf the information set out below. Th s form should be

signed personally and witnessed. It should be witnessed by the rerson

responsible for o the

document at the o flee of the

Corporate Affairs Commission. That person should also be identified in any document lodged. If the

document is lodged personallt by an officer then it should be w tnessed

bt an officer of the Corporate

Commission at the time of

lodgement. The statement should

contain, inter alia, the following

details:-The full name

that Eerson.

currently being used

The name under which the person was 'born.

The date and Elace of birth.

Any other name used between the date of birth and the date of the

statement.

Whether the person is or has been a

taxEayer and, if aEErotriate-(1) The name under w lch he lodged

--- his last return.

{II) The Elace of

\III) The taxation num er allocated --- to hilri.

His current address and any address used bt him as his ErinciEal Elace

of bus ness or residence during the

Erevious 5 years.

-154- Chapter 7

Previous Recommendations

In this area I did h a ve useful discussions with the

Commissioner of Corporate Affairs in Victoria and the

Attorney-General for the State of Victoria and officers of Corporate Affairs. 1 also discussed the matters with

officers of the NCSC. I understand that some of the

recommendations I have made are to be incorporated into a

new computerised system to be established. According to

media ceports in early September 1984 , the "disclosure"

provisions recommended by me in paragraph 3 above have been accepted by the Ministerial Council. Nevertheless, I have been gratified at the response by the State authorities. I

have had no contact with offices of Corporate Affairs of

other States. Presumably the Commonwealth Government has brought these matters to the attention of other States.

7.018

Volume 1

Banking Controls

4.08 I recommend:-(1.) Each person applying to open a bank

account be required by law to

provide a written statement

the information set out

below. his form should be

personally and wi tnessed by theank officer opening the account. The

statement should contain, inter

alia, the following details:-The full name currently being

used by that person.

The name under which the person was born.

The date and place of birth.

Any other name used between the date of birth and the date of

the statement. (e) Whether the person

been a taxpayer

-155-

is or has

and, if

Chapter 7

Volume 1

Previous Recommendations

(I) The name under which he

lodged his last return. (II) The place of

TII!)The taxation num er allocated to him.

(2.) The legislation should provide

aplropriate penalties for making a fa se statement. Banks tend to

require proof of incorporation of

companies before opening accounts. The law should demand they obtain

such lroof. The statement of

persona particulars should be

supplied by all pro}:osed for the account. I a ban er fails

to obtain the a ro riate statements

ou d e su Ject to severe

prov1.s1.on should also apply to the

use of accounts in business names or 1.n the names of trusts.

(3 In conjunction with

legislation dealing financial institutions - as atpropriate

Governmen s.

(2), similar

with all

be negotiated · with State

Every applicant to a bank or other

financial institution seeking the remission of funds overseas should be identified on a record to be kelt

of that transaction. This shou a

then be forwarded to the Reserve

Bank to be included on a

computerised record of all overseas transact1.ons.

Banking records, including all

vouchers, should be retained by the banks for a minimum period of seven

years. In the event originals of

such documents are released to a

customer, then colies of any such

documents includ ng endorsements

appear1.ng thereon should be made and likewise retained.

-156- Chapter 7

Previous Recommendations

I have received no response from Government to these

proposals. I am aware that similar proposals have been made by Mr Justice Stewart and by Special Prosecutor Robert

Redlich when reporting to Government. I am also aware, from media reports, that the banks are opposed to the

provisions. They are par ticularly opposed to being given

any role whereby they are to "police'' the activities of

their customers. There is much evidence which supports the recommendations I have made both in Interim Report No. 5 and in other reports submitted by me and, in particular, this

Report. In fact, I have repeated the recommendations as to

banking controls in Volume 4 of this Report. I have

mentioned other instances of facilitating fraud through

banks. I believe that these controls should be implemented.

7.019

Mining Permits

4.09 I recommend:-

(l.)Commonwealth and State petroleum exploration legislation be amended to provide that no agreement between

affectinf an interest in a

permit (includ an>; personal

convenant thereun er) 1S of ana

affect until an

registration of t at agreement

pursuant to the legislation. The

right of a prospective party to claim dama es· a a1nst the existin er:nitee

- w ere t at part¥ s e au t as e

to the non-reg1stration of the

interest - should be preserved. (2.) It be compulsory for an existing

permitee to advise the Minister of

any agreement entered into which will affect the interests in the l?ermit.

Failure to so advise the M1nister

within an appropriate time ¥eriod

should result in the loss o the

permit by the permitee.

Volume 1 -157- · Chapter 7

Previous Recommendations

(3.) Consideration be given to a proposal

that where it is intended to attract

investment from the public in a

perm1.t area any agreement in respect of the same which is intended to be

the basis of such investment should

be registered with the Mines

Department

person shall offer for sale or

asslfnment any interest or

sub- nterest in a permit unless an

between the permitee and

t e proposed vendor or rromoter of

the sale had been odged and

with the Mines Derartment

an a certificate of the Min1.ster as

to such registration is produced to

any such interested purchaser or

contributor prior to any such sale or ass1.gnment.

(5.)This Report be brought to the attention of the appropriate

Commonwealth and Western Australian State Ministers responsible for

petroleum and oil exploration.

I have had no reponse from Government in respect of these

recommendations.

7.020

Volume 1

Overseas Arrangements

4.10 I recommend:-Consideration should be given to treating 11 loans 11 made in the tax haven countries to

Australian residents as direct income unless a certificate

under Section 14C of the Tax

Administration Act has issued in respect of that transaction.

-158- Chapter 7

Previous Recommendations

(2.) Section 14D of the Tax Administration Act should be amended to include as a

ground on which the issue of a

cert1ficate should be refused, the

likelihood that creditors of" the

applicant in Australia will be

preJudiced by the issue of the

cert1ficate. (3.) Consultations take place with

Volume 1

foreitn with a view to

facil tat ng the admissibility of

evidence in Australia of banking and other financial transactions

offshore. Within Australia, there

should be provision for the

admissab1lity in civil and criminal sroceedings of such financial

ocumentary evidence from overseas provided the same bears a bankers

cert1f1cate as to its authenticitl

and a certificate from the loca

Australian representative in the

question as to the

pro uct1on o t e ocuments to 1t or

safe carriage.

(S . )The Australian Government should negotiate with as many countries as possible, particularly those in the Pacif1c r e 1on, the access to bankin

recor s 1n t ose countr es.

-159- ·chapter 7

Previous Recommendations

I regarded these recommendations as particularly important. I have had no discussions from Government as to them. I am

aware that officers attached to the Special Prosecutor

Redlich travelled to Singapore and Hong Kong to obtain

evidence in respect of the criminal activities referred to in Interim Report No. 5. They were able to obtain

documents, and other evidence, in their visit to Hong Kong. They were not so able in Singapore. Urgent arrangements

must be made with these and other countries to facilitate

the acceptibility of foreign banking records as evidence before the Australian courts. The United States Courts have apparently taken the view that the national interest in

investigating crime justifies overriding secrecy laws of other countries in some circumstances:-

Volume 1

"As Investigations of white-collar crime lead increasingly to banks and companies abroad, US courts are concluding the need for information over-rides other

countries' secrecy laws. A subpoena, US judges ruled recently, is

sometimes enough to force release of

sensitive bank and corporate documents offshore, if the subpoena is served on US soil. In the past, US prosecutors could obtain such records only through diplomatic

procedures, in part because judges have been reluctant to override the laws of

foreign lands by enforcing subpoenaes. US Authorities say the trend gives them

new and effective tools for cracking

cases involving drugs, money laundering and tax evasion, but many investors and

corporations which operate offshore fear it may lead to investigations into

offshore records. It also threatens countries which

become business havens because of secrecy laws ...

have their

In addition to the courts,

Government is moving to

offshore bank secrecy."

the US

penetrate

(Financial Review, 27th July 1984)

-160- Chapter 7

Previous Recommendations

I commend these views to Government. The current difficulty

in presenting admissible evidence to the Western Australian courts in prosecutions being conducted by the D.P . P. provide ample demonstration of the need for international liaison in this area.

7.021 In this

a Memorandum and

area , reference can usefully be made to paper prepared by the Commonwealth

Secretariat for Ministers at its documents were

presentation to the Commonwealth Law

meeting in Sri Lanka in February 1983. The

entitled Mutual Assistance in Criminal

Matters: A Commonwealth Pers pective. In discussing the

possible options for the development of mutual assistance in criminal matters within the Commonwealth part i cular

attention was give in the papers to the special problems

involved in the investigation and prosecution of commercial crime. This approach has been adopte d because of the

complex issues which can often arise i n this area and the

fact that commercial crime increasingly has an international dimension. Greater efforts should be made t o obtain better international cooperation in this field . I urge that the

level of Australian participation in and support of this

part of the programme of the Commonwealth Secretariat be

enhanced.

7.022

Volume 1

Conclusions

4.11 I recommend that this Report

have a wide referral within Government

and, in particular, that it be referred

to law enforcement agencies - both State and Federal throughout Australia for

1nformation purposes.

- 161- Chapter 7

Previous Recommendations

None of the representatives of Government agencies with whom

I have spoken had had access to volumes 2 or 3 of my

Report. I presume the basis on which Government did not

publish those volumes was that such publication may have

affected the subsequent prosecution of the offenders

referred to therein. That should not have effected the

proposed distribution there should be a

I suggested. It

wide distribution was of

my view that

the reports

throughout Australia, not just to Government departments, but to the community generally. It was for the Government

to decide whether that was appropriate. I recommend it be

done.

Volume 1 -162- Chapter 7

CHAPTER 8 - REFERENCES, PROSECUTIONS & RESULTS

11 We are better able to

neighbours than ourselves, actions than our own. 11

study our

and their

Aristotle, Nicomachean Ethics

8.001 There has been criticism of Royal Commissions

that prosecutions and convictions

investigations. Thus Commissions are have not

administered followed to act

only on 11

admissible11 evidence; that is, evidence admissible in a court of law on the trial of a particular offender.

This misinterprets the nature of the investigative role of the Commission. The very fact that it obtains evidence from offenders, by way of oral testimony or documents extracted by coercive powers, demonstrates - given the anathema with which any attempt to erode the concept of "no

self-incrimination" is regarded the futility of this

stance. Evidence taken from offenders The Royal Commission Act makes this

is not admissible. clear; so does the

Vic tor ian Evidence Act; "evidence" is obtained so

of

does the High Court. Whatever

criminal activity must still

remain the subject of critical prosecutorial examination to ensure it is sufficient to justify putting a person on

trial. As a matter of principle, I have adopted the

practice of referring matters to other bodies for the final investigative process leading to the arrest, charge and

prosecution.

Volume 1 -163- . Chapter 8

References

8.002 I have referred to my recommendations for a

" task force" to prosecute the perpetrators of the "bottom of

the harbour" schemes and for "a prosecuting arm" to assist

(Crime) Commissions. As a response to those

recommendations, the Special Prosecutors Act was enacted and Messrs Gyles and Redlich were appointed to prosecute tax and other matters identified by my Commission's work. Mr

Redlich was later given the additional responsibility of prosecuting matters referred by the Stewart Commission. I will later refer to some matters prosecuted by the offices of the Special Prosecutors on my referral.

8.003 Another initiative emerged f rom my work. From

the time my investigations commenced I received information of many criminal activities. Some required investigation to establish whether they fe 11 within my terms of reference. Occasionally, they did not. Again, on many occasions there were matters which fell within my terms but which were

better investigated by other bodies; in some cases, by a

coordinated group using the computer facilities of the

Commission. It was necessary to obtain some executive

imprimatur for this modus operandi . In many cases the

matters were of insufficient importance to justify formal reports. To obviate this problem, an amendment to the Royal Commissions Act was enacted in the form of Section 6 P which came into operation on 1 February 1983 (it was subsequently amended to take into account the introduction of the

Volume 1 -164- Chapter 8

References

National Crime Authority). This Section provided:-

"Where, in the course of inquiring into a

matter, a Commission obtains information that relates , or that may relate, to the

commission of an offence, or evidence of the commission of an offence, against a

law of the Commonwealth, of a State or of

a Territory, the Commission may, if in

the opinion of the Commission it is

appropriate so to do, communicate the

information or furnish the evidence, as the case may be, to -

(a) the Attorney-General

Commonwealth, of a State Northern Territory;

of the

or of the

(b) the National Crimes Commission

established by the National Crimes Commission Act 1982;

(c) a Special Prosecutor appointed under the Special Prosecutors Act 1982;

(d) the Commissioner of

Federal Police of

Force of a State or

Territory; or

the Australian of the Police

of the Northern

(e) the authority or person responsible

for the administration or

enforcement of that law."

I exercised the discretion liberally. It provided the

legislative power enabling much of the cooperative work

undertaken in the latter half of my term.

8.004 The deliberate dissemination of information

in accordance with provisions approval of Government. The

of the Act, met with

Attorney-General made the the

f ollowing remarks during a Parliamentary speech in October

1983.

Volume 1

"The Costigan Commission is investigating organised criminal activities on a very broad front. On last count - depending

-165- · chapter 8

on how one defines them - it had between

a dozen and 20 major separate

investigations proceeding, all of them linked in some way to the original

painters and dockers reference, but in

some cases the link is pretty marginal.

But clearly they are a wide-ranging set

of investigations. The Costisan

Commission, secondly, is

reports to government, most recently last week, one volume of which was tabled but

accompanied by massive and detailed

evidence of very far reaching and

alarming criminal fraud in one State.

The Costigan Commission is generating

prosecutions . Six people have already

been charged in relation to the

particular matter in respect of which the report was produced to government last

week, and many others are being

prosecuted as a result of the efforts of

Special prosecutors Gyles and Redlich, whose task has been to implement the

recommendations and the prosecutorial implications of the Costigan Commission Inquiry. The Costigan Commission is

SUQplying further information to law

enforcement and other agencies around the country which has been and continues to

be enormously helpful in tightening up

the systems as they are operating and the

procedures as they are applying, in

removing loopholes and avoiding future problems with the criminal law.

(Commonwealth Parliamentary Debates, Senate, 18th October 1983, p. 1650)

References

Cost Effectiveness

8.005

"We do what we can, and then make a

theory to prove our peformance the best."

Emerson, Journals (1834)

One of the other areas where a justification

for Royal Commissions is sometimes sought is in the area of

cost effectiveness. Why this should be so is puzzling.

That the suppress ion of crime, or the attempt, should be

measured in money terms is doubtful. It is difficult

Volume 1 -166- Chapter a ·

References

to measure the work of a Commission by reference to balance sheet considerations. In earlier reports I referred to some areas of criminal activity which were suppressed by my

investigations; some examples were fraud on the Social

Security system, workers' compensation fraud and

"ghosting". Attempts were made to quantify the savings

generated.

8. 006 In the course of the preparation of my fifth

Interim Report, I indicated the savings to t he community b y the attack on the tax industry. Even this enquiry was

complicated and imprecise. There had been attacks by others besides my Commission - for example, Government legislation and the McCabe-LaFranchi investigation. Moreover, how

should one measure the financial savings resulting from the suppression of such schemes. The gain may be measured in

hundreds of millions of dollars per annum.

8.007 With some

Commissioner of Taxation issued as a result

hesitation, to advise me

of information

I

of

requested the

tax assessments provided by the

Commission. He supplied those details. They were minimum figures, and did not include cases which were still under

investigation and for which no assessment had issued, or

cases where

investigations the and Department had

the information already provided

Commission material; served to supplement

the latter category would

or confirm

include a

commenced by the

existing number of

bottom of the harbour schemes considered by Special

Prosecutor, Roger Gyles QC.

Volume 1 -167- · chapter 8

References

8.008 The figures were illuminating. The number o f

taxpayers satisfying the minimum test referred to above i n respect of whom assessments had issued (to July 1983) as a

direct result of the Commission's activities was 676; the

amount of tax assessed (including additional tax) was

$25,009,302.00.

8. 009 To place this figure in perspective, the cost

of the Commission was approximately $12 , 000,000.

8.010 The gross tax recoveries have increased

significantly during the ensuing 15 months. I note the

recent report of Special Prosecutor Gyles,

" ... working in tandem with .. the Taxation

Office has identified 6206 companies

involved in bottom of the harbour

schemes. The crackdown has netted the

Government $333M ... about $257M remains to be collected."

(Sydney Morning Herald 15th August 1984)

It was reported the Special Prosecutor expected to charge 150 of "the major promoters" before he stepped down in

September 1984. Further in his report to the

Attorney-General for the year ended 30 June 1984 Special

Prosecutor Gyles stated:-

Volume 1

" ... To the end of the current year 3171

profiles of persons and entities

involved in company stripping other than simply as principals of companies

stripped had been compiled. They

participated in the company stripping industry in various ways.

-168- Chapter 8

After the initial collation

approximately 150 of the persons were

identified as high priority targets.

That number has since increased

significantly. In the meantime the

Australian Taxation Office estimate of the number of companies stripped has

been increased by more than 50% the

latest estimate is over 6, 000 compared

with the original estimate of something over 4,000 . 11

(Annual Report (1984) p.2)

References

Bottom of the Harbour

8.0ll In his first annual report, for the period 22

September 1982 to 30 June 1983, Mr Gyles set out the sources of his information. It included the Australian Taxation

Office, Police Forces, the McCabe and LaFranchi Report,

Corporate Affairs Commissions, the National Companies and Securities Commission and my Commission. Of my Commission he said:-"The continuing enqu1r1es of the Royal

Commissioner have spanned the activities of several promoters and a great volume

of documentary material and other

information has been made available to

me. My office has computer terminal

access to portion of the Commission data base. There is active liaison with the

Royal Commissioner and his staff."

(Annual Report [1983], p. 4)

8. 012 Under the heading of Operational Progress, Mr

Gyles dealt with the institution of proceedings to the date of his report:-

Volume 1

"Following advice from counsel retained prior to my appointment, a prosecution

was initiated in Western Australia by a

police officer attached to my office

-169- ' Chapter 8

There since

against Brian James Maher and Lloyd Errol Faint of Queensland and William Henry

Tolhurst of Western Australia. The

charges, under s. 86 [l](e) of the

Commonwealth Crimes Act, 1914, relate to an alleged conspiracy to defraud the

Commonwealth during 1973 in relation to several companies including Stirling

Court [1973] Pty Ltd. This was the Perth

case identified by the Costigan Royal

Commission. Members of the task force

did the further work which was advised by counsel to be necessary for prosecution. The three defendants were arrested on

29th October 1982 by members of the task

force ... This case is not sufficient on

its own to represent the alleged

activities of Maher and his associates, accordingly teams within my office are

currently examining a range of additional matters involving those persons".

(Annual Report [1983] p. 8)

References

have been many developments in

the presentation of the report. these prosecutions They are matters on

which Mr. Gyles has reported directly to Government.

8. 013 Mr Gyles made some general comments in his

first report dealing with the new role of the Special

Prosecutor (since subsumed by the office of the Director of Public Prosecutions). He said:-

Volume 1

"My appointment was due to the exposure

of failure by the authorities to deal

with what appeared to be a serious fraud

on the revenue for many years - leading

to public perception of gross

incompetence, if not worse.

Hitherto the usual reaction to such

situations in Australia has been to

appoint a Royal Commission. In the case

of my appointment, of course, the facts

were disclosed by a Royal Commission.

-170- Chapter 8

8.014 said:

Volume 1

References

Where such an operative event prima facie involves criminal activity, it will often be ·preferable to concentrate on rigorous investigation with a view to prosecution,

rather than have an administrative

enquiry - which is the nature of a Royal

Commission, whether headed by a Judge or not. The Special Prosecutors Act thus

provides a further option in dealing with cases involving investigations of

corruption or gross incompetence amongst high politicians or administrators. In those cases I believe that the departures from normal tradition which the office

involves are justified. It follows, of

course, that the use of the office should

be sparing.

(Annual Report [1983] p. 11)

Mr Gyles, in his second report in June 1984,

"The Commissioner of Taxation has

estimated that commission earned by the promoters and their associates in

relation to current year profit

companies was in the vicinity of $150

million. If the stripping of

undistributed profits, trust stripping, purported "Curran" and "Westraders"

schemes, and various other tax avoidance schemes were taken into account, the

figure would be very much higher. The

revenue foregone runs into billions of

dollars. Tax avoidance and evasion of this kind

in such volume is extraordinary in

absolute terms but almost incredible in relative terms having regard to the

small Australian economy. It has

recently been reported that the largest United States revenue fraud case ever

brought is being heard it involved

$US48 million. The two committals

currently being heard involve revenue loss of well over $200 million.

-171- Chapter 8

When sums such as these are involved,

special and extraordinary measures are called for. The fact that these may

cause administrative disruption and the expenditure of significant sums of money should be no barrier to effective

action. If there had been an adequate

administrative, judical, and political response in the first place the

situation would never have arisen. Even on the narrowest view of cost benefit,

the expenditure would be justified.

When the wider ramifications for the

effective and efficient conduct of tax

administration are taken into account, the cost will be recovered many times

over. The gross excesses of the tax

avoidance industry in the 1970's should never have occurred and should never be repeated. It is simply not good enough

to fail to cleanse the Augean (sic)

stables because the task is too dirty

and difficult ....

It will be apparent from the foregoing

that whilst I anticipate that a number

of other persons will be charged before the expiration of my term of office

there will be a number of investigations which will not have reached that point.

Furthermore, even in cases which are

before the courts, follow-up

investigations will be necessary. The

magnitude of the task has proved to be

beyond the resources available within the time given to me. I estimate that a

further 12 months beyond September will be necessary in order to adequately

investigate what I have called the inner circle of promoters and their principal associates. By that time, all

appro2riate charges against this group shoula be laid. That will then leave

the litigation to run its course."

(Annual Report [1984] p. 9-10)

References

8. 015 In a schedule Mr Gyles listed 16 7 matters in

various stages of prosecution. That list represents

prosecution of 32 major promoters and other functionaries involved in "Bottom of the Harbour Schemes".

Volume 1 -172- Chapter 8

References

The credit for those promotions rest with Mr Gyles. But in

the exposure of the schemes, much credit must go to Messrs

McCabe and LaFranchi with their successful investigation of the Maher group. There is little doubt the matters would

not have proceeded to prosecution, however, without the

publicity and pressure which followed my report on the same matters. Mr Gyles indicated that some 127 charges, pursuant to the Crimes (Taxation Offences) Act have or will be laid

against a further 27 individuals. been taken out in respect of four

Warrants of arrest have other offenders. In

addition there is a great number of cases involving other

defendants still being investigated by his office.

Other Tax Offenders

8.016 I have provided the Commissioner of Taxation

with much information relating to tax evaders other than

those involved in schemes investigated by Special Prosecutor Gyles. This has been directly responsible for assessments of many millions of dollars. These evaders come from

various walks of life including painters and dockers, the

professions, undertakers and S.P. bookmakers. With S.P.

bookmakers my operations have been particularly successful. In one case an assessment of some $2.4 million was levied.

The secrecy provisions of the taxation legislation renders it impossible to report the actual benefit to the community recovered taxation. of dollars.

Volume 1

I can say it amounts to many millions

-173- Chapter 8

References

Redlich Prosecutions

8.017 In the report of Special Prosecutor Redlich of

7 September 1984 were listed prosecutions. Of those matters

referred by my Commission he said:-

Volume 1

"The work of the Costigan Royal

Commission has been of inestimable

public benefit. It has generated a

public awareness about the type of

criminal activities which threaten our society, and provided the momentum and foundation for the creation of an

effective National Crimes Authority. The terms of my initial appointment to

deal with matters from this Commission have been fully described in Chapter 3

of my 1982-83 Annual Report. I was

required to institute and carry on

prosecutions with respect to "alleged illegal activities" . identified by the

Costigan Royal Commission and to take, co-ordinate or supervise the taking of

civil remedies on behalf of the

Commonwealth and its authorities in

respect to such illegal activities.

Pursuant to my brief from the Victorian Government I was also required to advise the Victorian Director of Public

Prosecutions and the Attorney-General in respect to Victorian offences identified by the Costigan Royal Commission.

There has been close consultation with the Royal Commission about the

disposition of the activities described in the Royal Commissioner's first four

Interim Reports to Government. The

Royal Commissioner and I agreed upon how these matters should be dealt with. The

Attorney-General was consulted and

concurred in the course proposed.

I reported to Parliament in 1982-83

that, inclusive of Interim Report No. 4, the Royal Commissioner had informed the Government about 52 areas of illegal

activity, but that the Royal

-174- Chapter 8

Commissioner's reports were only

designed to inform the Government as to the state of his investigations,

(paragraphs 3.7 and 3.21 of 1982-83

Report). The Royal Commissioner had not in the main made "findings" upon which

prosecutions could be based.

Volume 1

Prosecutions will flow from two of those matters and civil remedies will be

exercised in respect to another four

(paragraphs 3.22 of 1982-83 Report).

Bearing in mind the purposes for which

the first four Interim Reports were

provided to Government by the Royal

Commission, this result should not be

surprising. As previously adumbrated (paragraph 3.23 of 1982-83 Report), the matters referred to me by the Royal Commission

subsequent to Interim Report No.4, wili all lead to prosecution. Since my

1982-83 Report, the Royal Commissioner has referred a further 7 matters to me,

bringing the total number of matters

referred to mx office since Interim

Report No.4 to 18. All of these matters

are based on "hard facts" and have, or

should, lead to the institution of

prosecutions and in most cases the

taking of civil proceedings.

Over 600 charges have been 12 different areas

activities. Other charges be laid. Prosecutions

successfully completed in areas.

laid covering of illegal

are likely to

have been

6 of those

Summarh of the more significant matters from t e Costigan Royal Commission

The following is a summary of the

illegal activities referred to my office by the Royal Commission which has

required my detailed consideration. I have, for convenience, included those

operational matters adverted to in my

1982-83 Annual Report which have been

further developed since that time.

-175-

References

·chapter 8

(a)

(b)

Volume 1

Bankrupt accountant with large

liability operating companies tax

No tax returns lodged for many years

In my 1982-83 Annual Report I referred

to an accountant who, despite his

bankruptcy£ had been able to control the affairs o many hundreds of companies,

deal in very large sums of money and pay

little or no income tax. A large income

tax assessment involving many millions of dollars was levied against this

person, and subsequently judgement was obtained in the amount of the debt.

Execution in respect to that judgement has been an extremely difficult and

complex matter, as the bankrupt's

affairs are inextricably bound up in the affairs of many corporate entities which he controlled, or which were controlled on his behalf by persons who acted

solely at his direction. The manner in

which this person was able to manipulate the affairs of companies has been drawn to the attention of the Corporate

Affairs Office.

I mus t express grave concern at the ease

with which this person was able to abuse the corporate privilege and ensure that the benefits attaching to the concept of limited liability were utilised at all

times. If companies with minimum (i.e.

$2.) subscription requirements are to

remain acceptable, then the responsible authorities must more carefully monitor those who choose to abuse the privilege of incorporation and defraud creditors who will ultimately have little or no

recourse for recovery.

This person, associated with the

bankrupt referred to in the preceding

paragraph, has been assessed as owing

approximately $A3 . 5m. Judgement had

been obtained for approximately $Al. 3m. Judgement for the balance of that debt

References

-176- Chapter 8

has now been obtained and execution

proceedings have progressed at a swift

pace in the course of the past year.

Approximately $Al. 5m has been recovered from this person, who is still refusing

to re-enter the country for fear of her

arrest by prosecution authorities as a consequence of her past activities. It

is expected that the balance of the

properties rema1n1ng for sale will

result in the further recovery of

approximately $Alm.

( c) The backdating of family trusts to evade

tax

Volume 1

In my 1982-83 Annual Report I described a scheme involving fraudulently

backdated trust deeds to facilitate tax evas1on tor some 250 separate

participants. A task force under my

supervision and comprising Federal

Police and Taxation officers, have now completed their investigations and laid charges. The promoters of the scheme,

including a chartered accountant and tax consultant and employee accountants, have been charged with a conspiracy to

defraud the Commissioner of Taxation. One of the conspirators has already

pleaded guilty while committal

proceedings are underway against the

other conspirators. The substantial

amounts of taxation evaded and the

penalties imposed by the Taxation

Department have now been paid by the

participants involved. At the direction of my office, funds

controlled by the principal promoter and his family were garnisheed under the

provisions of the Income Tax Assessment Act. This promoter is facing a number

or- criminal charges arising out of his participation in this and other schemes, but he has taken a number of legal steps

to try and thwart the Commissioner of

Taxation from recovering the income tax due. The Full Court of the Supreme

Court of Queens land has held that the

Commissioner of Taxation is entitled to require the promoter's solicitor to pay funds held in the Solicitor's trust

account on behalf of his client to the

-177-

References

Chapter 8

(d)

Commissi oner of Taxation, pursuant to

the p r ov1s1ons of s.218 of the Act,

notwit hstanding that those funds are

held on a ccoun t of that client for

payment of prospective legal costs. The High Cour t of Australia held that the

Comm i ssioner of Taxation is entitled to a reasonable time in which to issue an

assessment to the promoter and that if

that person has conducted his or her

affairs in a complicated manner, the

length of time to which the Commissioner is entitled to determine that issue is

likely to be greater. The decision in

each case represents a significant step forward for the Commissioner in dealing with persons who participate in criminal activities and then attempt to rely upon procedural issues to defeat the

Commissioner's attempts to collect

income tax owed by those persons. Each

Court refused to accept that the

promoter and his family were acting in

good faith and denied them relief on the

various issues.

Bankrupt solicitor conducting tax

A former Queensland solicitor and

undischarged bankrupt has been

investigated for his participation in a substantial tax evasion sheme. A large number of charges under the Bankruptcy Act 1966 have been laid ar1s1ng from

activity whilst an undischarged

bankrupt. The charges are to be heard

in August.

(e) Telecom technician aiding SP bookmaker o

Prosecution completed Operation Zebra, a Victorian Police task force , prepared a brief to prosecute a

telecom technician for his involvement in the provision of an illegal telephone service to an SoPo operator. He was

convicted of the appropriate offence

under the Telecommunications Act and

sentenc ed to four months 1 imprisonment. He subsequently appealed against the

severity of the sentence to the County

Court o The appeal was dismissed . The

Judge stated in the course of the appeal

References

Volume 1 -178- Chapter 8

that the appellant, who had a number of

serious prior convictions, should not

have been employed in such a position.

(f) Contempt of and refusal to answer

at the Royal

Volume 1

A number of members of the Federated

Ship Painters and Dockers refused

to give sworn evidence before the Royal Commission in compliance with a

resolution carried at a stop work

meeting on 1 July 1981, not to

co-operate with the Royal Commission. Substantive and conspiracy charges were laid and returnable at the Melbourne

Magistrates' Court in December 1983, but were eventually adjourned until April 1984. The conspiracy charge was, on my

recommendation, withdrawn before the charges were heard. Three of the

defendants were required to re-appear before the Commission and refused to

answer questions in relation to another matter. They were subsequently charged with contempt of the Royal Commission in relation to their conduct on this second

occasion. All proceedings commenced in the Melbourne Magistrates' Court on 21st May. On that day an application was

made to the Magistrate to stay the

proceedings on the grounds that an abuse of process was involved. The Magistrate refused the application but permitted the Defendants time to apply to the

Supreme Court for a writ of Prohibition seeking a stay. The matter came on

before Gobbo J. on 23rd May and

concluded on 24th May when Gobbo J.

refused the application. The abuse of

process claimed by the Defendants

related to the refusal by the Director

of Public Prosecutions to grant the

Defendants an indemnity in respect to

the conspiracy charge which had been

withdrawn. It was said by the

Defendants that they would be prejudiced in the conduct of their defence of the

substantive charges if they were not

granted an indemnity. In refusing their application, Gobbo J. observed that a

stay could not be secured merely because the ferson charged might incriminate

himse f on some other charge when giving

-179-

References

·Chapter 8

sworn evidence in answer to the charge

he was facing. His Honour held that the

time to ascertain an abuse of process is

when, and only when, the second matter

(the conspiracy) is proceeded with. The matter was then referred back to the

Magistrate and the hearing continued .

Proceedings are now part heard, the

Magistrate having ruled on the Sth June 1984 that there was a case to answer on

each charge.

(g) Commercial fraud by merchant bank

Included among the discrete matters

referred to the Office of the Special

Prosecutor, were those which could be

grouped under the nomenclature of

commercial fraud by a merchant bank.

are under

consideration and have now been

inherited by the Director of Public

Prosecutions. Some of the matters which are currently under investigation

include a scheme to evade tax by

allegedly trading in Commodity Futures Contracts together with a further scheme which made use of multiple bank accounts in false names in order to conceal or

launder large sums of money. In many

cases breaches of. the Bankint (Foreign Exchange) may ave been

committed.

Under my supervision a task force was

formed comprising personnel from my

office, the Australian Federal Police

and the Australian Tax Office. In

addition, close liaison was maintained with staff of the New South Wales

Corporate Affairs Office. The Reserve Bank of Australia provided assistance as required. Search warrants were recently

executed in New South Wales and the

material is now under analysis. (h) Fraudulent exploration scheme

In my 1982-83 Annual Report (paragraphs 3.14 at pp 18-20) I dealt with this

investigation in some detail. The

investigation has been completed; 220 Commonwealth offences have been

identified, 80 charges having been laid

References

Volume 1 -180- Chapter 8

Volume 1

against 9 defendants; 4 being chartered accountants and one a financier. Three

committal proceedings have been set down for hearing at the Perth Magistrates'

Court in July of this year with an

anticipated duration of ten weeks . A

large number of overseas witnesses will be required to attend.

In investigating this exploration

scheme, the Royal Commission focused on the apparent fraud perpetrated on those members of the public who invested in

this scheme. The task force under my

management comprising Federal Police, Legal Officers and counsel directed

attention to breaches of Commonwealth law.

A senior legal officer and two officers of the Federal Police spent

approximately six weeks in Hong Kong and Singa pore obtaining evidence relevent to the Commonwealth offences, and the

offences committed in the State of

Queens land.

Pursuant to a Letter of Request the Hong Kong Supreme Court permitted the

examination of some 12 witnesses,

including solicitors and representatives from different financial institutions in Hong By contrast, the Singaporean

authorit1.es refused to give effect to a

Letter of Request which issued from the Perth Magistrates' Court in that access to records of Singaporean financial

institutions was not permitted. The Letter of Request did, however,

enable my officers to obtain

non-financial evidence. Four solicitors and five other witnesses were examined in a Singaporean subordinate Court.

Statements were taken from other

witnesses.

In other parts of this report I

considered specific problems that arisen during the course of

investigation of this scheme.

This particular criminal enterprise important implications for law

-181-

have have the

has

References

chapter 8

enforcement throughout the Commonwealth, which I have considered in some detail

in Chapters 3 and 6. The uncovering of

this illegal scheme and the preparation of prosecutions against those who

promoted it, have occupied the attention of the Royal Commission, this office and members of the Federal Police for a very

lengthy period. Because of the

ingenuity of the promoters and the

complexity of the scheme, protracted

investigation and analysis was required to prepare these matters for

prosecution. None of the prosecutions in relation to this scheme will be

short. I anticipate that the best part

of a year will be taken by our Superior

Courts in dealing with trials arising

our of these prosecutions.

Unfortunately this type of criminal

enterprise, so enervating of law

enforcement and the legal system, is

becoming all too common. Careful

consideration must now be given as to

how law enforcement agencies and our

legal system can best cope with this

sinister challenge.

References

(j) Prosecution pending for kidnapping

(k)

Volume 1

Committal proceedings have been

completed and the defendant is presently awaiting trial on two counts of

kidnapping. Other activities of the

Defendants are still under

consideration. The defendant was

identified by the Costigan Royal

Commission as connected with 18 separate criminal activities spanning the last 14 years and was the subject of an inquiry

by the Australian Taxation Office,

resulting in the issue of assessments to this person. Taxation returns had been

lodged by this person for a number of

years showing "nil" income, and

asssessments were issued pursuant to

s.l67 of the Income Tax Assessment Act. Recovery action will be pursued by the

Director of Legal Services.

Assessment and

-182- Chapter 8

The affairs of an alleged importer of

drugs was referred to me by the Costigan Royal Commission. This person had only one legitimate source of income which he disclosed for taxation purposes.

However, over a few short years he had

accumulated substantial land holdings, as well as substantial personal

property, which were held under at least five aliases and his own name in two

states. At the time the matter was

referred to me, fears were held that

this person might be about to sell or

encumber his assets and leave Australia with the proceeds. At my request tax

assessments were raised. A member of my staff and an investigation officer from the Australian Taxation Office attended Royal Commission hearings at the

invitation of the Royal Commission.

Armed with material obtained from

witnesses before the Royal Commission, and with the assistance of the Deputy

Commonwealth Crown Solicitor's Office, application was made for, and an

interlocutory injunction obtained,

restraining the person from dealing with his assets. was later

obtained for approx1mately $600,000 in favour of the Deputy Commissioner of

Taxation and steps are in train to

realise assets to satisfy the

judgement. This entire exercise was

completed in less than four weeks. The

criminal investigation has continued without disruption.

(1) Bankru t solicitor in com

Volume 1

activities.

A former solicitor, whilst bankrupt,

engaged in company stripping activities on a large scale from wnicb he earned

substantial fees. After tracing the

flow of funds it was established that he

avoided his own taxation problems by not lodging returns, and concealing his

assets by the use of several aliases.

Assessments totalling approximatley $500,000 have been issued to this person and recovery action is being pursued.

-183-

References

Chapter 8

(m)

(n)

(o)

Prosecution pursuant and recovery action

A company associated with persons

connected with criminal activity

referred to me by the Costigan Royal

Commision went into litluidation, owing approximately $50,00 to the

Commissioner of Taxation for unpaid

group tax ins ta lmen t deduct ions. At my

investigation the Deputy Commission

(sic) of Taxation is cons1.dering action against the directors and the public

officer, pursuant to s. 252 (L)(j) of the

Income Tax Assessment Act, including

action for the recovery of the tax

instalment deductions made from

employees' wages.

excess of $Aim ra1.sed. Tax evasion promoter. Assessment in

My advice was sought by the Deputy

Commissioner of Taxation in respect of an alleged conspiracy to defraud the

Commissioner arising from a tax evasion scheme. As a resul.t of my advice the

major promoter of this scheme has now

received assessments totalling

approximately $Aim and I have passed the conspiracy allegation to the Director of Public Prosecutions for his

consideration.

Solicitors' fees off-shore. Assessment to be raised

Members of a firm of solicitors

intimately involved in a fraudulent

exploration scheme arranged for fees to be concealed in an off-shore trust. My

off1.ce has co-ord1.nated the act1.vities of the Tax Office and I anticipate the

raising of assessments against these

individuals.

(p) False interest payments and investment

cla1.m. Assessments to be raised.

Certain investors in a fraudulent

exploration scheme, with the assistance of their solicitors, not only sought to

obtain large claims for deductions by

References

Volume 1 -184- Chapter 8

(q)

Volume 1

reason of their investment in the

scheme, but also intended to make false

for remittance of interest

payments upon bogus loans obtained from overseas. Interest payments were made to assignees from the purported lender. The assignees were the trustees of

trusts established overseas for the

investors' benefit. My office has

passed relevant information to the

Australian Taxation Office for

appropriate action. The Director of

Public Prosecutions would exercise a

number of civil remedies in this area

were he given the ability to do so.

Concealment of assets in web of trusts

and Assessments to be

An accountant, while bankrupt, arranged for the establishment of a large network of overseas companies as part of a

fraudulent exploration scheme . He made many overseas trips and concealed his

own interest behind a network of

and trusts. Staff from my

have been close contact with

investigators from the Australian

Taxation Office in an attempt to unravel the web of companies and trusts and the

flow of funds. My office has

co-ordinated the investigat ions of the Australian Taxation Office with

investigations by the Federal .Police. This person has many beneficial

interests which, almost without

exception, are concealed by the use of

companies. The directors of those

companies are his nominees, and the

shareholders hold their shares in trust for him. Efforts have been made, not

only to assist the Australian Taxation Office with raising assessments in

accordance with his true income, but

also to locate assets and trace the

beneficial ownership of assets with a

view to the ultimate recovery of tax

assessed. This has been no easy task.

It should now be completed by the

Director of Public Prosecutions .

-185-

References

Chapter 8

(r)

(s)

Commercial fraud

ssessments 1n excess o

Investigation of a taxpayer's affairs

revealed a liability to the Australian

Taxation Office in excess of $Alm. The

income was acquired by means of a number of commercial frauds, including sending companies to the bottom of the harbour, the acquisition of companies and

subsequent syphoning off of company

funds, insider trading on various stock exchanges, and the use of mining losses

to convert otherwise profitable

companies into loss companies.

Investigations are continuing into

possible Corporate, Reserve Bank, Crimes Act and Income Tax Assessment Act

offences.

Laundering of income. Investigation

cont1nu1ng.

The investigation of a merchant bank

disclosed a number of individuals

laundering income through the operat1on of false bank accounts. Close liaison

was maintained with the Australian

Taxation Office to enable it to issue

amended assessments against the

taxpayers in question.

(t) Investigation of a tax avoidance

promoter. Assessments contemplated.

The affairs of a tax avoidance promoter came to the attention of this office,

revealing that the promoter was involved in a number of tax avoidance schemes

associated with at least 20 companies

promoting fraudulent schemes. Numerous overseas transactions involving the

promoter and/or one of his associated

companies are currently being

investigated. Crimes Act, Banking

(Foreign Exchange) Regulations and

Income Tax Assessment Act offences are being considered. A substantial

taxation assessment is likely to be

raised against the promoter in the near

future by the Commissioner of Taxation.

References

Volume 1 -186- Chapter 8

(u) Corporate commercial frauds, money

laundering.

As a result of an investigation

conducted by the Australian Federal

Police, the affairs of a group of

companies controlled by three

individuals have been referred to this

office. The individuals concerned have sought to defraud the Commonwealth of

revenue by means of

and the o

misleading tax

returns. The investigations are

continuing into a possible Crimes Act, Banking (Foreign Exchange) Regulations and Income Tax Assessment Act offences.

(v) Defrauding of clients by a solicitor.

(w)

Volume 1

Prosecution under way.

This office and the Victorian Police

Fraud Squad have examined a number of

transactions involving the affairs of a Victorian solicitor, whose practising certificate was cancelled by the Law

Institute of Victoria. Following an

investigation, 29 charges have been laid against the solicitor, including false accounting, obtaining financial

advantage by forgery,

uttering and theft. The matter is still

awaiting committal and trial.

Sales tax scheme involving sale of

merchandise at artifically low market value. Board of review

current. In my 1982-83 Annual Report I outlined

the activities or a group of car

retailers who were involved in a scheme to evade sales tax. The principals in

this particular scheme took out

insurance against any possible sales tax liability, by employing "bottom of the harbour" techniques to strip the

companies concerned. Following the

assessment of sales tax with penalties by the Commission of Taxation, the

principals lodged Notices of Objection against each of the assessments and the Commissioner is now awaiting the outcome

-187-

References

Chapter 8

(x)

of some "representative cases",

involving similar schemes, to be heard

before the Taxation Board of Review.

In the meantime a task force is

continuing to collect and examine the

mass of evidence relating to the

implementation of this particular type of scheme with a view of instituting

proceedings for any offence which may

have been committed under Sales Tax Law, Crimes Act 1914 and other Commonwealth legislation. Social security frauds. Prosecutions

under way.

In my 1982-83 Annual Report I reported

on investigations carried out by the

Department of Social Security and the

Royal Commission into a number of Social Security frauds by members of the

Federated Ship Painters and Dockers

Union. Of the 122 files referred to

this office for further investigation

and prosecution, 65 matters were not

proceeded with for policy reasons, or

because the amounts owing to the

Department of Social Security were

insubstantial and therefore could not

justify the cost of civil recovery

proceedings. The remaining 57 files

have been referred to the Federal Police in four capital cities for prosecution. To date, two offenders have been

convicted, another twe 1 ve have been

charged and are awaiting trial, and the

balance are still under investigation.

(y) Sickness and unemployment benefits under

alias $64,700 over paid. A member of the Federated Ship Painters and Dockers Union was in receipt of

soc1al security benefits from mid 1975 until his arrest in September 1983.

During the period from mid 1976 until

his arrest, he also claimed, inter alia, sickness benefits, unemployment benefits and other pens1ons under

eight false names. T is enabled h1m to

defraud the Department of Social

Security of $64,694.47 in respect to 221

References

Volume 1 -188- Chapter 8

separate offences. He forged and

uttered at least 33 income tax returns

claiming entitlement to the refund of

group tax deductions in respect to certificates which were e1ther

unclaimed, or falsely obtained, relating to work carried out by persons puporting to be members of the Federated Ship

Painters and Dockers Union. As a

consequence of this activity, the person concerned was able to fraudulently

obtain the sum of $4,655.65 from the

Taxation Office. Charged with 293

separate offences, the person was

sentenced to imprisonment for four

years, with a minimum of two and a half

years to be served. He was also ordered

to make reparation to the Commonwealth of Australia in the amounts above

mentioned.

(z) S.P. bookmaker equipment supplied by

Ielecom employee.

During the course of a raid on premises

belonging to a particular S.P.

bookmaker, Victorian Police discovered that sophisticated electronic equipment had been installed by the bookmaker to

facilitate the conduct of his business. The distributor of this equipment was

interviewed and admitted supplying, but not installing the equipment. He was an

employee of Telecom who, from time to

time, supplied Telecom with electronic equipment.

The distributor of the equipment

admitted supplying electronic equipment to a person he later discovered to be an

S.P. bookmaker. Investigation is

continuing into these matters.

References

8. 018 Some of those matters bear further comment.

The bankrupt accountant referred to in paragraph (a) had

judgment entered against him by the Commissioner of Taxation for $5,530,812.28 on 8 September 1983. To date recovery

proceedings have approximately $400,000. Further

assessments exceeding $500,000 have been issued against a

Volume 1 -189- . chapter 8

References

number of his companies.

8.019 The members of the Federated Ship Painters and

Dockers ' Union referred to in paragraph (f) were convicted of all charges and fined. Those convicted of contempt were fined the maximum penalty.

8 . 020 The fraudulent exploration scheme referred to

in paragraph (h) is a prime example of the type of

commerc i al crime that has become common in our community. I add my support to Mr Redlich's comment that:-

"Unfortunately this type of criminal

enterprise, so enervating of law

enforcement and the legal system is

becoming all too common. Careful

consideration must now be given as to

how law enforcement agencies and our

legal system can best cope with this

sinister challenge."

8.021 The person charged with kidnapping and other

offences referred to by Mr Redlich in paragraph (j), has

been referred to and investigated by the Australian Taxation Office. His current tax liability amounts to approximately $190,000.

Other Prosecutions

8.022 It was my policy to disseminate information

where it assisted in the detection of offenders. This

resulted in numerous prosecutions. Many have not been

finalized and so the defendants cannot be identified. Some of the bodies that have initiated legal proceedings or

commenced investigations are:-

Volume 1 -190- Chapter 8

References

Attorney Generals' Department of Victoria Australian Federal Police Australian Taxation Office Commissioner of Corporate Affairs,

(New South Wales) Commissioner of Corporate Affairs, (Queensland) Commissioner of Corporate Affairs, (Victoria) Commissioner of Corporate Affairs,

(Western Australia) National Companies and Securities Commission Police Forces (Various) Australia Public Service Reserve Bank of Australia

Department of Social Security

Various joint task forces involving Australian Federal

Police, State Police Forces and other specialists have been assisted. Amongst the more significant proceedings

finalised are:-Francis Kinsella

8 . 023 He had failed to appear in Brisbane in July

1974 to answer charges of possession of stolen property and attempted murder. In November 1981, as a result of Federal and State Police enquiries and following identification of him using a false name, he was extradited to Queensland to

answer those charges.

Naval Dockyard Fraud

8.024 Painters

Eighteen and Dockers members of

Union were the Federated Ship

convicted in 1981 in

relation to forging and uttering Medical Certificates.

John Allan Wallace

8.025 Commission Detected as being

by in

Federal Police attached possession of heroin. to

He

my was

convicted and imprisoned. Subsequently he was convicted of

Volume 1 -191- Chapter 8

References

a major drug trafficking offence and was imprisoned for six years.

Peter Wilfred King

8. 026 The offender was a Ship Painter and Docker

involved in frauds on the Australia Taxation Office with i n preparation of some forty fraudulent returns. He was

inves t igated by the Federal Police regarding frauds in

claiming unemployment and sickness benefits under seven false names. Approximately $64,000 was defrauded from the Department of Social Security and some $4,500 from the

Australian Taxation Office. He is referred to in paragraph (y) of Redlich's Report. He was charged with some 290

offences under the Crimes Act 1914. Two charges related to the theft of telephones and another to unlawful possession of a firearm . He pleaded guilty to all charges, was

imprisoned for four years and ordered to r e pay the stolen

moneys.

Donald Brooks Lockyer

8.027 In August 1983 he was convicted of offences

under the Bankruptcy Act a nd he was imprisoned for six

months. In October 1984 he was convicted of further

offences and sentenced to 18 months imprisonment. He is

awaiting trial on charges of conspiring to defraud the

Commonwealth.

Russell Charles Meldrum

8.028 He came to notice as a result of enquir ies in

S.P. bookmaking operations in Vic t ori a. He was c onvicted of breaching the Telecommunications Act and sentenced to four months imprisonment.

Volume 1 -192- Chapter 8

References

Outstanding Matters

8.029 Other substantial matters where investigations

are proceeding and/or charges laid but have not been

finalised include those summarised hereafter.

Australian Federal Police

8.030 Warrants issued with respect to forging and

uttering false passports. under the Passports Act,

rna tters invo 1 ving $3 00, 000)

Investigations regarding offences Social Security Act (some 100

Bankruptcy Act, Crimes Act and

Taxation, Reserve currently underway. Bank and Companies Legislation are

The Federal Police were also involved

in various joint task forces investigating matters relating to drugs, currency offences and pornography. There are many investigations being carried out by this identified by my Commission. I have

information to the Australian Taxation

force on matters recently Office, provided

which is

working with this force, about major frauds by painters and dockers employed by a Sydney ship repair firm. These

investigations involve "ghosting". The revenue has been defrauded of at least $36,000. The same group are involved in Social Security and Workers Compensation fraud. One

recent referral to this force deserves special mention. It

involves the activities of the bankrupt accountant referred to in Paragraph (a) - of Special Prosecutor Redlich's report. I have recommended the bankrupt and a dismissed bank manager and other associates be investigated with respect to

possible offences arising out of their loan raising

activities and offences under the Bankruptcy Act and Crimes Act.

Volume 1 -193- · chapter 8

References

Commissions of Corporate Affairs (Various States)

8.031 Numerous matters have been referred. The

investigations are assisted by the Federal and State Police Forces. In New South Wales, at least three corporate

structures are being investigated as well as many

individuals. In Queensland, the operation of a large oil

exploration scheme and other companies used in illegal tax avoidance schemes are under investigation. The Western

Australian and Victorian Corporate Affairs Offices are

investigating the affairs of companies involved in illegal tax avoidance schemes. Many charges have been and will be

laid. The investigators are looking at company, crimes and security legislation offences. Numerous individuals have and will be charged with conspiracy. The National Companies has been assisted in its and Securities Commission investigations by my officers. I have recommended that the Commissioner of Corporate Affairs in Queensland investigate with a view to charging certain offenders with breaches of

the Companies Code in relation to:-(a) the control and management by the

accountant of companies in Queensland

whilst a bankrupt;

(b) the transfer of a debt of $1.9 million

from Company "A" to Company "B" in

circumstances where it would be

reasonably known that Company "B" would not be able to meet the debt, the result

being that the bank then employing the

dismissed bank manager was likely to be

defrauded, and

Volume 1 -194- Chapter 8

References

Joint Task

8.032 been of

Information collected by assistance to Federal/State my Commission has

Police task forces.

Such a "task force" in Queens land charged ten people with

drug-related offences.

State Police Forces

8.033 Assistance was provided to various state

,:>alice forces in addition to specific matters that are

referred for investigation and prosecution. In Queens land, four men are awaiting trial on charges of conspiracy to

defraud the public with respect to an oil and gas

exploration venture. A major SP bookmaker was arrested and is now awaiting trial in Queensland. Three Queenslanders were arrested and convicted on charges of selling dangerous drugs and have been imprisoned. I referred to the

Queensland Police, the accountant and his associates

mentioned in the previous paragraphs. they be investigated with a view to:-I have recommended

(a) charging them with appropriate offences

as a result of their share trading

activities which resulted in substantial loss to the then Bank of New South Wales

and a Brisbane sharebroking firm;

Volume 1 -195- .Chapter 8

(b) laying charges as a result of false

statements made in relation to the

granting of a bank loan of $15,000 said

falsely to be for home improvements; and (c) laying charges as a result of the

discharge of loans amounting to

$17 5, 000. The discharge of these loans

was made in order to release shares held

by the lenders as security, free from

further encumberance.

References

The Queensland Police are to investigate the dismissed bank manager following my referral. He allowed his employer bank

to be defrauded of a sum in excess of $100,000.

8.034 I have assisted the Victorian Police in a

variety of investigations into such matters as fraud on a

I

building society, murder, drug offences and SP operations. In respect of SP operations I have provided the Police with information, and material obtained by analysis and

processing of documents collected during my investigations. As a result two ex-bank managers have been charged with

criminal offences and two men have been charged with

kidnapping. One has also been charged with sixteen counts o f theft and common assault. I have passed on information

relating to an ex-bankrupt/ex-solicitor who was subsequently charged with twenty-nine offences including forgeries, utterings, obtaining property and financial advantage by deception, false accounting, theft and procuring the

execution of a valuable security.

Volume 1 -196- Chapter 8

References

Other Referrals

8. 035 In the course of my enquiries, I have come

into possession of information that referred to various

professional bodies, Registrars and employers. Some of the more significant matters are:-

Volume 1

Attorney-General's Department (New South Wales):

Keith Knight:

As a result of certain false statements

contained in his application for

admission as a barrister, details of

which I reported to the Attorney-General, this man's name was removed (by order of

the Supreme Court) from the barristers

roll. In August 1984, a fellow

practitioner who supported Knight's

application in circumstances which

suggested he may have been a party to a

deception was also reported but it was

determined that no action be taken to

charge him for mis-conduct.

A business man involved in illegal tax

schemes and massive frauds upon the

revenue has also been referred regarding his position as a Justice of the Peace .

-197- . Chapter 8

References

Banks

This matter has not yet been determined.

Attorney-General's Department (Victoria): Guy Keith Campbell:

Following an investigation of his affairs by me be was referred regarding his

position as a Justice of the Peace. His

commission was withdrawn.

Thomas Buckingham:

His commission as a Justice of the Peace

was withdrawn with respect to malpractice in the execution of his duties.

Australian Society of Accountants: Keith Knight was referred to the New

South Wales branch following my

investigation of his affairs and the

failed merchant bank group of Ward Knight and Dunn Pty Ltd. In December 1982, he

voluntarily withdrew from his membership of the Society and no longer practices as an accountant.

8.036 The activities of bank officers and their part

in the furtherance of a range of

from tax avoidance, illegal

matters. officers

bookmaking were serious against some of the

employers and police forces.

illegal activities ranging company dealings to SP

Action has been taken

involved by both their

Banks showed a similiar

complacency in regard to their staffs' activities as did

some bank officers towards the illegal activities of their customers. The banks that took remedial action as a result

of my investigations, were:-(i) National Australia Bank

Volume 1

Enquiries revealed breaches of banking regulations. These involved false

-198- Chapter 8

References

bank · accounts. Disciplinary action has been taken against at least three senior

officers. State Savings Bank of Victoria As a result of Commission enquiries a

bank manager was demoted, removed from

his branch and denied the right for

promotion of some two years. He elected

to resign shortly thereafter. Some

$70-80,000 is still owed to the bank as a

result of his illegal dealings. Supreme

Court action to recover $65,000 from a

notorious SP bookmaker has commenced. A bank accountant was initially demoted

following illegal activities identified by my enquiries. Subsequently it was

discovered he had given himself a

personal loan in a false name. No

payments were made. He was dismissed and charged with and convicted of theft by

deception. Westpac Banking Corporation

As a result of my investigations three

bank managers from the CBA bank had

disciplinary action taken against them. A Melbourne bank manager was dismissed because of his illegal dealings with a

corporate criminal who has also been

charged with various offences including kidnapping and assault. A loss of some

hundreds of thousands of dollars was

caused to the bank by his illegal

actions. The Manager has been charged by the Victorian Police with twelve charges of false accounting. Two New South Wales bank manag·ers faced disciplinary action

as a result of my investigations. One

was dismissed and the other demoted.

BARRISTERS BOARD OF WESTERN AUSTRALIA

Abraham Bereave

8.037 Following referral Bereave was investigated

and convicted of two counts of unprofessional conduct. The Supreme Court subsequently ordered he be struck off the roll of practitioners. His appeal was dismissed. He has sought leave to appeal to the High Court.

Volume 1 -199- · Chapter 8

References

LAW INSTITUTE OF VICTORIA

Galbally & O'Bryan

8. 038 Evidence was given by Mr Frank Galbally, a

principal in this firm, that monies held under the name of

" subsidiary account" appeared to consist of monies held on behalf of clients but not placed in his trust account. This

procedure did not appear to comply with the requirements of t h e Legal Profession Practice Act and the Rules made under

it. The matter was investigated by the Law Institute of

Victori a. It found that any breaches of that Act had

resulted directly from incorrect advice and supervision b y the firm's auditor. The auditor was reported to the

Australian Society of Accountants. As a result of the funds not being placed according to the Act the Solicitors

Guarantee Fund suffered a loss of income. The firm was

required to pay a sum of $8,378 to the fund representing

l ost interest. In view of the circumstances in which the

"subsidiary account" came into being no action was taken

against Mr Galbally or the firm of Galbally and O'Bryan.

Public Service Board (Commonwealth)

8.039 As a result of matters reported in Interim

Report No. 4, involving mainly illegal tax schemes, three

members of the Attorney-General's Department Perth, were charged under the Police Service Act. One member, Mr

Bercove, was subsequently dismissed and two others were

disciplined.

Volume 1 -200- Chapter 8

References

PROSECUTIONS ARISING FROM CONDUCT DURING COURSE OF THE COMMISSION'S HEARINGS

8.040 By reason

course of the Commission matters for prosecution.

of conduct occurring during the

hearings, I referred a number of

The following were convicted:-

(i) John Andrews

Convicted in September 1983, by the

District Court (New South Wales) on three charges of giving fal s e testimony. He

was placed on bond in the sum of $1,000

to be on good behaviour for three years

on two charges and on the third charge

was sentenced to two months imprisonment.

(ii) The Giannarelli Br others

Volume 1

As a result of evidence these four

brothers gave before me in October 1981, relating to their banking arrangements, they were subsequently sent for trial on charges of perj ury.

In March 1983, Emilio, Giovanni and Mario Giannarelli were convicted. Giovanni and Mario Giannarelli we r e both sentenced to two years imprisonment. Emilio was

placed on a good behaviour bond for five

years in the sum of $2,000. An appeal to

the Full Supreme Court of Victoria was

dismissed in April 1983 as to both

conviction and sen tence. In June 1983

Guiseppe Giannarelli was convicted of

perjury sentenced to fifteen months

imprisonment.

Mario and Giovanni Giannarelli

successfully L:ppealed to the High Court . Subsequently Emilio and Guiseppe

Giannarelli appealed to the Full Court of the Court of Victoria; their

were quashed and their

sentences set aside on the ground of

inconsistency of the common law of

perjury with the relating to

perjury in the Royal Commissions Act. As they had all served imprisonment,_ it was resolved not to prosecute the

Commonwealth offence .

-201- · Chapter 8

These men had all deliberately lied on

oath but escaped conviction on technical grounds. I recommend that the Royal

Commissions Act be amended so as not to

exclude the application of State laws

to perjury where a joint

CommissLon is being conducted.

Moreover I recommend that the provisions of the Royal Commissions Act be amended

so as to delete the requirement that the

false answer be shown to be "material" to the Inquiry. A great deal of time and

money can be spent, particularly in a

complicated investigation, in

establishing this matter when in truth

the only question is whether a witness

has chosen to lie on oath. I note that

in most jurisdictions "materiality" was removed as a requirement many years ago, and for good reason.

References

Roy Holman

8.041 Holman was convicted and fined in March 1982

in the Supreme Court of Victoria on two charges of refusing to answer questions before the Commission in breach of the Victorian Evidence Act.

Dennis Lowe

8.042 Lowe was convicted and fined in March 1982, in

the Supreme Court of Victoria on two charges of refusing to a nswer questions before the Commission contrary to the

provisions of the Victorian Evidence Act.

Executive Members of the Victorian Branch of the Ships

Painters and Dockers Union

8 . 043 On 2nd August 1984, Phillip John Scott,

Douglas Maxwell Sproule, Robert John Dix, Guido Spiller, Roy Leslie Holman and Paul John Burns, Executives of the

Victorian Branch of the Union and Francis Kinsella, a former

Volume 1 -202- Chapter 8

References

member, were convicted and fined for refusing to answer

questions as directed by the Commission. Scott and McDonald were convicted of contempt and fined on charges.

8. 044 There are five witnesses who have yet to be

dealt with on charges of perjury anq giving false testimony and two others who have been charged with refusing to answer questions. Two accountants are under investigation with respect to charges of giving false testimony.

Volume 1 -203- Chapter 8

CHAPTER 9 - TRANSFER TO NCA

Introduction

This chapter deals with the transition of the work of my Commission to the National Crime Authority. In

recent weeks there has been presented to the Parliament

copies of the correspondence between myself and Government relating to this matter. In the course of this chapter I

refer to that correspondence. I need to do so in order to

put into context recommendations which dppear towards the end of it.

Despite the frank and robust differences of

view expressed in this correspondence I have never had any doubt that Government was anxious to maintain the attack on organised crime. The Commission has had great support from b o th Prime Ministers for which I wish to record my

appreciation.

History

9.001 Report.

On 27 July 1982 I delivered my Fourth Interim

In it I described the operations of criminal

organisations in Australia. I gave an account of the extent to which many investigations had progressed. I isolated and defined the objective which the good Government of Australia required to be attained, namely the suppression of criminal organisations. I described what was r8quired to achieve

this objective, stating the systems needed, the

qualifications of the persons who should be employed, and the manner in which the job should be done.

Volume 1 -204- Chapter 9

Transfer to NCA

9.002 ·shortly prior to the delivery of the Fourth

Interim Report I had written to the then Prime Minister, the Right Honourable Malcolm Fraser. I had previously held

informal discussions with the Hinister for Administrative Services, the Honourable Kevin Newman, which had resulted in a letter of 6 May 1982. I had drawn attention to the

magnitude Commission allowed.

of the problem

completing its I had said:

and task the impossibility within the time

''I am aware that the Government is

considerinft the formation of a "Crime

Commission'. Indeed as I indicated to

you it was my intention as part of a

final report to discuss the alternative

methods available to Government to deal on a permanent basis with the kinds of

problems uncovered by this Commission. Such a report may well be pre-empted by

Government decision but I would not

expect such a decision to be made

quickly: a very considerable

investigation of various alternatives will no doubt have to be made before the

form of any such permanent structure is

determined.

In the meantime this Commission has a

job, and I believe a very imp or tan t job

to do. It will not be done quickly, but

will be done thoroughly. It will not be

completed when I return my letters

patent, for crime is an on-going activity and the directions of my investigation

will have ·to be pursued by someone or

some body when I have finished. But when

I am to finish depends on the view

Government takes as to its future role in

and attitude towards the attack on

organised crime. My feeling at the moment is that this

Commission requires a significant

extension of time ... "

(Letter from the Commissioner to The Han. Kevin Newman 6 Hay 1982)

of my

then

Volume l -205- Chapter 9

Transfer to NCA

9 . 003 I n my letter of 29 June 1982 to the Prime

Minister I referred him to this letter of 6 May and

requested an extension in the order of 2 to 3 years. No

immediate response was received.

9 . 004 The delivery of my Fourth Interim Report

fo llowing this request gave greater impetus for the creation of a Crime Commission. Most of the recommendations in the

Fourth Report were accep ted and implemented. The implicit recommendation that a Crime Commission was required was also a ccepte d. However, in all the discussions at that time and

t h e r eafter, even following the change of Government, the

r esponse to requests of the most fundamental character, such

as t he grant of an extension, was always long in coming.

Indeed I had received no official response to my letter of

29 June 1982 by October of that year, and the eventual

exte ns ion was not granted until a tew days before my

Commission e xpired. This made the task of budgeting for the

f uture very difficult a n d created great uncertainty amongst the staff, many of whom were not members of the Public

Service and had no security of tenure.

9 .005 By October 1982 the Government's intention to

es tablish a Crime Commission became known. I was required

to budget for the forthcoming year. I had been informed it

wa s intended the new Commission would take over the basic

structure, premis es and equipment of my Commission. If that was to be the case then, in budgeting, it was sensible to

pr ovide for the expansion of the staff, equipment and

techniques in anticipation of the new Commission adopting t hem. On 4 October 1982 I wrote to the Prime Minis ter

info rming him of my intention and pointing out t hat if this

was not acceptable my proposed budget should be rejected and I should commence winding down my staff and operations.

Volume 1

" ... The Commission now

guidance as to its future

this is an urgent need.

-206-

needs some

planning and

Chapter 9

Transfer to NCA

Its future planning is clearly affected

by the nature and timing of any decision

about a future National Crime Commission or other permanent structure. As I

understand current Government thinking, it is proposed that when a new body is

set up it will take over the basic

structure, premises and equipment of my Commission. If this understanding is in

beneral terms correct then it would be a

comparatively easy matter for me, after a suitable period of overlap, to hand over my investigations to that new body.

l4y immediate problem is that the extent

of my present investigations requires

expansion of staff, equipment and new

premises. My present premises are

with documents and people;

as desks are vacated for a short period

they are immediately occupied. This is

highly inefficient. Massive new loads of documents are expected shortly; they are extremely important and require detailed analysis.

The staff of the Commission have prepared a fresh budget for the financial year

ending 30 June 1983. It is proposed to

be handed to the Department of

Administrative Services this week. It is based on the assumption that the new

National Crime Commission will be taking over at the appropriate time. That is

the only reasonable assumption on which it could be drawn. If I did not make that assumption the

budget would need to be prepared on the

basis of a · winding down of the Commission about March next year with a view to

final report by the end of June. Such a

basis would prevent me from budgeting for the facilities and staff which I need

properly to continue my work. Moreover

there would not be the ability to

maintain my investigations in areas which my successor would expect to see

investigated when he took over my job.

Volume 1 -207- Chapter 9

9 .006

Transfer to NCA

I therefore ask for approval in principle to the basis on which I have prepared the

budget. If that basis cannot be approved at this stage it will be necessary for me

to commence the winding down and

disbandment of the current organisation with the result that any new structure

would be gravely impeded in its

commencement.

This letter is written on the basis that

the Commission's term has been extended to 30 June . (I note that the Victorian

Government has extended my term to 31

December.) Whether this is a realistic

date having regard to the extent of my

investigations depends on the speed with which a new viable structure is available to take over my work. I do not

underestimate the difficulties this will pose." (Letter Commissioner to the Prime Minister 4 October, 1982)

Within 24 hours of despatch of that letter the Acting Attorney-General, The Honourable Neil Brown, said I s hould proceed to budget on that understanding. I did so

and a budget was prepared which envisaged an expanded

Commission, occupying larger premises, designed for the

permanent home of the Crime Commission. The budget was

submitted for approval and accepted.

9 .007 On 25 October 1982, after the budget had been

approved, the Prime Minister replied to my letter noting my intentions and acknowledging that a transition from my

Commission to the new Commission was envisaged. It also

noted that the new Commission may be located in Canberra, which possibility precluded development of the premises in Me lbourne. Otherwise my Commission was to continue with the

development of techniques on the basis that its expertise

would pass to the new Commission.

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11 As the Acting Attorney-General has

discussed with you the Commonwealth for its part has agreed to extend your

Commission to l July 1983 on the

assumption tha t the National Crimes

Commissio n will be available to commence operations early in 1983. The Government recognises the need to allow for an

orderly transition between your

Commission and the new body. It would,

if necessary, consider extending your

Commission beyond l July 1983 to ensure

that this occurs. You have indicated an urgent need for

some guidance for the Commission's future planning. While the Commonwealth does

not seek to direct the Commission as to

how it should carry out its functions, it

sees certain areas of priority for action by the Commission in the remainder of its

term •..

I am asking the Acting Attorney-General to speak further with you and with Mr.

Cain, in relation to the future

activities of the Royal Commission and

the transition to the National Crime

Commission.

I note that you have prepared a fresh

budget for the remainder of this year

envisaging the expansion of staff and

equipment and new premises. The Minister for Administrative Services will be

considering these estimates and the best way of meeting your needs during this

period. This needs to be in the context

that the National Crime Commission may be located i-n Canberra rather than in

Melbourne."

(Letter Prime Minister to the Commissioner 25 October 1982)

The suggestion that the new Commission would b e s eated in Canberra made nonsense of the budget, by now

a pproved , in which premises were to be developed in

Melbourne . It alsd made difficult to justify the employment and training of staff recruited in Melbourne. It was not a

sensible location, for in Canberra it would be far removed

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from the geographical location of the operations of criminal organisations. It left me in a quandary as to what I should

do , since I had no wish to expend the public purse on a

false basis. On 4 November 1982 I again wrote to the Prime

Minister pointing out the difficulty created by the

possibility that the location may be in Canberra and seeking advice as to what should be done. I received an

acknowledgement of the letter, but no clarification.

Volume 1

''I think I should say at the outset that

I find the contents of (the Prime

Minister's letter of 25 October) very

d isturbing.

When I wrote to you on 4 October I

indicated · the urgent need for some

guidance as to the Commission's future

planning and advised you that unless

otherwise advised I propose to prepare a budget for the rest of the life of the

Commission on the basis that the expanded staff numbers, new premises and

additional equipment, could form the

basis of a proposed National Crime

Commission.

Within 24 hours I was advised by the

Acting Attorney-General that I should

proceed on the basis set out in that

letter. As a result a budget has been

prepared and delivered. Inspection of

new premises has been undertaken and

recommendations made and a new staff

proposal has been prepared.

I am now advised that the location of the

National Crime Commission may be Canberra.

Such a proposition completely destroys the basis on which I wrote my letter of 4

October and on which I have taken the

steps outlined earlier in this letter.

Let me explain this statement.

l. It has been contemplated in all my

discussions with the Government and particularly with the

Attorney-General, Senator Durack, that when a Crimes Commission was

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established my Commission would need a further six months. This would be

made up of three months handover period and three months for

preparation of a final report. Such

a handover assumed that the great

bulk of the staff presently working with the Royal Commission would

change over to the Crimes

Commission. They would maintain for the benefit of the Crimes Commission their expertise and their very

extensive range of personal contacts with law enforcement agencies

developed slowly over the last two

years. The new members of the

Crimes Commission would then be able to take over a continuing and

experienced staff and operation

already occupying suitable premises.

2. However if the Crime Commission is

to be based in Canberra, the

scenario changes. It is extremely

unlikely that any of the existing

staff would move to Canberra or

leave Melbourne. A completely new operation would have to be set up

and new premises acquired.

3. In those circumstances talk of a

relatively simple handover in three months is no longer appropriate.

Indeed I have grave doubts whether

my position as Royal Commissioner

for both the Commonwealth and the

Victorian Governments would fit

easily into the far more massive

operation which would then be

required.

4. Moreover since I wrote to you on 4

October your Government has

announced its decision to proceed

with the establishment of a National Crime Commission independently of the States, though hopefully with

their support and cooperation. Let me make it clear that I make no

comment on that decision. It is the

decision for Government to make, but it may in due course be a matter on

which I would need to take advice

from your Government and the

Victorian Government whether I

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could, acting under letters patent

from both Governments, actively

assist the operation of such a

Commission unless both Governments consent. I think it is appropriate

for me to say having regard to

experience I have gained and the

insight I have acquired in the last

two years that I would regard it as

a disaster for the Crime Commission to be located in Canberra. Such a

decision would make it difficult to persuade the appropriate people to staff and lead it, but far more

important is the undoubted fact that organised crime is not based in

Canberra. It operates in Melbourne and Sydney and the other large

seaboard cities of the country and

investigation into and an attack on it must be located in a place where

instant response can be organised

and access to information, both

documentary and personal, is easy.

In the result I am left in the same

dilemma that I raised in my letter

of 4 October. If I am to act on the

basis that I am to conclude my work

by 30 June 1983 and a Crime

Commission is not going to be

located in Melbourne it would be

impossible for me to justify the

considerable expense of new staff, new equipment and new premises.

Current predictions are that such

new premises would not be available before March 1983. It would be

unconscionable to contemplate such expenditure for an occupation of

approximately 3 months. In any

event the Commission would not be

expanding on that assumption but

contracting. I must therefore ask you as a matter

of urgency to advise me on the

assumption on which I am to plan the

remaining life of the Commission ... "

(Letter Commissioner to the Prime Minister 4th November, 1982)

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9.009 The Government had announced the intention to

establish a Crime Commission. A Bill was introduced into

the Federal Parliament on 21 October 1982. In the second

reading speech the Acting Attorney-General drew attention to the part of my Fourth Interim Report in which I described

the requirments for a successful Crime Commission.

"Several recent Royal Commissions have demonstrated that they are able to uncover and bring to public notice instances of

wrong-doing not detected by ordinary law enforcement agencies. These include the Costigan Royal Commission into the

Activites of the Fede rated Ship Painters and Dockers Union, which attributes its

success in this regard to first, its power

as a Royal Commission to require by

subpoena the production of documents and the attendance of persons for examination - this power is not of course possessed by

the police; secondly, its access to

equipment and expertise to enable

sophisticated intelligence gathering and analysis; and, thirdly, the use of

personnel with high intellectual capacity and special training.

(Acting Attorney-General Hansard 21 October 1982)

9 .010 In the context of the correspondence then

passing between me and the Government it was clear that the adoption of my staff, premises and techniques were seen as desirable and, subject to resolution of the debate as to the site of the new Commission, it was to be done.

9.011 The Bill steadily moved through Parliament.

During its course an amendment was made by which the

privilege against self-incrimination was to be allowed to witnesses and was to extend to their personal documents.

This raised difficulties as to my disposal of evidence, more particularly documents, which I had seized in circumstances in which the privilege did not apply. Now believing that

all were agreed that the new Commission should have access to everything I held, on 25 November 1982 I wrote to the

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Acting Prime Minister, drawing his

difficulty I would encounter in handing attention to the

those documents to

the new Commission in the absence of any statutory authority o r requirement to do so. It would allow the new Commission

to gain from me what it was precluded from obtaining

itself. There seemed some difficulty with certain advisers in the Government in grappling with this problem and that

difficulty continued to mark the dealings between me and

those advisers, even following the change of Government in 1983. In my letter of 25 November 1982 I said:

Volume l

"In my letter of 4 November I raised a

number of matters which related to the

ease of handover of my work to a National

Crime Commission. One further problem

has arisen which I have discussed with

Mr. Brown and Mr. Newman. That problem

arises from the so-called Spender

amendment to the National Crime

Commission Bill which enables a witness to claim self-incrimination in relation to documents. You will understand having regard to the way in which my Commission

had been conducted that I would regard

such a restriction on the National Crime Commission 1 s powers as very limiting .

indeed. Once again, of course, this is a

matter for Government policy. It does

however have a concern in relation to the easy handover of my work. If that

amendment had not been passed I would not have seen very much difficulty in handing over to the National Crime Commission the documentation which I currently hold.

However if a National Crime Commission is precluded from acquiring documents which may tend to incriminate a witness, then I

do not know how I could properly hand

over to such a Commission documents in

respect of which such a claim for

privilege might be taken. It would be

quite wrong for me to give to a National

Crime Commission through a back door

documents which it could not acquire

itself because of the amendment. This is

a very serious problem which would

require a good deal of thoupht if the

amendment remains in the Bill.'

(Letter Commissioner to Acting Prime Minister 25 November, 1982)

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9.012 The Bill was passed but before proclamation

there was a change of Government. I immediately wrote to

the new Prime Minister, the Honourable R.J. Hawke, A.C.,

M.P., seeking advice as to the future of the Crime

Commission. I drew attention to the emasculation of the

powers of the Crime Commission. I pointed out that if the

new Government proceeded with the existing Act, and if it

wished there to be a transfer from my Commission to it, a

three month period of co-existence between the new body and mine was necessary for investigations interruption and for the transfer to

to

be continue without effective. My

letter was dated 15 March 1983. In it I said:

Volume 1

11 What is required for the efficient and

necessary continuation of the

investigations of this Commission is that there should be a body in existence (at

least three months prior to my demise)

vested with the appropriate powers

enabled to maintain, without

interruption, my work. If the Government proposes to review in

depth the National Crimes Commission Act (and I do not for a moment suggest it

should not adopt this course) such review will obviously take a good deal of time,

perhaps beyond the end of this year. If

such reconsideration does not eliminate the Spender amendment and eliminate legal professional privilege, then a new Crimes Commission will not be able to take over

my work efficiently.

If it is the Government's desire that my

current investigations are to continue, a serious question arises as to how this is

to be achieved. One answer would be to

request me to continue my work beyond the end of this year. Whether such a request

should be made depends on the answers to

the matters raised in the preceding

paragraphs. 11

(Letter Commissioner to Prime Minister 15 March 1983)

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9.013 At this time the Report of the Royal

Commission of Inquiry into Drug Trafficking was submitted. It drew attention to the need for a Crime Commission and it

identified a number of deficiences in the unproclaimed Act in addition to those which I had identified. I pressed the

Government to give the matter further consideration. I was met with the answer that the immediate proclamation of the Act was envisaged and an invitation to accept the position of Chairman, or at least as one of the Commissioners, if not

Chairman. This was put during meetings I had with the new

Attorney-General, Senator Evans. In a letter of 25 March

1983 from me to the Prime Minister I reported upon those

discussions and my answer:

Volume l

"In my recent letter to you dated 15

March I indicated various questions which needed to be considered in terms of my

Commission and which could be a useful

basis of discussion.

I had such a discussion with the

Attorney-General last Monday. I have

since had two telephone discussions with Hr. Andrew Menzies, Deputy Secretary of the Attorney-General's Department, the · most recent of which was yesterday

afternoon. I am extremely disturbed by the

implications of those discussions. At the meeting with the Attorney-General it became clear that rather than contemplating an indepth consideration of

the Crimes Commiss ion Act, it wa s

intended with considerable expedition to proceed with the proclamation of the

existing Act. I was asked whether I

would be prepared to take on the job of

Commissioner. I said I was not. I will

return to the reasons for my attitude a

little later.

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Yesterday I was informed by Mr. Menzies

that the new suggestion was that the

Commission be set up with Sir Edward

Williams as Chairman, myself as number

two member, and Professor Ronald

Sackville as the third member. I

explained to Mr. Menzies that I had

already informed Sir Edward Williams that I was not prepared to accept a position

as a member of the Commission which was

in my view not able to do the job

effectively. Yesterday I sent to you a draft copy of

lectures prepared by Mr. Douglas Meagher Q. C. on the problems of organised crime

and the appropriate methods to deal with it. These illuminating papers outline

the many and varied matters which need

thorough and lengthy consideration before a final decision as to a permanent

structure is made. Although prepared

without access to the Report of Mr.

Justice Stewart and without knowledge of its contents that Report is in

substantial agreement as to the

deficiencies of the current proposals. The present Crime Commission Act is the

product of hasty consideration. It would be a great tragedy for this country if

the opportunity now presented to your

Government to consider these matters in depth with an input from a wide range of

interests in the community was not taken.

Volume 1

May I therefore urge you not to proclaim

this Act in haste. In its present form

it will not achieve the purpose for which it was intended. On a personal note let me refer to the

offer made to me to head the Commission.

I explained to the Attorney that I was

not prepared to accept this position.

The fact is that my present job has been

extraordinarly demanding and has had

considerable effects on my personal

life. My first preference is to return

to practice at the Bar from which I have

already been absent for 2 1/2 years. To

be absent for a further 2-4 years would

make more difficult that return. The

Attorney then suggested I would be

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assured of a Federal Judicial

appointment. This is an outrageous

suggestion. Quite apart from the fact

that I do not presently have judicial

ambitions having rejected offers in the past, it is quite wrong to regard

appointments to the Bench as a convenient method of solving other problems. One

such unfortunate appointment has already been made. But more significantly any

person holding the position of Chairman of a Crimes Commission must do so

completely independent of any hope or

promise which may be based on his

performance in his job. It was put to me on the basis that I

would have to accept a much lower

salary. Even if I was offered the

position of Crime Commissioner of a

properly set up Commission on a

barrister's fee level I would have to

consider seriously whether I would wish to accept the position. The level of

salary is not a major factor. I would

not be prepared to lend my name to the

present Commission because I am convinced it cannot do the job it is supposed to

do."

(Letter Commissioner to Prime Minister 25 March 1983)

9.014 At this time my senior assisting counsel had

been invited to deliver papers at the ANZAAS Conference in Perth. I urged him to take the opportunity to do so

believing that the new Government as much as the old desired public debate on the proper response to the problem of

organised crime. The papers were delivered to the Prime

Minister before they were published and every indication was given that publication of such matters was desired.

Officers of the Department of the Special Minister of State attended their delivery and there was much public debate

stimulated by them. Amongst other things those papers

debated the proper role for a Crime Commission, and the

powers that were required for it to do its job effectively.

A copy of those papers is to be found in Appendix 1-G. This

led to acceptance that there should be more intensive

consideration given to the nature of the Crime Commission.

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There had been no ·opportunity for those groups concerned with civil liberties to voice their opinion; nor for others in the community to have their say. Though my views

differed markedly from many of these groups, I was firmly of the opinion that debate was required. To that point the

debate had been marked by a most inadequate understanding of the issues involved. The response was a National Crime

Seminar held in the Senate Chamber at the end of July 1983.

I attended, together with my senior assisting counsel, and participated in the debate. Opportunity was given and taken for all manner of views to be expressed. Both I and my

senior assisting counsel made it clear that neither of us

was available for appointment to the new Authority no matter what shape it may take.

9.015 At this time I delivered my Fifth Interim

Report. I took the opportunity to express further views on

matters relating to the proposed National Crime Commission. Those views were published just prior to the Crime Seminar taking place and provided a further contribution to the

debate.

9.016 In the meantime the work of my Commission was

continuing. On 25 April 1983 the Prime Minister, the

Special Minister of State and the Attorney-General attended at my Commission 1 s premises where they were given a short

briefing of some two bours' duration by my senior assisting counsel on the operations of the Commission. This briefing was directed at the operations, as distinct from the

operational techniques, which required much longer to

impart. At the close of that briefing there was further

discussion between the Prime Minister and me as to the

location of the new Crime Commission, the Prime Minister

agreeing it should not be located in Canberra. The Prime

Minister made clear the Government's resolve for there to be a Crime Commission, and again publicly affirmed that

intention at the Seminar in the Senate Chamber in July. He

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reques t ed that the work of my Commission should focus upon

drug trafficking , and should proceed unt il the new Crime

Commi s sion was establi shed.

9.017 With these clear declarations by the

Go vernment, planning and operations within my Commission

were conducted on the basis that they would be taken over by the new Authority. Thus money was expended on the

deve lopment of computer systems, and operations were

unde rtaken, which otherwise would not have been. For

example, money was expended on the development of computer app l i cations with an eye to the future. Major operations

were undertaken which on any rational assessment were

unlikely to be completed during the life of my Commission; but i n respect of which it was confidently felt the new

Authority would see through to completion. Further it was anticipated that no matter how large an office might be

es t a blished in Melbourne, another office would be required in Sydney. The most likely candidate for that office was

t hat of the Stewart Commission. Accordingly it was invited to come on to the same data base as that of the Commission

and to adopt its systems. The junior staff of that

Co mmi s sion attended at my premises and were trained in the

computer systems. By that time the Stewart Commission was enquiring into Nugan Hand, and the use of the data base was

val uable because some of the Nugan Hand material I had

collected on one of my visits to the Colony of Hong Kong had

b e e n placed upon it.

9 .018 By August 1 983 the Government announced it

intended to enact new legislation creating a new body to be known as the National Crime Authority which was to commence operations on 1 January 1984. Hy Commission was due to

expire on 31 December 1983. This did not provide for the

necessary overlap if my systems and operations were to be

transferred to it effectively. On 10 August 1983 I wrote to

t h e Prime Minister drawing attention to the discrepancy in

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dates and seeking guidance. I pointed out that if there

were no handover I would need time to write a report which

would take some 3 months. Thus my investigations would

cease at the end of September. There would be a hiatus;

momentum would be lost and no effective transition would occur. In the letter I said:

Volume 1

11 As the life of this Commission will

terminate on 31 December this year it is

necessary that I should raise with you

certain matters on which I need advice

from Government so that future planning for the Commission can be done. The announced policy of Government is

that a National Crimes Commission is to

be established to commence operation on l January 1984. It is stated that this

body will take over my current

investigations, staff and premises.

Although a good deal of work, planning

and training will be needed, this

handover can be achieved if the new body

has adequate powers to continue my

investigations including access to Income Tax records.

However I cannot overlook the possibility that as a result of discussions at the

recent National Crime Seminar there may be a different kind of body set up in

collaboration with State Governments. It is of course for Government to decide

the power and structure of any permanent body set up to deal with the problems of

organised crime. !:!X concern is to see

that the over of my

investigations is done in a way which

reflects the nature of this new

organisation. For this reason the course I follow in

the last three months of the Commission

will be determined absolutely by the

decision to be taken by Government. Let

me explain by way of illustration.

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Scenario 1

The Government decides to set up a

National Crimes Commission based in

Melbourne with appropriate powers

including access to tax records. In this

case the new body would take over current investigations, staff and premises. A

period of training for new persons coming in would be needed. This would require a

minimum of two months, preferably three. During the last 6-8 weeks I would be

primarly concerned with the preparation of my final report. The handover though

difficult could be done efficiently. Scenario 2

The Government decides to set up a

National Intelligence Agency along the lines of the Victorian proposal. Such an agency would not have the powers to

continue my work. My task would then be

to finalise my Commission in the

traditional manner, return documents, cease the calling of evidence and prepare a final report. A very real question of

principle would arise as to what should

be done about documents acquired by me

pursuant to Royal Commission powers which could not be acquired by the new body

without these powers; also what would be done about the database I have

developed. Since the drive behind the

Victorian proposal reflects a reluctance to interfere with traditional liberties I w6uld have to take into account these

matters in deciding my attitude. The last three months of my Commission

would be devoted to these tasks. What

would happen to my staff depends on the

nature and location of the new body. If

it is not to be in Melbourne then any

useful relationship between it and my

Commission will be enormously difficult.

I mention these matters so that it can be

appreciated last three

entirely decision as

that my ability to plan the

months of my Commission is

dependent upon Government

to the form of the new body.

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Unless that decision is made at the

latest by the end of September I face an

almost impossible task of closing down this operation in any efficient and

sensible fashion.

All of the investigations currently being pursued by my staff have drug

implications. It is not possible for

those investigations to be completed by 31 December 1983 ...

Accordingly at the end of December I will have many very large uncompleted

investigations. The question arises as to what I should do with them. If there

is to be no body with the coercive power

to compel the production of banking and

legal records, no access to taxation

records and no ability to examine

witnesses, then there is no point in

handing the matters to someone else.

They will not be able to pursue the

investigations. They will be powerless to do so.

If there is a body with the necessary

powers then I may hand the matters over

to the great benefit of the community. Thus the nature of my final report

depends upon the existence or otherwise of a suitably empowered Authority to

continue the investigations. If it

exists my report will be comparatively

short recording the transfer. If it does

not exist my report will still be short,

for there will be little point in doing

more than indicating, as I have several

times, the nature and extent of organised crime."

(Letter Commissioner to Prime Minister 10 August, 1983)

I wrote again to the Prime Minister on 17

October 1983 about other matters. I received a response

from the Prime Minister on 26 October 1983. So far as it

related to the matter which is the subject of this Chapter

he said:

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"Following the Crime Commission

conference in July the Commonwealth and the States have been discussing the form of a possible National Crime Authority. A proposal developed in these disussions

is now under consideration by Governments. My Government's intention, subject to

Caucus approval on 1 November is to

introduce as soon as possible in November legislation for a National Crime

Authority with the aim of final passage

in the present Budget Sittings. The

Authority will have as its primary

function the conduct of investigations into suspected criminal activities

pursuant to references given by

Governments with the intention amongst other objectives of assembling evidence for the purpose of prosecutions and will have appropriate coercive powers as

necessary to pursue such references.

The Government recognises that while it would prefer the new Authority to be

established and in a position to take

over from your Commission on 1 January

1984, time will probably not permit the

formal establishment of the Authority

until 1 March and its full operational

effectiveness until some little time

after that. Bearing in mind the need for

an 11 overlap 11 transitional period during which your Commission can impart its

expertise and transfer its staff and

material to the new body, the Government accordingly has in mind, subject to your agreement and to further review if

circumstances make this appropriate,

extending your Commission to 30 April

1984.

The Government is proceeding in this

respect on the assumption that the

Commission will have completed its

essential work on that part of its

reference which directly concerns the

Ship Painters and Dockers Union by the

end of this year and that it will have

furnished its final report to Governments not later than the end of February 1984.

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We would envisage the transition process as commencing informally from the

beginning of January and formally from

the establishment of the new Authority on 1 March. During the whole of the period

between 1 January and 30 April the

Government would want your Commission to concentrate its primary attention on the process of communicating its expertise, transferring personnel and material to

the new Authority, making arrangements for on-going enquiries, and generally

assisting the Authority to take over its

role. While this is a broad outline of the

Government's wishes there will obviously be a need for discussion on details and I

have asked the Attorney-General and the Special Minister of State to arrange a

meeting with you to discuss in more

detail the proposed arrangements once the legislation has been introduced into the Parliament. In particular there will

need to be discussions on the passing on

of the criminal intelligence which the

Commission has assembled, conservation of the techniques and the expertise

developed and the arrangements for

handling outstanding enquiries."

(Letter Prime Minister to Commissioner 26 October 1983)

9. 020 The course proposed by this letter departed

radically from that suggested earlier, and raised

difficulties. I believed it impossible to submit a final

report, together with the return of my letters patent, and then continue as if I were still in office. The period

allowed for the transition was far shorter than that which I had previously advised was necessary. I did not regard my

earlier advice as being in error, and subsequent events have not shown it to be so. Accordingly I responded to the Prime

Minister's letter on 2 November 1983:

Volume 1 -225- Chapter 9

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"I would be less than frank if I did not

indicate to you my view that (your

letter) does not seem to meet the

problems outlined in my letter of 10

August which came at the end of a series

of letters commencing on 29 June 1982. In my letter of 10 August I indicated I

needed a minimum of two months,

preferably three, to train a new

Commission and hand over the documents

and the database. After that was done I

needed a minimum of---o::1f weeks to make a

final report. That is a total of five

months. Those estimates were based on

the assumption that the new Commission

would have like powers and at ieast as

wide a range of enquiries as my own

Commission.

At the moment apart from perusal of

repo:ts in the media I am ignorant of the

prec1se range of powers and functions of the new Commission. However, if what I

read is correct it seems clear that its

powers will be significantly more limited than mine; and the ambit of its

investigations would depend upon those which are referred by Government. Indeed it may have no areas to investigate until

such reference is made.

The result is that I cannot simply hand

over the database I have assembled to a

new body. For example the taxation

records I have collected have not been

collected pursuant to a Court order, and unless and until the new Commission

obtains a Court order and there is an

amendment to Section 16 of the Income Tax Amendment Act I am required by law to

return the records to the Australian

Taxation Office. The taxation records

held by me are very considerable. To

extract them, remove the data collated

from them from the computer system and

physically return the material will take some time.

The removal of the taxation records is

the least of the problems. If the new

Commission cannot compel evidence when such evidence incriminates, if it is

restricted by being denied access to

documents that incriminate and if it is

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limited in the matters it may

investigate, then I should not hand over

material gathered which would lie outside its authority. A great deal of the

material I hold is in this category. It

will be necessary to consider each item

and make a rational a decision as I can;

this will probably entail allowing

submissions to be made by the parties who have supplied such material. My earlier estimates of the time required for

handover made no allowance for these

procedures. I estimate that this process may take some two months after the new

Commission has had some matters referred to it (so that material relevant to its

investigations may be determined). My current investigations cover all

States and range over many areas of

criminal activity. Ideally I should be

able to act on the basis that all these

matters will be taken over by the new

Commission. Perhaps there will be

objections from some States as to the

referral of some of these matters. They

will need to know the full extent of my

investigations before they can decide

this matter. These questions are

unlikely to be decided quickly; but I

will have to make my decisions on the

basis of what has been referred at the

beginning of the handover period. The

schedule you outline in your letter

suggests the whole of the period l

January to 30 April 1984 be concerned

with handover and training. If I assume

that on l January there is a referral of

matters to be investigated by the new

body, this will still be quite

insufficient time to attend to the

matters I have described above, let alone address the very considerable task of

training the new officers. January is a

holiday period. It may be that the newly

appointed officers will take up their

positions and attend from ·that day on but I would think it unlikely. It is

certainly not something I would ask of my staff who have worked hard and long

during this year. At best matters would

get under way in the third week of

January. At the other e nd of your period

Volume 1 -227- Chapter . 9

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falls Easter. The

period thus shrinks adequate to attend

suggest .

apparent to three.

to the

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four month It is not

matters you

So far as the final report is concerned

it is not possible to attend to matters

of the complexity I have described above, and at the same time to write a final

report. Previously I had assumed that

the new body would take possession of all of my material. I had also assumed it

would follow through my many uncompleted investigations. It seems that it will do

neither of these things. In those circumstances I must write a

very different final report to that which I comtemplated in my earlier discussions with you. It must be written prior to

the return of the documentary material

for it is on that material that it will

be based. It will be, in these

circumstances, a massive task for I must

now write a report on incomplete

investigations, whereas previously I

expected to say no more than that those

investigations were in train and would be completed by the new Commission. Writing a report of a completed investigation is

difficult enough (witness Hamidan). To write it of incomplete investigations is very much more difficult. That task

cannot be done whilst also being engaged in training a new Commission and

determining the fate of the mass of

documentary material I have collected.

Moreover there is the problem of the

present investigations. When I saw you

in April this year you indicated your

wish, with which I concurred, that the

Commission should concentrate on Painter and Docker activity with particular

reference to drugs. That is the course I

have followed. It was necessary for me

to complete some current matters. That

has taken some time. In the case of

Hamidan it required a very large report. In other cases it has required the

briefing of other agencies to take on the partly completed investigations in order to finish them.

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The drug investigations are now

progressing very well. However as you

will understand the techniques used by

the Commission which have to date been

very effective involve a wide-ranging

enquiry circumscribing the main target area so as to understand it completely.

As the investigations proceed increasing obstructions are being and will be

encountered. This is to be expected.

What cannot be expected is that they will be quickly overcome. Even with the

powers of a Royal Commission it is still

very time consuming.

The new Commission cannot usefully be

given these investigations for it is to

be denied the powers needed to do them.

I cannot complete them within the time

you allow. On the other hand at this

moment they are at a critical point and

it would be contrary to the public

interest to stop. That is likely to

remain the case for the next few months.

It is only those who have experienced

investigations such as these who fully

appreciate the time they take and the

necessity for persistence. Those who are the targets have much to lose and a great

deal of money to employ in their

defence. I find it difficult to believe

that you would wish this fight to be

abandoned at this point; but if that is

the decision of the Government, so be it.

For these reasons I expressed the opinion that the time-table you give in your

letter is not only unworkable but

contrary to the public interest. If I

act on the reporting date you suggest

then I should immediately stop all

investigations and start writing. In

that manner I may get the report in by

the end of February, though it will

necessarily be far from complete and

therefore not satisfactory. It is not

likely such a report will serve many

useful purposes in the Government of our country. In that period I could not

allow any time for training the new

Commission or determining what should be handed over.

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At the time of submitting my final report

I must return my letters patent. At that

stage I become functus officio. If that

happens at the end of February then I

will not have given any attention to the

return of the documents. Certainly I

will not then be in a position (by reason

of the absence of power) to make the

appropriate directions. There will be no time for training the new staff.

The situation is not of my making. I

have repeatedly requested over the past 18 months some finality on the future of

the Commission and have asked for it in

adequate time to allow me to do my job

properly. Neither Government has ever

attended to that task with sufficient

appreciation of the lead time required

and this is no exception.

I do not think a sensible decision can be

made as to the date of termination of

this Commission until the new legislation is passed. Having regard to the

expressed intention to have it passed by the end of the budget session, I think I

should · for the time being request a

further extension until June 30 next year on the basis that final consideration can be given to the matter when the

legislation is passed and the new body is .

set up. In many ways I make this request

with a heavy heart. I have now been

doing this job for over three years. I

am anxious to return to private life and

to practise at the Bar but I cannot in

conscious cease the work I am doing

except on a proper basis."

(Letter Commissioner to Prime Minister 2 November, 1983)

On 8 November 1983 the Prime Minister responded to

my letter indicating its contents were being given serious

consideration:

Volume 1

"In the light of your comments the

Government is considering further the

question of the timing of the termination of your Commission.

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In th€ meantime it is a ppa r e nt that there

is a number of legislative and

administrative issues concerning handover arrangements to the proposed Na t ional

Crime Authority and the disposition o f

material gathered by you r Commission

which need to be addressed without delay .

I suggest that consideration of these

matters would be facilitated if officers of my Department, the Attorney-General ' s Department and the Department of the

Special Minister of State could have

detailed discussion as soon as possible with you or your o fficers. Th ose

discussions could if necessary be

followed by discussions at Ministerial level. (Letter Prime Minister to Commissioner 8 November, 1983)

The discussions took with senior

departmental officers in Melbourne place shor tly a f terwards .

Various ways and means of overcoming the problems I had

raised in my letter about the transfer of records were

discussed. I insisted t hat any arrangements be strictly in accordance with law, and that they did not flout any

principle of law. I advised that the simpl est and most

efficient means would be by a direction by Parliament

reflected in the National Crime Authority Bill that all of my database be transferred to the National Crime Authority.

Such a statutory direction would remove from me any

discretion in the matter and would make the transfer of the material immediately achievable.

9.023 By this time new legislation establ i shing the

National Crime Authority had b een p rese nted to Parl iament. It was again announced t h a t it was intend e d it should take

over my offices, staff , procedur e s and database . On 13

October 1983 I deliver ed the S i r John Barry Memorial Lecture in which I referred to the sys tem r equired for a success fu l

Crime Authority. In his second reading speech i n troducing

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the National Crime Authority Bill to the Senate on 10

November 1983 the Attorney-General referred to this lecture emphasing that the techniques I had spoken about were those required by the new Authority:

Volume 1

11 The Government believes that the

proposed Authority will meet the major

objectives and concerns that have emerged during the public debate on the Crimes

Commission issue over the last six

months, viz:

The need to avoid the fragmentation of

effort in the previous series of ad hoc

Royal Commissions, and to ensure

co-ordination and continuity in the fight against organised crime; the need to

maintain intact the resources, and

expertise of the Costigan Royal

Commission on the Activities of the

Federated Ship Painters and Dockers Union, and to ensure the continuation of its work; the need to take account of

the many fears and concerns expressed

about a permanent criminal investigation body with unlimited terms of reference

and uncontrolled investigative powers; and the need to secure the active

involvement and co-operation of the

States. The question that is most

frequently asked in relation to the

proposal is why is there a need for a new

body and how will its operation differ

from police investigations as they are

now conducted.

Police investigations are concerned

essentially with particular offences

known or reasonably believed to have been committed, with the starting point

usually being the complaint of a victim

or discovery by the police of the results of a crime. By and large, the police

forces of Australia do an excellent job

and there is no question of the Crime

Authority supplanting those organisations .

However, it is of the nature of organised

and sophisticated crime that particular manifestations of that crime

particularly in the areas of drug

importation, corporate fraud and tax

evasion - may not come to the attention

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of the police forces. Activities of this

kind may be so intricately interwoven,

may involve so many jurisdictions and may be so well camouflaged under apparently legitimate ways of doing business that

they may well not cause any one police

force to take notice.

The Costigan Royal Commission has shown that, by following a series of financial

leads in a determined exploratory

fashion, widespread and serious

conspiracies can be uncovered. The

techniques involved, and the need for

them to be deployed by a National

Authority specially designed for the

purpose, have been clearly described by Mr Costigan in a passage of his Sir John

Barry Memorial Lecture delivered on 13

October 1983."

(Senate, Hansard, 10 November 1983, 2492)

Thereafter the Attorney-General referred to a lengthy extract in which I described the requirements for an effective investigation of organised crime, and the manner in which it should be carried out. The second reading

speech left no doubt as to the intentions of the

Government. They received the enthusiastic support of all parties in Parliament, the consequential debate not being directed at this objective but rather as to whether it was

being effectively achieved. Seven days later, again in the Senate, the Attorney-General acknowledged the time it would take to effect a _proper transition. The Opposition had

proposed that the Bill be referred to a Senate Committee to investigate its adequacy, and the Government opposed it. The Attorney-General argued against delay. He said:

Volume 1

"There are problems with further delay in this respect. There are two parts to the

argument. The first part is that we are

unlikely to do much better than the model we have presently reached. The second

part of the argument is that there are

difficulties with further delay in this matter. Let it be appreciated that it is

not a matter of delay in this respect

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merely for one or two months. There is

and will be a very substantial transition period involved, once the legislation is in place, before the new Authority can be effectively on foot, and before the

Costigan Royal Commission on the

Activities of the Federated Ship Painters and Dockers Union can be asked properly

to terminate its formal existence. At

the moment we have assessed that

transition period as taking necessarily something like 4-5 months from the

enactment of this legislation, which we hope will occur some time later this

month or early December . Accordingly, we have indicated to Mr Costigan the current timetable we would be working on; that

is, the enactment of this legislation

either later this month or early

December, the formal creation of the new Authority on 1 March next year, and a

transition period extending both before and after that formal creation for a

couple of months either side, running to a proposed termination date of around 30 April . It may well be that that has to

be further extended because of the

enormous logistic difficulties associated with gearing up the new organisation and putting existing enquiries on the new

footing that they have to be put on in

order to satisfy the terms of this new

legislation. To delay any possible passage of

legislation, as is proposed, until the

end of May or early June - that is, the

end of the autumn session next year

will result in a slippage in this

timetable where the new Authority will

not be able to be put on foot. We cannot

ask people to gear up for something which has no legislative existence or authority behind it. The new Authority will not be

able to be put on foot until well into

the latter part of next year, and

probably not until the end of next year,

applying the sorts of rules of thumb I

have just indicated. We are buying, by

this particular exercise, not just a

month or twos' delay but a very

substantial delay in the effective

establishment of the proposed new

Authority. I do not believe that delay

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can · be justified given the enormous

processes of consultation that have

produced the particular model that is now before us and given also the difficulties and, let us acknowledge it , the dangers

associated with continuing on a de facto Crime Commission basis through the

Costigan Commission."

(Senate, Hansard, 2733-2734) 17 November, 1983,

It will be observed that the Attorney-General acknowledged the difficulties of transition and the requirement of a four or five months period.

9.025 On 17 November 1983 the Senate referred the

Bill to a Senate Committee to investigate the powers granted by it and to report by 30 April 1984. This decision

rendered abortive the discussions between myself and the Government as to my future programme. On 24 November 1983 I wrote to the Acting Prime Minister seeking a longer extension than I had previously sought. I referred to the

discussions with the senior department officers and also to a meeting I had with the Victorian Premier and the Federal

and Victorian Attorneys-General on 12 November 1983. I

reported:

Volume 1

"On Saturday 12 November I met with the

Victorian Premier and the Federal and

Victorian . Attorneys-General. At that

meeting I expressed the view that the

timetable suggested in an earler letter dated 26 October was too tight to be

workable. There were basically two

reasons for this.

Firstly there were some matters which I

could not easily hand over and which I

would need to finish myself. I referred

by way of example to the problem of

extortion in the Port of Adelaide which, to my surprise, has now raised a very

important question of whether there

should be permancy of employment for

painters and dockers. Before the Sweeney Commission the Union had argued

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strenuously against this concept; it has now told me it would like the matter

raised for serious debate. I expect this

question, which was not alive when I last

wrote to the Prime Minister, would add at least a month to my work.

Secondly one of the most important

activities associated with the handover is the training of the new Commissioners and new staff both in the content of the

investigations and in the techniques and systems developed over the last three

years. This of course can be done only

after appointments have been made by the Governments concerned. I think it is not

realistic to believe that this can be

done in the two months originally

suggested.

My discussions with Mr Cain and Senator Evans were based on the belief that the

National Crime Authority Bill would be

passed by the Parliament within a

fortnight. Although I expressed the view that I should request an extension of my

term beyond that which has been currently indicated, it appeared sensible to defer any such decision for a few weeks until

the final content of the legislation was known and so it was agreed.

It is now apparent from events in the

Senate last week that there will be no

Authority set up until at the earliest in

May 1984; a fortiori there wi 11 be no

appointments made and no references to

the new Authority until after that date.

As you know, as did the previous

Government, the uncertainty surrounding the life of the Commission has made

forward planning extremely difficult; by way of example last year my term which

was due to expire on 31 December was not

extended until 25 December. Such

uncertainty is very disruptive to the

work of the Commission and harmful to the morale of the staff. Moreover I am

increasing resistance to my

even with the powers

granted to me under the Royal Commissions Act there is growing tendency to impede

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my work by lengthy court

which I have no doubt are

outlast my term .

proceedings inte nded to

In all the circumstances I feel the

public interest and the demands of my

work require me to request that my

Commission be extended to 31 December

1984.

Unless such an extension is granted it

will not be possible to maintain the

thrust of my investigations or to hand

them over to a new Crime Authority in an

efficient and sensible manner. 11 (Letter Commissioner to Acting Prime Minister 17 November, 1983)

The Victorian Government responded by

accepting my suggestion and extending my term to the end of 1984. The Federal Government did not. By a letter dated 16

December 1983 the Prime Minister wrote:

Volume 1

11 As you will be well aware our position

remains one of concern about the

appropriateness of a public Royal

Commission Inquiry s o far as the ongoing

investigation of organised crime is

concerned; we remain committed to the

establishment as soon as possible of a

National Crime Authority to take over on a continuing basis those of your

investigations which bear upon organised crime more generally than just in

connection with the Federated Ship

Painters and Dockers Union. Although the Senate Committee of Inquiry has injected a degree of uncertainty we

still anticipate being able to legislate to create the new Authority with a

structure and powers not markedly

different from those proposed in the

National Crime Authority Bill 1983 by

June next. Certainly we would wish you

to plan your own activities on the

assumption that such a body will be in

existence by the end of June.

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Against this background the Government would wish you to focus your activity in

the next few months upon:

(a) Concluding those investigations

necessary to produce a report upon

a nd recommendations relating to the Federated Ship Painters and Dockers Union which report we would like to

recei ve on or before 30 April, 1984;

and

(b) preparing for the transition to the

new arrangements by compiling in a

form appropriate for references to

the proposed new National Crime

Authority such other material

relating to organised crime as you

feel requires further investigation. In effect the report referred to in (a)

would be your final report except insofar as it is necessary for you to report on

the trans i tional arrangements referred to in (b).

We would propose on this basis that your

term be extended - on the same terms and

conditions as to fees, staffing and such

like as are currently applicable - to 30

June 1984.

It is of course appreciated that some

further period may be necessary to ensure that the transition proceeds smoothly in terms of the recruitment and training of

personnel, the packaging of appropriate references and the transfer of formal

legal authority, and we will be happy to

discuss this aspect further with you when the legislative situation becomes clearer after the Senate Committee reports. We believe however that your own planning

should proceed on the assumption that the work of your Commission will, for all

purposes other than the bringing to

fruition of transitional arrangements, have concluded by 30 June .''

(Letter Prime Hinister to Commissioner 16 December 1983)

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9.027 Before responding to the Prime Minister's

letter, other events occurred which increased the workload of my staff. The Chairman and Vice-Chairman of the Senate

Committee discussed with my senior assisting counsel in

December 1983 whether he would be willing to identify the

major issues that arose in respect of the National Crime

Authority Bill. He agreed to do so, and in a remarkably short time prepared an extensive document identifying those issues. It is to be found in Appendix 1-H. It was

delivered to the Senate Committee prior to Christmas. At

that time it was indicated by the Chairman and Vice-Chairman that the Senate Committee would be anxious to view the

operational system would be seeking

and techniques of the Commission and

evidence from myself and my assisting

counsel. A letter requesting that assistance was received on 31 January 1984. On 2 February 1984 I wrote to the

Acting Prime Minister and the Premier of Victoria reporting on the request of the Senate Committee and stating that I

proposed to accede to the request unless there was some

objection. No objection was received. At the end of

January the briefing of the members of the Senate Committee in the operational procedures of the Commission was

undertaken by my senior assisting counsel occurred over a number of days. Later both he and I gave evidence to the

Senate Committee.

9.028 On 3 February 1984 I responded to the Prime

Minister's letter of 16 December, indicating it was not

possible to provide the report requested by 30 April.

Although the response is lengthy, I set it out as without it

a disjointed view may be formed of matters consequent upon it:

Volume l

"In previous correspondence and in

interim reports I have explained the serious situation in respect of

activities of organised crime

Australia. In making such reports I not been alone. From the personal

-239-

my

very the in

have

Chapter 9

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conversations I have had with the Prime

Minister and indeed from the public

statements of the Government it has been clear to me that my description of the

situation has been accepted by both your Government and the Victorian Government and for that matter is accepted by all

poli tical parties.

The investigations of the Commission as you know are not of minor character.

They are extraordinarily complex

requiring the examination of hundreds of thousa nds of documents and taking a

lengthy time to complete. Following the

Prime Minister's briefing by the

Commission on 25 April 1983 and his

desire that the Commission concentrate on drug trafficking, those investigations have been direc t ed at what is perhaps the

most difficult area of all, the

investigation of the financing of major drug importations and distributions in

Australia. It was not possible to

commence such investigations immediately after 25 April for there were at that

time i ncomplete investigations which I finalised and reported upon in

September. Thus the Commission's

investigations into the areas requested by the Prime Minister are only a few

months old. I am sure the Government did

not expect results within so short a

time; but in any event they have not

been attainable as yet.

The result is that the Commission is

presently involved in major

investigations into the financing of drug trafficking . Vast quantities of

financial documents have been seized and are being examined . That will not be

completed for some time yet. It is to be

followed by detailed analysis and the

examination of witnesses. The work if it is to be done at all will take many

months. The staff of the Commission are

presently fully engaged upon it, subject to matters which are related hereafter.

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There · can be no doubt that this work is

valuable and that it is in the interests

in the public health that it continue.

It is for that reason that I recommended,

and the Federal Government accepted, that there be a Crimes Authority.

Unfortunately such an Authority has not yet come into being. I am constrained to

say that the model proposed by the

present Bill before Parliament,

consideration of which has now been

referred to the Senate Committee, will not have the powers or

capability to continue the work being

done by my staff. In those circumstances even in the event of the Senate Committee approving the Bill in its present form an

Authority capable of continuing this work will not come into being. Thus I am

confronted with a situation not of my

making where I have embarked upon lengthy investigations in which no end is in

sight and no relief is at hand.

In addition to the weight of the

investigations I and my staff have taken on a further burden. Your Government has made plain the intention that the new

Crime Authority bereft of adequate powers and capabilities as it may be will take

over my staff and systems by installing

me in my new premises and authorising the employment at this late hour of

additional staff. I have assumed,

correctly I believe, that I am to train

the new staff so that when the new

Authority comes into being it will have

on hand a trained staff at least at lower

levels. I have accordingly seen to the

training of · the new staff. At some cost

to current investigations a five week

training course for approximately 20

people is being conducted and will be

completed towards the end of this month. As you would expect this does involve the time and attention of some of the leading members of staff and has a limiting

effect on their output of work on

investigations.

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Further, I and my senior counsel have

been called upon by the Senate Committee to explain i n detail the methods and

t echniques developed by the Commission that has been and is being done. It is

time consuming, par ticularly given the

wide nature of the e nquiries of that

Committee and their inability to attend a ll a t the same time (requiring

repetition of b r iefing ses sions which are in t h ems e lve s lengthy and arduous). Once again the investigative work of the

Commis sion is int err up t ed and delayed.

Nevertheless it is in the public interest t hat it be done .

In these circumstances I have found it

difficult to find the means by which I

may meet the request to complete

investigations and produce a report on

the Ship Painters and Dockers Union by 30 April . The report requested would

necessarily be a final report. That

would mean that in the space of three

months (less excluding Easter) I am

e xpected to complete investigations into the distribution of drugs by members of

this Union and write a report. It is

quite impossible. The Union in

Queensland has been the subject of

investigations in this area by both the

Australian Federal Police and the

Queensland Police for the past four years without reaching into the financial

areas. I am a relative "newcomer". Even

given the powers I have I cannot hope to

penetrate the organisation in that State alone in the time allowed. Much less is

it possible to penetrate the organisation in Victoria or New South Wales,

notwithstanding that in Victoria my

Commission has been exam1n1ng the

situation for some months longer than it

has in Queensland. (Both areas are

closely related.) Indeed if I was to write a report and

submit it by the time requested it would

be necessary for me to terminate now all

investigations and confine my report to a statement of the precise position these investigations have reached at this point in time. That would have the effect of

destroying the investigations and the

momentum they have gained. It would

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produce a report without fresh

recommendations for none of the

investigations has reached a point where the need for changes in law or policy has

become apparent. My recommendations

would simply tra verse the same ground as that which would be found in my previous

reports namely that Australia requires a Crimes Authority properly empowered to continue this work on a permanent basis.

Nor is it possible for me to suggest that

30 June would be a more satisfactory

date. If I assume that the new Crimes

Authority is established by June 1984 and that appointments as Commissioners and Counsel are made by early June 1984, then the balance of June will be spent in the

brief ing of those appointees in respect

of current operations (assuming that the new Authority is able to take on those

investigations an a s sumption which

cannot be made under the present

provisions of the Bill). More time would be required to train people at that level

in ·our operational techniques for there are very few people available who have

any experience remotely approaching that necessary to continue those techniques. June would be a very busy month. In fact

neither of those objectives would be

achieved in it. Much less would I have

time to write a report. Nor would I have

time to attend to the necessary work to

return documents and close the Commission. As I have explained previously it takes a

considerable time to brief and train

replacements for myself and my senior

counsel. Once that training is completed and the new Commissioners and Counsel

have taken control, then I will be in a

position and will have the time to write

a report likely to be of some use to the

Government. Until that time is reached

it is beyond my capability (or for that

matter the capability of any other man). In these circumstances I reluctantly

advise that I am quite unable to provide

your Government with a report by the end

of April. For as long as I am

Commissioner the investigations, being of such great importance to the public

health, will continue without abatement. Hopefully before my Commission expires

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there will come into being a Crimes

Authority endowed with powers and

capabilities sufficient to enable my

investigations to be continued by it." (Letter Commissioner to Prime Minister 3 February, 1984)

9.029 The Prime Minister responded to this letter on

27 February 1984. It is to be remembered I had made it

plain, both publicly and privately, that I would not accept a position on the new Authority. My senior assisting

counsel had also announced he would not accept any

position. Thus there had to be a change of personnel at the

very top of the Authority. The transition, in these circumstances, necessarily involved considerable briefing and training. On 27 February 1984 the Prime

Minister responded to my letter:

Volume 1

"I am sorry however to read that you

believe that you are unable to comply

with my request to provide my Government with a report upon and recommendations

relating to the Federated Ship Painters and Dockers Union by 30 April 1984.

While my Government wholeheartedly

recognises the value and effectiveness of your Commission I think that I should

emphasise our determination to establish a National Crime Authority with a

legislative charter more appropriate to the needs of a ongoing organised crime

fighting body and to have the necessary

legislation in place by June next. As

soon as possible thereafter we want the

Authority operating and in a position to take over from your Commission.

It was because of this firm objective

that I asked you to provide by 30 April a

report and recommendations on the matter central to your Inquiry, namely the

Federated Ship Painters and Dockers Union.

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My Government fully appreciates that a

report submitted by that date may not

canvass all aspects of the affairs of

that Union and its members and those

associated with it as fully and in as

much depth as, given unlimited time, you would wish. But of course no Royal

Commission has unlimited time and in

determining the scope and depth of its

report or reports every Royal Commission must have regard to the time available to

it.

In fact your Commission has been in

operation for over 3 years and 4 months

and we believe that it is not

unreasonable to request that within the next 2 months - or at the very latest by

June 1984 we receive from you a report

stating such findings as you have been

able during the period of your

appointment to reach, and such

recommendations as you are able at this

stage to make concerning the Union itself. My Government well appreciates that, at the time of the transition to the

National Crime Authority, you will be

conducting a number of ongoing enquiries and that arrangements will need to be

made with the Authority for the

continuance of those enquiries. You can be assured that you will be consulted

about this as matters develop, and that

my Government will cooperate fully in

ensuring the continuation of those

enquiries.

Volume 1

Certainly it is also appreciated that if

any situation arises in the context of

some area of ongoing investigation where important documentary or oral evidence will be irretrievably lost unless

particular steps are taken, then those

steps should be taken. Having regard to all these matters I must therefore repeat my request that you aim to produce the final report on the Union

itself - if not the activities of all its

members and associates - by 30 April 1984 and that you continue to prepare for

transition to the new Authority by 30

June 1984.

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9.030

Volume l

We look forward

immensely fruitful Commission on the

cooperation."

Transfer to NCA

to concluding the

work of your

basis of amicable

(Letter Prime Minister to Commissioner 27 February, 1984)

I replied to this letter on 5 March 1984:

"I am sure you will understand that I did

not lightly decline the request contained in your letter of 16 December 1983. I

believe that is apparent from my letter

of 3 February.

I think that before I respond to your

recent request I should advise you

briefly of some current investigations. Since the delivery of Interim Report No. 5 I have been concentrating on drug

trafficking and the Union. In doing so I

have applied the same techniques that I

have used in previous areas and on which

I have reported. Those investigations

have proved illuminating. In close

cooperation with the Queensland Police who have done a great deal of work in

this area, many painters and dockers have been identified and their systems of ·

importation and distribution are becoming much clearer. Indeed only last week

arrests were made and more are expected

shortly. These investigations range

beyond Queensland, of course, and go into New South Wales and Victoria. At the

same time I have been pursuing enquiries into the financing of these dealings. It

is in this context I have been looking at

major cash transactions in Brisbane,

Sydney and overseas, involving among

others Mr. Kerry Packer. I have taken

evidence from Mr. Packer both publicly

and in confidential session. His

explanations are quite unsatisfactory, but investigations are not complete and it would be unfair both to him and the

public if these investigations were not completed.

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As you · know from previous correspondence I am anxious both that the new Crime

Authority commence operation as soon as possible and that I hand over to it in an

efficient manner the investigations I am now conducting. Your Government's

determination to establish this body is welcome to me and in the public

interest. My concern is there may be a

lack of continuity in the

investigations. There were some matters arising out of this which I should refer

to: l. The last paragraph of the first page

of your letter seems to infer that I

have been deficient in not supplying reports to Governments. I have

already delivered five Interim

Reports over the last three years

and four months (the most recent of

which was July 1983) each of which

as might be expected dealt with the

Union in one way or another. A

Final Report on the Union would need to deal with the full ambit of my

Commission's work and thus would

truly be a final report. However it

is unlikely to cover new ground so

far as the Union is concerned

although new criminal activities may be described.

Volume l

2. On delivering such a report I would

return my letters patent. There is

authority derivable from my letters patents (Commonwealth or a fortiori Victorian) which would allow me to

remain in office for the purpose of

transition. I can act under the

letters patent only for the purposes of investigation and report. Once

this is done my office is at an end.

3. When I commence to prepare my final

report the full resources of the

Commission would be directed to that task and to the disposal of the

material I have acquired. I would

be compelled to conduct a hearing of the Commission. At that hearing I

would inform all parties that there would be no further evidence. I

would then take submissions as to

documents. My investigations would

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cease at that time. They would be

recommenced at the earliest many

months later and then only if the

new Authority had the powers and

decided to do so. Even if it did

the break in investigations is

likely to be fatal to their success

particularly the current drug

investigations. 4. The only basis on which an efficient

transition can take place is for me

to continue my investigations until the Crime Authority is up and

running. It would then take them

over. I would at that stage write a

comparatively short report. I would not be making findings about current investigations; that would be for

the Crime Authority. If I put in a

Final Report prior to that time any

finding I make would be based on

evidence which is not complete,

which has not been tested by other

parties and which has not been

assisted by submissions from those persons.

I have thought it desirable to mention

these matters so that you and your

Government can understand clearly the

necessary consequences of your request . . Those consequences would be inconsistent with and disastrous to your Government 1 s oft expressed desire to attack

sophisticated crime. This may have not

been made clear in my last letter.''

(Letter Commissioner to Prime Minister 5th March 1984)

9.031 The Senate Committee reported to the Senate

shortly after 30 April 1984, and the National Crime

Authority Bill was debated in Parliament in late May and

early June 1984. It was finally passed after many

amendments. In the course of that debate it was again made

plain that the new National Crime Authority was intended to take over my investigations and to adopt my operational

techniques. Indeed there was considerable discussion of

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t hose techniques· during the debate. It is to be remembered t hat t h e members of the Senate Committee had been fully

briefed upon them, and the Bill was passed by the Senate on

t he understanding that those were to be the techniques

employed by the new Authority.

9.032 On 21 June 1984 I received a further letter

from t he Prime Minister. He noted the passage of the

legisl a tion and the intention that the new Authority would be established on l July:

Volume l

''As agreed with you it is intended that

the Royal Commission continue its

investigations until the establishment of the NCA on l July. During the month of

July the Commission will work together

with the NCA passing on to it information about material held by your Commission a nd techniques employed by you. During

August and September your final report to the Government will be prepared with the r eport being presented to the

Governor-General by 30 September.

I am advised that your Commonwealth

letters patent will need to run to the

date by which your final report is to be

presented. To this end the Government is extending the reporting date of your

Royal Commission to 30 September 1984. Action is in h a nd to obtain formal

approval to this extension from the

Federal Executive Council.

As indicated · by the above arrangements, one of the major objectives in

establishing the NCA is for the Authority to preserve the records and techniques of your Royal Commission and to ensure the

con tinua tion of its work. In particular

it is intended that the first references

f or investigation to the NCA should

cover, inter alia, relevant outstanding matters arising from your enquiries.

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To this end I should be grateful if you

could, as a matter of urgency, give

consideration to what matters are now

In accordance with your

Commission s previous practice, it would be appreciated if those matters which you consider to be amenable to ordinary

police methods could be referred directly to the relevant police forces. As to any

matters then outstanding I should be glad if you would supply information to the

Government in sufficient detail to enable appropriate draft references to be

prepared to be put to the

Inter-Governmental Committee.

References to the Authority are required by the NCA Act to include:

A description of the general nature or the circumstances or allegations constituting the relevant criminal activity; A statement that the relevant

offence is or the relevant offences are or include an offence or

offences against a law of the

Commonwealth, State or Territory but without needing to specify the

particular offence or offences; and the purpose of the investigation.

In preparing the material for Government as to possible references it would be

appreciated if you would address these

matters and in addition supply any other material appropriate to be put to the

Inter-Governmental Committee when it

considers the proposed reference. It

would facilitate the transition between your Commission and the Authority's

investigations if the information

supplied by you on these outstanding

matters could be received a s a matter of

urgency but at the very latest by 13 July.

I should like to place on record again

the Government 1 s gratitude for your work as Royal Commissioner. I should also

like to offer my condolences on your

recent illness. It is of course

unfortunate that it has cut s hort the

time remaining for your enquiries. I

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also appreciate the onerous nature of the task of finalising your work over the

coming months. Nevertheless it is of

p aramount importance that the significant work initiated by your Commission should be continued by the NCA. Your

cooperation in ensuring its smooth

transition to the NCA will be of the

utmost importance in achieving this

obj e ctive. 1

(Letter Prime Minister to Commissioner 2 1 June 1984)

9.033 As I have reported elsewhere, I had been

hospitalised a week after Easter and had remained in

hospital for some weeks. The operations of the Commission

were naturally affected adversely by my lack of attendance . I returned to the Commission at the beginning of June, but

was s till recuperating from my illness.

9.034 The new proposal was one which imposed a

I was to considerable workload upon me and my staff. examine my current operations to determine whether they came within the National Crime Authority Act and was to do so

withi n two weeks. This task was made more difficult by the

unavailabili ty of a copy of the Act until the beginning of

J uly . I was to train the new Commissioners, and the heads

of t he ir operations, in the investigative techniques and

b r ief them on complex operations within the space of one

month. At the date · of receipt of the Prime Minister's

letter I did not know who the new Commissioners would be.

Nevertheless both I and my staff set about doing what we

could to facilitate the establishment of the new Authority. My senior assisting counsel in the absence of a copy of the

Act (he had a copy of Bill but it had been substantially

amended) prepared a list of current operations using his

i mag ination as to the likely criteria. When it became known that Mr. Justice Stewart had been appointed as Chairman that l ist, t ogether with some notes on each of the operations,

wa s forwarded to him.

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9.035 By 22 June 1984, on which day its first

meeting occurred, there had been established Crime Authority Steering Committee, comprising myself, the Secretart of the Department of

Minister of State, Mr A.D. McGaurr and Mr

the National the Chairman, the Special Menzies. The

formation of this committee had been forecast in a letter to me of 13 June 1984 from Mr McGaurr. At that time it was not

proposed I should be on the Committee. There was also to be

established a task force comprising representatives of my Commission as well as from many other departments and from the Stewart Royal Commission. Nevertheless it was

recognised that one of the major objectives of the Authority was to maintain intact the resources and expertise of my

Commission and to ensure the continuation of its work. The shortness of time was also appreciated by Mr. McGaurr:

"Legislation to establish the NCA has

been passed by the Parliament. The

Government has, on several occasions,

stated that it is its firm intention to

have the Authority established by 1 July.

The Government has also stated that one

of the major objectives of the NCA is to

maintain intact the resources and

expertise of your Royal Commission and to ensure the continuation of its work.

Accordingly the Government has as you

know agreed that the month of July will

be a transition period during which your Commission will hand over to the NCA.

As you will no doubt appreciate the task

of establishing the Authority is

considerable and the timing is likely to

prove very tight indeed."

(Letter Mr McGaurr to Commissioner 13 June 1984)

I raised with Government the question whether, if the

Authority was taking over operations, it would not be

desirable that I joined the steering committee. This was

accepted and, by the first meeting on 22 June, 1984,

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I had become a member. During the meeting I emphasised the

necessity for the earliest possible appointment of members so that the limited briefing period of July could be fully

utilized. I raised the need for the appointment of counsel

to conduct the investigations, and drew particular attention to the special skills required at that level. The minutes

included the following warning:

9.036

"Mr Costigan pointed to the urgent need to take

decisions of the

and make necessary clear impact on

appointments because the handover/briefing

programme he had in mind. He was particularly

concerned over the need to put draft references

together in line with the Commonwealth

Government's request, in addition to handing over and writing his report in the period remaining

available to him."

(Minute Steering Committee 22 June 1984)

Subsequently a copy of the Act came to hand.

It was subjected to analysis by my senior assisting counsel to determine the criteria to be satisfied in order for a

matter to constitute a relevant criminal activity within its meaning. A copy of the analysis was forwarded to the newly

appointed Chairman. A further analysis was made to

determine the materi-al required to be placed before the

Inter-Governmental Committee when it considered a proposed An analysis of the Act revealed it was difficult

to meet the several objectives of the Act. On the one hand

the Act required there be no public disclosure likely to

harm reputation. A copy of the reference was to accompany

every summons issued by the Authority. Accordingly if a

reference identified any person by name, there would be a

real likelihood of the reputation of the person so named

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being harmed by the mere issue of summonses. Yet not to

name a person in a reference effectively precluded the grant

of a narrow reference. An examination of the debate in

Parliament indicated it was Parliament's wish that

references be of narrow compass and be subject to the

approval of the Inter-Governmental Committee. The purpose was to restrict the operations of the NCA. My senior

assisting counsel and I found it impossible to draft a

narrow reference without identifying by name the people

suspected of the criminal activity. The omission of their names produced a reference of extraordinary width.

9.037 The analysis identifying these problems was

forwarded to the Chairman of the new Authority who in turn

made it available to the advisors of the Attorney-General. They resulted in a meeting taking place between Mr. Andrew Me nzies, then consultant to the Attorney-General, and my

a ssisting counsel and myself. In the course of that meeting

discussion took place as to how the reference could be

drafted. It resulted in it being agreed that my staff would

produce the material identifying the relevant criminal

activities leaving it to a draftsman in the

Attorney-General's Department to resolve the problem

relating to the drafting of a reference.

9.038 In those circumstances counsel assisting me

examined the operations of the Commission for the purpose of identifying "relevant criminal activities" which satisfied the criteria of the Act. The Act was "offence specific",

whereas the operations of my Commission had been "person specific". Thus it was necessary to view the operations in

an entirely different light from that which was the normal practice in the Commission. I explain further the

difficulties of doing this in Volume 2 of this Report . It

took a considerable effort on the part of my assisting

counsel to convert the description of operations into that required by the Act. It was far from a simple task . Not

Volume 1 -254- Chapter 9

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only was there a drafting difficulty; there was also the

problem of ensuring that in a real sense the criteria of the

Act could be satisfied. I was not prepared, nor were

Co unsel p r e pared, to pay mere lip service to that criteria.

I n the end, by a date close to 13 July, the task was

fin i s hed. Some 40 relevant criminal activities were

described. Subsequently and not surprisingly, a further 2 relev a nt criminal a ctivities were identified and described.

9.039 Having produced the material it was necessary

t o d e termine the means authorised by law by which I could

t ransmit the material to the National Crime Authority.

Section 6 P(2A) of the Royal Commissions Act provides that I may transmit information to the NCA only where it relates

11 to a n investigation being conducted'' by it. The NCA was

not conducting any investigation. Accordingly I could not p r o pe rly f orm the opinion that it was. Thus that provision

d i d not permit me to make the transmission requested by the

Pri me Hinister, nor was I assisted by section 56 of the

Na tional Crime Authority Act which had been inserted in

response to my specific request that there be a direction by Parlia ment that my database be made available to the Crime Au t hority.

it did not

Comm i s sion.

t o the NCA

ma terials.

Section 56 was of no use in this situation for

have effect until the termination of my Royal

Even then, it does no more than give a power

to take possession of documents and other

9 . 040 In this situation I requested advice be sought

f rom Sir Maurice Byers Q. C., the former Solicitor-General who was instructed to provide an opinion as to the proper

course o f action to follow. He confirmed my view that

sect i on 6P ( 2A ) did not permit the direct transfer of the

inf or mation; and that section 56 of the National Crime

Au t hority Act was of no value in this transitional period.

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He expressed the opinion that I could rely upon a provision

in section 6P(l) of the Royal Commissions Act by which I

could forward the summaries of the relevant criminal

activities to the Attorney-General even though it was only for the purpose of the Attorney-General forwarding it to the NCA. I had my reservations as to the propriety of that

course; but, upon Sir Maurice Byers advising that he saw

nothing improper in it being done, on 17 July 1984 I handed

the material to the Attorney-General and I understand he

immediately passed it on to the National Crime Authority.

9.041 In a letter dated 18 July 1984 signed by the

Chairman of the National Crime Authority I was informed the Authority had resolved that the material in the matters

forwarded through the Attorney-General was regarded by it as relating to relevant criminal activities, and it resolved to investigate them pursuant to section ll(l)(b) of the

National Crime Authority Act. A copy of the resolution was set out in the letter and was in these terms:

"The Authority resolved that in order

that the Authority might investigate

matters relating to relevant criminal

activities arising out of the material

forwarded to the Authority by the

Commonwealth Attorney-General on the 17 July 1984 Mr. F.X. Costigan Q.C. be

requested to make available to the

Authority for this purpose all documents and other materials that relate to the

Inquiry conducted by him as Royal

Commissioner and that are in his

possession or under his control as Royal Commissioner."

(Resolution Steering Committee 18 July 1984)

9.042 Some of the matters described in the Memoranda

of Relevant Criminal Activities were included only by reason of the operation of section 4(2) of the National Crime

Authority Act. That provision could operate only upon the

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Authority forming the relevant suspicion. My senior

assisting counsel later drew the attention of one of the

members of the Authority to the failure of the resolution to record that the relevant susp1c1on had been formed.

Following that, by a letter dated 23 July 1984 signed by the Chairman of the Authority, I was informed of a subsequent

motion at another meeting of the Authority which was in the following terms:

9.043

11 0n the motion of the Chairman the

Authority resolved that ar1s1ng out of

the material mentioned in paragraph 2 of the Minutes of the Inaugural Meeting of

the Authority, in addition to the matter mentioned in paragraphs 3 and 4 of the

said Minutes, the Authority, pursuant to Section 4(2) of the Act suspects that

offences which are not relevant offences as defined in Section 4(1), may be

directly or indirectly connected with or may be part of a course of activity

involving the commission of a relevant

offence so defined." (Letter Chairman NCA to Commissioner 23 July 1984)

By Section 6P(2A) of the Royal Commissions

Act , where I had obtained information, taken evidence or

r eceived a document that in my opinion related to an

investigation being conducted by the NCA, I might, if in my op inion it were appropriate to do so, communicate the

information to the NCA. In determining whether I should

form the requisite opinions, I took the view that I should

accept the resolutions of the NCA on their face and not

enquire further. Given those resolutions, and understanding as I did that they referred to the 40 matters which, at that

stage, had been forwarded to the NCA, I formed the opinion

that all of the information I held, comprising oral evidence documents and records on computer tape, did relate to

investigations now being conducted by the NCA and it was

appropriate to communicate the information to it. Thus I

authorised the Commissioners of the NCA in their capacity as

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Commissioners to access the database and to inspect the

f iles of the Commission.

9 . 044 It will be observed that this was not achieved

by 13 July 1984 as the Prime Minister had requested.

However it was achieved in the shortest possible time,

having regard to the strictures of law and the extent of the

work involved .

9 . 045 At this point it is appropriate I deal with

the ultimate consequences of the delivery of the relevant criminal activities memoranda. In the issue of the National Ti me s of 14-28 September 1984, and in subsequent issues,

extracts from the memoranda were published with the names of the i ndividuals veiled, but the activities described in such a ma nner as to allow easy recognition of the individuals,

immediately by those concerned, and ultimately by the

public. The memoranda had fallen into the hands of the

Na t i onal Times by an unauthorised disclosure. I do not

believe it was released from the Commission premises, nor by a ny of the Commission staff. A police investigation has yet t o establish how the disclosure occurred.

9. 046 As I have recorded earlier, the task imposed

by the Prime Minister was to facilitate the transfer of the

current investigations to the new Authority. Up until the

passage of the National Crime Authority Act, I had expected to eff ect the transition with a minimum of fuss. I had

ask e d for a statutory direction that my data base be

transferred, and for substantial time for oral briefings of the new staff. Had it been done in this fashion, the

me moranda of relevant criminal activities would not have

been pre pared. Indeed, little more would have been in

writing than the list of 29 matters forwarded directly to

t he Chairman of the Authority upon his appointment. Even

wit h in my Commission there was no document reducing the

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investigations into the terms found in the memoranda later published in the National Times.

9.047 However, disastrous though the experience has

been, it does have the benefit of drawing attention to a

major defect in the scheme of the National Crime Authority Act. It is a defect which, despite lengthy debate, has yet

to be fully recognised.

9.048 All other agencies engaged in law enforcement

commence their investigations without the necessity of first justifying in writing the reason for the investigation.

There is no legal requirement. If there is an operational

requirement, it is usually met by an oral briefing. The

explanation is simple enough. At the commencement of an

investigation very little is known. What is known is

usually mere suspicion. To demand

develop an exposition as to why

investigation at such an early time

that he is

the investigator is initiating an

to compe 1 him to

record his suspicions and construct an elaborate edifice on what may ultimately prove to be an unsound foundation. If

such a case is made in writing, the resulting document

attracts a status far above that intended and what is no

more than suspicion may be converted into concluded views. There is little doubt that was the fate of the memoranda I

transmitted to the Attorney-General. It is a course to be

avoided no matter wha·t the cost may be. I add that there is

little point in railing against the media should it happen

upon such writings and publish them; it is a fact of life

in Australia, and in all other free countries, that there is

a free Press which will publish such matters without regard

for the consequences.

9. 049 The National Crime Authority Act imposes the

task of reducing suspicion and allegation to writing by

law. The Authority is limited to investigating matters

defined as "relevant criminal activities". The definition

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is based upon "circumstances implying" or "any allegations" that offences characterised by the relevant criteria have been committed. An "allegation" is not a conclusion; a

"circumstance implying" is not the same as a circumstance

compelling a conclusion. The degree of satisfaction is

deliberately low, and encompasses matters which, on

investigation, may fail to establish that a relevant offence has been committed. This is understandable. After all, the Authority is required to investigate. If the answer is

known at the commencement, no investigation is necessary.

9.050 Having been compelled to allow as the basis

circumstances uncertain in their inference, and allegations the veracity of which has yet to be tested, the Act provides

that the coercive powers will be granted only upon the

Inter-Governmental Committee being satisfied it is proper so to grant. One aspect of satisfaction is that ordinary

police methods will not suffice. All governments in

Australia at Federal and State levels are invited to

participate. "circumstances" writing and

participants.

It follows, necessarily,

and the "allegations" will be

submitted for consideration

Thus there will come into being

that the

reduced to

· to the

documents

which record, in a formal and no doubt compelling manner,

matters of which the factual basis has yet to be examined ,

let alone tested. These documents will be sent to all of

these governments. Their security cannot be guaranteed. I believed I had ensured security with the passage being

merely from me to the Attorney-General, and then to the

National Crime Authority. Yet it was breached. How much

greater the probability of this where distribution is so

much wider.

9.051 distribution. The problem is not merely that of wide

If a reference is granted, there is a

mandatory requirement imposed by sections l3(2)(a) and

l4(2)(a) that the document containing the reference

Volume l · -260- Chapter 9

"describe the allegations". general nature of the

Thus these untested

Transfer to NCA

circumstances or and inconclusive

circumstances, or possible unfounded allegations, are to be recorded in the reference itself. By section 28(3) a copy

of the document is to be attached to every summons issued.

Th us the document is to be published.

9.052 There will be those who may attach

significance to the words "general nature" found in those

subsections imposing the requirement that the circumstances and allegations be described. I find little comfort in

their inclusion. If the purpose of the requirement is to be

met there must be sufficient particularity given to ensure the "circumstances" and "allegations" are indentifiable and do point to a criminal activity. Thus the requirement

imposes disclosure of matters asserting crimes when, after investigation, it may be found the basis is false. There

will be those who will seize upon these documents, publish them, and allow, perhaps by innuendo, perhaps by blatant

assertion, the identification of those involved in the

criminal activity to become known. The mere service of the summons, calling for production (perhaps) of documents

relating to an individual named within it, will give rise to t he supposition that the named person is the culprit.

9.053 The memoranda of relevant criminal activities

prepared and delive1:ed by my Commission were the result of intensive and deliberate attention to the requirements of the Act in describing relevant criminal activities. They

went no further than was believed necessary, having given

the Act due and proper study. Others will provide the same

degree of particularity, and will act on the same, or

lesser, material (I say lesser since in my case many were

the result of investigations I had conducted). Their

release in tne community will do great harm to individuals as has the release of mine. Yet this Act, born out of an

honest but misguided attempt to protect reputation, by this

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measure has allowed the worst possible situation to arise by which reputations may be destroyed without justification. Had the statutory requirements been otherwise the adverse and unjust consequences which have befallen a number of

people could have been avoided.

9. 054 I recommend that the strategy of the National

Crime Authority Act be changed so as to do away with the

requirement for a reference, and so remove any requirement that at the commencement of an investigation there be

recorded the circumstances implying offences, or allegations of offences. Other techniques for the control of the

Authority are required.

9.055 The transmission of the relevant criminal

activities in documentary form was not the only problem in the transition. Another was the lack of time to conduct

proper briefings. Much has already been debated on this in the national Parliament, and the correspondence between me and others concerning it has been published. It is

unnecessary to add to what I said in that correspondence. I

merely record that operational briefings did not take place, although in the last days of the Commission, whilst this

report was being printed, copied and bound, my senior

instructing counsel was able to give a little time to this

matter.

9.056 As I look back on the last four months of my

Commission, it is plain that it was never feasible to

commence a new Authority as mine ended, and expect it to

continue the operations without there being a substantial hiatus. The methods of operations, the systems, and the

philosophy of the work done by my Commission was far too

removed from the experience of those newly appointed for it to have been reasonable to expect there would be a rapid

assimilation of those matters by them.

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9.057 This had been demonstrated earlier, when Mr

Robert Redlich was appointed as Special Prosecutor at my instigation for the purpose of prosecuting and taking civil actions as matters were investigated by my Commission. It

was some months before he gained a full appreciation of the techniques being employed and the objectives being sought. Those months were marked with misunderstandings on both his and my parts; but within twelve months a much better

understanding, and cooperation, was achieved.

9.058 replaced

Mr Redlich,

by Mr Temby

and Mr Gyles Q.C., were then

Q.C., as Director of Public

Prosecutions. Once again the same problem arose. He,

together with a number of other significant people, lacking any knowledge of the objectives being sought and the means adopted to achieve them, interpreted the role of the

Commission in terms of a police force. He joined others in

the erroneous assumption that the material on which the

Commission acted was 11 inadmissible11 , or to cite a later

description, was 11anecdotal 11 • In fact the material on which I acted could not be of greater substance. It lacked free

admissions of guilt, but otherwise was readily admissible in Courts of law (as many cases have established), and was in

no manner 11anecdotal11 ). Yet such comments were made by Mr

Temby QC and others, notwithstanding their unfamiliarity

with the matters.

9.059 Precisely the same situation arose with the

commencement of duties by the new Commissioners of the Crime Authority. It was only towards the end of the last four

months any real appreciation was formed of the philosophy and techniques developed in my Commission. By this time, of course, the operations of the Commission had been suspended.

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9.060 In this sense, the transition failed. I hope

t hat the techniques will not be lost, and some appreciation

of their value will be gained. The result of the

d iff iculties in transition has been a report of far greater d imensions than I had hoped would be the case. I have

reported at length on the philosophy and techniques. I

deliver with this volume many other volumes detailing the

ext e nt a number of operations have reached, so that they may be continued in the future. In themselves they represent

t he product of that philosophy and those techniques. For

t hat reason I have recommended they remain confidential, at l east until the investigations and legal proceedings which

a re proposed in them have been concluded.

Volume l -264- Chapter 9

CHAPTER 10 - SUMMARY OF RECOMMENDATIONS

Introduction

10.001 I have consolidated in this chapter the

recommendations appearing in the several volumes of my report.

10.002 The recommendations summarised in this chapter

should not be read in isolation from the volume of the report

i n which they are primarily found. This did occur in respect

of the Fifth Interim Report, and led to a number of

misinterpretations which would not have occurred had the

critics known the circumstances in which the recommendations had been made. This should not be allowed to occur.

10.003 Insofar as the confidential volumes are

concerned, my recommendation that they be kept confidential does not mean that I counsel their concealment from those whose advice or action is required to implement the recommendations within them. The relevant confidential volume should be made

available to such people.

10.004 For convenience I have summarised the

recommendations under the headings of the volumes in which they are to be found.

Volume 1 -265- Chapter 10

Recommendations

Volume l - THE WORK OF THE COMMISSION

Perjury

10 .005 I recommend that the provisions of the Royal

Commissions Act 1902-1984 be amended so as to delete the

requirement that the false answer be shown to be "material 11 to the Inquiry.

10 . 006 I recommend that the Royal Commissions Act

1902-1984 be amended so as not to exclude the application of

State laws relating to perjury where a joint Commission is

being conducted.

National Crime Authority

10 . 007 I recommend that the requirement of a reference

being granted by the Inter-Governmental Committee, and its

a ttachment to every summons issued by the Authority, be

repealed, and that there be no control of the Authority based

u pon o r the compilation of "circumstances . implying"

or "allegations" of criminal offences at a time when an inquiry is commencing.

Volume 2 - INVESTIGATORY TECHNIQUES

Systems

10 .008 I recommend that the computer sys terns comprising

the computer tapes, manuals and volume two of this report be

made available to all law enforcement agencies for their use as

they see fit. In particular, I recommend they be provided to

the Victorian Police Force, especially the Bureau of Criminal Intelligence, and other law

sys tems being

Volume l

the Victorian Commissioner of Corporate Affairs enforcement agencies in Victoria. Upon those converted to a fourth generation language, I

-266- Chapter 10

Recommendations

recommend that the Commonwealth of Australia make them freely available to all State police forces and other law enforcement agencies.

10.009 I recommend that the data base (excluding

material derived from taxation records) be made available to the Australian Federal Police and the Victorian Police Force, and to the Victorian Commissioner of Corporate Affairs.

10.010 I recommend that there be a study made of the

appropriate guidelines to be issued to all law enforcement

agencies in respect of the selection of targets for proactive law enforcement, and that upon such guidelines being

determined, they be issued as guidelines by the Ministers

responsible for Police in both the Commonwealth and the State of Victoria for the guidance of their respective police forces.

Civil Proceedings by the Director of Public Prosecutions

10 .Oll I recommend that the Director of Public

Prosecutions be empowered to initiate civil actions on behalf of the Government (Commonwealth) irrespective of the stage

reached in criminal prosecutions.

Volume 3 - THE UNION

10.012 I recommend that there be enacted by agreement

between the Commonwealth and the States laws similar in nature and to the same effect as have been enacted in the United

States of America in the Labor-Management Reporting and

Disclosing Act of 1959, and that otherwise the commission of

extortionate practices by members of trade unions not be the

subject of the ordinary crime of extortion.

10.013 I recommend that the Commonwealth and the States

enact laws prohibiting a person holding office in a union for a period of five years following conviction for an indictable

Volume 1 -267- Chapter 10

Recommendations

offe nce. Such laws should imitate the existi ng provis ions

prohibiting like persons holding office in companies.

10.014 I recommend that there be enacted by agreement

between the Commonwealth and.the States laws similar in nature a nd to the s ame effect as have been enacted in the United

S tat es of Ame rica in the Racketeer and Influenced and Corrupt Organisations Statute.

10 . 015 I recommend the establishment at each port or in

the case o f s mall ports, for each group of ports, of a Port

Security Authority , to act as an intelli gence gathering and

dissem ina tio n agency. Detailed recommendations as to the

func tio ns a nd operations of this Authority are to be found in

Chap t er 5 o f Volume 3 .

Volume 4 - SP BOOKMAKING

10.016 I recommend that the Lotteries Gaming and Betting

Ac t 1966 (Vic) be amended so as to include an offence of

"possess i o n of instruments of betting", and that the powers of arres t be clarified.

10 . 0 17 I recommend that the penalty for i l legal

bookmaki ng be increased so as to provide a fine of $25,000 on a

f irs t offence; $100,000 maximum and $25,000 minimum on a

second c onviction; and $250,000 maximum and $50,000 minimum or three year s ' imprisonment on a third or subsequent conviction.

10.018 I recommend that the Lotteries Gaming and Betting

Ac t 1966 (Vic) be amended so as to make it an offence to give a

fal se na me and address when questioned by the police in respect of illegal g ambling.

10 .019 I recommend that the Lotteries Gaming and Betting

Act 1966 (Vic) be amended so as to render it an offence to

Volume 1 -268- Chapter 10

Recommendations

place a bet with illegal bookmakers, and that the penalty for

doing so be a fine of $25,000.

10.020 I recommend that on conviction of the offence of

illegal bookmaking, the offender be liable to turnover tax (in addition to any other penalty imposed) computed, in the absence of evidence to the contrary, on presumption that the amount of turnover found on che day of the offence was the average daily

turnover for each racing day of the preceding year.

10.021 I recommend that the State of Victoria establish

a small office charged with the responsibility of recovering

turnover tax from those convicted of illegal bookmaking, and that such office work in close association with the members of the Victorian Police charged with enforcement of the gaming laws. I further recommend that the Australian Taxation Office allocate investigators to assist with this office, its function being to recover income tax.

10.022 State

I recommend

Governments to that the there be a reference by

National Crime Authority

investigate illegal bookmaking throughout Australia.

10.023 I recommend that in addition to

all

to

the

investigations of the National Crime Authority the Australian Bureau of Criminal _Intelligence coordinate the gathering of intelligence throughout Australia on the operations of illegal bookmaking and race fixing.

10.024 I recommend that Telecom grant access to law

enforcement agencies to the SCRP machine facility.

Volume 5 - THE DRUG TRADE

10.025 I recommend the establishment of a Taxation

Investigation Tribunal. Details as to its functions and powers are to be found in Volume 5.

Volume 1 -269- Chapter 10

Recommendations

10.026 I recommend the establishment of a Taxation

Iuves tigation Officer. Details as to his functions and powers are to be found in Volume 5.

10.027 I recommend that the drug activities of Barry

be the subject of investigation Crime Authority, and that the

Richard Bull and his associates co- ordinated by the National Authority be granted a reference to conduct its own

investigations. In the event of my recommendation as to a

Taxation Investigation Tribunal being accepted, I recommend that Bull a nd his associates be investigated by that tribunal.

10.028 I recommend that the activities of the solicitor

Robert Cartwright (of the

Queensland) be referred to

appropriate action.

firm Power and Cartwright, Noosa, the Queensland Law Society for

Volume 6 - LOCKYER & McCARTHY and another (name suppressed as

person is awaiting

trial)

10 . 029 I recommend further investigations and the

initiation of criminal proceedings as set out in sub-paragraphs l-3 of paragraph 7.005 of Part l; and sub-paragraphs l-3 of

paragraph 13.011 of Part 2.

10 . 030 I recommend that the office of Justice of the

Peace held by the person the subject of Volume 6B in New South

Wales be terminated.

10.031 I recommend that the activities and affairs of

the persons the subject of Volume 6B be closely monitored by

all relevant law enforcement National Crime Authority, the and Federal Police forces,

Australian enforcement Customs Service,

agencies, and in particular the

Australian Taxation Office, State Corporate Affairs Offices, the Bankruptcy Offices and law

agencies in the United States.

Volume l -270- Chapter 10

Recommendations

10.030 I recommend that the Crimes Act of the

Commonwealth and the State of Victoria be amended to render it an offence to fail to report knowledge or information of

criminal offences where the offence is one punishable by

imprisonment for a period of not less than three years.

10 .031 I recommend that the structure, organisation and

methods of Bankruptcy and Corporate Affairs offices be reviewed t o provide proper equipment and facilities (including the

based information storage/ development of r e trieval/analysis a computer

system) for satisfactorily enforcing the

provisions of their respective Acts.

10 .032 I recommend that the Bankruptcy Act be amended:

Volume l

(a) to provide specifically that the

Official Trustee may investigate

trusts, companies, businesses,

partnerships and other entities

suspected of being financially

associated with the Bankrupt or any

member of his family;

(b) to rectify the apparent anomaly

appearing in Section 269(b) by making it an offence to carry on business in

thebankrupt's own name without

disclosing to the person with whom he deals that he is an undischarf.ed

bankrupt. I recommend the words 'in

his own or" be added after the word

first appearing;

(c) to render it an offence to fail to

disclose to the Registrar in

Bankruptcy or the Official Trustee

all banks, building societies, credit unions, credit and other accounts in any name used by, on behalf or for

the benefit of the bankrupt.

(d) to require the bankrupt to

the Official Trustee

statements of all deposits drawings from such accounts.

-271-

supply to quarterly into and

Chapter 10

Recommendations

Volume 7 - SOME DRUG CONNECTIONS

10 . 033 I recommend a Royal Commission into the

matte rs which are the subject of Volume 7.

Volume 8 - (Name suppressed as person is awaiting trial)

10.034 I recommend that the Building Societies Act

1976 (Vic) be amended:

Volume l

(a) to repeal Section 110;

(b) to widen the definition of director

so that it is in the same terms as

that found in section 5(1) of the

Companies Code; (c) to amend section 24 by insertion of

the word 11alone11 after the words 11board of directors 11 ; (d) to add prov1s1ons disqualifying

certain persons from participating in the management of building societies on grounds similar to those

disqualifying persons from

participating in the management of

companies;

(e) to add provisions by which a Court

may prohibit persons from engaging in the management of building societies.

(f) to add provisions similar to those in

the Securities Industra Act requiring any person who wishe to manage a

building society to be first licensed as a fit and proper person to do so;

(g) to allow the Court to appoint a

Receiver of a building society on the application of the Registrar; (h) to impose upon officers of a building

society the same duties backed by

similar penalties to those found in

sections 228-230 of the Companies

Code.

- 272- Chapter 10

Recommendations

(i) to extend the provisions of section

908 so as to require a bond of

indemnity from officers of building societies in amounts between $500,000 and $1 million, depending upon the

cash flow of the particular society. (j) to amend section 101 so as to relieve

building societies of penalty in the event of default, but to inflict the

penalty on those responsible for its

management.

(k) to extend the provisions so as to

empower the Registrar with access to financial records of the society and of banks and other persons with whom the society deals in like manner to

the powers granted to investigators of the Commissioner of Corporate

Affairs.

(1) to empower the Registrar

hearings, administer the conduct investigations

mal-administration of a

society is suspected.

to conduct oath, and

where

building

10.035 I recommend that the investigative staff of

the office of the Commissioner of Corporate Affairs be

available to the Registrar of Building Societies to assist in the conduct of investigations.

10.036 I recommend that Section 9 of the Bail Act

1977 be amended so that sub-section 2 provides:

Volume 1

"where a surety desires to use real estate

of which he or she is the registered

proprietor as valuable security in any

application for bail of an accused person before the release of the accused person

the following must be provided to the

court by the surety -(a) The certificate of title for the

property which is to be used as the

security or a certificate from the

office of the Registrar of Titles

-273- Chapter 10

Recommendations

attesting to the proprietorship of

the surety;

(b) where any mortgage or other

encumbrance exists over the property, a document from ·the mortgagee or

other person entitled to the ):>enefit of such encumbrance, caveat or

otherwise, describing the nature of the encumbrance and the effect if any on the value of the property;

(c) a document containing a sworn

valuation by an accredited real

estate valuer as at the date on which

the application for bail is made.

Volume 9 - ACTIVITIES OF RAY/PACKER

10 .03 7 I recommend that the matters described in

chapters 2 to 5 be referred to the Director of Public

Prosecutions (Commonwealth) for completion of the

investigation and the initiation of criminal proceedings.

10.038 I recommend the establishment of a joint task

for ce comprising police officers of the Australian Federal Police , the New South Wales Police and the Queensland Police

supported by officers of the Australian Taxation Office and the Corporate Affairs Commission of New South Wales and the Co r porate Affairs Office of Queensland, to investigate the

matters described in chapters 6 to 10.

10 . 03 9 I recommend that the Commonwealth of Australia

advise the New South Wales Government of my recommendation tha t the criminal charges on which Phillip Kingston Carver presently awaits trial should be discontinued.

10 . 040 I recommend that all of these investigations

be under the supervision of the National Crime Authority and that consideration be given to the grant of a reference to

a llow their proper completion.

Volume l -274- Chapter 10

l.ecoJDJDendations

Volume 10 - DEATH OF COOTE

10.041 I recommend that the joint task force referred

to in paragraph 10.026 investigate the circumstances of the death of Ian Percival Coote to prepare evidence to be led at an Inquest into that death, and to explore the other matters referred to in Volume 10.

10.042 I recommend that the selection of the joint

task force recommended in paragraphs 10.026 and 10.029 be in accord with the criteria recommended in paragraph 15.006 of Volume 10.

10.043 I recommend that the Commonwealth of Australia

tranmit to the Government of Queensland Volume 10 of this

Report, and my recommendations that there be an Inquest into the death of Ian Percival Coote.

Volume 11 - HASHISH OIL

10.044 investigate Report.

Volume 1

I recommend that the Australian Federal Police

the matters contained in Volume ll of this

-275- Chapter 10

REFERENCES FOR VOLUME 1

Cos tigan, F .X. (1984) " Organised Crime in a Free Society" in Current Affairs Bulkletin Vol. 60 No. 9 February 1984.

Aus tralia

Redl ich, Robert F. (Special Prosecutor). (1983) Annual Report of the Special Prosecutor 1982-83 (Canberra, AGPS)

(1984)

Annua l Report of the Special Prosecutor 1983-84 (Canberra, AGPS)

Gyles, Q.C . , R.V. (Special Prosecutor). (1983) Report to the Attorney-General for the Year Ended 30 June 1984 (Canberra, AGPS)

--- . (1984)

Report to the Attorney-General for the Year Ended 30 June 1984 (Canberra, AGPS)

International

Commo nwe alth Secretariat. (1983) "M utual Assistance in Criminal Matters : A Commonwealth Perspective" (Paper prepared for Commonwealth Law Ministers' Mee ting , Sri Lanka, February 1983)

Periodicals

Fi nanc i a l Review (Sydney)

Sydney Morning Herald (Sydney)

Volume 1 -276- References