Ben Hills investigates

Two months ago, in an obscure courtroom in the ivy-covered building in Melbourne’s Little Bourke St that houses the Federal Court, a judgment was handed down that attracted little attention beyond the small coterie of lawyers involved.

The 51 pages of Justice Ronald Merkel’s verdict in the case of “A1 and anor. v Betty King QC and ors.” is crammed with turgid legalese and rated not a mention in any newspaper or TV bulletin. But it is dynamite for Australia’s premier crime-buster, the National Crime Authority.

The two litigants – identified only as A1 and A2 – are bikies the NCA sought to haul in for interrogation under its “coercive powers”, a process likened by some to a Star Chamber in which witnesses are placed under a spotlight in a darkened room in the NCA’s offices and forced to answer questions on pain of imprisonment. Ms King was until recently the authority’s chief inquisitor.

These hearings are conducted in hermetic secrecy (you can be jailed for even mentioning that you have been summonsed to one) and can last eight hours. No other law enforcement agency has such draconian powers, which are the NCA’s main weapon in its fight against organised crime – last year 180 people were put through the wringer.

On this occasion, however, the intended victims refused to submit quietly. They challenged the “reference” – the government authority the NCA needs to launch an investigation – and they won. Justice Merkel ruled, in effect, that it gave the NCA such a broad and sweeping mandate that it was invalid.

If the judgment survives an appeal to a three-judge Full Bench of the court in Sydney next week, it will effectively destroy one of the NCA’s biggest operations in recent years – Operation Panzer, a full-scale onslaught on “Outlaw Motor Cycle Gangs” involving up to 15 State and Federal agencies, which has already, in NSW alone, resulted in 76 arrests and the seizure of 10 kilograms of drugs, as well as guns, explosives and $62,000 cash.

Some critics – who include former “members” as its triumvirate of directors are called – go further. They say the judgment undermines the whole legal authority of the NCA and may affect hundreds of serious criminal cases which resulted in lengthy jail terms and the seizure of property worth tens of millions of dollars.

“I’m not trying to scaremonger,” said a former NCA boss, “but if other references are drafted in this fatally-flawed way this could be a bigger disaster than Elliott.” He was referring to the case that hogged the headlines last week, the collapse of the NCA prosecution of former Elders-IXL boss John Elliott on fraud charges involving $66 million after another judge ruled its six-year investigation illegal.

Claiming he had been the target of a political vendetta (he is a former national president of the Liberal Party), Mr Elliott vowed to destroy the NCA. “I’ve got my hands around the chook’s neck,” he growled, “but, as Churchill said, I haven’t begun to wring it yet.”

That may not be necessary. The two judgments are only the beginning of the nightmare which is engulfing Australia’s Untouchables.

The Treasurer, Peter Costello, has hacked into the NCA’s funding, lopping $9 million off its current $38 million annual budget over the next three years. The NCA’s new chairman, John Broome, says 65 of the 400 staff will have to go and admits the authority is currently unable to take on one new investigation.

The authority has also been rocked by allegations it has been infiltrated by corrupt police. Although Mr Broome says an internal investigation has found no evidence that the NCA has been compromised, he concedes: “I’m not stupid. I’d never suggest that with 100 police there would not be one involved in some illegality.”

Finally, there is a mounting chorus of complaint from outside organisations as varied as the Australian Federal Police union and the Australian Council of Civil Liberties, that the NCA has lost its way – that it has been ineffective in combating organised crime, that its powers are too oppressive and that (in the words of Robert Richter QC, John Elliott’s $3,500-a-day barrister) “they didn’t give a f— (about acting illegally). They are not accountable to anyone”.

In the view of many, it is time for the NCA to be dismantled and its powers devolved back to the myriad of other conventional crime-fighting organisations (see chart).

Would this mean (as the former Justice Minister, Duncan Kerr, warned before the last Federal election) “the only people cheering will be the criminals”? How has the NCA performed in its mission against crime?

Wins and losses

For an organisation so obsessed with secrecy, the NCA’s headquarters – a pastel coloured, post-modern building overlooking a park in East Melbourne – has at times leaked like a sieve. Since it was founded in 1984 it has rarely been far from the headlines.

Created at a time when law enforcement was a “sexy political issue” (as a former chairman puts it), the NCA was meant to investigate and exterminate major organised crime which had been exposed by a series of royal commissions. It was felt that existing police agencies were unco-ordinated and under-resourced to fight sophisticated cross-border crime – the NCA was to be a “rolling royal commission,” rather than the “ninth police force” which some critics believe it has become.

The NCA did have a few major successes, although some of these cases were taken over after other law enforcement agencies had put in the hard yards. Bruce “Snapper” Cornwall was extradited and imprisoned for heroin smuggling; Abe “Mr Sin” Saffron went to jail for tax fraud; Barry Moyse, former head of the South Australian drug squad, was sentenced to 20 years for large-scale marijuana cultivation.

But too often these wins were overshadowed by embarrassing debacles. In the late 1980s, the NCA spent two years and $4 million to $5 million pursuing a rumour that Chris Sumner, the former South Australian Attorney-General, was being blackmailed by someone with evidence that he made a practice of crawling around his lounge room floor with a naked prostitute on his back, flogging him with a riding crop. In 1991, an NCA report tabled in the South Australian Parliament found there was no substance to these or any other allegations against Sumner.

More recently, in April of last year, an inquiry commissioned by Mr Kerr into the NCA’s dealings with one Mehmed Skrijel – an Adelaide fisherman who claimed his life was ruined after he was framed on drugs, explosives and firearms charges – found it “highly likely that there has been some very serious misconduct,” and recommended a royal commission. The NCA is still embroiled in legal action over this.

The finding provided the first public evidence of what many in the law enforcement community had long suspected – that, hidden by the veil of secrecy, incompetence and even corruption lurked within the bosom of the NCA. Earlier this month, the self-confessed corrupt former Australian Federal Police officer, Alan Taciak, went on TV claiming he knew of 78 other corrupt police and that some of them had worked on secondment for the NCA.

A former NCA boss says he was so concerned about links between the authority’s police and criminals that when – for instance – Abe Saffron was to be seized on tax evasion charges, police from Melbourne were flown up to do the job for fear NSW police attached to the authority would tip him off. This source remains extremely concerned that one policeman he regards as “an evil bastard” remains in a senior position inside the authority.

Others are critical of the “public service mentality” of the AFP officers who now control all the NCA’s investigative work. “They get to work at 10 to 8, they are out the door at 5 past 4 – they don’t think like police officers, they aren’t trained like police officers,” said another source.

Costs and recoveries

In 1990 the bitter infighting between the NCA and other law enforcement agencies surfaced publicly when its second chairman, Mr Peter Faris, QC, resigned through ill health after only seven months in the job. This followed an incident one night when he was stopped by Victorian police outside a brothel with $170 in his hand – no charges ever eventuated and Mr Faris’s friends maintain he was “set up.”

During his short tenure, it was Mr Faris who began the investigation into John Elliott that was to become such a debacle. He directed the agency on its first major expedition against white-collar crime – an area where it was never intended to go – by taking over the investigation from the then corporate watchdog, the National Companies and Securities Commission. “Henry Bosch (former NCSC chairman) could barely conceal his glee,” recalls one former NCA boss.

Even where the NCA claims its biggest victories – against drug trafficking and money laundering – there is no evidence it is winning the fight against organised crime. In fact, the contrary. Last year, Austrac, Australia’s sophisticated cash-flow reporting system, reported that $3.5 billion was probably being laundered through Australia every year; in 1989 a parliamentary committee found that the Australian drug trade was worth $2.6 billion a year.

Extraordinarily, last year the NCA produced a report which concluded that there was no evidence of the Mafia operating in Australia – a report which particularly puzzled those involved in the 1977 murder of the Griffith anti-drug crusader Donald McKay.

Mr Broome makes much of the fact that the NCA consumes only 1 per cent of Australia’s total law enforcement budget. But, since it was established, that comes to a hefty $332 million. It is legitimate to ask: What sort of bang have law-abiding citizens got for their bucks?

Including joint Federal/State task forces, 868 people were charged by the NCA in the first 11 years of its operation. Of these, more than half eventually walked free. A total of 383 were convicted, at an average cost of $866,840 per criminal – way in excess of the typical cost of a State police conviction.

The NCA highlights the tens of millions of ill-gotten gains and avoided taxes it recovers. It has claimed that these almost cover its operating costs. However, these figures are also misleading. A closer examination shows that they are only nominal amounts – the total actually recovered in the decade to 1994-95 was just $20 million, a little over half of one year’s budget.

Power and supervision

The bungles over the Elliott prosecution and the “bikies case” have highlighted an even more serious problem with Australia’s Most Secret – the apparent lack of effective parliamentary supervision. The “references” were approved by an inter-governmental committee consisting of State and Federal ministers, and subject to review by a joint parliamentary committee.

In view of the agency’s extraordinary powers, close oversight of its operations was seen as essential – when the law was first passed it even included a sunset clause which could be used to wind it up if it abused its authority. As well as its “coercive powers”, the NCA engages in electronic espionage – last year it got warrants to tap 105 people’s telephones and install 121 listening devices.

Yet, for six years in the Elliott case, evidence has revealed that the NCA was sitting on two sets of legal opinions that its terms of reference were flawed, apparently without the knowledge of either committee. Said one former NCA boss, about the parliamentary committee: “I’m not sure that they (the committee) ever actually read a reference. It was always difficult even to get a quorum. When we did sit down, you’d get a question like, ‘Well, what have you been doing lately?'”

Another was even blunter – the parliamentarians, he said, were “pretty dopey”.

Mr John Bradford, a Queensland Liberal with no legal or law enforcement background who is the new chairman, has said the committee will “re-examine the NCA’s role and powers.” He did not know what this would involve or whether public submissions would be sought. He denied there was any “secret Liberal agenda” to get rid of the NCA, though he conceded it was “possible” it had withheld information from the committee.

Betty King, the only former NCA boss prepared to go public with her concerns, believes that if the authority is to survive its legislative mandate will have to be radically redrafted. “The NCA Act is one of the most tortured pieces of legislation I have seen … the references might as well be written in Hindustani, and that is the problem,” she said.

Ms King has heard that John Howard’s new Liberal Government may be planning to effectively end the NCA by merging it into its long-time rival, the Australian Federal Police. If this does happen, she wants the authority’s “coercive powers” stripped away: “I would never give any police agency access to the powers they have, because they are extremely wide and need to be exercised by people who are not out there to persecute or catch a crook.”

The man who is leading the NCA’s fight for survival, John Broome, is – unlike his predecessors, who have included judges and QCs – a career public servant who once served on the personal staff of former AttorneyGeneral Lionel Bowen.

As to whether the two judgments – Elliott and the bikies – may mean the overturning of much of the authority’s work of the past decade, and signal its demise, he says he is confident about the outcome of the appeals, and finds the question “such a hypothetical that I am not prepared to give a response”.

The NCA’s record has been “variable”, he concedes, but “there is greater support for the NCA in 1996 than there has ever been, other than last week’s minor little outbreak in the media”.

Who could fight the NCA’s battles?

Money laundering:
– Federal Police
– AUSTAC (cash transactions reporting agency)
– State revenue bodies

Major crime (ie. drug importations):
– State and Territory agencies such as NSW Crime Commission
– Customs

White-collar crime:
– Securities Commission
– State police corporate crime squads
– Taxation Office

– State and Territory agencies such as ICAC (NSW) & Criminal Justice Commision (QLD)

Criminal intelligence:
– Federal Police/State Police
– Bureau of Criminal Intelligence