PRIME MINISTER

GOVERNMENT'S RESPONSE TO FINAL REPORT OF ROYALCOMMISSION INTO THE ACTIVITIES OF THE FEDERATED SHIP

PAINTERS AND DOCKERS UJNION

Release of Final Report

The Government is releasing Volumes 1 to 5 of theCostigan Commission Final Report. This is in accordancewith the strong recommendation of the Royal Commissioner(at paragraph 1.025 of Volume 1 of the Report). TheGovernment is also releasing an appendix volumecontaining Appendices 1A, lB and IC, which list thepublic witnesses, their representatives and publicexhibits.

There are another six substantive volumes whichMr Costigan recommended, and the Government accepted,should remain confidential. Mr Costigan has said (atparagraph 1.024 of Volume 1) that he made suchrecommendations in some cases because persons are ontrial and in other cases because hig~hly sensitivecurrent investigations could be impeded, if notdestroyed, by disclosure. (In addition, some appendixvolumes have not been published because of similarconcerns, because of the need to protect the security ofthe systems passed to the NCA or because they containmaterial published elsewhere).

Within three of the five -substantive volumes published,certain deletions have been made identified by blankspaces in certain parts of those volumes. As I hadinformed the Parliament would occur, these deletionswere based on the advice of the Government's legal andlaw enforcement advisers. The Victorian Government andits advisers were also involved in this process and thedeletions were brought to Mr Costigan's attention.

Agreement was reached between the Commonwealth andVictorian Governments that certain limited deletionsshould be made. In Volume certain names ofindividuals and companies have been deleted on the

strong advice of the Commonwealth and VictorianDirectors of Public Prosecutions in order to avoidprejudice to certain current and imminent prosecutionproceedings. only 12 pages are affected pp 86-91,100-101, 104-106, 113. In Volume 3, certain material atpages 31-33 which might have identified 4n individualhas been deleted on the strong advice of the VictorianDirector of Public Prosecutions to avoid prejudice to acurrent prosecution. In Volume 5, certain material(pages 29-72) about the activities of a drug traffickerwhich, if revealed, might impede investigations has beendeleted on the strong advice of the National CrimeAuthority.

My assurance to the Parliament that the decisions onwhat would or would not be tabled or published would inno way be affected by political considerations hasaccordingly been completely honoured.

Just three days after my Government received the FinalReport, I made available a complete copy to the Leaderof the Opposition (with the exception of 3 appendicescontaining highly sensitive and technical materialrelating to the Commission's computer systE!m Mr Peacock is aware that only a very restricted numberof copies of this sensitive material was presented tothe Commonwealth by the Commission). Mr Peacock hasassured me that the confidential material wrill becompletely protected.

The release of the final report of the CostiganCommission puts to rest the irrational claims andbehaviour of the opposition on the crime issue.

Firstly, it sinks without trace the charge made by theopposition Leader on 3 October 1984, that:

11 We are going into an election campaignwithout Mr Hawke allowing the Australian people toknow what is in the Costigan Report Australiais entitled to know the extent to which thissophisticated network of organised crime is takingover this country. And yet the Prime Minister isnot going Co allow that to occur This manis trying to walk away from telling Australiansjust what the extent of the threat is."

Secondly, it buries the claim that in any way thisGovernment had something to fear from the CostiganCommission Report as I said on 20 September:

"The Government has no reason to believe that theCostigan Commission's investigations will reflectadversely on it."

That judgment has been vindicated by both the Report andthe Royal Commissioner himself.

Finally, after muted threats to leak material properlydeleted from the Report, as I have noted above, theOpposition Leader has conceded that the deletions areappropriate.

Yet again the Opposition Leader has been revealed as onewho is prepared to make the wildest allegations withoutany foundation in fact. This will further confirm thejudgment of the Australian people as' to his unfitnessfor the office to which he aspires.

Overview of Final Report

Mr Costigan's Final Report, both in its published andunpublished volumes, represents his important overviewof the state of organised crime in Australia. Itconfirms the picture sketched by Mr Costigan in his fiveinterim reports, of widespread white-col.lar criminalactivities involving tax offences, offenices againstcompany law, drug importations and many oth 'ers, as wellas substantial linkages to blue-collar criminalactivity. It renders all the more important the LaborGovernment's unequivocal commitment to total support fora sustained fight without fear or favour againstorganised crime.

The remarkable evolution of the Costigan RoyalCommission, as it pursued the labyrinth of organisedcrime, began from the Painters and Dockers Union. InVolume 3 of his Final Report, Mr Costigan concludes thatunion employees have engaged in manifold criminalactivities including tax fraud, social security fraud,ghosting, compensation fraud, theft on a grand scale,extortion, the importation of drugs, the shipment ofarmaments and all manner of violence.

By the end of its evolution, the Costigan Commission hadalso made a significant contribution, so confirming theresults of previous major inquiries of the past decade,to the exposure of the role of organised crime in drugtrafficking. Thus certain of the unpublishedconfidential volumes relate to unfinished inquiries intodrug-related matters. Mr Costigan also refers to havingmonitored, during the last two years, various drugoffenders, and in the course of this action, havinguncovered a range of further criminal activities.Arrests and prosecutions have resulted from information

obtained analysed and disseminated by his Commission;joint action by drug enforcement and taxationauthorities has been encouraged. A number of unfinisheddrug-related investigations have been referred to theNational'Crime Authority; these are now under activeconsideration.

My decision to request the Royal Commissioner in April1983 to concentrate his further investigations on drugtrafficking has been amply vindicated it is, asMr Costigan puts it, a "particularly nauseating"' area ofcrime.

Exposure of tax frauds and related tax evasion ~Schemeshas undoubtedly been a major achievement of the CostiganCommission, as witnessed by its disclosure of the bottomof the harbour schemes and the substantial number ofconsequential prosecutions by Special ProsecutorRedlich. At July 1983 tax assessments of $25m hadissued as a direct result of the Commission'sactivities, a figure Mr Costigan believes has increasedsignificantly during the last 15 months. Mr Costiganrefers to Special Prosecutor Gyles' identification of6206 companies involved in bottom of the harbour schemesand revenue collection which has netted the Government$333m, with $257m remaining to be collected. Theenduring impact of the Costigan Commission oninvestigation, prosecution and recovery acti6n inrelation to tax fraud in Australia is thus indisputable.

A reading of the Final Report discloses that theCostigan Royal Commission has consciously sought anddeveloped a high degree of co-operation with lawenforcement agencies throughout Australia. Itdeliberately focussed on major targets within its termsof reference and adopted a practice of referring lessermatters for example, social security and workers'compensation frauds to relevant agencies. Amendmentto the Royal Commissions Act was sought and granted toenable dissemination (otherwise than through formalreports) of information to law enforcement agencies; inaddition to convictions ilready obtained, numerousinvestigations and prosecutions by agencies thro.ighoutAustralia are continuing as a result.

Mr Costigan also adopted the practice of referring majormatters to other bodies for the final investigativeprocesses leading to arrest, charge and prosecutions.Creation of the Special Prosecutor's office was inrecognition of, and assisted in, this practice; thecreation by this Government of the office of Director ofPublic Prosecutions has enabled the effectivecontinuation of the practice.

Acknowledgement of the Costigan Commission's uniquedevelopment of investigative techniques in relation toorganised crime is particularly warranted. TheCommission has concentrated both on documentary evidencein seeking to follow the paper trail and upon thedevelopment of sophisticated computer informationmanagement systems; and has done so in two major areas:the accrual of criminal wealth, as traced through thefinancial system, and the manifestation of criminalorganisation as demonstrated through the association ofindividuals. The capacity to do so was greatly enhancedby the more than doubling of the financial resources ofthe Commission under this Government, and thesubstantial increase in its staff. The bulk of theCommission's staff, skilled in these 'investigatorytechniques and the technology upon which they vitallydepend, has been transferred to the NCA, which nowcarries the baton of this Government's commitment to thefight against organised crime.

Comments on National Crime Authority (NCA)

Not surprisingly, Mr Costigan's report includes manyreferences to the National Crime Authority (NCA).Chapter 9 of Volume 1 deals with the transfer from theRoyal Commission to the NCA; in various sections,Mr Costigan points to what he considers to beinadequacies in the National Crime Authority'legislation; finally the NCA features in therecommendations: one change to the NCA plus a number ofmatters to be investigated further by the Authority.

Thus, despite the opposition's criticisms of recenttimes, Mr Costigan has only made one explicitrecommendation for change to the NCA legislation.

Transition

Mr Costigan devotes Chapter 9 of Volume 1 to thetransition to the NCA. It is mainly an historicalaccount, drawing heavily on correspondence betweenhimself and the present and former Governments, much ofwhich has already been tabled.

Mr Costigan raises two specific concerns regarding thetransition:

the possible prejudice to future investigations bythe publication of the summaries in the NationalTimes a concern shared by the NCA and thisGovernment; and

.the lack of time to conduct briefings.

Much has already been said on this latter point. Asnoted in the report, Senior Counsel was able to givesome briefings in the Commission's last days.Mr Costigan draws a parallel to the time taken bySpecial Prosecutor Redlich and Gyles and the Director ofPublic Prosecutions, Mr Temby, to fully understand theCommission's operatiohs. There is one great,overwhelming difference the NCA has absorbed almostall of the Commission's staff, fully versed in theCommission's operating techniques, computer system,extensive data base and outstanding investigations. Ithas thus assimilated the accumulated knowledge of theCostigan Royal Commission.

Mr Costigan also refers to a "substantial", butinevitable, hiatus in continuing his operations. TheGovernment does not accept that there has been asubstantial delay. The Authority wasted no time inresolving on 18 July to investigate the Commission'soutstanding investigations. Given the importantobjective of the Authority subsuming the Commission'sstaff, it was not able, of course, to become! fullyoperational until the Commission staff had completedtheir work on the final report. That has now happendedand the Authority is up and running, with fully trainedstaff and an extensive computer system.

Importantly, the report in no way criticises, the NCA forits part in the transition. Indeed, it notE-s that onlyone day after receiving the Commission's summaries ofoutstanding investigations, the Authority resolved toinvestigate these matters and requested access to alldocuments held by the Commission.

Legislative Criticisms

Mr Costigan's criticisms of the Authority's statutoryframework fall into three main areas:

the need for the Authority to seek specificreferences;

*insufficient access to taxation records; and

*inability of the NCA to expose an individual'sinvolvement in criminal activities.

Mr Costigan urges removal of the requirement in the NCAAct for references to be given by the MinisterialCommittee to the Authority before the Authority canexercise coercive powers as to a specified subjectmatter of inquiry. He assumes that the references to begiven by Governments to the Authority will go into suchdetail that, if they become public, reputations of

persons referred to will suffer.

The security of such information is, of course, veryimportant. The Government, however, is not convincedthat appropriate procedures and safeguards oralbriefings in the most sensitive of cases) cannot be setin place. In fact, I-have already written to theSpecial Minister of State, who is the Chairman of theInter-Governmental Committee, requesting that he take upthese matters with the NCA to ensure appropriatesecurity and that briefing arrangements are put inplace.

In considering the form of the references to be given tothe NCA there is not only the concern referred to byMr Costigan that references might identify persons tothe prejudice of their reputations, but the furtherconcern lest references be expressed so broadly thatthey impose no effective limit on the area of a specialenquiry by the Authority.

However, in the drafting of the first references givenby the Commonwealth Minister to the NCA on 19 October1984, deliberate care was taken to ensure that bothconcerns were met. Thus, the two referEnces did notidentify individuals and, by referring in the referencesto additional information furnished to the Minister,reasonably clear limits were placed on the Authority'sareas of inquiry.

It must be emphasised that the Authority may undertake ageneral investigation within its very broad statutorycharter without a reference, and it is only when itrequires to exercise coercive powers that a reference isneeded.

For the Government to allow the Authority to exercisethese special coercive powers otherwise than under areference of a specified subject matter of inquiry wouldbe an abdication of the Government's properresponsibility and the great majority of the communitywould, I am sure, be gr~atly concerned if restraints onthe exercise of the special powers were removed.

Mr Costigan expresses disappointment that the NCA willnot have the same access to taxation records as he hashad. The NCA does, of course, have access to taxationinformation. In relation to tax-related investigationsthe Commissioner of Taxation may pass information directto the NCA. In other cases, the Authority must firstobtain a warrant from a Federal Court Judge. This isconsidered an appropriate balance between the need toprotect individual privacy and to allow the NCA acess torelevant information. The Opposition did not oppose or

move to amend this when the legislation was debated.

Mr Costigan considers it a weakness in the NCA's armourythat it does not have the power to hold public hearingsand to report upon identities. He considers it aparticular handicap in the fight against drugtrafficking, and indeed to overcome this, proposes aTaxation Investigation Tribunal and a new RoyalCommission to investigate a particular matter.

The importance of public exposure as a deterrent is oneof the central themes of the Commission's final report.Mr Costigan acknowledges, however, that this veryfundamental issue was fully considered by the SenateSelect Committee to which both Mr Costigan and hisSenior Counsel gave evidence and indeed by theGovernment in developing the legislation. Publichearings and reports were, however, specificallyrejected, primarily on the ground that a person'sreputation should not, as a general rule, be prejudicedor put at risk unless and until he or she becomessubject to the ordinary process of the criminal or civillaw. This is a quite legitimate difference of opinionabout the best way to tackle organised crime.

This raises important issues which ought to be re-statedhere. There has been considerable debate as to whatmodel the Government ought to adopt in establishing apermanent body to lead the fight against organised crimeand to follow up the important start made by theCostigan Commission. As instanced earlier, views differon almost all points.

Mr Justice Stewart's comment on 26 September, however,is very pertinent. He said:

function of a Royal Commission is completelydifferent to the function of a National Crime Authority.The function of a Royal Commission is completelydifferent to the function of a National Crime Authority.The function of a Royal Commission is to identify areasof crime, to point in the right direction. A RoyalCommission is not a body that seeks to accumulate hardevidence and Mr Costigan has already indicated that hehasn't seen ihis task as that, he hasn't want~ed to doit, he hasn't tried to do it But the function ofthe NCA accumulating hard evidence is quite a differentfunction

The Government and the members of the Authority areconfident that the Crime Authority has the appropriatepowers and resources to do the job. It has a mix ofpowers specifically designed for the task powers whichin some areas go beyond those of a Royal Commission. it

has taken over almost all of the resources of theCostigan Royal Commission staff trained in theCommission's investigative techniques all of theinformation collected, and the Commissioner's computersystem and extensive data base. Furthermore, allAustralian Governments have advised of their support forand co-operation with-the NCA.

The Government has also made it clear that shouldmembers of the Crime Authority form the view that theyrequire an extension of their power, then it will*respond quickly and sympathetically to any such request.

The Government is not alone in believing the Authoritycan meet the challenge ahead.

Previous recommendations

In Volume I of his Final Report, Commissioner Costiganlists recommendations contained in his Interim Reports3, 4 and 5. (Interim Reports 3 and 4 were presented tothe previous Government; Interim Report 5 was presentedto the Labor Government in July 1983). Additionally,' MrCostigan adverts to his understanding about what actionthe Government has or has not taken on them.

Prior to the announcement of the election, decisions hadbeen taken or action was in train, in respect of all ofMr Costigan 's recommendations emanating from InterimReports 3, 4 and

Mr Costigan's recommendationq concerning amendments tothe Income Tax Assessment Act, contained in his Tnteri"-Report 3, were incorporated in amendments to the IncomeTax Assessment Act passed in 1982. Subsequently, thisGovernment passed the NCA (Consequential Amendment) Act1984 which enables Royal Commissions to pass taxationinformation they have received to the NCA.

In respect of Mr Costigan's recommendations concerningthe establishment of a Special Task Force to investigateand prosecute criminal afid civil cases contained inInterim Report 4, Special Prosecutors Redlich and Gyleswere appointed. -Their work will now be carried on bythe Director of Public Prosecutions Office created bythis Government.

In respect of Mr Costigan's recommendation in InterimReport 5, that attention be paid to an appropriatedegree of co-operation between the Office of theDirector of Public Prosecutions and State prosecutionagencies, Mr Temby has indicated that he is conscious ofthe need to bring about co-operation between his officeand State authorities'and he is taking steps to thatend.

In respect of Mr Costigan's recommendations in InterimReport 5, concerning exchange controls, they weresignificantly affected by the Government's new foreignexchange arrangements, a point acknowledged by MrCostigan in Volume I of his Final Report.'

In respect of Mr Costigan's recommendations in InterimReport 5 concerning corporation controls, the Governmenthas endorsed the Ministerial Council's decision of 16December 1983 to approve in principle the desirabilityof achieving a national information system onshareholdings. This should substantially meet theobjectives of Mr Costigan's proposals.

In respect of Mr Costigan's recommendations in InterimReport 5 concerning mining reserves, the Government hasagreed that the Petroleum (Submerged Lands) Act beamended to clarify and strengthen provisions relating tothe approval and registration of agreements betweenparties holding or acquiring interests in petroleumtitles. The recommendations on Mining and Petroleumhave been brought to the attention of State and NorthernTerritory Ministers, and the Minister for Resources andEnergy had been undertaking consultation with his Stateand Territory colleagues on proposed amendments to thePetroleum (Submerged Lands) Act.

In respect of Mr Costigan's remaining recommendations inInterim Reports 4 and 5, concerning amendments toSection 16 of the Income Tax Assessment Act, taxcontrols, banking controls, and overseas arrangements,extensive consultation has taken place on these far-reaching recommendations. In each area, firm proposalshad been prepared which can be considered after theelection.

Mr Costigan's Final Recommendations

Mr Cost igan's principal recommendations are summarisedin Chaper 10 of Volume 1 of his report.

Mr Costigan makes a number of recommendations relatingto the strengthening of existing legislation or newlegislation for the fight against organised crime inAustralia. Some of these also involve State

Governments, with whom the Federal Government will needto work closely in considering the recommendations.These include, for example, proposals for new agenciessuch as the Port Security Authority, TaxationInvestigation Tribunal and Taxation InvestigationOffice.

In its formal response to these recommendations, theFederal Government will also wish to have the detailedadvice of the NCA, the Commonwealth DPP and the AFP,they now have independent statutory responsibility forthe investigation and prosecution of offences againstCommonwealth law. As the Government has consistentlymade clear, it will respond quickly and sympatheticallyif it should be evident that their existing powers areinhibiting these organisations in the f *ight againstorganised crime. Any formal changes to their existingpowers would, of course, be a matter for decision afterthe caretaker period.

Mr Costigan makes a number of recommendations regardingongoing investigations and prosecutions. The full reportis now in the hands of the NCA, the Commonwealth DPP andAFP and under their statutory powers they do not needany formal direction from the Federal Government toproceed with the gathering of admissible evidence orprosecutions if they judge such courses to beappropriate in the light of the report. However, shouldthe Government receive any recommendations requiringimmediate action from these bodies during the caretakerperiod, such action will be immediately taken by theGovernment.

As to recommedations concerning the setting up ofinvestigations outside the framework of the NCA theCommonwealth DPP, and the AFP, the Federal Governmenttakes the view in principle that the NCA, theCommonwealth DPP and the AFP are the bodies to which theFederal Government, with the support of the States inthe case of the NCA, has entrusted the leading role inthe fight against organi -zed crime in Australia. it isnot only logical but essential that the Governmentshould give them 'full support in that fight. Formaldecisions on these recommendations should, of course,properly wait until the end of the caretaker period.

Ongoing Investigations/Prosecutions

Apart from ongoing investigations/prosecutions referredto in the Final Report (including the Confidentialvolumes), Mr Costigan's staff were also attending to anumber of ongoing inquiries. The Commission also passedto the NCA a number of completed or wel.l advancedanalyses of investigations into drug-relIated matters.

These current investigations and prosecutions are nowthe subject of action by the NCA, the Commonwealth andVictorian DPPs, and the AFP. Mr Costigan'sinvestigations have therefore been continued in nonehave the trails gone cold.

Moreover, the resources of the Costigan Royal Commissionhave now been transferred to the NCA: the Commission'scomputer database and system; the analyses prepared bythe staff of the Commission: the material contained inreports of the Commission, including the full,unexpurgated final report; one of the Commission'sjunior counsel; most of the solicitors who have beenengaged in conducting Mr Costigan's operations; andaccountants, analysts, collators and other staff whohave been involved in Mr Costigan 's operations. Therecan be no doubt that, as Special Prosecutor Redlich saidat page 48 of his recent report, "the Authority has thescope to maintain the initiatives developed by theCostigan Royal Commission"

Mr Costigan has recommended that the activit~ies andaffairs of certain persons mentioned in the confidentialvolumes be closely monitored and investigated by allrelevant law enforcement agencies including the NCA, theAustralian Taxation Office, Australian Customs Service,corporate affairs offices, bankruptcy offices arid lawenforcement agencies in the United States. It will fallto the incoming Government to address these matters andto give such further directions as may be considerednecessary.

Civil Liberties Issues

Some of the material in the published Volume!s poseddifficulties for the Government because of theGovernment's strong commitment to civil liberties. Thismaterial relates to the naming of certain individuals.Mr Costigan argues at some length that exposure ofsuspected criminal activities by public reports of RoyalCommissions and like bodies before conviction of thepersons concerned and, indeed, even in circumstanceswhere conviction-is unlikely, is a proper and effectivemeans of dealing with those activities. on this basisMr Costigan has named a considerable number of personsas suspected of committing offences or being in some wayinvolved in the commission of offences.

The Government strongly believes that such a course isnormally neither correct in principle nor effective infinal result. It believes that persons should not benamed in public reports as having committed, or as beingsuspected of having committed, offences unless duly

convicted in the courts of law. To do so would make amockery of the rule of law, of the long-standingpresumption of innocence before conviction and ofprotections that should be afforded by the law to everycitizen.

In the circumstances surrounding this Report, however,the Government believes it has no alternative todeciding that deletions should be confined to those madeon narrow legal and law enforcement grounds which I havedescribed. With considerable reluctance the Governmenthas decided that no deletions should be made because ofthe civil liberties considerations mentioned above, manyof which are almost certainly applicable. This decisionhas been taken for two primary reasons:

given the nature and structure of Mr Costigan' sReport, it would not be practical to delete allreferences to persons named as being involved in thecommission of offences to delete all suchreferences would make the Report, to a large extent,meaningless; and

there has been a high degree of public expectation inrelation to this Report resulting from the breachesof confidentiality that have occurred by publicationof material in the National Times, arnd the cheap anddishonest political posturing by the opposition thatthe Government had something to hide. Thesubstantial deletion of names would therefore belikely to lead to community concern andmisunderstanding.

For the reasons stated the Government's profoundlyregrets the course of action that has been necessary inthis instance, and it is important to note that theNational Crime Authority Act makes provision to ensurethat this cannot happen in the case of the NCA. TheGovernment does not believe that naming of persons inpublic reports is an effective or appropriatealternative to the processes and sanctions of the law ofthe land.

Conclusions

Finally I should like to extend, on behalf of allconcerned Australians, our sincere appreciation for theapplication and dedication with which Mr Costigan andhis staff have approached the important tasks they weregiven by successive Governments, tasks which expandedfrom limited objectives into the investigation andexposure of organised crime.

There have, as Mr Costigan acknowledges, been frank and

robust differences of view, from time to time, between

his Commission and both my Government and the former

Government. As I have earlier noted these have been

legitimate differences of opinion about the best way to

tackle organised crime. But, as Mr Costigan records,

there has never been any doubt that the Government was

anxious to maintain the attack on organised crime.

Under the auspices of the NCA and relevant agencies and

with undoubted community support, the Government as

Mr Costigan acknowledges will continue to take all

action to stamp out organised crime.

1 November 1984