ANNUAL REPORT 1996-97

SEPTEMBER 1997

Introduction

1. The Parliamentary Joint Committee on the National Crime Authority was established by Part III of the National Crime Authority Act 1984 (NCA Act) which was proclaimed on 1 July 1984. The Committee first met on 18 October 1984, following the passage of the necessary resolutions of both Houses. The National Crime Authority Bill 1983, on which the Act is based, had no provision for such a committee. Part III was enacted in the form of an amendment to the Bill during the Committee stage in the Senate. The Bill had provided for the Ombudsman to have jurisdiction over the Authority and for a process of regular judicial audit. The amendment to establish the Committee was opposed by the Government in the Senate but, once the Senate's majority view was clear, was accepted in the House of Representatives.

2. The Committee has been re-established at the commencement of each subsequent Parliament and is now approaching 13 years of operation. The current Committee, which was established in May 1996, has sought to be vigilant in its observance of the duties ascribed to it in section 55 of the NCA Act. Its duties are:

(a) to monitor and to review the performance by the Authority of its functions;

(b) to report to both Houses of the Parliament, with such comments as it thinks fit, upon any matter appertaining to the Authority or connected with the performance of its functions to which, in the opinion of the Committee, the attention of the Parliament should be directed;

(c) to examine each annual report of the Authority and report to the Parliament on any matter appearing in, or arising out of, any such annual report;

(d) to examine trends and changes in criminal activities, practices and methods and report to both Houses of the Parliament any change which the Committee thinks desirable to the functions, structure, powers and procedures of the Authority; and

(e) to inquire into any question in connection with its duties which is referred to it by either House of the Parliament, and to report to that House upon that question.

3. It has also sought to observe the proscriptions in subsection 55(2) of the NCA Act which states:

Nothing in this Part authorises the Committee:

(a) to investigate a matter relating to a relevant criminal activity; or

(b) to reconsider the findings of the Authority in relation to a particular investigation.

4. This is the first occasion in its 13 year history that the Committee has resolved to present a separate report to the Parliament, and hence the public, of its activities over the preceding financial year period. Some reporting data has been contained both in the annual reports of the Department of the Senate, which provides the Committee's secretariat, and in publications of the Department of the House of Representatives. Early in its term, however, the Committee tabled reports entitled First Report in November 1995, Second Report in November 1986 and Third Report in November 1989, in which it presented a general overview of its operations and reported any observations or difficulties it had noted during the immediately preceding period.

Year in review

5. The Committee first met following its re-establishment in the 38th Parliament on 31 May 1996 for the purpose of the election of Chair and Deputy Chair. Mr John Bradford MP and Mr Bob Sercombe MP were elected respectively.

6. By 30 June 1997 the Committee had met on 37 occasions, including 15 public hearings and eight in-camera hearings, for a total period of 82 hours. The Committee also tabled three reports, details of which are given in the appropriate sections of this report.

7. As from 1 July 1996 Senator Stott Despoja was appointed to the Committee in replacement for Senator Spindler whose retirement took effect as at 30 June 1996. On 6 November 1996 Senator Gibbs was appointed by the Senate to replace Senator Bolkus and on 12 February 1997 Senator Ferris replaced Senator Ian Macdonald, both of whom had resigned from the Committee following their appointments to senior positions.

General monitoring of the NCA's activities

8. In the Committee's view, the most important duty of the Committee is contained in paragraph 55(1)(a) of the NCA Act, which requires the Committee to monitor and to review the performance by the Authority of its functions. It is clear from the debates in the Senate which preceded the Committee's insertion in the Act that the Committee was expected to scrutinise the operations of the Authority in sufficient detail to comment on any perceived procedural flaws or to note any potential abuses that might be arising.

9. The Committee has traditionally addressed this duty by holding regular meetings with the Authority and its staff, at which the opportunity is taken by Committee members to raise any matters of concern. Considerable correspondence is also exchanged between the Committee and the Authority. The Authority has assisted this process by the provision of a confidential quarterly report of its activities.

10. Once re-established in May 1996 the Committee sought an early meeting with the Authority in order to quickly inform itself of the major issues and considerations which it would need to confront. This meeting was held in the Authority's Melbourne offices on 12 June 1996. The Committee received a comprehensive, informal briefing about the NCA's role and functions from Mr John Broome, NCA Chairperson, and Mr Greg Melick, NCA Member (who constitute the Authority itself); and from Mr Peter Lamb, General Manager, Operations, Mr Dene Hawke, General Manager, Corporate, and Ms Heather Monger, Acting Director, Policy. The Committee has received considerable assistance from these NCA personnel throughout the year, including from Ms Monger's replacement as Director of Policy, Ms Susan Gillett.

11. On 26 June 1996 a decision by Justice Merkel in the Federal Court of Australia held that two references given to the NCA under which it was investigating organised criminal motor cycle gangs were invalid, because they were too imprecise to give those affected sufficient basis to challenge NCA orders issued pursuant to the references. The Committee again met informally with Authority representatives in Melbourne on 12 August 1996 to discuss the implications for the NCA's operations of Justice Merkel's decision and other topical issues.

Public briefings

12. It had been the practice of the Committee in more recent years to conduct occasional public briefings with representatives of the Authority during which the NCA could outline its current program of activity (in general terms) and to answer questions from Committee members.

13. The Committee resolved to undertake its first such public briefing in Melbourne on 22 October 1996. It had also noted public comment by Ms Betty King QC, a former Member of the NCA, about perceived problems with the NCA, especially in relation to the high turnover of Authority members. Ms King agreed to appear at a public hearing of the Committee in Melbourne on 21 October 1996.

14. In the event, both Melbourne hearings were conducted, initially in public, with a most helpful exchange of information and views, before in camera evidence was taken in relation to matters of a sensitive or confidential nature. One topic of particular discussion was the decision in August 1996 of Justice Vincent in the Victorian Supreme Court to rule against the admissibility of the bulk of evidence presented in a prosecution of Mr John Elliott and others, which decision led Justice Vincent to acquit the several accused. The Attorney-General promptly announced that he had asked his Department to review the role of the NCA in the Elliott case.

15. Another such public briefing was held in Canberra on 3 March 1997, at which the Committee focussed its discussion on the Authority's 1995-96 Annual Report (see paragraphs 38 to 41 below for details), a report of the Australian National Audit Office entitled Recovery of the Proceeds of Crime (discussed in paragraphs 29 to 31), and a report of the Australian Law Reform Commission entitled Integrity: but not by trust alone (see paragraph 23).

Evaluation of the National Crime Authority

16. The Committee had conducted an initial evaluation of the NCA in 1988[1] and a comprehensive evaluation in 1990-91, which had led to its November 1991 report Who is to Guard the Guards? An Evaluation of the National Crime Authority. However, despite the report's 11 recommendations, no related statutory reform had subsequently been made. Further, sizeable budget cuts and the implementation of the Report of the Review of Commonwealth Law Enforcement Arrangements[2] and the Report on the Future Strategic Role of the National Crime Authority in State Law Enforcement Systems[3] meant that the law enforcement environment had undergone significant change in more recent years.

17. Accordingly, the Committee resolved that it was timely that it should again conduct a general evaluation of the role and functions of the NCA to determine whether it was still meeting the objectives for which it was established and, if it was to continue, whether its statutory charter needed reform to ensure its efficiency and effectiveness.

18. The Committee announced on 17 October 1996 that it had resolved to conduct a general evaluation of the NCA, but it chose to wait until February 1997 to formally launch its inquiry by placing advertisements in the national media inviting submissions. The hiatus had been intended to provide opportunities for the inquiry by the Attorney-General's Department into the Elliott case to be completed, and for appeals to have been settled in relation to the Merkel and Vincent judgements. At the time of finalising this report (August 1997), the Federal Court of Australia had upheld the appeal against Justice Merkel's decision and leave to appeal had been sought from the High Court. An appeal by the Victorian Director of Public Prosecutions to the Victorian Court of Appeal for consideration of 12 points of law arising from Justice Vincent's rulings had also commenced. The Committee is unaware of the state of progress of the inquiry by the Attorney-General's Department, however.

19. The terms of reference adopted by the Committee were those used for the 1990-91 evaluation in the following terms:

(1) the constitution, role, functions and powers of the Authority, and the need for a body such as the Authority, having regard to the activities of other Commonwealth and State law enforcement agencies;

(2) the efficiency and effectiveness of the Authority;

(3) accountability and parliamentary supervision of the Authority; and

(4) the need for amendment of the National Crime Authority Act 1984.

20. By 30 June 1997 the Committee had received 42 submissions and had conducted public hearings in Brisbane, Sydney, Adelaide, Melbourne and Canberra. The Committee anticipates that it will complete its conduct of the inquiry and table its report in the Parliament before the end of the 1997 sittings.

Examination of complaints

21. One of the functions perceived for the Committee by its founders in the Senate was to receive and consider individual complaints made against the Authority, its staff and those seconded to work for it. This function was not clearly spelt out in the NCA Act. In fact, the absence of a complaints mechanism in the Act has been the subject of prolonged debate, but with little concrete progress having been achieved.

22. The Committee's approach to this function has varied over the years and, since at least 1991, the Committee has preferred to press the Government to introduce a formal complaints system rather than it attempt the role itself. The basis for this approach was that the Committee believed that it lacked the time and investigative staff necessary to deal adequately with individual complaints.

23. In December 1996 the Australian Law Reform Commission (ALRC) tabled its report entitled Integrity: But not by trust alone. The Commission's investigation followed requests from the Government that it examine the adequacy of the complaints mechanisms for the Australian Federal Police and the NCA. The Commission has recommended the establishment of a National Integrity and Investigations Commission (NIIC) to examine complaints against both law enforcement agencies. The Committee held a public hearing with representatives of the ALRC on 16 September 1996 at which it discussed the Commission's July 1996 Draft Recommendations Paper entitled Complaints against the AFP and NCA. Subsequent to the hearing, the Committee notified the Commission that it remained unconvinced of the need for the NIIC, particularly its proposed role in relation to the NCA. The Committee is considering the Commission's report in the context of its evaluation of the NCA.

24. Past failings by the Committee to examine individual complaints did not discourage some individuals from lodging complaints with the Committee, possibly because of the absence of any more appropriate vehicle. Given its concern that there should be some attempt at external scrutiny of and concern for the integrity of the NCA's operations, the current Committee resolved to examine the basis of those complaints lodged with it.

25. On each occasion, the Committee sought from the NCA a detailed brief in relation to the matters raised in the complaint and, to its credit, the NCA provided the Committee with a comprehensive paper detailing the background to and substance of the NCA's investigations into the complainant and/or the complaint.

26. The Committee believes that it would be inappropriate for it to discuss in this report the details of the complaints it pursued with the Authority. Even where the complainant has not sought anonymity, the Committee believes that their right to privacy should be respected.

27. In those cases where the Committee reached a concluded view on the complaint, it accepted that the Authority had been justified in pursuing the matter in question and that it had used means that were lawfully available to it in accordance with the provisions of the NCA Act. Such responses may not have met with universal acclaim by the complainants but at least they had the reassurance that the NCA had had to account to some authoritative external body for its actions. It remains beyond the Committee's capacities to conduct complaints investigations, not least because of the constraints on its access to sensitive NCA operational material.

28. As at 30 June 1997 the Committee had a small number of cases still under active consideration. In one case the Committee had taken in camera evidence from the complainant in order to clarify the details of the complaint. In the case of Mr M Skrijel, who has a longstanding complaint against the NCA, the Committee invited Mr Skrijel to appear at a public hearing in Melbourne to discuss his concerns.

Recovery of the Proceeds of Crime

29. The Australian National Audit Office (ANAO) tabled its Audit Report No. 23, 1996-97, entitled Recovery of the Proceeds of Crime on 13 December 1996. The report was a performance audit of the performance of several agencies, including the NCA, in the recovery of proceeds of crime.

30. Under the Audit Act 1901 all ANAO reports stand referred to the Joint Committee of Public Accounts (JCPA). In view of its statutory duty to monitor how the NCA performs its functions, the Committee sought agreement from the JCPA that it undertake the review of the audit report. The JCPA advised the Committee that there was a well established practice allowing a period of at least three sitting days to elapse between the tabling of an audit report and consideration by the House of whether to refer an audit report to a committee other than the JCPA. Because of the tabling of Audit Report No. 23 on 13 December 1996, during the final sitting day of the 1996 sittings, the decision on the most appropriate form of parliamentary review was deferred until after the summer adjournment to February 1997. In February 1997 the JCPA informed the Committee that it had decided to review the audit report as an item in one of its quarterly round table reviews of audit reports, which took place on 7 May.

31. The Committee discussed the audit report with representatives of the NCA at a public briefing held on 3 March 1997. The Committee noted that the audit had not been uncomplimentary about the performance of the NCA in relation to the recovery of proceeds of crime although NCA Chairperson, John Broome, indicated that he would wish to see pecuniary penalty orders sought from the courts on a routine basis, whether the accused was known to have assets or not. The Committee will continue to monitor the NCA's performance in this important area with interest.

Committee representations

32. The Committee's program of monitoring of the activities of the NCA led it to write to the Attorney-General on two occasions to raise its concerns about the deleterious effects on the operations of the Authority of the substantial cuts made to its budget.

33. It was with some satisfaction that the Committee noted the allocation in the 1997-98 Budget of an additional $6.9 million ($20.4 million over the period 1997-98 to 1999-2000) to enable the NCA to extend its investigations into complex money laundering and tax evasion schemes.

Examination of NCA annual reports

34. The NCA Act requires the Committee to examine each annual report of the Authority and to report to the Parliament on any matter it deems appropriate. Although the annual reporting system for Commonwealth statutory authorities is one of their principal accountability mechanisms to the Parliament, the NCA Act requires the Authority to present its annual report to the Inter-Governmental Committee for transmission, together with such comments on the report as that Committee thinks fit, to the Attorney-General for tabling in the Parliament.

35. In its 13 year history, the Committee has interpreted this provision in a range of ways, varying from a cursory examination of an annual report to a detailed analysis of its compliance with the reporting requirements of the NCA Act.

1994-95 Annual Report

36. The NCA's 1994-95 Annual Report was tabled in both Houses on 25 October 1995 but was not examined by the Committee before the dissolution of the 37th Parliament. On 19 September 1996 the Parliament's attention was drawn to the possibility of an error in the NCA's 1994-95 report. Mr John Broome, NCA Chairperson, wrote to the Committee on 25 September 1996 to brief it on the matter and the Committee also raised the issue at its public briefing in Melbourne on 22 October with NCA representatives.

37. The Committee tabled its report entitled Examination of the Annual Report for 1994-95 of the National Crime Authority on 2 December 1996. The Committee was able to confirm the details of the error contained in the report and to clarify its derivation. The Committee found that there had been a problem with the terminology used to describe the tax situation of a target group of companies, rather than any attempt at a false representation of the situation. The Committee expressed its concern that such an error should occur in the NCA's annual report and that the NCA had not seen fit to advise the Committee at the time the error had first been noted.

1995-96 Annual Report

38. When the NCA tabled its 1995-96 Annual Report in December 1996[4] the Committee examined it in accordance with its statutory duty and discussed its contents at a public briefing held with representatives of the Authority on 3 March 1997.

39. The Committee tabled its report entitled Examination of the Annual Report for 1995-96 of the National Crime Authority on 25 March 1997. The current Committee was in operation for only about one month of the period under review in the NCA report and it primarily sought to examine the adequacy of the report as an accountability document to the Parliament.

40. One of the areas of concern to the Committee was the lateness of tabling the report in the Parliament in apparent breach of the NCA Act. At the Committee's request, the Hon. Daryl Williams MP, Attorney-General, provided an explanation for the late tabling, which was included in the Committee's report. The Committee foreshadowed that, in the context of its evaluation of the NCA and the operations of the NCA Act, it would give consideration to calling for a 31 October reporting deadline in order to ensure more timely reporting.

41. The Committee's report also discussed aspects of the NCA's report, and its format, to which attention should be given to make it more useful as an accountability document. The Committee awaits the tabling of the 1996-97 NCA Annual Report with interest.

Examination of the criminal environment

42. Paragraph 55(1)(d) of the NCA Act gives the Committee a duty to examine trends and changes in criminal activities, practices and methods and to report to both Houses of the Parliament any change which the Committee thinks desirable to the functions, structure, powers and procedures of the Authority.

43. It has been pursuant to this duty that in the past the Committee has arguably undertaken some of its most significant inquiries. Once its attention has been drawn to a potential problem, say, in law enforcement it is able to quickly compile a body of evidence, especially by use of public hearings under the protection of parliamentary privilege, to analyse that evidence and to present a report to the Parliament.

44. While the Committee did not undertake any specific inquiry during 1996-97, it did conduct two public hearings with the intention of adding to the level of public awareness and knowledge, and hence the quality of public debate, of the matters canvassed.

Discussions with Secretary-General of Interpol

45. In December 1996 the Committee was fortunate to be able to conduct a public hearing in Canberra with Mr Raymond Kendall QPM, the Secretary-General of the International Criminal Police Organisation, otherwise known as Interpol. The Committee's discussion with Mr Kendall traversed various topics, which the Committee summarised in a report to Parliament entitled Law Enforcement in Australia - An International Perspective, which was tabled on 24 February 1997. The Committee's report summarised discussions on Australia's relations with Interpol, law enforcement and security, electronic commerce, immigration issues, paedophile activity and mutual assistance and essentially concluded that inter-agency cooperation at an international level is essential in order to benefit Australia's readiness and capacity to confront international criminal activity. The Committee made three recommendations. In its response tabled on 17 June 1997 the Government accepted two recommendations in full and accepted the principles underpinning the third.

Law enforcement implications of electronic commerce

46. Early in its term, the Committee's attention had been drawn to the issue of the law enforcement implications of electronic commerce. The Committee was advised that, early in 1996, the Commonwealth Law Enforcement Board had established a task force, the Electronic Commerce Task Force, to examine and report to it on the law enforcement implications of electronic commerce . The Committee resolved to conduct a public hearing on 24 March 1997, following the publication of the Task Force's report.

47. The Committee took evidence from Mrs Elizabeth Montano, Director of the Australian Transaction Reports and Analysis Centre, who chaired the Task Force; Mr Glenn Wahlert, a senior analyst with the Office of Strategic Crime Assessments, who had been a member of the Steering Group to the Task Force; and Dr Peter Grabowsky, Director of Research at the Australian Institute of Criminology, where he was involved in a research project exploring risks and counter-measures relating to the use of telecommunications as the instrument and/or the target of crime.

48. The Committee was told that every technological development has provided a new opportunity for criminality. The development of the Internet and use of such new payments systems as smart cards have raised a member of complex law enforcement issues, for example, in relation to tackling international money laundering. Not least of the problems is the global reach of the Internet and the difficulty of asserting national sovereignty in such circumstances.

49. As at 30 June 1997 the Committee had not determined what further examination it would make of the issue. The transcript of its hearing on 24 March 1997 is available from the secretariat to interested parties on request.

Organised criminal paedophile activity

50. In November 1995 the Committee had tabled a report entitled Organised Criminal Paedophile Activity. The Committee's interest in the topic derived from the recognition in the February 1994 Report of the Review of Commonwealth Law Enforcement Arrangements (CLER) of "organised paedophile networks" as an appropriate area of concern for the NCA.

51. The Committee found that rather than operating in the traditional model of 'organised crime' groups, where there are contacts between paedophile offenders, they consist of loose informal networks of peer-to-peer contacts. The Committee also found that most sexual offences against children are committed by their relatives and neighbours who are not paedophiles in the strict sense of the term and who do not operate in any organised or networked way.

52. The Committee made seven recommendations with a view to improving the capacity of law enforcement to pursue the perpetrators of paedophile activity, both within Australia and overseas. The Government response, tabled on 5 February 1997, was largely supportive of the Committee's recommendations and at the Committee's urging the issue has been given priority attention at the Australian Police Ministers' Council.

53. When the current Committee gave consideration to the Government's response, concern was expressed that its predecessor's findings may not adequately reflect the extent of the threat of organised paedophile activity based on more contemporary evidence, especially the revelations of the Wood Royal Commission into the NSW police service. Accordingly, the Committee determined that it should write to the British National Criminal Intelligence Service (NCIS) and the International Criminal Police Organisation (Interpol) to seek their advice about the validity of the report's findings.

54. NCIS Director General, Mr A. H. Pacey, CBE, QPM informed the Committee on 14 March 1997 that the conclusions of the Committee on the extent of organised criminal activity by paedophiles in Australia appeared to mirror the current position in the UK to a large extent. Mr Pacey advised that, in NCIS's experience, most sexual offences against children are committed, often in an opportunistic fashion, by relatives or friends. Within the UK there is also very little evidence to support the notion that paedophiles are organised into hierarchical, structured groups.

55. Because the Committee felt that Mr Pacey's letter would make an important contribution to the public debate in Australia, it resolved to publish the letter and copies have been made available to interested parties. In particular, the NCA was provided with a copy of Mr Pacey's advice to assist it in the compilation of a strategic assessment of the extent of organised paedophile behaviour, as recommended in the 1994 CLER report.

56. As at 30 June 1997 the Committee had not received advice from Interpol. It understands, however, that the NCA's strategic assessment is close to finalisation and that consideration is being given to publishing a version of the assessment.

Telecommunications Interception

57. The NCA is one of the law enforcement authorities which is authorised to seek warrants for the interception of telecommunications under the Telecommunications (Interception) Act 1979. The capacity to intercept telephone calls is a very effective law enforcement tool. The report on the operations of the Act for the year ended 30 June 1996, which shows a steady increase in the number of warrants sought by relevant agencies over the past three years, attributes the increase to the greater emphasis placed upon interception as an efficient and effective evidence gathering process.

58. As a result of concerns it held in relation to the ability of law enforcement agencies to intercept and monitor telecommunication services, in August 1996 the Committee wrote to both the Attorney-General and the Minister for Communications and the Arts to seek their advice.

59. Both Ministers referred to the Review of the Long Term Effectiveness of Telecommunications Interception, completed by Mr P. J. Barrett of the Department of Finance in March 1994. Mr Barrett concluded that the costs of maintaining interception capabilities can be substantially reduced if the capabilities are built into new technology at the design stage, based on a "common user requirement". Mr Barrett considered that the development and implementation of an international agreement to this end offered the best prospects of maintaining an interception capability on a cost-effective basis in Australia after 1997.

60. While the major recommendations of the Barrett Review were implemented by the Telecommunications (Interception) Amendment Act 1995, Mr Barrett also recommended that a further review of telecommunications interception should be held in the first half of 1997, with this review to include an evaluation of the outcomes of the earlier review and an assessment of progress internationally towards a common user requirement.

61. The Committee notes that the Attorney-General introduced into the Parliament on 14 May 1997 the Telecommunications (Interception) and Listening Device Amendments Bill 1996 (later 1997) which, inter alia, sought to introduce new arrangements by which agencies are able to obtain warrants authorising the interception of telecommunications for the investigation of serious criminal offences. The Bill was agreed to by the House on 18 June 1997 and is listed for consideration by the Senate in the Spring sittings.

62. The Committee is unaware of any other progress in relation to the foreshadowed review of telecommunications interception and will make inquiries during its continuing operations.

Other activities

63. After some six months of operation the Committee felt that it would be useful to hold an informal discussion with the Attorney-General about a range of operational and policy issues. A frank exchange took place between the Committee and Mr Williams on 7 November 1996 and the Committee records its appreciation of the cooperation shown by the Attorney-General towards the Committee over the past year.

64. The establishment of the Committee in 1984 was the forerunner to several equivalent parliamentary committees being set up to perform a similar role. On 7 November 1996 the Committee met representatives of the Queensland Parliamentary Criminal Justice Committee in Canberra and on 23 May 1997 it was hosted in Sydney by the Parliamentary Joint Committee on the ICAC. Both exchanges were informative and the Committee found it of particular interest to hear how these committees had dealt with problems which the Committee had also faced.

65. Finally, the year marked the third anniversary of the bombing in March 1994 of the Adelaide office of the NCA which caused the tragic death of Detective Sergeant Geoffrey Bowen and seriously injured solicitor Peter Wallis. The bombing is under investigation by the South Australia Police which, at the Committee's request during the year, informed it in general terms of the state of progress with the investigation. The Committee is disappointed that there has been no prosecution of the perpetrator and looks forward to early progress in the case.

John Bradford MP
Chairman

[1] The National Crime Authority - An Initial Evaluation, Report by the Parliamentary Joint Committee on the National Crime Authority, Canberra, 1988.

[2] AGPS, Canberra, February 1994.

[3] By Sir Max Bingham QC and Mr John Avery AO, April 1995, unpublished.

[4] The report was tabled in the House of Representatives on 11 December 1996 and in the Senate on 13 December 1996.