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Chapter Four

Powers

You have to bear in mind that criminals do not play by Queensberry rules. [1]

INTRODUCTION

4.1 The work of the Moffit, Woodward, Williams, Costigan and Stewart Royal Commissions revealed that existing law enforcement agencies could not adequately deal with the problem of organised crime ... [without] ... coercive powers. [2]

4.2 At the time of the establishment of the NCA it was accepted that some sort of system was needed to:

... enable the Authority to discharge effectively its role in dealing with organised crime offences within its jurisdiction, but without prejudicing the rights and liberties of individuals. [3]

4.3 The system established in 1984, which was described in detail in Chapter 3, was to permit the NCA access to coercive powers but only within strictly defined terms of reference. This Chapter addresses the effectiveness and appropriateness of the NCA's powers in order to determine whether, in Mr Martin's imagery quoted above, when it enters the ring to fight against some of Australia's most powerful criminals, it might have one hand tied behind its back.

CURRENT POWERS OF THE NCA

General and Special Investigations

4.4 The Attorney-General's Department told the PJC that:

The National Crime Commission Act 1982 was enacted in December 1982, but the Commission had not been established before a change of Government led to a major review and the adoption of the present Act. … Major changes introduced in the National Crime Authority Act 1984 included … defining and limiting the Authority's powers by making a clear distinction between general and special investigations with coercive powers being exercisable only in relation to the latter … [4]

4.5 Under the present arrangements, the terms of the reference prescribe the particular 'relevant criminal activity' for which the NCA's special powers may be utilised. General investigations, on the other hand, do not require a reference and utilise only normal policing and investigative powers.

4.6 As well as having its own general powers of investigation under the NCA Act, the NCA also has access to State and Territory police powers by virtue of its capacity to employ seconded police officers. [5] The question of whether police officers could retain the powers of their office when seconded to the NCA was the subject of judicial consideration in the context of AFP search warrants. An NCA warrant issued under section 22 of the Act was described by the Full Federal Court in Ryder & Ors v Morley & Ors 1987 [6] as `more detailed, requires more specific information and is in general more protective of the rights of citizens than section 10(1) of the Crimes Act 1914 [Commonwealth] [being the section under which an AFP officer may obtain and exercise a warrant for search and seizure]'. [7]

4.7 The Court held that the NCA's right to apply for a warrant in no way negates the operation of section 10(1) of the Crimes Act, [8] so that section 10(1) may act `as a convenient corollary to section 22 and other powers of the Authority'. [9] The confirmation in this decision in relation to search warrants extends to any other Territory or State police powers which are retained by officers seconded to the NCA. The South Australian Police submission pointed out the benefit to law enforcement generally as a result of this decision:

This judgement, in essence, established that members of a joint task force seconded to the Authority can still utilise the various powers in State based or Commonwealth legislation to investigate matters that are the subject of an Authority reference ... [so that] ... the secondment of State police, AFP Agents and members of outside law enforcement agencies brings together a variety of powers that greatly facilitate criminal investigation generally. [10]

General Powers

4.8 The NCA also has its own powers for acquiring information for the purpose of its general investigations. For example, there is legislation which gives authority for information to be handed over to it by Commonwealth agencies. Under section 20 of the NCA Act, the Authority may require information which has been obtained by a Commonwealth agency in the ordinary course of its duties. While a few agencies are immune from this requirement, either because of secrecy provisions [11] or are among the exceptions listed in Schedules 1 and 2 of the Act, they may still be subject to a request from the NCA for information. [12]

4.9 The NCA also has its own powers for acquiring information for the purpose of its general investigations. For example, there is legislation which gives authority for information to be handed over to it by Commonwealth agencies. Under section 20 of the NCA Act, the Authority may require information which has been obtained by a Commonwealth agency in the ordinary cause of its duties. While a few agencies are immune from this requirement, either because of secrecy provisions [13] or are among the exceptions listed in Schedules 1 and 2 of the Act, they may still be subject to a request from the NCA for information. [14]

4.10 In these situations, the discretion to comply with the request rests with the principal officer of the agency concerned. [15] At the discretion of the Tax Commissioner, furthermore, and in connection with a serious offence or a proceeds of crime order, the NCA may be granted access to a person's tax records under the Tax Administration Act 1953. [16] The information contained in the tax records, however, is not to be used as evidence in court but rather to assist in the process of finding out if an offence has been committed. [17]

4.11 Other means available to the NCA for acquiring information include the power to:

• use a listening device for the purpose of investigating a narcotics offence (under a warrant obtained under the Customs Act 1901); [18]
• have arrangements with State jurisdictions for acquiring criminal intelligence; [19] and
• recruit informants as confidential sources in appropriate investigations.

4.12 The effect of Ryder & Ors was to validate the NCA's ability to operate as a truly federal law enforcement agency because the NCA has access to all powers that police officers have in their own jurisdictions. This means that the Authority can utilise whichever power is most appropriate to the circumstances, to strengthen the value of task forces. The NCA tends to rely on its general investigative powers, and accompanying intelligence, to develop a sufficient case to seek to persuade the IGC to grant it a reference, by which its use of access to 'special powers' is authorised.

Special Powers

4.13 In brief, special powers are powers by which the NCA can compel people to attend private meetings and answer questions (section 28) or produce documents (section 29) relating to relevant criminal activity. [20]

4.14 The NCA's special powers are not available to police services because no Australian legislature is prepared to give them to their police services, in view of concerns about their misuse. The PJC notes, however, that these powers are by no means unique to the NCA. As well as being similar to the powers exercised by a royal commission, the powers are similar to those available to a number of other statutory bodies. The Australian Securities Commission (ASC), the Australian Competition and Consumer Commission (ACCC), the Australian Broadcasting Authority (ABA) and the Independent Commission Against Corruption in NSW (ICAC), all have similar powers and generally less restrictions on their use.

4.15 The ASC is a regulatory body with a law enforcement responsibility which, like the NCA, involves investigating serious criminal activity. However, the other bodies mostly use their powers to identify civil breaches, or for regulatory functions, rather than investigating criminal offences. The NCA's special powers need to be viewed in the context of its role in investigating serious criminality. On the other hand, in a democratic society no allegations of criminal behaviour should negate the rights of an individual to be able to contest the allegations on a fair basis.

4.16 Furthermore, as discussed in Chapter 2, the criminal justice system within which the NCA's special or inquisitorial powers are granted is an adversarial one. This makes it almost inevitable that there will be some compromise in ensuring that the special powers have the appropriate degree of checks and balances.

Discussion of the special powers

4.17 The Attorney-General's Department summarised the extent of the NCA's special powers in the following terms:

Together with the power to obtain documents by notice, the most significant of the compulsive powers conferred on the Authority are those relating to the conduct of hearings for the purpose of a special investigation, including the power to summons witnesses to appear before the Authority to give evidence or produce documents or other things. [21]

4.18 Such powers are not normally regarded as acceptable in the hands of police. However, the basis on which the community is prepared to accept such powers in the hands of a body like the NCA was described by the then Inspector-General of Intelligence and Security, Mr Ronald McLeod, in the following terms:

I am not concerned in the sense that governments have seen fit to invest bodies like the NCA with very powerful coercive powers. But that is also true in the intelligence and security community, where a body like ASIO, for example, has got substantial special powers that are not available to most other agencies of government - powers that people would normally regard as potentially representing substantial invasions of the privacy of individuals.

Those powers exist because they are judged to be important for the purposes of good government, and I think the law enforcement area is somewhat akin to the intelligence and security area in the sense that law enforcement bodies have very strong coercive powers which the community is prepared to allow them to exercise within a framework because of the importance of those powers in carrying out a law enforcement activity. [22]

4.19 Although the NCA's coercive powers are not available to ordinary police services in Australia, their benefit to law enforcement generally has been welcomed by the police services. The Australian Federal Police submission, for example, expressed the view that:

This process has been assisted by the NCA's valuable special (coercive) powers which are not available to traditional law enforcement agencies. These powers have enabled the NCA to better investigate complex areas of criminality such as the structure and methods of operation of Colombian cocaine syndicates. The powers have also helped by providing improved access to taxation and banking records which among other things, can be crucial to recovering any proceeds of crime. [23]

4.20 In relation to the NCA's power to obtain documents the South Australia Police submitted that:

The notices issued pursuant to Section 29 of the National Crime Authority Act 1984, have been shown to be the most valuable investigative tool of recent times. State based laws relating to the obtaining of financial records in the course of investigations can at times be cumbersome and there appears to be no reason why this power should not remain in the Act in its current form. [24]

4.21 The submission of the Victorian Government stated that the Victoria Police supported the continued use of special investigations on the basis that:

It is the very nature of organised crime that the leaders isolate themselves as far as possible from the criminal activity while enjoying the profits and the power. Traditional law enforcement methods have proven ineffective in tackling such structures... One of the current strategies of the Victoria Police is to have the NCA (Melbourne) conduct specific hearings and use its other special powers to get behind the structures, both organisational and financial, of organised crime groups. [25]

4.22 The Victorian Government submission put the coercive powers into a law enforcement context for the PJC by describing the range of strategies developed over recent years to more effectively combat organised crime:

• strategic planning;
• focused proactive investigation of specific criminal groups (as against focussing on specific types of crime such as drug trafficking);
• intelligence collection plans including the development of detailed individual and group profiles;
• following the money trail;
• continued disruption to criminal group's activity through prosecution or legal action;
• asset seizure;
• undercover infiltration;
• co-ordinated investigations through national task forces;
• on-going strategic assessment of identified organised crime groups; and
• use of special investigative powers through organisations such as the NCA and State Crime Commission. [26]

Concerns

4.23 Of the strategies listed in the Victorian Government submission, however, it was only the NCA's use of its special powers that evoked concern from witnesses to the PJC's inquiry about the possible erosion of civil liberties. The representative of the Queensland Council for Civil Liberties, Mr Ian Dearden, expressed the following view:

I guess it is a question of ensuring that ... it [the NCA] is constantly watched. Until individuals themselves come face to face with the consequences of misuse, or potential misuse [of power] they really do not think too much about it... I have just come from acting for a young man who has been flogged by a couple of Queensland police officers. Until he was flogged, he probably had an entirely benign view of the Queensland police service. He now has a very different view because it has touched him personally ... [27]

4.24 Representing the Bar Association of Queensland, Mr Marshall Irwin said:

The Association takes the view that the Act should not be amended in any way which will weaken the current protections which it provides. [28]

He added that 'the significant intrusive powers vested in the Authority' should at all times be subject to 'oversight by legal practitioners who are considered by the Association as being better qualified to properly manage the NCA's use of special powers vis a vis individual rights'. [29]

4.25 The strongest expressions of concern about the NCA's access to special powers came from the NSW Council for Civil Liberties which submitted that:

It is of grave concern for the future of this democratic country that incisions are permitted to be made into our civil and legal rights without the consensus and approval of citizens of this country. If left unchecked, the damage created by such statutory bodies will become further exacerbated to an extent where it will become irreparable. ... In the words of Robert Richter, QC,: “Once these basic safeguards are eroded, the targeted individual is put through the inquisitorial process, and having delivered himself or herself into the hands of the interrogator/prosecutor, he is then served up to the judicial system for dispatch, the balance having been completely shifted to the inquisition”. [30]

4.26 Another concern to which the PJC's attention was drawn was that of the President of the Australian Council for Civil Liberties, Mr Terry O'Gorman. He had suggested that the NCA's role in prosecution should be suppressed until a trial was complete on the basis that, in the minds of the jury, the very mention of the NCA gives a significance to the crime that may not in fact be the case. [31] In response to this suggestion, Mr Paul Rutledge, an officer of the Queensland Director of Public Prosecutions said:

You can raise that sort of argument with respect to almost any squad or organisation that has been involved. I do not see the need for it. In fact I see a lot of practical difficulties ... If you have got a ruling that the NCA is not to be mentioned and, when you are half-way into a five-week trial, some witness you have no control of just drops the name 'NCA'. I know what the defence counsel would be doing at the other end of the bar table. [32]

4.27 Of the representatives of the civil liberties groups, Mr Dearden's evidence in particular was tempered by reference to the NCA's actual record of performance, rather than from a philosophical perspective. He said:

I and my colleagues believe that things like the National Crime Authority ... are a necessary and tolerated evil. [33]

Mr Dearden had earlier explained:

I believe you treat the National Crime Authority exactly as you would treat a black snake; you treat it very cautiously; you never take your eyes off it; and you need all the protection you can get. [34]

4.28 Mr Frank Costigan's response to the concerns of the civil liberties groups was that:

Any law usually affects some rights of some individuals and represents a compromise between the public interest and individual rights. I find the academic or civil libertarian view is inclined to look only at the individual rights and ignore the existence of organised crime. [35]

4.29 Author and researcher Mr Bob Bottom commented on the concerns about the NCA's access to coercive powers in the following terms:

It is intriguing that search and subpoena powers and compulsory interrogation are opposed for a Crimes Commission, yet no protests have emerged over the granting of the same powers in other areas. Fruit fly, rabbit noxious weed, argentine ant and building and health inspectors have more right of entry than police, and cattle tick inspectors can stop and search cars at will. Police are left with not even the right to demand that people give their name and address. Inspectors for the Department of Social Security can enter homes to check who pensioners are living with and examine all financial records, even tax files. And when it comes to compulsory interrogation these powers are already embodied in the Bankruptcy Act and the new National Companies and Exchange Commission. Why not for a Crimes Commission. Why not for a Crimes Commission? Why, indeed, should business men, bankrupts and pensioners have less rights than murderers, drug traffickers, arsonists, thieves, smugglers, race fixers, pornographers and other racketeers? [36]

The powers in use

4.30 Former NCA member, Ms Betty King QC, provided the PJC with an 'insider' perspective on how coercive powers are exercised within the NCA when she said:

Before I exercised any of the coercive powers it was the first thing I satisfied myself of - that it was an appropriate use in relation to a reference. There have been a number of occasions on which I have refused to sign them, as has Mr Gray [a fellow NCA Member at the time]. It is not a rubber stamp, despite what people may think. There is a document required in relation to each summons that is sent to you. There is a document that is required which we have, certainly over the 2 years I was there, continually changed and altered to improve the amount of information provided to the member. [37]

4.31 Ms King went on to further reassure the PJC that, to the best of her knowledge, the powers were not used unnecessarily, especially 'in relation to accountants and bank managers, and things such as obtaining documents':

... there have been a number of times where I have said that there were other ordinary law enforcement methods that were available and they ought to be utilised. That includes search warrants or just simple requests of people and organisations to provide the information. It seems to me that most people are happy to provide information if they can. Some are unhappy. It was for those people that the coercive powers were designed so that you should ask first. If you get a knock-back you then look at whether or not it is appropriate.

So one of the questions I would always ask people is, “have you in fact checked whether they are willing to provide this information?" If I got the answer, "no, I haven't," then they would be told to go and do that. Eight out of 10 times people would say, "yes here is the information". [38]

4.32 Having heard Ms King's evidence that the special powers were only used when appropriate, several witnesses were asked whether NCA personnel had ever been known to be over-zealous. The responses were almost invariably supportive of the NCA's actions. [39] For example, Mr Rutledge, who had a longstanding connection with the NCA replied:

I simply have not seen any example of such zealotry. It is as simple as that. [40]

4.33 Mr Reaburn noted that the real danger is that somebody's commitment to the task might cause them to spill over into illegal conduct in order to achieve the task. But he said he was not aware of that happening in the NCA. [41]

4.34 Mr Broome pointed out that the constitution of the Authority and its relatively small size meant that greater operational control was exercised over its activities than would otherwise be possible in most other law enforcement agencies. He also said that:

The other thing which I think is worth making a point about is that the way we operate is essentially different from any other agency because of the multidisciplinary team approach ... If you look at the police royal commission results in New South Wales, most of the problems - I am not saying all of them-seem to have come out of circumstances in which fairly small groups of individuals had worked together for long periods of time; they developed a trust within a small group such that they could effectively break the law and cover each other's backs. If you break up that kind of long-term relationship by having two or three-year secondments, and you mix up the players consistently, you take away one of those opportunities. [42]

4.35 The PJC is reassured that the structure of the NCA, particularly its small size, constitution and multidisciplinary approach whereby individuals are seconded for short terms and subject to regrouping minimises the opportunity for corrupt practices to develop. Further, the greater operational control over the NCA's activities which results from this structure contributes to the responsible use of powers.

4.36 In assessing the NCA's use of its powers, the PJC notes that the majority of witnesses who addressed the issue were of the view that the NCA's exercise of its powers has been appropriate and proper. Further, while aspects of the NCA's operations have been the subject of litigation, the Authority's use of its powers has been vindicated. While these outcomes are positive, the PJC notes that its evaluation of the NCA's exercise of its powers is made without the benefit of the report of the Attorney-General's Department into the role of the Authority in the John Elliot case.

THE ISSUE OF MORE POWERS

4.37 Having found little support for the view that the NCA is making improper use of its existing powers, the view was put to the PJC that its powers should be augmented. For example, the submission of the South Australia Police Service stated that 'there is a requirement to increase its special powers, not erode them' on the basis that the Authority's:

... present powers may well have been deemed progressive and sufficient when the Authority was first established in 1984, but they are somewhat lacking in today's legal environment. [43]

4.38 When this issue was canvassed with other witnesses, however, it was generally seen as unnecessary. Mr Reaburn made the point that:

I'm not sure what else you could give it. It has a telephone intercept and listening device process, search warrant powers, compelling evidence powers and compelling documents powers. It is in that sense the most power-rich law enforcement agency. [44]

4.39 When asked if more power was needed to combat the problem of drug trafficking when 'there were so many federal agencies and so many police, so many people with great power, working on this issue', [45] Mr Malcolm Gray's response was to say:

I would be interested in someone describing to me what the power is that one would give in particular areas before you can actually positively answer that question. It is a very nice generalisation to say, `To stop this, we must give more power.' But what? [46]

4.40 Mr Costigan expressed the firm view that giving the NCA 'more money or more powers' would not help the drug problem. He said that it was not a question of adding extra powers because ' it is not a law and order battle. It is when you are talking about the major traffickers and major importers ... but, for the great bulk of users, it is a medical problem and a health problem'. [47]

4.41 Unlike its South Australian colleagues, the Queensland Police Service stated that it was 'generally satisfied' with the provisions relating to the NCA's powers and 'would not, at this stage, recommend any major amendments'. [48]

4.42 A very different perspective was submitted by the Australian Federal Police Association in proposing that:

The coercive powers arm of the organisation could be progressively transferred to selected judicial elements of all jurisdictions. Police and other law enforcement agencies could then access that coercive power, as managed by trained judges under warrant. The test could be the seriousness of the offence or the inability to finalise the investigation using traditional non-coercive methods. Public interest should be an over-riding factor, not the present reliance on political considerations in NCA referrals. This would be a fundamental shift in general criminal law, but on logically based criteria and not without its international precedence. [49]

4.43 This submission was supported by the personal comments of the Association's then National Secretary, Mr Christopher Eaton [50] and by Mr Terry Collins, Secretary of the Police Federation of Australia & New Zealand. [51] If the intent of their submission was that coercive powers should be more broadly accessed by ordinary police services outside the confines of the Authority, then the PJC must reject it. The Authority's use of special powers is not simply a quasi-judicial role. They are an integral component of its investigative role and are provided for its use within a comprehensive system of accountability mechanisms, and only to a small group of statutory officers in whom the community has vested a great responsibility to act properly. The community has shown no desire to extend such trust to the general police and should do so at the State and Territory level before any such reforms of the NCA are contemplated.

4.44 The PJC accepts that witnesses saw little need for the granting of additional powers to the NCA for the purpose of improving its capacity to fulfil its role in law enforcement. The PJC has determined, however, that the NCA should be granted the opportunity to access certain additional powers to enable it to have greater control over its activities.

THE ISSUE OF SELF-INCRIMINATION

Basic principles

4.45 Under section 30(4) of the NCA Act, persons who are the subject of NCA investigations cannot be compelled to supply information which might tend to incriminate them. The individual right against self-incrimination is both:

• a fundamental principle in a system where the onus is on the Crown to prove guilt, so that no process of law can compel a person to admit to an offence and
• a recognised international human right not to testify against oneself.

4.46 The Queensland Bar Association's submission referred to a statement of the European Human Rights Commission in Saunder's Case (1994):

... the privilege against self-incrimination is an important element in safeguarding an accused from oppression and coercion during criminal proceedings. The very basis of a fair trial presupposes that the accused is offered the opportunity of defending himself against the charges brought against him. The position of the defence is undermined if the accused is under compulsion or has been compelled. [52]

4.47 Every investigative body is therefore limited, by legislation or by common law, by the right to an individual's protection against self-incrimination. There are some investigative bodies, such as a royal commission and the ASC, which may compel a witness to provide information even though it may tend to incriminate the person supplying the information. [53] [54] However, the common law protection in these cases is incorporated into the respective enabling legislation to prevent the information supplied to the investigative body from being used in evidence in criminal proceedings against the person. Thus, while witnesses who claim self-incrimination in these cases have no right to silence, they are automatically immune from ever having the information used as evidence against them in future judicial proceedings.

4.48 When faced with a witness who claims self-incrimination, therefore, these bodies must decide which of two outcomes is the more important to them at this stage of their investigations: the nature of the information which the witness may be able to supply, or the determination of the offences the person may (or may not) have committed. Because the role of a royal commission is to get to the truth of a matter, the priority of a royal commissioner will almost always be to obtain information rather than to take into account the need for a conviction at some later date.

4.49 The ASC's investigative processes are pursued in a similar vein. The ASC's National Director, Enforcement, Mr Paul Longo informed the PJC that he:

... just wanted to stress that at the investigation stage, which is the stage that the ASC operates at, our interest is to find out what happened. If the individuals wish to claim privilege [against incriminating themselves], it is not our policy at all to discourage them from doing so. It is a matter entirely for them. [55]

4.50 Thus an ASC witness who claims self-incrimination continues to be required to provide the ASC with information, but is automatically immune from any prosecution which may be supported by material which the witness has supplied in evidence to the ASC. Mr Longo indicated to the PJC that ASC investigations generally proceed to require information from a witness who claims self-incrimination, regardless of future prosecutorial considerations. [56]

4.51 The South Australian Director of Public Prosecutions, Mr Paul Rofe, alluded to the benefits of the royal commission and ASC approach when he said:

I cannot see any basis for a self-incrimination rule, other than that those answers could then be used in subsequent proceedings. If that was not so, I do not see any basis for having self-incrimination. [57]

NCA's current arrangements for providing witness immunity

4.52 The situation for the NCA is markedly different from the royal commission and ASC approaches. Under section 30(5) of the NCA Act, the Authority cannot itself determine whether to provide an immunity against self-incrimination. Instead, it is required to seek such an immunity from a Director of Public Prosecutions.

4.53 Former NCA member, Mr Malcolm Gray, explained how this puts the NCA's investigative processes into a very different light from those of the ASC:

If the [investigative] body knows that persons coming before the particular body have been guilty of a degree of wrongdoing, the body may then make an assessment as to whether or not their information is still more important than that they be convicted and punished for whatever offences they have committed. It is in that assessment where you get the divergence between what the Australian Securities Commission may do and what the National Crime Authority may do. The Australian Securities Commission may make up their own minds because any evidence given before the Australian Securities Commission cannot be used against the person. All that they can do is to use the information gained.

4.54 But the Australian Securities Commission does not have to go to a prosecuting authority and say `This man might have committed these offences. If he gives us answers which show that he has committed these offences, will you give him an indemnity from prosecution' - or , in the case of the National Crime Authority Act - `an undertaking that he will not be prosecuted for these offences?' It is the prosecuting authority that therefore makes that particular decision. [58]

4.55 The NSW Council for Civil Liberties expressed a view which was contrary to Mr Gray's evidence because it submitted that, 'Although the privilege against self incrimination is reinstated by the NCA Act, a person summoned to appear does not have the right to silence'. [59] This submission conflicts with the PJC's understanding of the NCA's self-incrimination provisions which is that NCA investigators cannot, under the present arrangements, take away the right to silence of a witness who claims self-incrimination. Only the prosecutor can do this.

4.56 The current process for granting immunity was succinctly described by Mr Rutledge who had been involved in a number applications for indemnity in the office of the Queensland DPP:

We have guidelines that are set out by the Director. They [the NCA] send the application for the indemnity to us, the Director then considers it - quite often with advice from me - and his advice goes to the Attorney-General who may or may not grant the indemnity. [60]

Arguments against the current system

4.57 The Authority has indicated that it finds this system cumbersome and often unworkable. Mr Broome stated that:

Our model is one that says that you do not have to answer a question which is self-incriminatory. The kinds of questions which people assert would be incriminatory never cease to amaze me. I have actually had a person refuse to tell me the name of their parent on that ground. So I think there is some scope for change there... Perhaps the most workable [model] is that there be a requirement to answer questions but that the answers cannot be used against the person who has given them. [61]

4.58 The Attorney-General's Department also submitted that:

The Authority is concerned about several provisions of the NCA Act dealing with hearings that can potentially reduce its ability to obtain evidence from a witness who may be less than whole-hearted about assisting an inquiry. We understand the Authority's concerns to include ... the operation of the immunity provision at subsection 30(5) in relation to self incrimination. [62]

4.59 The Department's submission also reminded the PJC that:

Submissions were made to the PJC during its 1991 inquiry to the effect that the Authority's investigations would be more effective if the privilege against self incrimination available to a witness before a hearing were to be removed or qualified. The PJC rejected these proposals. The staff of the Authority, however, continue to express concerns over the mechanism provided for at subsection 30(5) for the granting of immunities by the Director of Public Prosecutions. [63]

4.60 The South Australia Police also stated that:

Similar hearing powers are already exercised by organisations such as the Australian Securities Commission and the Australian Taxation Office. Introducing this power would therefore simply place Authority hearings on a similar plane to that of some other investigative bodies. [64]

4.61 Mr Costigan supported this view that immunity against having the material used later in evidence against the witness should automatically flow from a pleading of self-incrimination. The basis of his proposition was:

If you are really trying to get a broader picture in an investigation - you are trying to get a sense of how things are done in money laundering or in drug importation or whatever. You have got someone in the witness box where that gap is there and you need to fill that gap in order to continue down the road. You say to them, "Alright, I want you to answer this question: what did you do with that money on such and such a day? Any answer you give cannot be used in any prosecution of you." He then tells you what he did and you know then that he is guilty of something but you cannot prosecute him... [But] it adds to the information pool. It furthers your investigation. [65]

4.62 Mr Costigan's evidence in this regard was consistent with the Attorney-General's Department's explanation of why the current arrangements cause problems for the NCA:

The Authority has indicated that it is often important to obtain an immunity for a witness at an early stage of an investigation when it is seeking to uncover the extent of particular criminal activities or the identity of key persons involved in those activities. At that stage, the Director of Public Prosecutions can be reluctant to grant immunities where the value of the proposed evidence and the nature of the witness's involvement is uncertain. The Authority states that it may not be able to provide the detail required about a witness at the time he or she may be most useful to an investigation. [66]

Arguments in favour of the current system

4.63 The PJC also heard arguments that opposed any change to the current arrangements. The Queensland Bar Association, for example, submitted the view that the current system was preferable to any system which might remove the witness's right to silence and 'simply render incriminating evidence given after objection, inadmissible' in criminal proceedings. [67]

4.64 Queensland Council for Civil Liberties representative, Mr Dearden, submitted that the current arrangements constituted the appropriate balance 'given that the NCA has the sort of coercive powers it has'. His concern related to the issue of derivative incrimination on which basis he argued that, if the arrangements are changed so that witness immunity flows automatically, then:

... although that answer cannot be used against you, the investigation that flows from the answer can be used against you and that's where you go over the edge. [68]

Other perspectives

4.65 Support for the status quo comes from the way in which the NCA's investigative processes are said to be used in practice. In its Annual Report, the NCA wrote that:

Witnesses are not called in to plead self-incrimination. When a witness is required to attend, it does not necessarily mean they are suspected of involvement in criminal activity. Most people who appear before the Authority are summonsed to provide information about the activities of other people under investigation. [69]

4.66 Speaking as a former Member, Ms Betty King QC told the PJC that:

One of the things that I think is important is ... in my view, that the hearing should be utilised for is not to bring in the people who are the subject of the investigation, but to bring in people who can provide information about the actual matter, or about the people who are the subject. You do not want to bring people in purely for the purpose of claiming self-incrimination. [70]

4.67 The South Australia Police, on the other hand, expressed the view that this approach:

... hinders the summonsing of the main targets of an investigation and restricts the hearing to peripheral players in anticipation of some additional evidence being obtained or some new avenue of enquires revealed. [71]

Conclusion

4.68 In noting the range of conflicting viewpoints on the issue of immunity against self-incrimination, Mrs Susan Crennan, former Chairman of the Bar Council of Victoria, reminded the PJC that:

... the ASC and all sorts of other investigators. They all have their own special approach to self-incrimination ... [but] ... you obviously have to address that in terms of what you are seeking to achieve. [72]

4.69 What a body is seeking to achieve depends upon its role and responsibilities. Mrs Crennan's comment prompts the PJC to consider the differences between the role and responsibilities of the NCA on the one hand and the prosecuting authority on the other. The NCA's primary responsibility is to investigate and as a result substantiate the charges to be brought. The DPP's most fundamental responsibility, on the other hand, is to decide whether or not to institute or to continue a prosecution. [73] With this distinction in mind, the PJC appreciates the basis on which the Commonwealth DPP indicated its position on the issue of granting immunities when requested by the NCA:

The DPP is strongly of the view that it should not grant an indemnity against prosecution lightly or routinely and without close analysis of the need for and the implications of such an undertaking. The DPP acknowledges that this may create difficulties for the NCA as its legislation currently stands. [74]

4.70 On the basis of the DPP's evidence, the PJC notes that section 30(5) creates a role/responsibility mismatch by:

• requiring the office of the DPP to make a decision which, for that office, is part of the prosecuting process, while for the NCA it is part of the investigating process; and by
• not allowing the NCA to make its own investigative decision whether or not to accept a witness's claim against self-incrimination, nor to decide if it still requires the information, in which case witness immunity would automatically flow.

4.71 The Attorney-General's Department recognised in its submission that 'provisions similar to that proposed [to provide automatic immunity to coercive investigation subjects who claim self-incrimination] exist in other Commonwealth legislation, although no general law enforcement agency has this power'. [75] Although a number of statutory bodies have this power, the PJC considered that an ASC investigation is the most likely to have aims which are similar to the NCA in dealing with serious criminal activity. [76] For example, CLER described the ASC as a specialist agency with law enforcement responsibilities and wrote that, in September 1990, 16 matters were designated as national priority matters. These matters were known as the 'big 16', of which 13 were described by CLER as investigations resulting in 'substantial criminal charges'. [77]

4.72 The PJC concludes that the aims of an NCA and an ASC investigation would be sufficiently similar to warrant recommending the ASC model for dealing with self-incrimination within an NCA special investigation. The PJC's analysis of the ASC model has revealed that it is streamlined compared with that of the NCA, with two main advantages which the PJC concludes should be adopted for the NCA. They are:

(a) when witnesses who claim privilege are compelled to answer, the immunity against the information being used against them as evidence automatically flows; and

(b) if the information needed by the ASC is contained in a document, (which the courts have often referred to as 'speaking for themselves'), there is no privilege at all. [78]

Recommendation 7: That the National Crime Authority itself, not a Director of Public Prosecutions, should make the decision about whether to indemnify a witness who claims self-incrimination. To protect against improper use of this power, each such decision must be referred immediately for examination by the Inspector-General of the National Crime Authority

Recommendation 8: That no privilege against self-incrimination should attach to summonsed documents.

WITNESSES NEED TO BE PROPERLY INFORMED

Problems from a self-incrimination perspective

4.73 When a person is summonsed to attend an NCA hearing and give evidence under section 28, the person will be informed about the subject matter by having attached to the summons, a copy of the notice referring the matter to the NCA for special investigation. This requirement to attach the notice does not apply in relation to a section 29 summons for documents, with the recipient being told only where and when the summonsed documents should be produced along with a statement that the document is 'relevant to a special investigation'. [79]

4.74 As discussed in detail in Chapter 3, while the reference is required to set out in writing:

• the general nature of the circumstances or allegations constituting the relevant criminal activity;
• a statement to the effect that the relevant offences are, or include, offences against the law of the Commonwealth or Territory or (in the case of a State reference) a law of the State, but need not specify particular offences; and
• the purpose of the investigation [80]

there is a concern that this is not sufficient information for witnesses to be able to make a properly informed decision that they may be incriminating themselves ( in which case, of course, they have a right not to answer the questions). [81]

4.75 Ms King described how inadequate she regarded a reference document to be able to inform a witness of what the investigation was about. She expressed the view that:

The reference might as well be in hindustani, and that is the problem ... if you were given that document as a copy served with a summons - what would you think you were attending for. [82]

4.76 Witnesses who expressed similar concerns that the reference document is generally not capable of properly informing witnesses summonsed by the NCA included Mr Robert Richter QC [83] and Mr Craig Caldicott, representing the Law Society of South Australia. [84] Their concerns related to the issue of a witness's need to be sufficiently informed to be able to recognise whether they may be incriminating themselves by providing the information requested. Mr Caldicott did acknowledge, however, that the issue would not normally arise in the case of, say, a bank which is compelled to produce documents.

4.77 Mr Caldicott concluded that:

... a person is entitled to know what it is that is being investigated. [85]

4.78 Mr Broome stated that it was 'not true [that] people do not know the matter on which they are being subject to an inquiry':

They are given a copy of the reference and, despite what some have said about references, they do identify the kind of criminal behaviour which is being investigated. They are also given a summons [which] must set out the general nature of what's being investigated. ... If a person is unrepresented in a hearing [we] explain to them what the parameters of the Act are, their entitlement not to answer questions, and so on. [86]

4.79 The situation may not be as simple as that implied by Mr Broome's response, however. Mr Caldicott, for example, explained that:

You simply do not know. It may be an innocent explanation. By the production of banking records, taxation records, a whole series of other type of documentation, suddenly he may innocently hand over those documents believing that he is innocent, but the police, who have an influence in the NCA, have a very suspicious nature about them and wish to investigate matters further. From a client's perspective, you would simply like to know what is being investigated. It could be something innocuous such as, "We want every financial document that you've ever possessed going back for the last four years". [87]

4.80 While people summonsed to give information to the NCA about their own activities might be expected to seek legal advice before complying, this does not always happen. Mr Geoffrey Provis, the President of the Law Institute of Victoria, informed the PJC that there may not be opportunity to seek legal advice:

At 10 o'clock at night [the person summonsed] receives a knock on the door and someone says, "Here's a subpoena to appear at 9 am tomorrow morning in Albert Street East Melbourne". [88]

The representatives of the Law Institute also noted that it is commonplace for people who are summonsed to attend court not to seek legal advice.

4.81 The problem relates to 'the individual who is an innocent member of the public who is being called into give evidence about his or her observations of what occurred on a street corner in Altona in relation to a drug deal':

That person, who is like a frightened rabbit, is hauled in by the NCA and has absolutely no idea what is going on. [89]

4.82 Also representing the Victorian Law Institute, Mr David Grace QC noted that even a witness who had been summonsed because 'they had just happened to see a drug deal going on on the corner' would be threatened because:

... when the subpoena is served upon them, they are not told why they are being brought before the NCA. They are given a subpoena which has attached to it terms of reference which range from offences of selling aspirin to gun running. They look at it and say, `What have I done? What have I involved myself in? [90]

The investigative perspective

4.83 Mr Reaburn told the PJC that:

... you need to conduct some inquiries ... without totally, as it were, revealing a hand. If we have too comprehensive and too onerous rule about disclosure in those kinds of circumstances, it can be inimical to the investigation. It is a balancing one there. [91]

4.84 In a similar vein, Mr Broome said he was not aware of any person's right to natural justice during the course of an investigation. He told the PJC that it was not until the trial stage of the investigative continuum that obligations of disclosure arise. Mr Broome gave as his authority for this view:

... Ross v Costigan, which has been on the books for years, which says that you investigate, and in investigating you do not have to tell the person who was the subject of the investigation what you may or may not suspect in the course of the investigative process. [92]

4.85 Ms King emphasised her view, however, that the purpose of the NCA coercive powers are:

... an information gathering tool and it is really an investigative tool that was designed to be such. It was not designed to be a Star Chamber, to make people confess on the rack. It was designed to elicit information. The more information you give a person before you bring them in, the more information they can provide. [93]

4.86 In relation to the concerns raised about the need for NCA witnesses to be fully informed about the subject matter of investigations, the Committee has concluded that the status quo should be retained. While the Committee accepts that there are situations which arise where witnesses may be concerned that they have insufficient knowledge of the NCA's intentions, this has to be balanced against the public interest derived from the successful conduct of investigations into organised crime. By amending the Act to enable the NCA itself to grant immunity where witnesses claim self-incrimination (rather than referring the question to the Director of Public Prosecutions), the process will have a continuity which may give witnesses greater certainty of the effect and direction of NCA investigations on their individual cases. Further, the presiding member would be in a better position to address any concerns in this respect raised by witnesses.

CLIENT LEGAL PRIVILEGE

4.87 Client legal privilege was defined by the Law Society of South Australia as a privilege which prohibits evidence being adduced [ie presented in court] if, on objection by a client, the Court finds that adducing the evidence would result in disclosure of:

(a) a confidential communication made between the client and a lawyer, or

(b) a confidential communication made between two or more lawyers acting for the client; or

(c) the contents of a confidential document (whether delivered or not) prepared by the client or a lawyer. [94]

It added:

The central justification for the client legal privilege is the necessity for clients involved in the legal process to be able to be appropriately represented and thus to be able to communicate fully and frankly with their legal advisers or advocates... [for which reason it] ... is an important basis of the administration of justice. [95]

4.88 The New South Wales Council for Civil Liberties noted that:

... legal professional privilege is not written into the Act. It is sad to think that we have reached a stage were people cannot speak freely and obtain advice from lawyers without the possibility that this information will be divulged. [96]

4.89 The only provision in the NCA Act which provides for something like client legal privilege is, in Mr Malcolm Gray's words:

... that curious provision which says that the legal practitioner may take legal professional privilege but must give the name of his client ... [97]

4.90 Mr Gray was referring here to section 30(3) which permits a legal practitioner required to attend an NCA hearing to refuse to disclose information communicated to him by a client unless the client has agreed to have such communication disclosed. The practitioner is required, however, to supply the name and address of the person to whom or by whom the communication was made. There is no indication in the Act that the same lawyer-client confidential information may not be required from the client. Instead, once the Authority has obtained the client's name and address, the Act is silent about the extent to which the client may refuse to disclose information that has been the subject of confidential communication with their legal representatives.

4.91 On the basis of the Law Society's definition, therefore, there appears to be no provision in the NCA Act which comprehensively contains a guarantee of client legal privilege. Mr Gray told the PJC that, although there is an argument that NCA investigation subjects cannot refuse to answer questions on the grounds of client legal privilege, 'there is a decision that they can'. Mr Gray added that:

There appears to be an express abrogation, or possibly an implied abrogation, of the privilege in relation to documents... Legal professional privilege is certainly in a clouded area as far as the Act is concerned .... [98]

4.92 If a former NCA Member such as Mr Gray finds the existing provision 'curious' it seems to the PJC to be a matter which should be clarified. The PJC therefore concludes that the current section should be amended to achieve the following ends:

• to clarify the issue of client legal privilege by stating the circumstances in which witnesses' communication with their legal representatives is or is not privileged;
• to provide the appropriate protection to ensure that witnesses are able to communicate fully and frankly with their legal advisers or advocates at an NCA hearing without fear of disclosure; and
• to be drafted in terms which recognise that the privilege is there to protect the client and not the lawyer.

Recommendation 9: That the application of client legal privilege be clarified.

SEARCH WARRANTS

4.93 Under section 22 of the NCA Act, an Authority member may apply to a judge for the issue of a search warrant. [99] The PJC notes that, as a result of the decision in Ryder & Ors v Morley & Ors 1987, [100] the NCA has access to all search and seizure warrant powers that are available to police officers in their own jurisdictions and who are seconded to the NCA.

4.94 However, the aim of issuing a warrant under the NCA Act differs from most ordinary search and seizure warrants issued to State and Territory police officers in that the latter are primarily for the purpose of seizing evidentiary material in connection with a specific offence. The NCA warrant, on the other hand, provides an adjunct to its ability to hold hearings and to issue summonses for the production of documents, by restricting the issue of a section 22 warrant to those cases where a summons may result in the destruction of required information.

4.95 The distinction between section 22 search warrants and police warrants was explained by Mr Rozenes in his paper presented to the Fifth International Criminal Law Congress, as follows:

The power to compel the production of documents and things ... can be particularly useful, .... However, in a general investigation, these items can be seized under [an ordinary police] search warrant. The real benefit of using [section 22 warrants] will be in locating the items. [101]

4.96 Thus the NCA may use a variety of means to compulsorily acquire information: it may hold hearings and issue summons for the production of documents; if material required by the Authority, (such as documents), is likely to be destroyed or concealed in response to the issue of a summons, it can obtain a section 22 warrant to locate and seize the items, which its seconded police officers usually exercise; and once the commission of a relevant offence has been suspected, the NCA may access from the jurisdiction of one of its seconded officers, the most appropriate search.

4.97 Although the NCA can utilise the search powers of any of its seconded officers, the South Australia Police stated that there are times when officers from the Authority are not secondees from another law enforcement agency, which led it to submit that the NCA requires its own powers of search equivalent to State and Territory jurisdictions:

Section 22 of the National Crime Authority Act 1984, should be analogous to powers cited under South Australian legislation in Section 67 of the Summary Offences Act, ... This would establish powers of search presently far in excess of that provided to other law enforcement agencies but of the kind required of a national crime fighting body. [102]

4.98 The South Australian warrant available under section 67 of the Summary Offences Act 1953 referred to in this submission was explained in the following terms by Detective Superintendent Edmonds:

South Australia is a little unique in that a document known as a general search warrant can be issued to police under a particular section of the Summary Offences Act. Now, it is because of the very wide powers it contains that we jealously guard it and there is a policy within the South Australian police that that particular warrant will only be issued to people who are designated as detectives and to some other people who may be officers in charge of remote police stations ... This warrant empowers us, any time of the day or night, to enter any premises and search, find evidence and take possession of property ... [and the warrant is not issued by a judge or magistrate, it] is actually issued by the Commissioner of Police. [103]

4.99 Should the NCA be so empowered to issue its own warrants, the South Australia Police Service wrote that it also recognised:

Establishment of policies and procedures, such as those already implemented by the SA police in relation to the exercise of such powers would be required to maintain integrity. [104]

Detective Superintendent Edmonds also acknowledged that while it was a `simple solution', it may be `unpalatable to some people'. [105]

4.100 Mr David Grace of the Criminal Law Section of the Law Institute of Victoria expressed concern about this proposal in the following terms:

You would need an independent watchdog such as a Supreme Court judge in place, otherwise there are vested interests involved. The bloke who is appointed [to issue the warrants] drinks with the bloke who wants the warrant. [106]

4.101 In its submission, the South Australian Bar Association expressed support for the relatively restrictive nature of section 22 warrants as constituting sufficient search power:

Although the powers of search conferred by section 22 of the National Crime Authority Act may be exercised for the purposes of a special investigation (rather than on suspicion of an offence) it requires a belief to be formed that the object of the search might be concealed, lost, mutilated or destroyed. In the course of investigations one would have thought that no greater power was required. Where offences are suspected which would require a search to be conducted a Federal or State police force (as the case may require) that police force has adequate powers to deal with that circumstance, it should be entrusted to do so and to carry out the enforcement of the law consequential thereon. There would appear to be no good reason to remove judicial scrutiny of the NCA process in seeking its search warrants under section 22 or to broaden the grounds upon which they may be sought. [107]

4.102 It is arguable that extra search power is not necessary or appropriate on the basis that the NCA has ready access to whatever search power is appropriate to the circumstances, dependent upon the jurisdiction of its seconded officers. Should the NCA not have access to the most appropriate State or Territory power for the circumstances, because it has no seconded officer from the required jurisdiction, it is arguable that this should be regarded as a strategic or operational issue rather than one which indicates the need for more power.

4.103 The NCA has, however, been entrusted with the power to compel information from people in situations where ordinary police methods would not be effective, and a section 22 warrant provides an adjunct to such power by enabling the Authority to locate and obtain documents and other material that may be destroyed should the NCA issue a summons for their production. As discussed in the context of the references system in Chapter 3, the PJC has recommended that the use of coercive powers should be statutorily limited to where the Authority has a reason to believe the use of such power is necessary.

4.104 The PJC is of the view, however, that the members of the NCA should be empowered to issue a section 22 search warrant in a narrowly defined set of circumstances. In this respect, the PJC has examined the model for the issue of search warrants available to the NSW Independent Commission against Corruption. The principal features of the model are as follows. An authorised justice may issue a warrant (authorising powers of entry, search seizure and delivery) if satisfied that there are reasonable grounds for doing so. The Commissioner may issue a search warrant if the Commissioner thinks fit having regard to all the circumstances and is satisfied that there are reasonable grounds for doing so.

4.105 Further, search warrants should 'as far as practicable, be issued by authorised Justices'. This makes it clear that the Commissioner should only issue a warrant where the alternative of obtaining one from a Justice is not practicable. Finally, the Commissioner and Justices may only issue a warrant if the officer has reasonable grounds for believing that documents or other evidence connected with ICAC investigations are, or within 72 hours will be, brought into or onto the subject premises.

4.106 The PJC is keen to ensure that the search warrant power is narrowly prescribed and is able to be used only as a last resort option. As a safeguard and an accountability mechansim, the PJC considers that it would be appropriate that any decisions made by the Authority in relation to applications for search warrants should be notified immediately to the Inspector-General of the National Crime Authority for independent review.

Recommendation 10: That the National Crime Authority should be empowered to issue search warrants in narrowly defined circumstances. Any decision made by the Authority in relation to an application for a search warrant should be notified to the Inspector-General of the National Crime Authority as soon as practicable.

TELEPHONE INTERCEPT POWER

4.107 The NCA has the power to intercept telephone communication granted to it under the Telecommunications (Interception) Act 1979. The NCA may access this power by obtaining a warrant which may be issued by a judge for exercise by either a Member of the Authority or by a seconded police officer. Also, as Ms Betty King pointed out, the telephone intercept powers are tied to a reference which Ms King said she thought was as it should be. [108]

4.108 The benefit of the power to tap into telephone communications was described by Mr Rutledge in evidence before the PJC in relation to successful drug laws enforcement operations. Mr Rutledge said that in his experience:

... the power to intercept telephones is a very powerful weapon. You have to understand that the reality of drug networks is that they have to communicate and if you can get into their communications - and Rocco Barbaro and this organisation here, if I can use it as an example ... They were very careful about everything they said on the telephone. Everything was coded. But you can construct very powerful cases even against the background that people are being very guarded in telephone conversations ... [109].

4.109 He added that telephone intercepts were:

... very powerful for a prosecutor to use if you have got a series of telephone conversations and then you link it to actual physical surveillance of what goes on as a reaction to that telephone conversation ... [110].

4.110 The Queensland President of the Council for Civil Liberties, Mr Dearden called telephone tapping `one of these tolerated evils' which he said his organisation accepted on the basis that:

We do not see that the clock is going to be wound back. A typical NCA brief might have 200, 300, 400 or 500 telephone taps. It is quite clearly an important weapon and we tolerate it. [111]

4.111 Ms Betty King expressed the view that the telephone intercept powers available to the Authority were adequate and that she was:

... absolutely unaware of any time that the Authority has stepped outside its lawful capacity in respect of telephone intercepts. [112]

4.112 Mr Bob Bottom pointed out that, while all State police services can use listening devices and surveillance:

The one asset the NCA has got, of course, is phone taps [because only] some States can use them. [113]

4.113 The PJC concludes that telephone intercept powers are an accepted law enforcement tool in the hands of those organisations where access to such powers is within the framework of appropriate safeguards. As the NCA described in its Annual Report:

The interception of telecommunications services is subject to strict controls imposed under the TI Act [Telecommunications (Interception) Act 1979] and by internal NCA procedures. The Commonwealth Ombudsman conducts twice yearly inspections to assess the NCA's compliance with the provisions of the TI Act. In each inspection this year, the Commonwealth Ombudsman reported a very high level of compliance. This is consistent with earlier audits and reflects the importance the NCA places on compliance. [114]

4.114 While the PJC recognises that the Ombudsman's jurisdiction in relation to the TI Act is broader than just the NCA, it observes that it may be appropriate for the proposed Inspector-General to assume this role from the Ombudsman.

RELATIONSHIP WITH THE JUDICIARY

Penalties

4.115 The NCA submitted the constraint on its effectiveness of:

the minimal deterrent effect of penalties imposed for white collar crime, especially income tax fraud, money laundering and associated activities such as `structuring' to conceal funds and transactions. In a number of investigations the resulting penalties imposed did not appear to reflect the underlying seriousness of the criminality... It needs to be recognised that most organised crime is driven by profit, and legislation relating to the concealment of that profit needs to be both effective and a realistic deterrent. [115]

4.116 Mr Broome provided as an example:

a movement of $15 million out of this country through an account by a person who was charged and convicted. The results were that the person was initially given a weekend detention which was increased, on appeal, to twelve months. [116]

4.117 While the PJC is conscious of the complexities for the courts in applying convictions, neither of the outcomes referred to by Mr Broome appear satisfactory. Mr Broome further commented that, from the NCA's national perspective:

... penalties can vary across the country very substantially for what seems to us to be very similar kinds of offences. [117]

4.118 He gave an example of three people, all charged with money laundering offences on whom the fines imposed were $1,000, $3,000 and $6,000 respectively, with the latter also receiving a four months prison sentence. As Mr Broome pointed out, money laundering is the most popular means by which criminal profits are taken out of the country. [118]

4.119

In the PJC's opinion, criminals who have the sophistication and the resources to engage in offshore money laundering must, when caught and convicted, be treated with more appropriate seriousness. The PJC takes the firm view that penalties should be imposed which are both consistent across the country and bear some relation to the scale of the criminality.

Recommendation 11: That the penalties for the offence of money laundering be increased.

Judicial challenges at the investigation stage

4.120 Both the Attorney-General's Department and the NCA raised their concerns about provisions of the Act dealing with hearings that can potentially reduce the Authority's ability to obtain evidence from a witness who may be less than cooperative in assisting an inquiry. In particular:

• the meaning of the term 'reasonable excuse' in subsections 30(1) and 30(2) where a witness fails to attend a hearing or refuses to answer a question; and
• the adequacy of the penalty for the offences of failing to comply with the requirements of subsections 30(1) or 30(2). [119]

4.121 The issue primarily relates to the investigation stage of the Authority's inquiry when it is using its special powers. The NCA Act provides that where a witness refuses to comply with the NCA's directive to attend a hearing, answer a question or produce material without having a `reasonable excuse' [120] it is an offence which attracts a maximum penalty of a fine of $1,000 or imprisonment for a period of 6 months.

4.122 The Department submitted that it regarded the present penalty as being:

... insufficient where serious criminal activity is involved. [121]

The Department added that it has undertaken to review the appropriateness of these and other penalties and to advise the Attorney-General. The CLER Review found that there were:

a number of matters where powerful and influential persons and/or groups were almost beyond the reach of the law. These persons had the power, resources and influence to challenge the authority of the regulators, and indeed by implication, the State itself. Such figures must be held to account. [122]

4.123 In the PJC's view, such persons are unlikely to be restrained in their refusal to answer questions or produce documents by such relatively trivial penalties. The PJC believes that the Attorney-General's Department should review all of the penalties contained in the NCA Act to ensure that they are not only brought up-to-date, appropriately indicate the seriousness of the offences, and perhaps work to encourage greater cooperation of those involved.

Recommendation 12: That the penalties for non-compliance with the National Crime Authority Act 1984 be increased.

4.124 On the second issue of the 'reasonable excuse' provisions, the Department submitted that:

The Authority finds that persons summonsed to give evidence at a hearing may put forward a variety of circumstances as constituting a 'reasonable excuse' in the meaning of subsection 30(2) for failing to answer questions or produce documents. An example is that a witness's chosen legal representative is not available at the time of a hearing as stated in the summons. From time to time the Authority and the Director of Public Prosecutions may disagree over whether a particular circumstance is sufficient to constitute a 'reasonable excuse'.

There would be advantages in clarifying this issue. This will be addressed, at least in part, through the Commonwealth Criminal Code. The Criminal Law Reform Unit has advised that once the Code comes into force there will generally be no role for the 'reasonable excuse' because defences provided in the Code (circumstances in which there is no criminal responsibility) are intended to cover the vast majority of excuses defendants may raise... The NCA Act will be reviewed once the Code comes into force. [123]

4.125 Obviously, the PJC would wish the provisions in the NCA Act to mirror those of the Commonwealth Criminal Code. It trusts the issue will be settled in time for inclusion in the revised bill which the PJC is recommending be introduced in the Parliament to amend the current NCA Act.

Recommendation 13: That, pending the passage of the Commonwealth Criminal Code and as a matter of general guidance of what is considered acceptable, the meaning of `reasonable excuse' under sections 30(1) and 30(2) of the National Crime Authority Act 1984 should be defined in the Act.

Federal Court applications

4.126 Under section 32 of the NCA Act where a person who is the subject of an NCA special investigation seeks to challenge the NCA's power to require them to answer questions or furnish other material, the NCA having determined to press the issue, the witness may apply to the Federal Court for a review of the NCA's decision. Such a challenge is required to be lodged no later than five days after the NCA's decision has been communicated to the witness.

4.127 The investigation is then largely in abeyance while the Federal Court's processes proceed. NCA Member Mr Greg Melick told the PJC that, even taking a `conservative' view:

… a person with enough funds and properly advised could probably delay the Authority's investigative process by some three to four years before they could actually be forced to answer relevant questions before a hearing. [124]

4.128 He added that while `it is not in the Crown's interest to prolong a trial and delay it and make the evidence so stale it is no longer relevant or people die or cannot remember what happened':

It is clearly to the defence's advantage to create those sorts of delays. [125]

The series of judicial challenges discussed in Chapter 3 demonstrated the cost to the community of these sort of delaying tactics.

4.129 Mr Melick also expressed the view that:

The Act is a series of compromises and in quite a lot of places absolute nonsense because of the hysteria and people's overreaction to the perceived interference of civil liberties. In the section on the requirement to attach a copy of the reference to a section 28 summons but not a section 29 notice, there is nothing in the parliamentary debates about it. It is a matter that has exercised the Full Court of the Federal Court for nine months, and we still have not got a decision; yet we are supposed to be able to act in a timely and effective manner... I am getting sick of conducting hearings and having QCs turn up in front of me all the time taking technical points and referring it off to the Supreme Court or the Federal Court. It takes months to sort out. None of the other organisations that have the same powers we have have to undergo that process. [126]

4.130 He added:

The criminal justice system is all about making the Crown prove its case; it is not about the search for the truth. There is no room for searches of the truth in the criminal justice system in the way it is set up in Australia at the moment or in the common law world. I think that is one of the fundamental problems. [127]

4.131 The CLER review also commented on the resources available to NCA suspects in the following terms:

It is not correct to assert that the Commonwealth has such resources that it can easily match these [organised crime] figures, for these figures will very often call in resources beyond those which the Commonwealth law enforcement community can muster. Figures such as these can be ruthless in attempting to protect their interests. The Review heard in one case of investigators and prosecuting attorneys being investigated with a view to identifying ways of harassing and intimidating them. Such tactics are more often than not matched with more legitimate tactics utilising a team of expert lawyers and accountants whose brief is simply to frustrate the due process at every available opportunity. The Review heard of many instances where long administrative review processes were invoked in a bid to stop further investigations. [128]

4.132 The PJC notes that under common law, although there is no right to a speedy trial, delay by the prosecution in bringing a case to trial may constitute an abuse of process on the basis that it may render a fair trial impossible. [129] The PJC believes that the present arrangements by which persons subject to investigation may delay NCA investigations indefinitely are also an abuse of process. While there will always be an unlimited amount of work for the NCA to keep itself occupied while matters are before the courts, there are considerations of justice as well as operational realities which require more expeditious consideration of the challenges to which it is being subjected.

4.133 While section 32 places a commendable level of urgency on a person dissatisfied with an NCA decision to apply to the Federal Court for a review within five days, experience has shown that, having complied with that initial time-pressure, the well-resourced subject of an NCA investigation may have the capacity to unduly prolong the proceedings. The PJC is therefore inclined to view favourably Mr Broome's suggestion that judicial challenges at the investigation stage need some sort of `fast track' process to push these cases through the court system for rapid resolution. [130] The PJC notes that there are precedents in criminal law for such `speedy trial provisions':

In New South Wales the prosecution must indicate that it is ready to proceed with the trial within prescribed time limits. In Victoria trials for sexual offences must commence within three months... In the Northern Territory, Queensland, Tasmania and Western Australia the accused may apply to be brought to trial and if there is no trial within the prescribed time the accused may apply for a discharge ... In South Australia there are time limits before which the accused is to appear in the trial court and provisions to assist in the early hearing of trials. [131]

4.134 The PJC concludes that the Federal Court should commence its review of section 32 applications within a very short time-frame to avoid the misuse of delays to the advantage of suspected criminals. Obviously, timeframes will be influenced by the complexity of matters and, in the more complex cases, the PJC appreciates that a speedy resolution cannot be expected. Nonetheless, the PJC notes the comparative speed in which other matters can access the justice system. As Mr Broome pointed out:

... challenges by footballers to tribunal decisions, for example, seem to be able to get all the way to the High Court in the space of days, if not hours. [132]

4.135 The PJC recognises that there is inherent unfairness in a system which enables those with the monetary resources to do so and thus contrive to frustrate the processes of the law. It is a problem common to law enforcement agencies generally that well-resourced litigants can delay or even avoid the consequences of justice, an advantage not available to lesser-resourced litigants. While the Committee acknowledges that these matters require a thorough examination, it also accepts that any such examination would properly involve a consideration of the constitutional issues and implications. The Committee is of the view that this is a matter which should be the subject of an inquiry by one of the Commonwealth Parliament's Standing Committees of Legal and Constitutional Affairs.

4.136 The Committee would welcome any efforts by the judiciary to avoid the abuse of judicial proceedings by any party intending to delay justice.

AN UNNECESSARILY COMPLEX ACT

4.137 The NCA submission noted that:

The effectiveness of the NCA would be enhanced by a complete re-write of the NCA Act which is at present too complex and difficult to interpret. [133]

4.138 NCA Member, Mr Greg Melick added that:

The problem is that the law should not be so unclear as to enable decisions of the kind we have seen in these [court] cases. They have required substantial time, resources and judicial consideration to set right. [134] ... we do not necessarily want more powers, we just want a clear and unequivocal and unambiguous Act, because at the moment even the judiciary are not taking a consistent approach and, if the people who are being investigated have got the money, as a lot of them have, they can delay these proceedings indefinitely ...

The 'Elliott matter' involving 'three and a half years of litigation' was cited by Mr Melick as a `typical example' of the inordinate delays that are made possible as a result of a statute which is so open to interpretation. [135]

4.139 On the issue of judicial challenges to the Authority's powers, Ms Betty King QC related the problems to an unnecessarily complex Act, when she said:

One of the major complaints I have is that the National Crime Authority Act itself is appalling. It might well be written in Hindustani. It is unbelievably difficult to interpret. [136]

4.140 Mr Norman Reaburn, Deputy Secretary of the Attorney-General's Department, while acknowledging that there are parts of the Act "which are somewhat complex", said that he "would hardly wish to take the view that it is unintelligible". [137]

4.141 The PJC accepts the proposition that the Act cannot be said to be clear and unambiguous and that, given the extent of statutory reform envisaged in this report, it has concluded that the Act should be completely redrafted. The PJC notes that the only beneficiaries from the complexity and ambiguity of the Act are well-resourced defendants and their lawyers.

4.142 Finally, it should also be recalled that several proposed amendments of the NCA Act contained in the 1992 bill which was laid aside by the Government for particular reasons had bipartisan support at the time but remain to be enacted. These included the repeal of sections 12(4) and 12(5) which had been criticised by the South Australian Supreme Court as long ago as 1989 in the Carbone case; and amendment of section 29A, introduced in 1992, which conflicts with the credit reporting provisions of the Privacy Act 1988.

4.143 Given that there have been no subsequent amendments of substance of the NCA Act, the PJC suspects that the implementation of its recommendations in this report will provide a convenient opportunity for such longstanding flaws in the legislation to be rectified.

Recommendation 14: That, given the substantial amendment of the National Crime Authority Act 1984 required to implement the PJC's recommendations in this report, the Government should rewrite the Act to ensure that Parliament's intentions are expressed in clear and unambiguous terms.

Summary of Operation Albert

4.144 In view of the significance of Operation Albert in the Authority's recent history, the PJC has included the following summary of the case as it demonstrates the range of the Authority's powers in operation.

4.145 Mr Peter Faris QC was appointed Chairman of the NCA on 1 July 1989. In late 1989 Mr Faris approached the then Chairman of the then National Companies and Securities Commission (NCSC), Mr Henry Bosch, to ask whether there were any major 'white collar' matters which the NCSC could not pursue but which the NCA might. In November 1989 Mr Bosch wrote to Mr Faris, offering the investigation of conduct by directors and officers of Elders IXL Ltd (Elders), in relation to the buy-out by Harlin Holdings Ltd (Harlin).

4.146 In December 1989, the NCA sought a reference from the Commonwealth Attorney-General, Mr Lionel Bowen, to investigate the matter. After consulting all other members of the Inter-Governmental Committee (IGC) by telephone Mr Bowen granted the reference on 21 December and the investigation, known as Operation Albert, began. The Melbourne University Law Review provided a brief history of the Albert investigations in the following terms:

The NCA used its special powers to question the four directors allegedly involved in the transactions: John Elliott, Peter Scanlon, Kenneth Biggins and Ken Jarrett. Each denied that the transactions were shams, and gave long detailed accounts of why the transactions had been made. Elliott told the NCA that the transactions had been done with his knowledge, on his instructions and for a genuine reason. The others all told the same story. The NCA was not convinced and set out to prove that the stories told by the accused were false, using its special powers to compel testimony from witnesses and to obtain copies of relevant documents.

This evidence tended to show that the transactions were a sham; indeed, by the end of the case the sham nature of the transactions was not even disputed by the accused. In a statement released on the day of his directed acquittal, for example, Scanlon admitted that in form the transactions were shams, but claimed that they had been used to discharge a debt genuinely and legitimately owed to Hawkins. Scanlon claimed that the choice of a sham vehicle for discharging the debt had been the choice of Ken Jarrett and Ken Jarrett alone.

To the NCA, however, the fact that each of the accused had originally provided a false version of the circumstances in relation to the transactions was evidence from which the accused's consciousness of guilt could be inferred. In other words, the sham nature of the transactions, together with the fact that the accused had lied on oath about them, suggested that the transactions had involved criminal wrongdoing on the part of the four directors. [138]

4.147 Early in 1990 reports of the investigation into Mr John Elliott and his Elders associates were apparently leaked to the media, coinciding with the announcement on 16 February 1990 of a general election in March. Mr Elliott was at that time President of the Liberal Party of Australia and accusations were made of a political agenda behind the investigation and the timing of the leak. Mr Elliott himself has said that: 'the actual referral was the political conspiracy,' [139] and that: 'it was [done] in preparation for the 1990 federal election'. [140] He told the PJC that: 'The ALP started this vendetta on me.' [141] He also indicated that it was the then ALP Minister for Police in Victoria, Mr Steve Crabb, who was the source of the leak. [142] The PJC is of the view that the publication of these details was most unfortunate. It undermined the proper secrecy of the process and gave rise to a perception of a political motivation.

4.148 Mr Elliott referred to a number of press reports of comments by senior ALP figures in late 1989 and early 1990, including the then Prime Minister, Mr Bob Hawke, and suggested that: 'by late 1989 Labor Party politicians were threatening me with an inquiry into my business affairs as one of the means by which political harm could be done to me in the lead-up to the election.' [143]

4.149 Mr Bowen contended that the first he knew of the matter was when Mr Faris requested the reference and produced two opinions from leading counsel in Melbourne to support the request. Mr Bowen further states that following press reports of the investigation he publicly invited Mr Andrew Peacock, the then leader of the Liberal Party, to examine the documents presented by Mr Faris. Mr Peacock did not avail himself of the offer [144] Mr Hawke has denied emphatically any involvement in the reference of the matter to the NCA and that the NCA investigation was part of any political vendetta. [145]

4.150

Ms Betty King QC, a Member of the Authority from 1993 to 1995, told the PJC that during that time: 'there was no political involvement or interest in respect of the investigation. It was an investigation into alleged criminal activity.' [146] Mr Elliott himself has conceded that he did not see the conduct of the NCA's investigation as part of the alleged political conspiracy, but argued that once the reference had been granted the Authority pursued a vendetta against him as a 'tall poppy', without regard to the evidence. [147] In reply, the Authority has argued that it has conducted investigations into people of greater public prominence than Mr Elliott as well as people of lesser prominence, and that the status or public position of those being investigated is irrelevant. What is significant is the seriousness of the criminal activity involved. [148]

4.151 The matter was subsequently discussed at the IGC meeting in March 1990, when further references were signed by the relevant Victorian and South Australian Ministers. The references signed by the Commonwealth Attorney-General and the Victorian and South Australian Ministers described the allegations in the following terms:

That in relation to transactions concerning (directly or indirectly) the disposal and/or acquisition of securities in Elders IXL Limited, certain directors of that company, alone, or in concert with other persons, improperly used their positions as directors of that company, and improperly used information acquired by virtue of those positions in order to gain an advantage or advantages for themselves or some other person or persons or to cause detriment to that company and that with fraudulent intent, certain directors of that company, alone, or in concert with other persons, failed, in and in relation to the said transactions, to act honestly in the exercise of their powers and the discharge of the duties of their offices as directors of the said Elders IXL Limited. [149]

4.152 According to the NCA, when the investigation began at the end of 1989 and through the early part of 1990, the investigation team considered a wide range of issues related to the Harlin takeover of Elders. One of these lines of investigation came to light after a visit by the investigation team leader to New Zealand in May 1990, when two 1988 payments from Elders to Mr Allan Hawkins, totalling $66.5 million, came to light. These payments were referred to in journal entries as 'H fee'.

4.153 The New Zealand Serious Fraud Office (NZSFO) had been conducting its own investigation, quite independently, into Mr Hawkins of the Equiticorp Group (Equiticorp), after the New Zealand Securities Commission (NZSC) was alerted to the H fee transactions in March 1990. Mr Hawkins later served two and a half years of a six year sentence for fraud and conspiracy following the NZSFO investigation of the 1987 collapse of Equiticorp.

4.154 There has been some contention that the NCA acted improperly in cooperating with the investigation of the New Zealand agencies. This has been based on argument as to whether the NZSFO and the NZSC perform functions 'similar to functions of the Authority'. [150] As part of this cooperation an officer of the NZSFO was present at NCA hearings on two occasions in 1990 as authorised by section 25(5) of the Act. According to the Authority, certain material from the Elliott investigation was lawfully provided to the NZSFO in accordance with the provisions of the NCA Act. The NZSFO was undertaking its own criminal investigations into matters related to the NCA's investigation. [151] The officer of the NZSFO was present at NCA hearings in order to assist the Authority, not the other way round [152] although the Authority now acknowledges that, in retrospect, the identification of the attendance of the NZSFO officer would have been appropriate. [153]

Recommendation 15: That, without restricting the manner in which the Authority may regulate the conduct of proceedings at a hearing under section 25 of the National Crime Authority Act 1984, where the presiding member has permitted a person to attend a hearing who is not a member of the NCA's staff, witnesses should be so advised and be able to comment.

4.155 Information was also provided to the NCA by the NZSC through the NCSC. The NZSC decided that this route was the most appropriate, following the NCA's initial request to the NZSC. The PJC has not received evidence to support Mr Elliott's assertion that the NCA engaged in a subterfuge by procuring the NCSC to request the NZSC for the information. [154]

4.156 Counsel engaged by the Authority expressed concern in mid-1990 that the references may have been open to challenge in the way that they had been drafted, and the references were therefore redrafted and signed at the next IGC meeting in September 1990. At this time the Authority gave specific consideration to the extent to which the references properly authorised the investigation. The then Chairman of the Authority, Mr Justice Phillips, has told the PJC that he urged caution with the Elliott reference because of the media controversy during the federal election held earlier that year, not because he believed, as alleged by Mr Elliott, that the Authority might be acting outside the law. [155]

4.157 Despite Mr Elliott's claims that the Authority was prepared at that time to ignore the possible invalidity of the references, the Authority's decision, in the face of conflicting legal advice, to put the question to one side until a court should decide the issue, appears to have been a reasonable one. Mr Elliott did not challenge the validity of the reference at the NCA hearings or at his trial and it has never been found to be invalid. [156] The PJC believes that there are no grounds which would support an assertion that the NCA accepted that the references were invalid but proceeded anyway. The NCA has indicated that the investigation was, and was always thought to be, within the terms of reference. The Victorian Office of Public Prosecutions, which undertook the prosecutions, also considered that the matter was covered by the wording of the reference.

4.158 According to the NCA, the investigations of the $66 million payment revealed at a fairly early stage strong suspicions that the alleged basis for the payment (foreign exchange losses) was bogus, and that the payment was in satisfaction of a debt owed to Hawkins for his part in preventing the take-over of BHP by Robert Holmes a'Court in 1986. Had the attempted take-over succeeded it would also have given Holmes a'Court control of Elders and prevented the subsequent take-over of Elders by Elliott and others. On 5 August 1996, counsel for Elliott conceded in court that the foreign exchange losses were not genuine. The trial judge, Vincent J, noted that: 'the foreign exchange transactions represented a mystery to be resolved'. [157]

4.159 In the period from November 1990 to January 1991 each of the eventual defendants was summonsed to give evidence at hearings before the Authority in relation to the foreign exchange transactions. Attached to each of the summonses were copies of the respective Notices of Reference. Mr Elliott claims that he was not aware of the issues to be canvassed at these hearings [158] but, according to the Authority, he and his advisers were informed in advance of the hearings that the Authority wished to question them about the transactions. [159] Each defendant had legal representation when giving evidence at these NCA hearings.

4.160 Prior to giving evidence the defendants were advised of the effects of section 30(4) of the NCA Act, which provides the right to refuse to answer any question on the grounds of possible self-incrimination. No claim of privilege and no claim to be entitled to refuse to answer any question was made by any of the defendants. Mr Elliott claims to have been 'ambushed' by the Authority in relation to the line of questioning adopted at its hearings. The PJC, however, is more inclined to accept the view of Foster J in in the Federal Court in 1993 Jarrett v Seymour who stated that the timing of Mr Elliott's complaints appeared to suggest that 'this attack upon the legitimacy of the inquiry into the "foreign exchange matter" is a highly elaborate afterthought.' [160]

4.161 In evidence to the PJC, Mr Peter Scanlon, one of Mr Elliott's co-accused, claimed that in his numerous appearances before the NCA he was never asked any questions about the H fee or related matters. He went on to say that no questions on the matters were asked of any of the directors of Elders, Equiticorp or BHP who appeared, or of any of the advisers, lawyers and bankers associated with those companies. [161]

4.162 In February 1991, the Attorney-General's Department, on behalf of the NCA, forwarded a request to Swiss authorities under the Mutual Assistance in Criminal Matters Act 1987, for information from the Swiss Bank Cantrade about transactions relating to the trading of convertible bonds issued by an Elders subsidiary in 1984. A $105 million parcel of the bonds was sold to BHP in 1986, realising a profit of $78 million for the owners, which was deposited into accounts with Bank Cantrade. The owners of the bonds have yet to be identified. Mr Elliott has sought to oppose the release of the information from Bank Cantrade through legal challenge but has denied any knowledge of the ownership of the bonds.

4.163 On 27 September 1993, Mr Elliott and Mr Kenneth Jarrett obtained injunctions in the Federal Court to prevent the NCA from laying charges and against the publication of proceedings. Similar injunctions were later obtained by Mr Scanlon and others. These injunctions were revoked on 9 October and leave to appeal this decision was refused. On 12 October Mr Elliott held a media conference at which he denounced what he saw as the political agenda behind the NCA harassment of himself and his fellow Elders directors.

4.164 Charges of theft and conspiracy to defraud were laid against Mr Elliott and others on 24 December 1993. Five of the accused were committed for trial in December 1994, with two other defendants being discharged. Mr Jarrett was charged in 1994. In early 1995 he decided to confess his guilt and become a witness for the Crown. He subsequently pleaded guilty to Companies Code offences and served six months imprisonment.

4.165 One of the offences Mr Jarrett admitted to was that he had concealed from the Board of Elders that he and other executives were the beneficial owners of the bonds sold to BHP. According to Mr Garry Livermore, formerly an investigator with the NCA, the Authority has documents which show money coming from Bank Cantrade accounts controlled by Mr Elliott and Mr Scanlon back to Australia as part of the equity they needed in a bid to acquire control of Elders. [162]

4.166 The trial of the remaining defendants commenced before Mr Justice Vincent on 29 January 1996. Justice Vincent had earlier given evidence at a hearing of the PJC in November 1990, during which he had expressed reservations concerning the potential for inroads into civil liberties by the NCA. The prosecution did not raise the question of a possible perception of bias against the NCA on the part of the Judge. Mr John Broome, Chairman of the NCA, told the PJC that he did not know why the prosecution had not raised the issue of bias. [163] Mr Livermore told the PJC that as 'a public and private critic of the NCA since its establishment,' and owing to the possible perception of bias, Justice Vincent should not have heard the case. [164] Speaking in general terms, Mr Brian Martin, Commonwealth Director of Public Prosecutions, told the PJC that faced with a judge who had been critical of the NCA in the past he would seriously consider objecting to that judge presiding. [165] The Victorian OPP has not offered any explanation for its decision not to object to Justice Vincent's hearing of the case.

4.167 A statement was issued on behalf of Justice Vincent on 8 October 1997, in which it was emphasised that his views on the NCA had been on the public record since 1983, and that while he had argued the need for appropriate safeguards and monitoring he had accepted that there was an appropriate role for the NCA. The statement expressed concern at any suggestion of bias on the part of the judge. Justice Vincent thus appears to have missed the point that it was because of his known views on the NCA that critics of the outcome now query why a claim of perception of bias was not raised by the prosecution before the trial commenced. The PJC also questions the process whereby, of all the judges who could have been selected to sit on such a sensitive case, someone who could be perceived as a strong NCA critic was appointed. It believes that given the circumstances of the case and the scope for allegations of bias, the selection of Justice Vincent as trial judge was puzzling.

4.168 During the trial the defence sought access to a great deal of material which was privileged. To do so the defence had to argue that the Authority had abused its power, in order to come within the relevant test. Initially the Judge was prepared to say that there was an arguable abuse of power and on that basis refused the Authority's claim for legal professional privilege. Subsequently, he concluded that there had, in fact, been no abuse but by then the documents had been disclosed.

4.169 It is, of course, critical to law enforcement agencies that their investigatory techniques are kept confidential, and the NCA has had longstanding concerns about the use of disclosure processes by defence counsel to seek to determine how their clients came to notice.

4.170 In dealing with the allegations of abuse of power by the Authority the OPP called a number of witnesses, including the NCA's counsel at the time, former Members of the Authority and the former leader of the investigation team. Notwithstanding their evidence the trial judge held, in a ruling on 8 May 1996, that the Authority had gone beyond the limits of the matter referred to it by the IGC in investigating the foreign exchange transaction, and concluded that the hearings under section 28 of the NCA Act in which the defendants had been questioned about the transaction were unlawful, and that therefore the defendants' statements had not been voluntary.

4.171 The OPP, and the Authority, considered the judge's ruling of 8 May to be wrong in law and contrary to the facts. Accordingly, the OPP sought special leave to appeal to the High Court. On 21 July 1996, the High Court, while recognising that there were important points to be decided, held that Victorian law clearly intended that there should be no interlocutory appeals by the Crown during the course of a trial and therefore declined to intervene at that stage. The PJC understands that this situation exists only in Victoria. It believes that there is a strong public interest in higher levels of common practice in criminal law matters. In relation to the inability of the High Court to grant an interlocutory appeal in this matter, the PJC urges the Victorian Government to bring its legislation into uniformity with that of other jurisdictions.

4.172 This left the way open for defence counsel to seek to have all other evidence acquired by the Authority which supported the charges rendered inadmissible in accordance with the Judge's ruling of 8 May. In a decision handed down on 21 August 1996 the Judge held that all of this evidence should be held inadmissible, having been illegally obtained because the Authority's coercive powers had been illegally used to obtain what he said was 'curial advantage'.

4.173 This decision effectively ruled out all of the evidence obtained by the Authority using its coercive powers which would have been led in the trial, and as a result the OPP decided not to proceed with the remaining charges. Instead, the OPP sought to enter a nolle prosequi in respect of three of the defendants and in respect of perjury charges faced by the remaining three defendants. Over objection from the OPP Justice Vincent refused to accept the nolle prosequi. On 22 August 1996, Justice Vincent found the accused not guilty and acquitted them.

4.174 The Victorian DPP then referred twelve points of law on which the acquittals were based to the Court of Appeal pursuant to section 450A of the Crimes Act 1958 (Vic). In an unanimous judgment delivered on 26 September 1997, the Court of Appeal answered the questions in favour of the Authority. The Court found:

• that the 'matter' referred to the NCA was to be ascertained by reference to the notice of reference alone and not to preceding documents;
• that the Authority need not 'perceive a nexus' between the 'matter' referred to it and what is to be investigated at the hearing; and
• that the lawfulness of the hearing will not determine the voluntariness, and hence the admissibility, of the statements made at the hearing.

4.175 Although the Court of Appeal did not address the question of whether or not the Authority had acted lawfully in its investigations into the Albert matter, there is no other possible conclusion from its decision. The Authority has also pointed out that it has been successful in defending all the various challenges to aspects of the Authority's investigation in the Albert matter, and has been found to have been acting lawfully in every case in every court, the only exception being in the trial before Justice Vincent. [166]

4.176 While the decision of the Court of Appeal most certainly validates the lawfulness of the Authority's investigations, its decision can have no legal effect on the defendants. Since they were acquitted by the trial judge, they cannot be tried again on those charges. Mr Elliott has argued vigorously in public that the acquittals by Justice Vincent completely exonerate him and that they confirm that the NCA's actions have been completely unacceptable. It should be pointed out, however, that not only does the decision of the Court of Appeal invalidate these arguments but that even in the original trial the acquittals were based on legal argument as to the admissibility of evidence. No jury was ever called upon to consider the evidence. On 24 October 1997, Mr Elliott and Mr Scanlon applied to the High Court to appeal the Court of Appeal's decision.

4.177 Mr Elliott has consistently claimed that the investigation of the Elders take-over and related matters was unjustified: an abuse of the NCA's powers and the result of a wholly inappropriate culture within the Authority, 'a pattern of law breaking, mischief-making and denial'. [167] The PJC believes, however, that given the initial information supplied to it by the NCSC it was entirely appropriate for the Authority to investigate the matters irrespective of Mr Faris having initiated the first step by approaching the NCSC.

4.178 The initial letter from Mr Bosch to Mr Faris stated that:

We have been concerned about the way in which some directors of Elders IXL have gained effective control of one of Australia's major companies. It appears that there may have been breaches of the Companies legislation and the Companies (Acquisition of Shares) legislation and possibly State Crimes Acts.

4.179 Mr Faris' subsequent report to the Attorney-General concluded that the circumstances of the relevant matters revealed substantial planning and 'the use of sophisticated methods and techniques to camouflage the illegal activities in a manner calculated to defeat ordinary police methods of investigation'. [168]

4.180 In the face of such serious allegations the PJC believes that it was appropriate that the Authority investigated the matters raised. Following its own investigations and hearings the NCA passed the matter to the Victorian OPP, which would have independently assessed the quality of the NCA brief and satisfied itself that charges for theft and conspiracy should be laid. Subsequently, there was a full, contested committal hearing before a magistrate, as a result of which a number of those accused were committed for trial.

4.181 Once charges had been laid and court proceedings initiated it was incumbent on the prosecution to make as strong a case as it could and to present the most telling evidence available. The PJC is of the view that there is no evidence that the vigorous investigation and prosecution reflects a vendetta . Further, the Committee does not find it credible that Mr Bosch, Mr Faris, the Victorian Office of Public Prosecutions and the committal magistrate were all party to a conspiracy against Mr Elliott, or that the OPP and the magistrate were unable to assess the adequacy of evidence put forward as the basis for a trial.

4.182 Mr Brian Martin, Commonwealth DPP, told the PJC that the Commonwealth and State DPPs and the courts were an effective curb on any potential abuse of its powers by the NCA: 'if they [the NCA] abuse their powers then the evidence will not be admissible, and we will tell them so, or the court will tell them so'. [169]

4.183 Mr Elliott also raised with the PJC his concerns about the NCA's non-disclosure requirements [170] which meant, he said, that he 'could not go and tell Mr Kennett [Premier of Victoria] he was even being investigated'. [171] Mr Scanlon also drew attention to the fact that, when summonsed to an NCA hearing, he could not even tell his wife where he was going. [172] In these instances, Mr Elliott and Mr Scanlon were each alluding to the prohibition on the disclosure of their summonses - in terms of both their content and their existence. [173]

4.184 The PJC has some sympathy for the inconvenience this may have caused these two witnesses in their daily activities. However, the PJC notes that the non-disclosure provision was specifically inserted into the Act in 1991 to ensure that the safety of witnesses is not threatened, and that their reputation or fair trial is not prejudiced by others revealing the existence of an NCA investigation, or any information about it or proceedings connected with it. [174]

4.185 Mr Elliott's counsel, Mr Robert Richter QC, was known for his views opposing the secrecy in which the NCA's hearings may be held. In a paper presented to the Fifth International Criminal Law Congress, Sydney, Mr Michael Rozenes QC effectively countered what he referred to as 'Richter's major criticism' that the secrecy of NCA's investigations constitutes 'a threat to the suspect summoned before the NCA'. [175] Mr Rozenes responded to the Richter argument by pointing out that, although the NCA powers were inquisitorial, like a royal commission, they are exercised at the investigation stage and therefore (unlike the search for truth by a royal commission) 'secrecy is essential in the interests of a fair trial'. Mr Rozenes further clarified that, whatever information may be obtained or revealed during the investigation stage, 'only admissible evidence should be presented at a subsequent trial'. [176] Thus the PJC rejects any suggestion that the NCA's hearings should be in public rather than in private.

4.186 The duration of the Albert matter raises other issues, particularly the question of the extent to which those members of the community with sufficient means can avoid legal process, or the consequences of legal process. From the issuing of the first reference to the laying of charges against Mr Elliott and others four years elapsed. A further two years elapsed before the trial began, involving approximately one hundred days of court hearings, followed by another two years for the trial and subsequent appeal. The trial itself lasted seven months but never went beyond legal argument before the Judge. Trial by jury was never reached. Justice Brooking of the Court of Appeal noted that: 'that foundation of the system has never been anywhere to be seen'. According to Justice Brooking:

This case reinforces my view that criminal proceedings in this State are out of control ... we have had four years of legal proceedings, concerning events which began in 1986. I cannot regard as satisfactory a criminal justice system which can permit what has happened here. [177]

4.187 Mr Livermore spoke in similar terms when he told the PJC that Mr Elliott 'effectively outlasted and outresourced the NCA and the DPP', and that the case brought the criminal justice system into disrepute. 'Not one of some 130 witnesses ever gave evidence before a jury in this matter. It is a disgrace and a blight on the system.' [178]

4.188 Mr Greg Melick, the current Member of the NCA, told the PJC that a person with enough funds and properly advised could probably delay the Authority's investigative processes by some three to four years before they could actually be forced to answer relevant questions before a hearing. He referred to the Elliott matter as a typical example: 'three and a half years of litigation, in which they did not win one stage but they delayed the matters by a substantial amount of time.' [179] Mr Melick also commented that: 'anybody who can afford it can probably avoid the consequences because, if you have got the money - and it takes millions of dollars - you can protract the system for as long as you like.' [180]

4.189 Mr Melick told the PJC that it was in the interests of the defence in a case to create delays such that evidence is stale, people cannot remember what happened or even die. [181] The PJC notes that the first reference on the Albert matter was issued in December 1989 and the trial before Justice Vincent concluded in August 1996. The investigations and subsequent court actions thus took place over the course of nearly seven years. During this period the Chairmanship and the investigating staff of the NCA would have changed on several occasions.

 

Footnotes

[1] Mr Brian Martin, Commonwealth Director of Public Prosecutions, evidence, 26.5.97, p. 369.

[2] NCA evidence, 22.5.97, p. 266.

[3] Senator Gareth Evans, Second Reading Speech, Senate Hansard, p. 2495.

[4] Evidence, 2.6.97, pp. 383-4.

[5] NCA Act, section 58 permits the secondment of State police officers and section 49 allows for other Commonwealth employees to be seconded, including AFP officers.

[6] 76 ALR 329.

[7] Ryder & Ors v Morley & Ors 76ALR329 at 335.

[8] The Court's decision was primarily based on its interpretation of section 22 of the NCA Act in sub-section (10) which states that `Nothing in this section affects a right of a person to apply for, or the power of a person to issue, a warrant, being the right or power existing otherwise than by virtue of this section'.

[9] Ryder & Ors v Morley & Ors 76ALR329 at 335.

[10] Evidence, 10.6.97, p. 537h.

[11] NCA Act sections 19A(5) and (6)

[12] NCA Act section 19A

[13] NCA Act section 19A(5) and (6).

[14] NCA Act section 19A.

[15] Or a “prescribed officer” as defined in section 19A.

[16] Section 3E.

[17] That is, apart from a tax-related offence or in proceedings for making a proceeds of crime order: Taxationa Administration Act section 3E (3) to (10).

[18] Section 219B.

[19] NCA Act, section 21(1).

[20] NCA Act, section 11(2).

[21] Evidence, 2.6.97, p. 388.

[22] Mr McLeod added however, that he thought that 'there is a strong argument that there does need to be an appropriate set of accountability responsibilities' and that 'the absence of a body oversighting the way in which the NCA carries out its business is clearly a serious gap in the accountability framework that exists at the moment'. This issue is addressed by the Committee is Chapter 5. Evidence, 16.6.97, p. 900.

[23] Evidence, 2.6.97, p. 423.

[24] Evidence, 10.6.97, p. 537i.

[25] Evidence, 11.697, p. 635.

[26] Evidence, 11.6.97, pp. 634-5.

[27] Evidence, 21.5.97, p. 74.

[28] Evidence, 21.5.97, p. 6.

[29] Evidence, 21.5.97, p. 141d. This issue is discussed in Chapter 7.

[30] Evidence, 22.5.97, p. 216.

[31] Evidence, 21.5.97, p. 66.

[32] Evidence, 21.5.97, p. 66.

[33] Evidence, 21.5.97, p. 70.

[34] Evidence, 21.5.97, p. 67.

[35] Evidence, 4.6.97, p. 455.

[36] Evidence, 21.5.97, p. 26.

[37] Evidence, 21.10.96, p. 30.

[38] Evidence, 21.10.96, p. 30.

[39] The only exceptions to this came from witnesses who had been NCA targets.

[40] Evidence, 21.5.97, p. 66.

[41] Evidence, 2.6.97, p. 406.

[42] Evidence, 4.6.97, p. 485.

[43] Evidence, 10.6.97, p. 537g.

[44] Evidence, 2.6.97, p. 405.

[45] Evidence, 10.6.97, p. 524.

[46] Evidence, 10.6.97, p. 524.

[47] Evidence, 4.6.97, p. 91.

[48] Evidence, 21.5.97, p. 119.

[49] Evidence, 16.10.97, p. 919.

[50] Evidence, 16.10.97, p. 939.

[51] Evidence, 16.10.97, p. 939.

[52] Submission No 41, p. 5.

[53] Evidence, 10.06.97, p. 595.

[54] Royal Commissions Act 1902, section 6 and Australian Securities Commission Act 1989, section 68.

[55] Evidence, 22.5.97, p. 197.

[56] ibid.

[57] Evidence, 10.6.97, p. 595.

[58] Evidence, 10.6.97, p. 534.

[59] Evidence, 22.5.97, p. 217.

[60] Evidence, 21.5.97, p. 66.

[61] Evidence, 8.10.97, p. 1191.

[62] Evidence, 2.6.97, p. 388.

[63] Evidence, 2.6.97, p. 389.

[64] Evidence, 10.6.97, p. 537i.

[65] Evidence, 4.6.97, p. 505.

[66] Evidence, 2.6.97, p. 388.

[67] Submission No 41, p. 5.

[68] Evidence, 21.5.97, p. 75.

[69] NCA Annual Report 1996-97, p. 42.

[70] Evidence, 22.10.96, p. 29.

[71] Evidence, 10.6.97, p. 537i.

[72] Evidence, 11.6.97, p. 618.

[73] The booklet Prosecution Policy of the Commonwealth, articulates guidelines for the DPP on making the decision whether or not to institute or continue a prosecution.

[74] Evidence, 26.5.97, p. 367.

[75] Evidence, 2.6.97, p. 389.

[76] For example, the ACCC which was set up under the Trade Practices Act 1974.

[77] CLER, p. 113.

[78] ASC Act, section 68. This system compares favourably with the provisions in the NCA Act under which:when a witness claims privilege, the NCA must go to the DPP for a decision to override it (section 30(5)); andprivilege can be claimed in relation to documents as well as oral evidence (section 30(2)).

[79] Section 29(1).

[80] Section 13(2) & 14(2).

[81] Section 30(2).

[82] Evidence, 21.10.96, p. 29. This argument was addressed in Chapter 3 - see footnotes??

[83] Evidence, 12.6.97, p. 878.

[84] Evidence, 10. 6. 97, p. 602.

[85] Evidence, 10.6.97, p. 603.

[86] Evidence, 22.10.96, p. 27.

[87] Evidence, 10.6.97, p. 603.

[88] Evidence, 11.6.97, p. 747.

[89] ibid.

[90] ibid.

[91] Evidence, 2.6.97, p. 397.

[92] Evidence, 22.10.96, p. 26.

[93] Evidence, 21.10.96, p. 29.

[94] Evidence, 10.6.97, p. 599.

[95] Law Society of SA in evidence, 10.6.97, p. 599.

[96] NSW Council for Civil Liberties in evidence, 22.5.97, p. 219.

[97] Evidence, 10.6.97, p. 533.

[98] ibid.

[99] In urgent circumstances, application for a warrant may also be made by telephone under section 23.

[100] 76 ALR 329.

[101] Published in the Criminal Law Journal, 1995, vol. 19.

[102] Evidence, 10.6.97, p. 537h.

[103] Evidence, 10.6.97, p. 559.

[104] Evidence, 10.6.97, p. 537h.

[105] Evidence, 10.6.97, p. 560.

[106] Evidence, 11.6.97, p. 755.

[107] Evidence, 10.6.97, p. 517.

[108] Evidence, 21.10.96, p. 33.

[109] Evidence, 21.5.97, p. 61.

[110] Evidence, 21.5.97, p. 61.

[111] Evidence, 21.5.97, p. 74.

[112] Evdience, 21.10.96, p. 33.

[113] Evidence, 21.5.97, p. 32. Mr Bottom noted that Queensland did not have this power. Subsequently, however, it is understood that Queensland police were also to be granted the power to intercept telephone communication.

[114] NCA Annual Report 1996-97, p. 43.

[115] Evidence, 22.5.97, p. 277.

[116] Evidence, 3.3.97, p. 20.

[117] Evidence, 3.3.97, p. 20.

[118] Evidence, 3.3.97, p. 19.

[119] Evidence, 2.6.97, p. 388.

[120] Sections 30(1) and (2).

[121] Evidence, 2.6.97, p. 389.

[122] CLER, p. 110.

[123] Evidence, 2.6.97, p. 389.

[124] Evidence, 8.10.97, p. 1175.

[125] Evidence, 8.10.97, p. 1184.

[126] Evidence, 22.5.97, p. 304.

[127] Evidence, 8.10.97, p. 1181.

[128] CLER 8.8, p. 111.

[129] Jago v District Court of New South Wales (1989) 168 CLR 23.

[130] Evidence, 8.10.97, pp. 1176-7.

[131] `Halsbury's Laws of Australia - Criminal Procedure'; Butterworths Service 52 [130-13565].

[132] Evidence, 8.10.97, p. 1177.

[133] Evidence, 26.5.97, p. 277.

[134] Evidence, 8.10.97, p. 1168.

[135] Evidence, 8.10.97, p. 1176.

[136] Evidence, 21.10.96, p. 20.

[137] Evidence, 2.6.97, p. 20.

[138] Melbourne University Law Review, 1997, vol. 21, p. 333-4.

[139] Evidence, 12 6.97, p. 890.

[140] ibid., p. 848.

[141] ibid., p. 86.2.

[142] ibid., p. 851.

[143] ibid., p. 848 and sub Annex 1 8-11.

[144] Submission no. 47.

[145] Submission no. 46

[146] Evidence 21 October 96, p. 23.

[147] Evidence 12 June, pp. 873, 890.

[148] Submission no. 14a, p. 25.

[149] Submission no. 14a, p. 10.

[150] NCA Act, section 17(2).

[151] Submission no. 14a, p. 4.

[152] NCA response to allegation 7.

[153] In camera evidence.

[154] NCA Submision no. 14a, p. 2.

[155] NCA Submission no. 44.

[156] NCA Submission 14a, p.2.

[157] NCA Submission no.14a, p. 3.

[158] Evidence, 12.6.97, p. 877.

[159] NCA Submission no. 14a, pp. 5-6.

[160] NCA Submission no. 14a, pp. 7-8.

[161] Evidence, 23 June, p.1100.

[162] Evidence, 8 October, pp. 1146-47.

[163] Evidence, 8 October, p. 1184.

[164] Evidence, 8 October , p. 1141.

[165] Evidence, 26 May, p. 379.

[166] NCA Submission no. 14a, p. 14.

[167] Evidence, 12 June, p. 770.

[168] Evidence, 12 June, p. 848.

[169] Evidence, 26 May, p. 372.

[170] NCA Act, section 29A.

[171] Evidence, 12.6.97, p. 864.

[172] Evidence, 23.6.97, p. 2000.

[173] NCA Act, sections.29A and 29B. These requirements allow that disclosure may be made at any time for the purpose of obtaining legal advice, legal aid, etc.

[174] National Crime Authority Amendment Bill 1991, Explanatory Memorandum, p. 1.

[175] Published in Criminal Law Journal, 1995, vol.19, p. 72.

[176] ibid.

[177] Supreme Court of Victoria, Court of Appeal No 252.1996, p. 5-6.

[178] Evidence 8 October, pp. 1138-39.

[179] Evidence 8 October, pp. 1175-76.

[180] Evidence, 8.10.97, p. 1181.

[181] ibid. p. 1184.