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Middlesbrough job seeker Jack Hill, 18, is so desperate forwork he has advertised himself in a newspaper ‘‘for sale’’page with a price tag of £2.50 ($A3.85) for anyone willingto give him an unpaid trial as a mechanic. It ran alongsideads for toys, prams, cots, keep-fit gear and used bikes.

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Airport in grip of drug tradeSydney customs officerslinked to organised crime TRAFFIC CONTROL

PAUL KATRALIS Customs officer, Sydney Airport

Charged in October with drug trafficking and corruption offences.

ALEX “LITTLE AL” TAOUILUnderworld figure

JOSEPH HARBDrug trafficker who in 2010 transferred his share in Sydney apartment to Lamella.

DIEGO REFOJOSDrug trafficker

PAUL ADRIAN LAMELLACustoms Officer, Sydney Airport

Arrested Monday regarding alleged involvement in drug trafficking and bribery. Previously found by police in 2008 in a car with five

small bags of cocaine, some of which he admitted using.

HOW THEY GET THE DRUGS THROUGH SYDNEY AIRPORTAllowing drug filled luggage to pass freely through customs controls

Enabling drug money to be smuggled out of Australia to fund the re-supply of drugs

Turning CCTV cameras to the roof or walls to allow corrupt activity to go undetected

Accessing customs databases to check whether police have asked for certain passengers to be searched

THE RESPONSE FROM CUSTOMSAnti-corruption measures

Sweeping review of culture, management and leadership

Give CEO new powers to deal with suspected corrupt officersppp

Introduce drug and alcohol testing Require all customs officers to report

corruption or serious misconduct Education programs for staff and

crackdown on officers who do not report criminal associations

These [anti-corruption] changes… are necessary but not sufficient as they do not

tackle workforce cultural issues, where more needs to be done.

Leadership and determined effort will be required to ensure those who do not

share the values of honesty, integrity and professionalism... are identified and dealt with.

Acting Customs CEO Mike Pezzullo

Up to 15 allegedly corrupt customs officials at Sydney Airport

Internal memos warn that the agency’s anti-corruption policy is “outdated and requires revision”.

Previous official warnings to customs to act on corruption

Lamella and other customs officers are allegedly linked to the following Sydney crime figures:

AALLEXEX ““LILITTTTLELE JOOSEPH HARBJOOSESEPHPH HHARARBB DIDIEGODIIEGEGOO

By NICK McKENZIEand RICHARD BAKERAGE INVESTIGATIVE UNIT

Continued PAGE 2Editorial PAGE 14

AN ENTRENCHED network ofallegedly corrupt customsofficers at Sydney Airport hasbeen importing drugs withorganised crime figures forseveral years in one of Australia’smost serious corruption scan-dals.

At least 15 officials in SydneyAirport’s border security postsare suspected of involvement inserious misconduct or corrup-tion, ranging from criminalassociation and leaking inform-ation to drug trafficking, drugmanufacturing, money launder-ing and bribery. The numbermay be as high as 20.

A six-month Fairfax Mediainvestigation – conducted inassociation with the ABC’s 7.30program – can reveal that thecell has been exploiting majorgaps in airport and customssecurity to smuggle millions ofdollars of narcotics and drugmoney past border controls andon to Australia’s streets.

Corrupt airport baggagehandlers are also allegedlyinvolved. The allegedly corruptcell has been operating since atleast 2009 from the interna-tional passenger terminal andfreight section and is suspectedto have imported pseudo-ephedrine, cocaine, steroidsand possibly weapons.

Property, court and businessrecords, social media sites andmultiple well-placed sourceslink members of the cell toSydney-based crime figures,including underworld figureAlex “Little Al” Taouil, drug traf-fickers Joseph Harb and DiegoRefojos and members of theComancheros outlaw bikie gang

and Middle Eastern crimegroups.

The scandal is regarded asextremely serious because of thescale of the alleged corruptionand the failure of the CustomsService – which was led untilAugust by career public servantMichael Carmody – to act onmultiple warnings that theorganisation was badly exposedto corruption.

The customs agency hasemployed officers with knowncriminal associations andallowed relatively junior officersto wield significant influenceover other staff by having thepower to manage rosters.

Leaked customs documentsdating back to 2007 detailmultiple internal warnings thatcustoms lacked the power,resources and ability to detectcorruption and that its anti-corruption framework was “out-dated and requires revision”.

In response to a series ofquestions sent to customs onMonday, acting customs CEOMike Pezzullo stressed that theagency had already made majorimprovements to its corruption-busting system.

But Mr Pezzullo conceded‘‘more needs to be done’’ andrevealed he would ‘‘take allnecessary action’’, including thelaunching of an agency-widereview of ‘‘workplace culture,management and leadership . . .to ensure the integrity of ourworkplace’’.

He also said that while cus-toms ‘‘internal oversight sys-tems’’ had helped to identifycorruption risks at Sydney Air-port in 2011, ‘‘clearly more canbe done’’.

Fairfax and the ABC have

Questions on Geoff Shaw fund-raiser

Geoff Shaw

By ROYCE MILLARand MELISSA FYFEAGE INVESTIGATIVE UNIT

EXCLUSIVE

Got a tip?investigations@theage.com.au

EMBATTLED Liberal MP GeoffShaw is under pressure on a newfront with a cloud now hangingover a fund-raising club heappears to have run in his Frank-ston electorate not registeredwith the Australian ElectoralCommission.

Emails from Mr Shaw,obtained by The Age, show hehas been a key player in what hedescribes as ‘‘the 1500 CLUB’’and ‘‘my 1500 CLUB’’ which gen-erated funds for the Liberals,including the successful 2010Frankston election campaign.

They reveal he was a key fig-

ure behindthe club,whichreceived$1500 fromdevelopersand otherbusinessfigures inreturn forbenefits,including

free access to events with MPsand celebrity figures.

One such event was a$120-a-head dinner in July 2010that featured Olympic rowerJames Tomkins as a guestspeaker. Invitations to this andother fund-raising events weresent out by Mr Shaw’s privatecompany, Geoff Shaw & Part-ners.

News of the activities of thelittle-known club raise questionsabout whether it conforms withCommonwealth electoral lawsand the party’s fund-raising rulesat the time.

Last year, the Victorian partyfaced an embarrassing probe byfederal electoral authorities afterFairfax Media revealed the activ-ities of a string of ‘‘supporterclubs’’ across Melbourne thatappeared to be operating inbreach of electoral laws. Chiefamong them was Business First,another southern suburbs clubfounded by Liberal-aligned lob-byist Geoff Leigh and upperhouse MP Inga Peulich.

Failure to make appropriatedisclosures is an offence punish-able by a fine.

While the Liberal Party’s

‘‘supporter groups’’ have sincepublicly disclosed their activitieson the electoral commissionwebsite, Mr Shaw’s 1500 clubremains unknown to authorities.

State party director DamienMantach declined to respond toa series of questions, insteadreleasing a one-line statement:‘‘The fund-raising conducted bythe Frankston electorate confer-ence complies with electorallaws and adheres to the fund-raising code of conduct,’’ he said.

Premier Ted Baillieu faces agrowing headache over Mr Shaw,who has been at the centre of aslew of controversies, includingthe misuse of public resources.Mr Baillieu did not comment.

Italian charity faces police scrutinyBy ROYCE MILLARand MELISSA FYFEAGE INVESTIGATIVE UNIT

Carlo Carli

‘The allegations to thepolice come after growingunease.’

POLICE are assessing a reportalleging inappropriate financialconduct at a Melbourne-basedcharity run by some of Austra-lia’s leading Italian communityfigures.

The Carlton-based CO.AS.IT,funded by the Australian andItalian governments, is a wel-fare, education and culturalorganisation for Italianmigrants.

A Victoria Police spokes-woman confirmed that policeare assessing a ‘‘report’’ alleginginappropriate conduct.

‘‘As this process remainsunder way, it would be inappro-priate to comment further at

this stage,’’thespokes-womansaid.

FairfaxMedia isalso awarethat seniorranks ofthe HealthDepart-

ment have raised issues con-cerning CO.AS.IT’s handling ofhome-based support servicesfor Italian senior citizens.

The allegations to the policecome after growing uneaseamong some members of Mel-bourne’s Italian communityabout the operations ofCO.AS.IT. Former Victorian MPfor Brunswick Carlo Carli has

recently questioned manage-ment about a previouslyunknown entity called theItalian Services Institute, whichappears to have received mil-lions of dollars of donationsfrom CO.AS.IT in the pastdecade.

Mr Carli briefly worked forCO.AS.IT managing its heritagecentre, Museo Italiano, but wasretrenched on the grounds ofirreconcilable differences whenhe started asking questionsabout the charity’s operations.

CO.AS.IT chief executiveGiancarlo Martini-Piovano hasbeen in his role since 1974.

‘‘The only thing I can say isthat CO.AS.IT has done nothingwrong, in every sense, and Ihave not got anything else tosay,’’ he said.

At CO.AS.IT’s general meet-ing in November, managementrefused to answer members’questions about the charity’sfinances.

Meanwhile, concerns aboutthe organisation have beenraised twice in the Italian parlia-ment by politicians with partic-ular concern for expatriateItalian communities.

CO.AS.IT has substantialland holdings in Carlton. It alsoruns a childcare centre and atravel agency and supports theteaching of Italian in Victoria.

Sweepinginquirythe onlyanswerANALYSISRICHARD BAKER ANDNICK McKENZIE

Continued PAGE 2

MEET the new targets of Austra-lia’s corruption fighters. Theyare young, often in their 20s,mostly fresh faced and fit, butfor whom a night out means afew ecstasy pills or somecocaine.

Through friends, family, thegym or the clubbing scene, theyknow bikies and organisedcriminals who, like them, areoften relatively young andmuscled up.

On Facebook, where theyfreely document their night life,these corruption targets lookmuch like their underworldfriends. They pose with theirshirts off, muscles flexed andtattoos on display, or with theirarms around similarly buff,inked-up mates or skimpilydressed female companions.

Some of these targets evenproudly state on their Facebookpage who they work for: theAustralian Customs and BorderControl Service.

The scandal exposed todayhas lifted the lid on the dismalvetting, oversight and culturethat has allowed alleged drugtrafficking and serious corrup-tion to become entrenchedamong small cells of customsofficers.

It is too early to say howmany successful drug

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Customs officers implicated as drug trade grips airportFrom PAGE 1

Watch ABC-TV’s report into bordersecurity tonight on 7.30.

traced drugs seized last Marchby NSW police in an apartmentin the Sydney suburb of Woo-looware to one of several drugconsignments allegedly smug-gled past border controls bycustoms officials at Sydney Air-port.

Diego Refojos, 24, recentlypleaded guilty in the NSW Dis-trict Court to serious drugoffences connected to the Woo-looware raid. It is believedRefojos was linked to severalearlier drug importations thathave never been recovered byauthorities.

It is understood that twoallegedly corrupt customs offi-cials were at the Wooloowareapartment before the raid, butleft before the drug squadarrived.

A small number of customsofficers are also suspected tohave helped manufacture intodrugs the precursor chemicals

they allegedly smuggled into thecountry.

One of the alleged key play-ers in the cell is airport customsofficer Paul Adrian Lamella, whohas suspected links to Taouil,Refojos and Harb. Lamella wasarrested by federal police onMonday and charged withoffences involving drug import-ation and corruption.

Lamella retained his job atcustoms despite NSW policealleging in 2008 that they dis-covered him in a car with twoother men and five small bagsstamped with Playboy bunnylogos and filled with cocaine.

Also, Lamella’s customs posi-tion and security clearance werenot affected when Lamella lateradmitted using a small amountof cocaine.

Property records also showthat in 2010 Harb transferred hisshare in a Sydney apartment toLamella.

Harb was arrested in Augustby federal police and charged

with smuggling drugs throughSydney Airport.

For several months Fairfaxand the ABC have delayedreleasing details of the investig-ation at the request of an anti-corruption taskforce, code-named Marca, run by the Aus-tralian Commission for LawEnforcement Integrity and theAustralian Federal Police.

ACLEI and the AFP haverefused to provide any detailedcomments about Marcabecause it is an ongoing inquiry,although ACLEI confirmed itwas investigating ‘‘corrupt con-duct in border environments’’.

Court records reveal thattaskforce Marca arrestedLamella in Sydney earlier thisweek and charged him withdrug trafficking and bribery.

In August, another customsofficer, Paul Katralis, wasarrested and charged by thetaskforce with drug traffickingand bribery.

But several other allegedly

corrupt customs agents atSydney Airport, includingofficers with strong links to drugtraffickers, are still working forthe agency. Broader ethical andintegrity failings in customs arenot being investigated byMarca.

The revelations will putintense pressure on the federalgovernment to explain why sus-pected corrupt officers are stillworking and why there are stillgaping holes in airport bordersecurity, despite multiple warn-ings from police and officialinquiries, including the 2005Wheeler report on securityproblems at the airport.

While up to 20 customsofficers are suspected to haveengaged in a range of seriousmisbehaviour, it is understood acore group of up to 10 officersare believed to be responsiblefor drug trafficking.

A range of well-placedsources, including figures at theairport, told Fairfax that the

allegedly corrupt officers’ activ-ities included:■ Allowing drug-filled back-packs and luggage to pass freelythrough customs controls.■ Allowing drug money to besmuggled through the airportand out of Australia to fund theresupply of drugs to be smug-gled back through the airport.■ Manipulating staff rosters andusing CCTV black spots to allowcorrupt activity, including drugtrafficking, to go undetected.

A high-level internal customsmemo in November 2007warned that customs’ internalaffairs unit had “insufficientcase management resourcesand capability”, and that despitecalls for anti-corruption reforms“no action has been taken at thistime”.

In 2007, 2008 and 2009,internal memos called for betteranti-corruption intelligencegathering, drug and alcoholtesting and “the mandatoryreporting of fraud, corruption,

serious misconduct and admin-istrative breaches”.

Customs only began introdu-cing many of these reforms thisyear, and some will not be inplace until next year, althoughin 2011 the agency fell under thejurisdiction of ACLEI.

Mr Carmody resigned quietlyfrom customs in August afterthe arrest of Paul Katralis.

The customs anti-corruptionreform process has been exped-ited by Home Affairs MinisterJason Clare, who is believed tohave been briefed on taskforceMarca’s work earlier this yearand to have raised concerns atcustoms’ failure to haveadequate anti-corruption meas-ures in place.

Even the simplest of thechanges called for in late 2007 –the renaming of the internalaffairs unit – took more than twoyears to implement.

Training blamed for detection failureOfficers did not see drugs in X-raysBy RICHARD BAKERand NICK McKENZIE

Former customs chief Michael Carmody has been cleared of wrongdoing. PICTURE: JOHN WOUDSTRA

FAILURE by customs officersusing X-ray equipment to detectdrugs hidden in shipping con-tainers at Sydney’s port wastreated as a ‘‘training defi-ciency’’ and not referred to theagency’s specialist investigationunit, a report has found.

The Australian Commissionfor Law Enforcement Integrityinvestigated the failure bycustoms officials as well asallegations that senior man-agers, including the agency’sformer chief executive, MichaelCarmody, sought to cover it up.

Fairfax Media has obtained aSeptember report by a lawenforcement integrity commis-sioner, Philip Moss, which clearsMr Carmody and other seniorcustoms managers of wrong-doing. But he identified short-comings in the agency’s anti-corruption procedures.

Mr Moss, whose investiga-tion was triggered by ananonymous complainant,found that customs officersusing X-ray equipment hadfailed to detect drugs in 11shipping containers betweenMarch and August last year.

The failure was discoveredafter police gave customs man-agers information that causedthem to review copies of theX-rays.

Mr Moss said the matter wasinitially treated by customs as atraining deficiency. Althoughsome senior customs officersraised the possibility of corrup-tion, the agency’s Integrity andProfessional Standards Branchwas not consulted on how thematter should be dealt with.

Mr Moss said Mr Carmodyhad been on leave when muchof this occurred and onlybecame aware of the failureafter it had already been treatedas a training problem.

He found Mr Carmody noti-fied the Australian Commissionfor Law Enforcement Integrityof the failure to detect the drugsand raised the matter with hisagency’s specialist investigationbranch.

Mr Moss had no evidence tosuggest corrupt conduct led tothe failure to notice the drugs.

In response to questionsfrom Fairfax Media, acting cus-toms chief executive MichaelPezzullo said the agency’spolicies had been tightened toensure all failures to identifydrugs and other contraband arereported to the Integrity andProfessional Standards Branch.

‘‘Our systems need to be con-tinually enhanced andimproved such that they canpick up the warning signs andallow resolute action to be takenas required. We need to pick upthe warning signs and act onthem,’’ Mr Pezzullo said.

He praised his predecessor,Mr Carmody, for driving integ-rity reforms in customs.

Mr Moss also found no evi-dence to support the suggestioncustoms staff who tried to raisecorruption issues had been dis-advantaged in their employ-ment.

But he received statementsfrom ‘‘a number of affected wit-nesses [who] expressed frustra-tion with a culture that, in theirrespective views, had insuffi-cient appreciation of corruptionrisk’’.

Appearing before a joint par-

liamentary committee thismonth, Mr Moss referred to the‘‘real and present threat to Aus-tralian law enforcement thatorganised crime poses, particu-larly at Australia’s borders’’.

The ACLEI, which overseesintegrity in the Australian Fed-eral Police and the AustralianCrime Commission, was givenresponsibility for customs inJanuary last year.

‘‘Our focus has been on cus-toms. There is no question thatit continues at the present timeand will for the foreseeablefuture. It is just that the vulner-abilities at the border in an

environment in which Customsand Border Protection works areso high,’’ Mr Moss told the com-mittee.

Mr Carmody could not becontacted for comment.

Broadinquirythe onlyanswer

From PAGE 1

importations have been aidedby customs officials or exactlyhow staff with criminal recordsand associations could be work-ing for a law enforcementagency.

The criminal inquiry beingundertaken by the AustralianCommission for Law Enforce-ment Integrity (ACLEI) and fed-eral police is gathering evidenceto prosecute drug traffickers,including customs officials.

But a criminal probe is not abroad and independent inquiryand may not be able to answermany of the serious questionsthat flow from this scandal.

And what of the public ser-vants, including senior customsmanagers, who have not com-mitted a criminal offence buthave nevertheless failed in theiroversight duties?

Leaked internal documentsdating back to 2007 reveal thatfor several years customs hasignored high-level warningsthat its anti-corruption systemwas woeful. Its failure to actpromptly on these warnings hascontributed directly to thescandal.

The good news for customsis that it has an acting CEO,Mike Pezzullo, who is viewed asfar more aggressive, dynamicand reform-driven than its for-mer boss, career public servantMichael Carmody.

Carmody resigned in August,within days of the first allegedlycorrupt customs officer beingquietly arrested and monthsafter Home Affairs MinisterJason Clare spoke publiclyabout the need for changewithin customs. If the govern-ment believes Pezzullo can drivethat change, he should beappointed CEO immediately.Now more than ever, customsneeds a permanent boss.

As for a broad inquiry, thegovernment could appoint aformer judge or senior policingofficial to lead a taskforce intothe scandal and to advise on thehandling of disciplinary casesand wide-ranging reform.ACLEI, which has royal commis-sion powers including the abil-ity to hold public hearings,could perform a similar role.

Such an inquiry may need toconduct some of its activitiesbehind closed doors so as not toprejudice the cases of chargedcustoms officers. But it shouldreport publicly, and speedily.

Until all serious questionsare answered, how can the pub-lic have confidence that theagency ostensibly at the fore-front of the battle against drugtrafficking is not hosting its ownsmugglers.

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DRUG ABUSE ANDTHE BOOMERS

Shane Green INSIGHT

THE YEAR OF LIVING DISGRACEFULLYMaking headlines in 2012 GOOD WEEKEND

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A Mumbai man known only as Sanjay has spent thepast nine months living in a guava tree because hiswife refuses to say sorry after he caught her cheatingon him with a neighbour. Sanjay, 25, survives on fruitfrom the tree and food handed up by relatives.

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IN THEIR

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gun controlINSIGHT

ON THE EDGE

The fi scal cliffBUSINESSDAY

BEAUTY ANDTHE BUGLIFE&STYLE

Smuggled guns: customs officers lied about scanEXCLUSIVEB Y N I C K M c K E N Z I EA N D R I C H A R D B A K E RA G E I N V E S T I G AT I V E U N I T

C O N T I N U E D PA G E 6

UP TO two dozen illegalhandguns – including somebought by Sydney crime gangs– passed through Port Botanyafter customs officers falsifiedpaperwork to wrongly claimthey had X-rayed the containerin which the weapons werehidden.

A six-month Fairfax Mediainvestigation – conducted in

association with the ABC’s 7.30Report – can also reveal that cus-toms is investigating about 100criminal allegations involving itsstaff – the highest number in theagency’s history – and hasreceived more than 1300 allega-tions of misconduct since 2008.

It has also emerged that act-ing Customs Service CEOMichael Pezzullo was frozen outof parts of the federal police’sprobe into corruption at SydneyAirport because his brother, acustoms officer, works and asso-ciates with several members ofthe allegedly corrupt customsairport cell.

In other revelations, whichcome after Thursday’s expose ofan allegedly corrupt cell of cus-toms officers at Sydney Airport:■ Dozens of pages of sensitivecustoms documents were leakedto a crime syndicate controlledby drug and illegal tobaccosmuggler Mohamad Jomaa, whoran a syndicate that boasted ofhaving several contacts insidecustoms.■ A joint police taskforce hasidentified up to 12 suspectedcorrupt customs officials work-ing on NSW’s maritime bordersecurity, adding to the cell of 15allegedly corrupt officers at

Sydney Airport, including somestill working there.■ Employees of Menzies AviationServices with federal govern-ment security clearances arebeing investigated over theirlinks to alleged drug traffickingwithin customs. Menziesprovides baggage handling ser-vices at the airport.

The smuggled handgunswere identified by a police oper-ation codenamed Otford, whichdiscovered that the guns weresmuggled in engine parts that asmall number of customsofficers falsely claimed they hadscanned. Further investigations

found that the officers falsifiedpaperwork to give the engineparts the all-clear.

While the customs officerswere caught lying about theirfailure to scan the container,there is no evidence they knew itcontained guns.

It is unclear if any of thesmuggled guns, which includedfour semi-automatic pistolsrecovered by police, were used inany of Sydney’s spate of gang-land killings.

Customs has dealt with thecase as a matter of misconductand incompetence and said in astatement that the officers

involved had been subject to“code of conduct provisions”and in October “receivedremedial training and workplacecounselling”.

However, senior NSW policeare believed to have been furiousabout customs’ role in the affair,especially after it followed astring of so-called “misdetec-tions” by customs staff of drugshipments.

Regarding the ongoing air-port probe, there is no sugges-tion that Mr Pezzullo’s brother isinvolved in corruption. (Fairfaxmade several attempts to

s

’Tis theseasonto bejollywell sadB Y D I J A N A D A M J A N O V I CA N D A M Y C O R D E R OY

SEASONAL stress and theglobal economic gloom aremaking Christmas less thanmerry for thousands ofworkers.

People are overloaded,dissatisfied and increasinglyanxious, figures from Australia’slargest provider of workplacecounselling services show.

The chief executive of David-son Trahaire Corpsych, MicheleGrow, said Christmas was a timewhen workers increasingly feltfamily and financial pressures,which were now combining withpressure from workplaces undereconomic strain.

An increase in the number ofcompanies making staff redun-dant around the middle of theyear was beginning to take itstoll, she said.

‘‘Of course, redundancyimpacts the people who go, butthere is generally a much biggerimpact on the people who stay,’’she said.

‘‘When an organisationdownsizes, it is very rare thework has gone away.’’

In the approach to Christmasthis year, the company has recor-ded an 87 per cent increase incalls related to workload issuesand a 73 per cent increase inworkplace satisfaction issuescompared with the same periodlast year.

Calls about work/life balance,issues with superiors, personalstress and financial issues havealso increased.

Davidson Trahaire Corpsychreceives more than 200,000 callseach year, and Ms Grow said thenature of the calls tended tochange during the festiveseason.

‘‘Particularly in December, wesee an increase in perceivedharassment behaviour fromend-of-year events,’’ she said.

And the hangover continuesuntil January, when calls aboutfamily, relationship and financialproblems pick up.

The chief executive ofbeyondblue, Kate Carnell, saidwhile the national depressioninitiative did not receive morecalls around Christmas, thenature of calls changed.

‘‘We certainly get an increasein the number of people who aredoing it tough, particularly withfamily issues . . . people who aredivorced and aren’t with theirkids or people who have lostsomeone in the past 12 months,’’she said.

‘‘People are all underincreased stress, and stress is amajor precursor to depressionand anxiety.’’

THEY SAID IT‘We’re getting back into surplus in three

years ... Come hell or high water’Wayne Swan, August 2010

‘[Delivering a 2012-13 surplus] is right for confi dence and it’s right for jobs. It’s the right economic policy for the times.’

Wayne Swan, ABC Radio National, 30 November 2011

‘We are determined to deliver a budget surplus, we stand

by the forecasts and we’re on track to deliver it.’

Julia Gillard, 5 November 2012

‘Dramatically lower tax revenue now makes it

unlikely that there will be a surplus in 2012-13.’

Wayne Swan, 20 December 2012

PICTURE: AAP

B Y C L A N C Y Y E AT E S

Swan dumps surplus pledge

C O N T I N U E D PA G E 2

Malcolm Maiden comment PAGE 2FORUM

Michelle Grattan PAGE 22

WAYNE Swan has ditched hislong-held promise to deliver abalanced budget this financialyear, saying a ‘‘sledgehammerhit’’ to government revenuemeant a return to surplus wasunlikely without resorting todamaging spending cuts.

After new figures showed taxreceipts during the first third of

this financial year were $3.9 bil-lion lower than expected, theTreasurer said it would beirresponsible to make furthercuts in the quest for a balancedbudget.

Mr Swan was unable to saywhen the budget would return tosurplus, and said he did not careabout the political significanceof walking away from the pledge.

Labor has been promising asurplus in 2012-13 since May

2010, but Mr Swan said theglobal economic slump and thestubbornly high Australian dollar

had sparked a $20 billion write-down of tax receipts this yearalone. Filling the revenue holewould require further cuts topublic spending, he said, whichrisked hurting the economy andpushing up unemployment.

‘‘What we’ve seen is a sledge-hammer hit our revenues,’’ hesaid.

‘‘At this stage, I don’t think itwould be responsible to cutharder or further in 2012-13 to

fill a hole in the tax system if thatputs jobs or growth at risk.’’

The main hit to the budget’sbottom line has come from asharp deterioration in businesstaxes. Weaker commodity priceshave taken a hefty toll on miningprofits, while other industriessuch as manufacturing and tour-ism have been squeezed by thehigh dollar.

Opposition Leader TonyAbbott said the decision was a

fundamental policy failure, andsought to liken it to Prime Minis-ter Julia Gillard’s promise beforethe 2010 election not introduce acarbon tax.

Mr Swan stressed the govern-ment had not been loosening itspurse strings, with public

METAGE A006

N E W S6 THE SATURDAY AGE HOLIDAY EDITION, DECEMBER 21-22, 2012

Focus on future bestfor young criminalsB Y J A N E L E E L E G A L A F F A I R S R E P O R T E R

YOUNG criminals are lesslikely to reoffend when juven-ile justice supervisors focuson their future potentialrather than past behaviour.

According to Monash Uni-versity professor Chris Trotter,who observed 46 juvenilejustice officers in interviewswith 117 offenders in NewSouth Wales over four years,workers who took a ‘‘non-blaming’’ approach thatfocused on positive outcomes –finding a job, avoiding friend-ships with criminal peers –reduced the likelihood that theyoung criminals would reoffendtwo years on. This was in linewith previous studies involvingadult offenders.

‘‘The worker takes a viewthat the young person has donesomething wrong and that’s afact but this is simply the past.They think, ‘What can we donow between you and me tohelp you to develop a more pro-social lifestyle regardless ofwhat you’ve done?’ ’’ ProfessorTrotter said. ‘‘[They focus] lesson threats and pointing outconsequences and more on‘what you can be in the futureand how I can help you to getthere’.’’

He said this helped ‘‘theyoung person to see their

potential to have a better lifefree of crime’’ and to deal withthe areas in their lives wherethey struggled – includingemployment, peer groups, druguse and family issues – that hadoften led to the criminal beha-viour.

While most of the officers heobserved in the study, releasedthis week, did this ‘‘well’’, hesaid those who did it better sawbetter results.

Professor Trotter said youngpeople with supervisors whofailed to do this, making ‘‘noattempt to help the young per-son understand the purpose ofsupervision and . . . appeared tobe punitive or blaming’’, weremore likely to reoffend in thatperiod.

About 90 per cent of youngpeople in NSW and Victoriaunder juvenile justice super-vision were supervised in thecommunity, with the rest indetention.

Professor Trotter could notcomment on the extent towhich the ‘‘non-blaming’’approach was currentlyemployed. ‘‘The willingness ofthe juvenile justice system inNSW to expose the practice ofthe work, to allow an academicto come in, watch what’s hap-pening and use it to furtherdevelop skills – this has hardly

ever happened anywhere in theworld,’’ he said.

Supervisors were oftensocial work graduates and vis-ited offenders weekly for abouta year on average, dependingon the court order. While theywere trained in best-practicetechniques, they used a mixtureof different approaches, and itwas largely up to them howthey helped individual offend-ers, he said.

‘‘Very skilled’’ supervisorscould halve the likelihood ofreoffending, whereas ‘‘lessskilled’’ workers had less impacton young people, he said.

Professor Trotter said thestudy, funded by the AustralianInstitute of Criminology, couldaffect the way youth justiceofficers were selected andtrained, as ongoing training insuch skills could help furtherreduce recidivism rates.

‘‘There is potential for wide-spread reductions in recidivismif juvenile justice organisationsprescribe a counselling role tosupervisors and employ staffwith relevant qualifications,’’the study said. ‘‘Ongoing train-ing and supervision focused oneffective practice skills mayprovide for further reductionsin reoffending.’’

The juvenile justice officersobserved had an average of10 years’ experience working inthe system.

FREE ‘By her side was a man many would consider detrimental to her image’

Bail granted afterwhite knight fails

Model and make-up artist Krystle Hill reacts after getting bail in Sydney. PICTURE: JAMES BRICKWOOD

B Y L I S A D A V I E S

‘Lamella allegedly gavethem strict instructions ‘notto get too dressed up’.’

SHE spends six months of theyear in the south of France andclaims to ‘‘live and work withbeautiful energies’’, but make-up artist Krystle Hill walkedout of a holding cell on Thurs-day with a less glamorous tag –alleged drug mule.

Hill was bailed on charges sheconspired with her customsofficer boyfriend, AdrianLamella, to import a commercialquantity of a border-controlledprecursor, pseudoephedrine.

In a bizarre twist, by her sideas she was whisked fromSydney’s Central Local Courtcells on Thursday was a manmany would consider detri-mental to her image – colourfulSydney identity ‘‘Big Jim’’ Byrnes.

After his long history of dal-liances with law enforcement, hetried to be her knight in shiningarmour – unfortunately a priorcriminal history meant he couldnot be deemed an ‘‘acceptableperson’’ to deposit $20,000 toensure her freedom.

Police allege that betweenMay and June 2009, Hill wasasked by Lamella to travel toThailand with an accomplice,and return with 10 kilograms ofpseudoephedrine betweenthem.

Police documents allegeLamella told the women theirreturn to Australia would beunimpeded, because ‘‘theywouldn’t be searched as he wasworking as a customs officer thatday’’.

He allegedly gave them strict

instructions ‘‘not to get toodressed up’’ as they would draw‘‘too much attention to them-selves’’.

They arrived back on ThaiAirways flight TG993 on June 19,2009.

Lamella allegedly offered fel-low customs worker Paul Katralisvials of human growth hormoneworth up to $1800 and $5000cash to help facilitate their safepassage through, although hewas ultimately unable to assist ashe was moved to other dutiesthat day.

In any event, the women werenot searched, but police allegetheir incoming passenger cardswere destroyed or otherwise nothanded to immigration authori-ties.

Hill’s barrister, Wayne Baffsky,argued the case against his clientwas not strong, and ultimatelythe magistrate agreed.

While Mr Byrnes offered todeposit the $20,000 suretyrequired for bail to be finalised,the Crown objected and anotherwoman paid the money.

Never known for shyness, MrByrnes attended the court topersonally offer his support toHill anyway, the pair having metrecently.

The case was adjourned toFebruary 27, and Hill has beenordered to report to Rose Baypolice twice a day.

Overhaul tackles corrupt customs cultureB Y M E G A N L E V Y A N D H A R R I E T A L E X A N D E R

‘You’ve got to changethe culture . . .’JASON CLARE, Home Affairs Minister

THE federal government hasadmitted that the culture of theAustralian Customs and Bor-der Protection Service needs amajor overhaul, followingallegations that some of itsofficers have been involved indrug trafficking, money laun-dering and organised crime.

Home Affairs Minister JasonClare said on Thursday that anew board had been appointedto root out corruption in the cus-toms service, including JusticeJames Wood, who oversaw aroyal commission that exposedcorruption in the New SouthWales police force.

But he said details on how thestructure and culture of the cus-toms service would be reformedwould not be announced untilnext year.

‘‘You’ve got to change the cul-

ture of the organisation,’’ he said.‘‘You’ve got to create an organ-isation where it’s not acceptableto turn a blind eye; where it’s notacceptable not to reportsomething where you see ithappening.

‘‘The federal police has got adifferent standard here. My viewis that customs need to be at thatsame standard, because they’reat the same risk of being corrup-ted by organised crime.’’

A six-month joint investiga-tion between Fairfax Media andthe ABC’s 7.30 has revealed thatat least 15 officials in SydneyAirport border security posts aresuspected of involvement inserious misconduct or corrup-tion. The number may be as highas 20.

Their alleged conductranges from criminal associationand leaking information to

drug trafficking, drug manu-facturing, money laundering andbribery.

The Australian Federal Policeannounced on Thursday thateight people had been arrestedover suspected airport drugtrading, including a customsofficer and a quarantineinspector. They are believed tobe members of a syndicateexploiting major gaps in airport

and customs security at SydneyAirport.

Australian Federal PoliceCommissioner Tony Negus saidit would be alleged that courierswere sent overseas to collectdrugs before returning throughcustoms with the help of peoplein ‘‘trusted positions’’.

‘‘Certainly, what has beenalleged before the courts so far isthat the customs officersinvolved in this would meet drugcouriers off the plane,’’ he said.‘‘They would then walk themthrough the primary line ofcustoms and then out into thewaiting hall, so they wouldfacilitate their entry through thenormal checks and the normallaw-enforcement processes thateveryone goes through whenthey enter this country.

‘‘It will be alleged that they[customs officers] certainlyplayed a role in organising thecouriers themselves to go over-seas, and to actually facilitatetheir collection of the narcoticsoverseas, and then again playeda key role in bringing them backthrough the airport without anydetection or any scrutiny fromthe normal process.’’

Mr Clare said three ‘‘distin-guished Australians’’ had been

appointed to the new CustomsReform Board, which wouldreport directly to him. They areJustice Wood, former NSWpolice commissioner KenMoroney, and David Mortimer,the former CEO of TNT Limited,former deputy chairman ofAnsett and former chairman ofAustralia Post and LeightonHoldings.

Major reforms had alreadybeen introduced to the Austra-lian Customs and Border Protec-tion Service this year as a resultof the AFP investigation, includ-ing covert operations to test theintegrity of customs officers, anddrug and alcohol testing, MrClare said.

Customs and Border Protec-tion Service acting chief MichaelPezzullo said he was disappoin-ted but not surprised by the cor-ruption revelations.

He said nobody had beenstood down from their jobs.

Paedophiles in jail porn ringB Y N O E L TO W E L L

CONVICTED paedophiles inCanberra’s jail have allegedlyset up a pornography ring,sharing electronic images ofchild sex abuse under thenoses of prison guards.

Several investigations areunder way into how the threeprisoners, including two of theACT’s most dangerous child sexpredators, were able to obtainand share files containing thematerial while serving theirsentences at the AlexanderMaconochie Centre.

It is even alleged that a childpornography website washosted from within the prisonbefore police swooped on thejail on Tuesday. The ACTgovernment’s Justice andCommunity Safety directorateis set to come under intensescrutiny in coming days toexplain how the alleged ringwas allowed to develop.

Fairfax Media has estab-

lished that digital TV set-topboxes, legitimately obtainedwith the knowledge of correct-ive authorities, personal videorecorders and USB portablehard drives were allegedly usedto store and distribute thematerial.

The prison’s intelligence unitbegan passing information tojail authorities about the men’ssuspected activities months agobut it is unclear what led to thedelay in calling in police.

Central to the alleged plotwas a laptop computer that afourth prisoner, who has sincebeen released, had permissionto bring into the jail despite themisgivings of some guards.

The USB drives, which looklike cigarette lighters in prisonX-ray security screeningimages, are easy to smuggleinto jail and can be pluggedinto ports on the set-top boxes.

The technical expertise isbelieved to have been shared byan offender, who cannot benamed for legal reasons, who

served four years of a nine-yearsentence over what a judgedescribed as ‘‘premeditated andpredatory’’ rapes of a 10-year-old boy.

The paedophile, an ITexpert, was deported to hisnative South Africa after servinghis four year non-parole periodand being found to have beenof good behaviour while in jail.

But before his release he wasallowed to have a laptop com-puter, which allegedly led to thedevelopment of the child pornring. Another man suspected tobe involved is serving a 16-yearsentence for offences againstyoung boys. He has beendescribed as a computer expert.

A police spokesman con-firmed detectives were examin-ing several devices seized onTuesday. ‘‘ACT Policing’s Crim-inal Investigation detectivesconducted a search . . . andseized several items suspectedto contain child exploitationimages,’’ he said.

With LOUIS ANDREWS

Smuggled guns: customs officers lied about scanning containerF R O M P A G E 1

contact Mr Pezzullo’s brotherbut was not successful.)

One of the aspects of theprobe is whether customs staffnot involved in corruption nev-ertheless knew that some oftheir colleagues may have hadinappropriate associations ormay have been engaged inquestionable behaviour in oroutside of work hours. At leastfour customs officers still work-ing at Sydney Airport attendedthe court case of an allegedlydrug-using officer withoutinforming their bosses.

Asked about his brother’srelationship with suspectedcorrupt customs officials, MrPezzullo said: “I was advised bythe previous CEO that I was tobe excluded from all briefingsand information related toallegations concerning possiblecorrupt activities at Sydney Air-port on the basis that I had afamily member who worked atthe airport.”

Of the suspected corruptcustoms officers on the water-front identified by the joint-agency Polaris taskforce, sev-eral are suspected to beinvolved in facilitating illegal

tobacco or drug importations.A confidential Polaris report

from this year states that theCustoms Examination Facilityat Port Botany has been “infilt-rated” by criminals.

“Polaris investigationsdemonstrate links between CEFstaff [including customsofficers] and criminal syndi-cates which are involved in theimportation of illicit drugs andtobacco into Australia,” it says.

One of the customs officialssuspected to be aiding mari-time drug and tobaccoimportations was allowedaccess to highly sensitive

information despite having twobrothers known to NSW policeas drug traffickers.

This officer was also one ofat least two customs staff withstrong ties to a crime syndicateled by convicted drug traffickerMohamad Jomaa, as well as totwo alleged tobacco smugglerswho are currently before courtand are facing charges of brib-ing a third customs official.

Asked about the suspectedcorrupt customs officer withlinks to Mohamad Jomaa, MrPezzullo told Fairfax that he“chose to resign while customs.. . was making an assessment

of his suitability to continue tohold a security clearance”.

Dirk Scott, the general man-ager of Menzies Aviation, saidon Thursday that he had heardnothing from federal police orthe federal government aboutany of his staff having suspec-ted links to allegedly corruptcustoms officers or crimefigures.

Allegations of corrupt bag-gage handlers emerged in 2004after supporters of SchapelleCorby alleged that airport staffhad put drugs in her boogieboard bag. Federal police laterdiscredited these claims.

Health academic killed in TasmaniaB Y A N D R E W D A R B Y H O B A R T

AN ACADEMIC known as aninternational founding fatherof health economics, GavinMooney, is said to have beenmurdered in southern Tas-mania.

Professor Mooney and hispartner Delys Weston werefound dead by police called totheir rural home by her 27-year-old son, according to the ABC.Nicholau Francisco Soares hasbeen charged with theirmurders.

Police said they were calledto a house at Mountain River,

south of Hobart, early onThursday, where the couplewere found dead with severehead injuries.

Professor Mooney, 69, andMs Weston moved to Tasmaniain 2011 from Perth, where hehad been director of the Socialand Public Health EconomicsResearch Group and professorof health economics at CurtinUniversity.

His book Challenging HealthEconomics was published in2009, and his website said hewas working on two otherbooks, on citizens’ juries in

healthcare, and on healthcarereform. In June 2009 he wasawarded an honorary degree insocial sciences by the Uni-versity of Cape Town as ‘‘one ofthe founding fathers of healtheconomics’’, and he consultedon priority setting, equity,Aboriginal health and socialdeterminants of health.

Ms Weston studied the polit-ics of genetic engineering.

‘‘It’s just one of those tragicsituations, unfortunately,’’Detective Inspector PeterPowell said.

Soares, from Fremantle, wasto face court later on Thursday.

With AAP