EG TODAY LIVE & LEARN

On set with prisoner Hugh Jackman in France for Les Miserables Victorias most-improved school PLUS T The states top schools NEWS, LIFTOUT
Full details PAGE 17 F

TODAYS WEATHER Becoming dry 14-23

PUBLISHED IN MELBOURNE SINCE 1854

THURSDAY, DECEMBER 20, 2012

INC $2 GST

CUSTOMS IN CRISIS A SPECIAL INVESTIGATION

Airport in grip of drug trade

Sydney customs officers linked to organised crime
By NICK McKENZIE and RICHARD BAKER
AGE INVESTIGATIVE UNIT
AN ENTRENCHED network of allegedly corrupt customs officers at Sydney Airport has been importing drugs with organised crime figures for several years in one of Australias most serious corruption scandals. At least 15 officials in Sydney Airports border security posts are suspected of involvement in serious misconduct or corruption, ranging from criminal association and leaking information to drug trafficking, drug manufacturing, money laundering and bribery. The number may be as high as 20. A six-month Fairfax Media investigation conducted in association with the ABCs 7.30 program can reveal that the cell has been exploiting major gaps in airport and customs security to smuggle millions of dollars of narcotics and drug money past border controls and on to Australias streets. Corrupt airport baggage handlers are also allegedly involved. The allegedly corrupt cell has been operating since at least 2009 from the international passenger terminal and freight section and is suspected to have imported pseudoephedrine, cocaine, steroids and possibly weapons. Property, court and business records, social media sites and multiple well-placed sources link members of the cell to Sydney-based crime figures, including underworld figure Alex Little Al Taouil, drug traffickers Joseph Harb and Diego Refojos and members of the Comancheros outlaw bikie gang and Middle Eastern crime groups. The scandal is regarded as extremely serious because of the scale of the alleged corruption and the failure of the Customs Service which was led until August by career public servant Michael Carmody to act on multiple warnings that the organisation was badly exposed to corruption. The customs agency has employed officers with known criminal associations and allowed relatively junior officers to wield significant influence over other staff by having the power to manage rosters. Leaked customs documents dating back to 2007 detail multiple internal warnings that customs lacked the power, resources and ability to detect corruption and that its anticorruption framework was outdated and requires revision. In response to a series of questions sent to customs on Monday, acting customs CEO Mike Pezzullo stressed that the agency had already made major improvements to its corruptionbusting system. But Mr Pezzullo conceded more needs to be done and revealed he would take all necessary action, including the launching of an agency-wide review of workplace culture, management and leadership ... to ensure the integrity of our workplace. He also said that while customs internal oversight systems had helped to identify corruption risks at Sydney Airport in 2011, clearly more can be done. Fairfax and the ABC have

TRAFFIC CONTROL

Up to 15 allegedly corrupt customs officials at Sydney Airport

THE RESPONSE FROM CUSTOMS

Anti-corruption measures
Sweeping review of culture, management and leadership Give CEO new powers to deal with suspected corrupt officers p 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

Sweeping inquiry the only answer

RICHARD BAKER AND NICK McKENZIE
MEET the new targets of Australias corruption fighters. They are young, often in their 20s, mostly fresh faced and fit, but for whom a night out means a few ecstasy pills or some cocaine. Through friends, family, the gym or the clubbing scene, they know bikies and organised criminals who, like them, are often relatively young and muscled up. On Facebook, where they freely document their night life, these corruption targets look much like their underworld friends. They pose with their shirts off, muscles flexed and tattoos on display, or with their arms around similarly buff, inked-up mates or skimpily dressed female companions. Some of these targets even proudly state on their Facebook page who they work for: the Australian Customs and Border Control Service. The scandal exposed today has lifted the lid on the dismal vetting, oversight and culture that has allowed alleged drug trafficking and serious corruption to become entrenched among small cells of customs officers. It is too early to say how many successful drug

ANALYSIS

PAUL ADRIAN LAMELLA

Customs 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.

PAUL KATRALIS
Customs officer, Sydney Airport
Charged in October with drug trafficking and corruption offences.

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

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

ALEX LITTLE ALEX LITTLE LITTLE AL TAOUIL

Underworld figure

JOSEPH HARB JOSEPH HARB OSEPH ARB

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

DIEGO DIEGO IEGO REFOJOS

Drug trafficker

Previous official warnings to customs to act on corruption

HOW THEY GET THE DRUGS THROUGH SYDNEY AIRPORT

Allowing drug filled Enabling drug money luggage to pass freely to be smuggled out of through customs controls 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

Internal memos warn that the agencys anti-corruption policy is outdated and requires revision.

Continued PAGE 2 Editorial PAGE 14

Continued PAGE 2

Questions on Geoff Shaw fund-raiser Italian charity faces police scrutiny

EXCLUSIVE
By ROYCE MILLAR and MELISSA FYFE
AGE INVESTIGATIVE UNIT
EMBATTLED Liberal MP Geoff Shaw is under pressure on a new front with a cloud now hanging over a fund-raising club he appears to have run in his Frankston electorate not registered with the Australian Electoral Commission. Emails from Mr Shaw, obtained by The Age, show he has been a key player in what he describes as the 1500 CLUB and my 1500 CLUB which generated funds for the Liberals, including the successful 2010 Frankston election campaign. They reveal he was a key figure behind the club, which received $1500 from developers and other business figures in return for benefits, Geoff Shaw including free access to events with MPs and celebrity figures. One such event was a $120-a-head dinner in July 2010 that featured Olympic rower James Tomkins as a guest speaker. Invitations to this and other fund-raising events were sent out by Mr Shaws private company, Geoff Shaw & Partners. News of the activities of the little-known club raise questions about whether it conforms with Commonwealth electoral laws and the partys fund-raising rules at the time. Last year, the Victorian party faced an embarrassing probe by federal electoral authorities after Fairfax Media revealed the activities of a string of supporter clubs across Melbourne that appeared to be operating in breach of electoral laws. Chief among them was Business First, another southern suburbs club founded by Liberal-aligned lobbyist Geoff Leigh and upper house MP Inga Peulich. Failure to make appropriate disclosures is an offence punishable by a fine. While the Liberal Partys supporter groups have since publicly disclosed their activities on the electoral commission website, Mr Shaws 1500 club remains unknown to authorities. State party director Damien Mantach declined to respond to a series of questions, instead releasing a one-line statement: The fund-raising conducted by the Frankston electorate conference complies with electoral laws and adheres to the fundraising code of conduct, he said. Premier Ted Baillieu faces a growing headache over Mr Shaw, who has been at the centre of a slew of controversies, including the misuse of public resources. Mr Baillieu did not comment.

By ROYCE MILLAR and MELISSA FYFE

AGE INVESTIGATIVE UNIT
POLICE are assessing a report alleging inappropriate financial conduct at a Melbourne-based charity run by some of Australias leading Italian community figures. The Carlton-based CO.AS.IT, funded by the Australian and Italian governments, is a welfare, education and cultural organisation for Italian migrants. A Victoria Police spokeswoman confirmed that police are assessing a report alleging inappropriate conduct. As this process remains under way, it would be inappropriate to comment further at

Got a tip?
investigations@theage.com.au

this stage, the spokeswoman said. Fairfax Media is also aware that senior ranks of the Health Carlo Carli Department have raised issues concerning CO.AS.ITs handling of home-based support services for Italian senior citizens. The allegations to the police come after growing unease among some members of Melbournes Italian community about the operations of CO.AS.IT. Former Victorian MP for Brunswick Carlo Carli has

recently questioned management about a previously unknown entity called the Italian Services Institute, which appears to have received millions of dollars of donations from CO.AS.IT in the past decade. Mr Carli briefly worked for CO.AS.IT managing its heritage centre, Museo Italiano, but was retrenched on the grounds of irreconcilable differences when he started asking questions about the charitys operations. CO.AS.IT chief executive Giancarlo Martini-Piovano has been in his role since 1974. The only thing I can say is that CO.AS.IT has done nothing wrong, in every sense, and I have not got anything else to say, he said.

At CO.AS.ITs general meeting in November, management refused to answer members questions about the charitys finances.

The allegations to the police come after growing unease.

Meanwhile, concerns about the organisation have been raised twice in the Italian parliament by politicians with particular concern for expatriate Italian communities. CO.AS.IT has substantial land holdings in Carlton. It also runs a childcare centre and a travel agency and supports the teaching of Italian in Victoria.
ISSN 0312-6307

WEATHER
MELBOURNE Becoming dry 14 23 BALLARAT Becoming dry 8 21 BENDIGO Dry day 14 26 GEELONG Becoming dry 12 22 HORSHAM Mostly sunny 8 26 MILDURA Dry day 13 30 SALE Morning rain 14 22 WARRNAMBOOL Showers 10 20 WODONGA Early shower 16 28 Details PAGE 17

MELBOURNE DAMS

ODD SPOT
Middlesbrough job seeker Jack Hill, 18, is so desperate for work he has advertised himself in a newspaper for sale page with a price tag of 2.50 ($A3.85) for anyone willing to give him an unpaid trial as a mechanic. It ran alongside ads for toys, prams, cots, keep-fit gear and used bikes.

INDEX
ARTS CLASSIFIEDS COMMENT & DEBATE EDITORIALS, LETTERS MINDGAMES PAGE PAGE PAGE PAGE PAGE 13 12 15 14 16 OBITUARIES SHARES TELEVISION TRIBUTES WORLD PAGE 16 BUSINESSDAY 8, 9 PAGE 17 PAGE 12 PAGES 8-10

A YEAR AGO: 35.3% AGO: 66.5%

81.2 48.3%

9 770312 630042

Be the best Santa you can be.

With a little Optus joy.
Visit optus.com.au/prepaid
SingTel Optus Pty Limited ABN 90 052 833 208.
METAGE A001

OPTUS15426/AGE/STRIP2

2
SUBSCRIBE & SAVE

THE AGE THURSDAY, DECEMBER 20, 2012

CUSTOMS IN CRISIS

13 66 66 subscribers.theage.com.au
Watch the paper come to life using your iPhone* wherever you see this symbol:

Training blamed for detection failure

Officers did not see drugs in X-rays
By RICHARD BAKER and NICK McKENZIE
FAILURE by customs officers using X-ray equipment to detect drugs hidden in shipping containers at Sydneys port was treated as a training deficiency and not referred to the agencys specialist investigation unit, a report has found. The Australian Commission for Law Enforcement Integrity investigated the failure by customs officials as well as allegations that senior managers, including the agencys former chief executive, Michael Carmody, sought to cover it up. Fairfax Media has obtained a September report by a law enforcement integrity commissioner, Philip Moss, which clears Mr Carmody and other senior customs managers of wrongdoing. But he identified shortcomings in the agencys anticorruption procedures. Mr Moss, whose investigation was triggered by an anonymous complainant, found that customs officers using X-ray equipment had failed to detect drugs in 11 shipping containers between March and August last year. The failure was discovered after police gave customs managers information that caused them to review copies of the X-rays. Mr Moss said the matter was initially treated by customs as a training deficiency. Although some senior customs officers raised the possibility of corruption, the agencys Integrity and Professional Standards Branch was not consulted on how the matter should be dealt with. Mr Moss said Mr Carmody had been on leave when much of this occurred and only became aware of the failure after it had already been treated as a training problem. He found Mr Carmody notified the Australian Commission for Law Enforcement Integrity of the failure to detect the drugs and raised the matter with his agencys specialist investigation branch. Mr Moss had no evidence to suggest corrupt conduct led to the failure to notice the drugs. In response to questions from Fairfax Media, acting customs chief executive Michael Pezzullo said the agencys policies had been tightened to ensure all failures to identify drugs and other contraband are reported to the Integrity and Professional Standards Branch. Our systems need to be continually enhanced and improved such that they can pick up the warning signs and allow resolute action to be taken as required. We need to pick up the warning signs and act on them, Mr Pezzullo said. He praised his predecessor, Mr Carmody, for driving integrity reforms in customs. Mr Moss also found no evidence to support the suggestion customs staff who tried to raise corruption issues had been disadvantaged in their employment. But he received statements from a number of affected witnesses [who] expressed frustration with a culture that, in their respective views, had insufficient appreciation of corruption risk. Appearing before a joint par-

Get started in three easy steps 1. Download the latest Age app from the App Store. 2. Press the AirLink button. 3. Scan the photograph with an AirLink symbol.
*Compatible with iPhone 3GS, 4, 4S, 5

Broad inquiry the only answer

From PAGE 1
importations have been aided by customs officials or exactly how staff with criminal records and associations could be working for a law enforcement agency. The criminal inquiry being undertaken by the Australian Commission for Law Enforcement Integrity (ACLEI) and federal police is gathering evidence to prosecute drug traffickers, including customs officials. But a criminal probe is not a broad and independent inquiry and may not be able to answer many of the serious questions that flow from this scandal. And what of the public servants, including senior customs managers, who have not committed a criminal offence but have nevertheless failed in their oversight duties? Leaked internal documents dating back to 2007 reveal that for several years customs has ignored high-level warnings that its anti-corruption system was woeful. Its failure to act promptly on these warnings has contributed directly to the scandal. The good news for customs is that it has an acting CEO, Mike Pezzullo, who is viewed as far more aggressive, dynamic and reform-driven than its former boss, career public servant Michael Carmody. Carmody resigned in August, within days of the first allegedly corrupt customs officer being quietly arrested and months after Home Affairs Minister Jason Clare spoke publicly about the need for change within customs. If the government believes Pezzullo can drive that change, he should be appointed CEO immediately. Now more than ever, customs needs a permanent boss. As for a broad inquiry, the government could appoint a former judge or senior policing official to lead a taskforce into the scandal and to advise on the handling of disciplinary cases and wide-ranging reform. ACLEI, which has royal commission powers including the ability to hold public hearings, could perform a similar role. Such an inquiry may need to conduct some of its activities behind closed doors so as not to prejudice the cases of charged customs officers. But it should report publicly, and speedily. Until all serious questions are answered, how can the public have confidence that the agency ostensibly at the forefront of the battle against drug trafficking is not hosting its own smugglers.

FAITH
Muslim Prayer Times F: 3.59 S: 5.54 D: 1.18 A: 5.12 M: 8.42 I: 10.29. Text for Today Jesus parents were surprised at what Simeon had said. Then he blessed them and told Mary, This child of yours will cause many people in Israel to fall and others to stand. Luke 2:33-34a

LOTTERIES
Wednesday Lotto (draw 3201): 16, 9, 36, 12, 29, 18. Supplementaries: 42 and 38. Super 7s Oz Lotto (draw 983) dividends: Division 1, $40,000,000; division 2, $30,754.90; division 3, $3,916.65; division 4, $344.60; division 5, $41.10; division 6, $22.40; division 7, $15.25.

VICE-REGAL
The Governor and Mrs Chernov hosted a breakfast in honour of Madame Xu Jinrong, Vice-Governor of Jiangsu. The Governor presided over a meeting of the Executive Council at the Old Treasury Building. The Governor received Mr Geoffrey Conaghan, Victorian commissioner to India. LINK: governor.vic.gov.au

Former customs chief Michael Carmody has been cleared of wrongdoing.

liamentary committee this month, Mr Moss referred to the real and present threat to Australian law enforcement that organised crime poses, particularly at Australias borders. The ACLEI, which oversees integrity in the Australian Federal Police and the Australian Crime Commission, was given responsibility for customs in January last year. Our focus has been on customs. There is no question that it continues at the present time and will for the foreseeable future. It is just that the vulnerabilities at the border in an

PICTURE: JOHN WOUDSTRA

environment in which Customs and Border Protection works are so high, Mr Moss told the committee. Mr Carmody could not be contacted for comment.

Customs officers implicated as drug trade grips airport

From PAGE 1
traced drugs seized last March by NSW police in an apartment in the Sydney suburb of Woolooware to one of several drug consignments allegedly smuggled past border controls by customs officials at Sydney Airport. Diego Refojos, 24, recently pleaded guilty in the NSW District Court to serious drug offences connected to the Woolooware raid. It is believed Refojos was linked to several earlier drug importations that have never been recovered by authorities. It is understood that two allegedly corrupt customs officials were at the Woolooware apartment before the raid, but left before the drug squad arrived. A small number of customs officers are also suspected to have helped manufacture into drugs the precursor chemicals

INSIDE
GOT A NEWS TIP?
Email: newstips@theage.com.au SMS: 0406 843 243 Newsdesk: (03) 8667 2250 Newsdesk Fax: (03) 8667 2327 CONTACT Advertising: 13 22 43 Photo Sales: fairfaxsyndication.com The Age Store: theageshop.com.au General Inquiries: (03) 8667 2000

Access The Age from your mobile

*Carrier data charges may apply

they allegedly smuggled into the country. One of the alleged key players in the cell is airport customs officer Paul Adrian Lamella, who has suspected links to Taouil, Refojos and Harb. Lamella was arrested by federal police on Monday and charged with offences involving drug importation and corruption. Lamella retained his job at customs despite NSW police alleging in 2008 that they discovered him in a car with two other men and five small bags stamped with Playboy bunny logos and filled with cocaine. Also, Lamellas customs position and security clearance were not affected when Lamella later admitted using a small amount of cocaine. Property records also show that in 2010 Harb transferred his share in a Sydney apartment to Lamella. Harb was arrested in August by federal police and charged

with smuggling drugs through Sydney Airport. For several months Fairfax and the ABC have delayed releasing details of the investigation at the request of an anticorruption taskforce, codenamed Marca, run by the Australian Commission for Law Enforcement Integrity and the Australian Federal Police. ACLEI and the AFP have refused to provide any detailed comments about Marca because it is an ongoing inquiry, although ACLEI confirmed it was investigating corrupt conduct in border environments. Court records reveal that taskforce Marca arrested Lamella in Sydney earlier this week and charged him with drug trafficking and bribery. In August, another customs officer, Paul Katralis, was arrested and charged by the taskforce with drug trafficking and bribery. But several other allegedly

corrupt customs agents at Sydney Airport, including officers with strong links to drug traffickers, are still working for the agency. Broader ethical and integrity failings in customs are not being investigated by Marca. The revelations will put intense pressure on the federal government to explain why suspected corrupt officers are still working and why there are still gaping holes in airport border security, despite multiple warnings from police and official inquiries, including the 2005 Wheeler report on security problems at the airport. While up to 20 customs officers are suspected to have engaged in a range of serious misbehaviour, it is understood a core group of up to 10 officers are believed to be responsible for drug trafficking. A range of well-placed sources, including figures at the airport, told Fairfax that the

allegedly corrupt officers activities included: Allowing drug-filled backpacks and luggage to pass freely through customs controls. Allowing drug money to be smuggled through the airport and out of Australia to fund the resupply of drugs to be smuggled back through the airport. Manipulating staff rosters and using CCTV black spots to allow corrupt activity, including drug trafficking, to go undetected. A high-level internal customs memo in November 2007 warned that customs internal affairs unit had insufficient case management resources and capability, and that despite calls for anti-corruption reforms no action has been taken at this time. In 2007, 2008 and 2009, internal memos called for better anti-corruption intelligence gathering, drug and alcohol testing and the mandatory reporting of fraud, corruption,

serious misconduct and administrative breaches. Customs only began introducing many of these reforms this year, and some will not be in place until next year, although in 2011 the agency fell under the jurisdiction of ACLEI. Mr Carmody resigned quietly from customs in August after the arrest of Paul Katralis. The customs anti-corruption reform process has been expedited by Home Affairs Minister Jason Clare, who is believed to have been briefed on taskforce Marcas work earlier this year and to have raised concerns at customs failure to have adequate anti-corruption measures in place. Even the simplest of the changes called for in late 2007 the renaming of the internal affairs unit took more than two years to implement.

Watch ABC-TVs report into border security tonight on 7.30.

Get a prepaid smartphone and a bonus recharge with Vodafone

Want to get what you really want this Christmas? Feel free.

Prepaid bundle

Samsung GALAXY Mini 2 PLUS Bonus $29 Flexi Cap recharge

Offer ends 31.01.13 (Unless extended).

149

Head in store

vodafone.com.au/christmas v

1300 100 515

Offer only available with specially marked Samsung GALAXY Mini 2 between 24 October 2012 and January 31 2013 (unless extended). $29 Flexi Cap recharge card expires 31 August 2013. If the voucher is not activated on or before this date, the value of the card will be forfeited. Once activated, the $29 Flexi Cap recharge has a 28 day expiry period for all inclusions. All inclusions expire after 28 days or upon next recharge, whichever occurs first. Offer cannot be used for commercial or resale purposes. Recharge cards are not refundable, exchangeable or redeemable for cash. Handsets locked to the Vodafone network unlocking fee applies. Vodafone Pty Limited. ABN 76 062 954 554. VPOP0041/MA/PR

A WHOLE NEW WAY TO BUY A TOYOTA HAS ARRIVED.

Introducing Toyota Access
Now you could aord to drive a new car for the rest of your life while enjoying unprecedented levels of aordability, exibility and assurance. With clever options and choice at every step, Toyota Access puts you in the drivers seat.
Terms and conditions apply. Valid X4031 A09802/MA/S
METAGE A002

TOYOTA TOYOTA ACCESS

toyota.com.au/access

A SMARTER WAY TO BUY

THE YEAR OF LIVING DISGRACEFULLY

Making headlines in 2012 GOOD WEEKEND

DRUG ABUSE AND THE BOOMERS

Shane Green INSIGHT

HOLIDAY EDITION, DECEMBER 21-22, 2012

s

$3

theage.com.au

Tis the season to be jolly well sad

BY DIJANA DAMJANOVIC A N D A M Y C O R D E R OY
SEASONAL stress and the global economic gloom are making Christmas less than merry for thousands of workers. People are overloaded, dissatisfied and increasingly anxious, figures from Australias largest provider of workplace counselling services show. The chief executive of Davidson Trahaire Corpsych, Michele Grow, said Christmas was a time when workers increasingly felt family and financial pressures, which were now combining with pressure from workplaces under economic strain. An increase in the number of companies making staff redundant around the middle of the year was beginning to take its toll, she said. Of course, redundancy impacts the people who go, but there is generally a much bigger impact on the people who stay, she said. When an organisation downsizes, it is very rare the work has gone away. In the approach to Christmas this year, the company has recorded an 87 per cent increase in calls related to workload issues and a 73 per cent increase in workplace satisfaction issues compared with the same period last year. Calls about work/life balance, issues with superiors, personal stress and financial issues have also increased. Davidson Trahaire Corpsych receives more than 200,000 calls each year, and Ms Grow said the nature of the calls tended to change during the festive season. Particularly in December, we see an increase in perceived harassment behaviour from end-of-year events, she said. And the hangover continues until January, when calls about family, relationship and financial problems pick up. The chief executive of beyondblue, Kate Carnell, said while the national depression initiative did not receive more calls around Christmas, the nature of calls changed. We certainly get an increase in the number of people who are doing it tough, particularly with family issues . . . people who are divorced and arent with their kids or people who have lost someone in the past 12 months, she said. People are all under increased stress, and stress is a major precursor to depression and anxiety.

Swan dumps surplus pledge

THEY SAID IT
Were getting back into surplus in three years ... Come hell or high water
Wayne Swan, August 2010

[Delivering a 2012-13 surplus] is right for condence and its right for jobs. Its the right economic policy for the times.
Wayne Swan, ABC Radio National, 30 November 2011

BEAUTY AND THE BUG

LIFE&STYLE

We are determined to deliver a budget surplus, we stand by the forecasts and were 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

IN THEIR SIGHTS
America debates gun control
INSIGHT

BY CLANCY YEATES
WAYNE Swan has ditched his long-held promise to deliver a balanced budget this financial year, saying a sledgehammer hit to government revenue meant a return to surplus was unlikely without resorting to damaging spending cuts. After new figures showed tax receipts during the first third of

this financial year were $3.9 billion lower than expected, the Treasurer said it would be irresponsible to make further cuts in the quest for a balanced budget. Mr Swan was unable to say when the budget would return to surplus, and said he did not care about the political significance of walking away from the pledge. Labor has been promising a surplus in 2012-13 since May

2010, but Mr Swan said the global economic slump and the stubbornly high Australian dollar

had sparked a $20 billion writedown of tax receipts this year alone. Filling the revenue hole would require further cuts to public spending, he said, which risked hurting the economy and pushing up unemployment. What weve seen is a sledgehammer hit our revenues, he said. At this stage, I dont think it would be responsible to cut harder or further in 2012-13 to

fill a hole in the tax system if that puts jobs or growth at risk. The main hit to the budgets bottom line has come from a sharp deterioration in business taxes. Weaker commodity prices have taken a hefty toll on mining profits, while other industries such as manufacturing and tourism have been squeezed by the high dollar. Opposition Leader Tony Abbott said the decision was a

fundamental policy failure, and sought to liken it to Prime Minister Julia Gillards promise before the 2010 election not introduce a carbon tax. Mr Swan stressed the government had not been loosening its purse strings, with public
C O N T I N U E D PAG E 2

Malcolm Maiden comment PAGE 2

FORUM
Michelle Grattan PAGE 22

Smuggled guns: customs officers lied about scan

EXCLUSIVE
BY NICK McKENZIE AND RICHARD BAKER A G E I N V E S T I G AT I V E U N I T
UP TO two dozen illegal handguns including some bought by Sydney crime gangs passed through Port Botany after customs officers falsified paperwork to wrongly claim they had X-rayed the container in which the weapons were hidden. A six-month Fairfax Media investigation conducted in association with the ABCs 7.30 Report can also reveal that customs is investigating about 100 criminal allegations involving its staff the highest number in the agencys history and has received more than 1300 allegations of misconduct since 2008. It has also emerged that acting Customs Service CEO Michael Pezzullo was frozen out of parts of the federal polices probe into corruption at Sydney Airport because his brother, a customs officer, works and associates with several members of the allegedly corrupt customs airport cell. In other revelations, which come after Thursdays expose of an allegedly corrupt cell of customs officers at Sydney Airport: Dozens of pages of sensitive customs documents were leaked to a crime syndicate controlled by drug and illegal tobacco smuggler Mohamad Jomaa, who ran a syndicate that boasted of having several contacts inside customs. A joint police taskforce has identified up to 12 suspected corrupt customs officials working on NSWs maritime border security, adding to the cell of 15 allegedly corrupt officers at Sydney Airport, including some still working there. Employees of Menzies Aviation Services with federal government security clearances are being investigated over their links to alleged drug trafficking within customs. Menzies provides baggage handling services at the airport. The smuggled handguns were identified by a police operation codenamed Otford, which discovered that the guns were smuggled in engine parts that a small number of customs officers falsely claimed they had scanned. Further investigations found that the officers falsified paperwork to give the engine parts the all-clear. While the customs officers were caught lying about their failure to scan the container, there is no evidence they knew it contained guns. It is unclear if any of the smuggled guns, which included four semi-automatic pistols recovered by police, were used in any of Sydneys spate of gangland killings. Customs has dealt with the case as a matter of misconduct and incompetence and said in a statement that the officers involved had been subject to code of conduct provisions and in October received remedial training and workplace counselling. However, senior NSW police are believed to have been furious about customs role in the affair, especially after it followed a string of so-called misdetections by customs staff of drug shipments. Regarding the ongoing airport probe, there is no suggestion that Mr Pezzullos brother is involved in corruption. (Fairfax made several attempts to
C O N T I N U E D PAG E 6

ON THE EDGE
The scal cliff
BUSINESSDAY
ISSN 0312-6307

WEATHER
MELBOURNE Mainly sunny 12 23 BALLARAT Sunny 7 24 BENDIGO Sunny 10 28 GEELONG Mainly sunny 9 21 HORSHAM Sunny 8 28 MILDURA Sunny 13 31 SALE Sunny 10 24 WARRNAMBOOL Clearing 9 20 WODONGA Sunny 12 30 Details PAGE 25

MELBOURNE DAMS

ODD SPOT
A Mumbai man known only as Sanjay has spent the past nine months living in a guava tree because his wife refuses to say sorry after he caught her cheating on him with a neighbour. Sanjay, 25, survives on fruit from the tree and food handed up by relatives.

INDEX
ARTS PAGE 24 CLASSIFIEDS BUSINESSDAY 12-15 COMICS LIFE&STYLE 45 CORRESPONDENT PAGES 11-14 FORUM PAGES 20-23 INSIGHT LOTTERIES SHARES TELEVISION TRIBUTES PAGES 15-19 PAGE 2 BUSINESSDAY 9-10 LIFE&STYLE 46,47 BUSINESSDAY 16

A YEAR AGO: 35.3% AGO: 66.5%

81.2 48.3%

9 770312 630066

Fit MORE into your life with NEW BLACKMORES ON THE GO packs.
These portable, lightweight and convenient packs t just about anywhere, making them ideal for everyday situations and travelling. Now its easy to support your health and wellbeing whilst on-the-go. Discover MORE of your favourite Blackmores products in the ON THE GO range today. For product information and personalised advice visit blackmores.com.au or nd us on
Always read the label. Use only as directed. If symptoms persist see your healthcare professional. Store below 30 in a dry place away from direct sunlight. CHC52727-12/12

mobile

METAGE A001

THE SATURDAY AGE

HOLIDAY EDITION, DECEMBER 21-22, 2012

NEWS

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

Focus on future best for young criminals

BY JANE LEE LEGAL AFFAIRS REPORTER
YOUNG criminals are less likely to reoffend when juvenile justice supervisors focus on their future potential rather than past behaviour. According to Monash University professor Chris Trotter, who observed 46 juvenile justice officers in interviews with 117 offenders in New South Wales over four years, workers who took a nonblaming approach that focused on positive outcomes finding a job, avoiding friendships with criminal peers reduced the likelihood that the young criminals would reoffend two years on. This was in line with previous studies involving adult offenders. The worker takes a view that the young person has done something wrong and thats a fact but this is simply the past. They think, What can we do now between you and me to help you to develop a more prosocial lifestyle regardless of what youve done? Professor Trotter said. [They focus] less on threats and pointing out consequences and more on what you can be in the future and how I can help you to get there. He said this helped the young person to see their potential to have a better life free of crime and to deal with the areas in their lives where they struggled including employment, peer groups, drug use and family issues that had often led to the criminal behaviour. While most of the officers he observed in the study, released this week, did this well, he said those who did it better saw better results. Professor Trotter said young people with supervisors who failed to do this, making no attempt to help the young person understand the purpose of supervision and . . . appeared to be punitive or blaming, were more likely to reoffend in that period. About 90 per cent of young people in NSW and Victoria under juvenile justice supervision were supervised in the community, with the rest in detention. Professor Trotter could not comment on the extent to which the non-blaming approach was currently employed. The willingness of the juvenile justice system in NSW to expose the practice of the work, to allow an academic to come in, watch whats happening and use it to further develop skills this has hardly ever happened anywhere in the world, he said. Supervisors were often social work graduates and visited offenders weekly for about a year on average, depending on the court order. While they were trained in best-practice techniques, they used a mixture of different approaches, and it was largely up to them how they helped individual offenders, he said. Very skilled supervisors could halve the likelihood of reoffending, whereas less skilled workers had less impact on young people, he said. Professor Trotter said the study, funded by the Australian Institute of Criminology, could affect the way youth justice officers were selected and trained, as ongoing training in such skills could help further reduce recidivism rates. There is potential for widespread reductions in recidivism if juvenile justice organisations prescribe a counselling role to supervisors and employ staff with relevant qualifications, the study said. Ongoing training and supervision focused on effective practice skills may provide for further reductions in reoffending. The juvenile justice officers observed had an average of 10 years experience working in the system.

Bail granted after white knight fails

BY LISA DAVIES
SHE spends six months of the year in the south of France and claims to live and work with beautiful energies, but makeup artist Krystle Hill walked out of a holding cell on Thursday with a less glamorous tag alleged drug mule. Hill was bailed on charges she conspired with her customs officer boyfriend, Adrian Lamella, to import a commercial quantity of a border-controlled precursor, pseudoephedrine. In a bizarre twist, by her side as she was whisked from Sydneys Central Local Court cells on Thursday was a man many would consider detrimental to her image colourful Sydney identity Big Jim Byrnes. After his long history of dalliances with law enforcement, he tried to be her knight in shining armour unfortunately a prior criminal history meant he could not be deemed an acceptable person to deposit $20,000 to ensure her freedom. Police allege that between May and June 2009, Hill was asked by Lamella to travel to Thailand with an accomplice, and return with 10 kilograms of pseudoephedrine between them. Police documents allege Lamella told the women their return to Australia would be unimpeded, because they wouldnt be searched as he was working as a customs officer that day. He allegedly gave them strict instructions not to get too dressed up as they would draw too much attention to themselves. They arrived back on Thai Airways flight TG993 on June 19, 2009. Lamella allegedly offered fellow customs worker Paul Katralis vials of human growth hormone worth up to $1800 and $5000 cash to help facilitate their safe passage through, although he was ultimately unable to assist as he was moved to other duties that day. In any event, the women were not searched, but police allege their incoming passenger cards were destroyed or otherwise not handed to immigration authorities.

Lamella allegedly gave them strict instructions not to get too dressed up.
Hills barrister, Wayne Baffsky, argued the case against his client was not strong, and ultimately the magistrate agreed. While Mr Byrnes offered to deposit the $20,000 surety required for bail to be finalised, the Crown objected and another woman paid the money. Never known for shyness, Mr Byrnes attended the court to personally offer his support to Hill anyway, the pair having met recently. The case was adjourned to February 27, and Hill has been ordered to report to Rose Bay police twice a day.

Paedophiles in jail porn ring

BY NOEL TOWELL
CONVICTED paedophiles in Canberras jail have allegedly set up a pornography ring, sharing electronic images of child sex abuse under the noses of prison guards. Several investigations are under way into how the three prisoners, including two of the ACTs most dangerous child sex predators, were able to obtain and share files containing the material while serving their sentences at the Alexander Maconochie Centre. It is even alleged that a child pornography website was hosted from within the prison before police swooped on the jail on Tuesday. The ACT governments Justice and Community Safety directorate is set to come under intense scrutiny in coming days to explain how the alleged ring was allowed to develop. Fairfax Media has established that digital TV set-top boxes, legitimately obtained with the knowledge of corrective authorities, personal video recorders and USB portable hard drives were allegedly used to store and distribute the material. The prisons intelligence unit began passing information to jail authorities about the mens suspected activities months ago but it is unclear what led to the delay in calling in police. Central to the alleged plot was a laptop computer that a fourth prisoner, who has since been released, had permission to bring into the jail despite the misgivings of some guards. The USB drives, which look like cigarette lighters in prison X-ray security screening images, are easy to smuggle into jail and can be plugged into ports on the set-top boxes. The technical expertise is believed to have been shared by an offender, who cannot be named for legal reasons, who served four years of a nine-year sentence over what a judge described as premeditated and predatory rapes of a 10-yearold boy. The paedophile, an IT expert, was deported to his native South Africa after serving his four year non-parole period and being found to have been of good behaviour while in jail. But before his release he was allowed to have a laptop computer, which allegedly led to the development of the child porn ring. Another man suspected to be involved is serving a 16-year sentence for offences against young boys. He has been described as a computer expert. A police spokesman confirmed detectives were examining several devices seized on Tuesday. ACT Policings Criminal Investigation detectives conducted a search . . . and seized several items suspected to contain child exploitation images, he said. With LOUIS ANDREWS

Model and make-up artist Krystle Hill reacts after getting bail in Sydney.

PICTURE: JAMES BRICKWOOD

Overhaul tackles corrupt customs culture

BY MEGAN LEVY AND HARRIET ALEXANDER
THE federal government has admitted that the culture of the Australian Customs and Border Protection Service needs a major overhaul, following allegations that some of its officers have been involved in drug trafficking, money laundering and organised crime. Home Affairs Minister Jason Clare said on Thursday that a new board had been appointed to root out corruption in the customs service, including Justice James Wood, who oversaw a royal commission that exposed corruption in the New South Wales police force. But he said details on how the structure and culture of the customs service would be reformed would not be announced until next year. Youve got to change the culture of the organisation, he said. Youve got to create an organisation where its not acceptable to turn a blind eye; where its not acceptable not to report something where you see it happening. The federal police has got a different standard here. My view is that customs need to be at that same standard, because theyre at the same risk of being corrupted by organised crime. A six-month joint investigation between Fairfax Media and the ABCs 7.30 has revealed that at least 15 officials in Sydney Airport border security posts are suspected of involvement in serious misconduct or corruption. The number may be as high as 20. Their alleged conduct ranges from criminal association and leaking information to drug trafficking, drug manufacturing, money laundering and bribery. The Australian Federal Police announced on Thursday that eight people had been arrested over suspected airport drug trading, including a customs officer and a quarantine inspector. They are believed to be members of a syndicate exploiting major gaps in airport Certainly, what has been alleged before the courts so far is that the customs officers involved in this would meet drug couriers off the plane, he said. They would then walk them through the primary line of customs and then out into the waiting hall, so they would facilitate their entry through the normal checks and the normal law-enforcement processes that everyone goes through when they enter this country. It will be alleged that they [customs officers] certainly played a role in organising the couriers themselves to go overseas, and to actually facilitate their collection of the narcotics overseas, and then again played a key role in bringing them back through the airport without any detection or any scrutiny from the normal process. Mr Clare said three distinguished Australians had been appointed to the new Customs Reform Board, which would report directly to him. They are Justice Wood, former NSW police commissioner Ken Moroney, and David Mortimer, the former CEO of TNT Limited, former deputy chairman of Ansett and former chairman of Australia Post and Leighton Holdings. Major reforms had already been introduced to the Australian Customs and Border Protection Service this year as a result of the AFP investigation, including covert operations to test the integrity of customs officers, and drug and alcohol testing, Mr Clare said. Customs and Border Protection Service acting chief Michael Pezzullo said he was disappointed but not surprised by the corruption revelations. He said nobody had been stood down from their jobs.

Youve got. to.change the culture .

JASON CLARE, Home Affairs Minister

and customs security at Sydney Airport. Australian Federal Police Commissioner Tony Negus said it would be alleged that couriers were sent overseas to collect drugs before returning through customs with the help of people in trusted positions.

Health academic killed in Tasmania

BY ANDREW DARBY HOBART
AN ACADEMIC known as an international founding father of health economics, Gavin Mooney, is said to have been murdered in southern Tasmania. Professor Mooney and his partner Delys Weston were found dead by police called to their rural home by her 27-yearold son, according to the ABC. Nicholau Francisco Soares has been charged with their murders. Police said they were called to a house at Mountain River, south of Hobart, early on Thursday, where the couple were found dead with severe head injuries. Professor Mooney, 69, and Ms Weston moved to Tasmania in 2011 from Perth, where he had been director of the Social and Public Health Economics Research Group and professor of health economics at Curtin University. His book Challenging Health Economics was published in 2009, and his website said he was working on two other books, on citizens juries in healthcare, and on healthcare reform. In June 2009 he was awarded an honorary degree in social sciences by the University of Cape Town as one of the founding fathers of health economics, and he consulted on priority setting, equity, Aboriginal health and social determinants of health. Ms Weston studied the politics of genetic engineering. Its just one of those tragic situations, unfortunately, Detective Inspector Peter Powell said. Soares, from Fremantle, was to face court later on Thursday. With AAP

Smuggled guns: customs officers lied about scanning container

F RO M PAG E 1

contact Mr Pezzullos brother but was not successful.) One of the aspects of the probe is whether customs staff not involved in corruption nevertheless knew that some of their colleagues may have had inappropriate associations or may have been engaged in questionable behaviour in or outside of work hours. At least four customs officers still working at Sydney Airport attended the court case of an allegedly drug-using officer without informing their bosses.

Asked about his brothers relationship with suspected corrupt customs officials, Mr Pezzullo said: I was advised by the previous CEO that I was to be excluded from all briefings and information related to allegations concerning possible corrupt activities at Sydney Airport on the basis that I had a family member who worked at the airport. Of the suspected corrupt customs officers on the waterfront identified by the jointagency Polaris taskforce, several are suspected to be involved in facilitating illegal

tobacco or drug importations. A confidential Polaris report from this year states that the Customs Examination Facility at Port Botany has been infiltrated by criminals. Polaris investigations demonstrate links between CEF staff [including customs officers] and criminal syndicates which are involved in the importation of illicit drugs and tobacco into Australia, it says. One of the customs officials suspected to be aiding maritime drug and tobacco importations was allowed access to highly sensitive

information despite having two brothers known to NSW police as drug traffickers. This officer was also one of at least two customs staff with strong ties to a crime syndicate led by convicted drug trafficker Mohamad Jomaa, as well as to two alleged tobacco smugglers who are currently before court and are facing charges of bribing a third customs official. Asked about the suspected corrupt customs officer with links to Mohamad Jomaa, Mr Pezzullo told Fairfax that he chose to resign while customs ... was making an assessment

of his suitability to continue to hold a security clearance. Dirk Scott, the general manager of Menzies Aviation, said on Thursday that he had heard nothing from federal police or the federal government about any of his staff having suspected links to allegedly corrupt customs officers or crime figures. Allegations of corrupt baggage handlers emerged in 2004 after supporters of Schapelle Corby alleged that airport staff had put drugs in her boogie board bag. Federal police later discredited these claims.

METAGE A006