Mark Colvin | PM | 26 March 2012
MARK COLVIN: The Australian illegal drug trade is now measured not in millions or even hundreds of millions but in billions of dollars. That's one result of a high-level secret operation run by federal law enforcement centred on the Australian Crime Commission.
It was called Operation Dayu, and it involved the commission setting up a money laundry to be used as a honey trap for organised crime. Before, the Australian Institute of Criminology estimated that about $390 million a year were going overseas to pay for illegal drugs. As a result of Operation Dayu that estimate is now between $4 billion and$12 billion a year.
The story is told in a new book, 'The Sting', by Melbourne Age journalist, Nick McKenzie. Full disclosure, he's also a graduate of this program. I asked Nick McKenzie about the money laundry.
NICK MCKENZIE: Well it operated in Australia, and the book's very careful about not giving too much away, there's a whole raft of important law enforcement laws which prohibit giving operational details away.
But very broadly it operated the way a money laundry would operate. It was a service where a criminal who wants to move their money off-shore without drawing any adverse attention can go there and know that in 24 hours their money's going to be sitting with Mr X in Hong Kong, Macau or Vietnam, wherever it may be. Of course, the real background story is, all the while these investigators were watching the money.
MARK COLVIN: So it involved the Government, the Australian Crime Commission, setting up what was effectively an illegal operation, letting people do illegal things for a while so as to watch them?
NICK MCKENZIE: Indeed, but of course …
MARK COLVIN: That's an incredibly grey area.
NICK MCKENZIE: … it's not foreign to law enforcement. And many years ago, pioneered by the FBI (Federal Bureau of Investigation) and the drug enforcement agency in the United States, but taken up by law enforcement a couple of decades ago in Australia, is the idea of a controlled operation where the police allow the committing of a crime to catch criminals or detect, normally, a larger piece of criminality.
It's controversial, but police defend it by saying, 'well how else do we get to those at the top of the tree?'
MARK COLVIN: It's controversial alright, because in New South Wales it led to major corruption, didn't it, that type of thing?
NICK MCKENZIE: Indeed, and that's why it's very, very closely monitored by government agencies. If any policing agency decides to undertake a controlled operation they have to go through a whole lot of hurdles for very good reason. Indeed, it can, of course, lead to corruption; that's why safeguards have to be in place.
In this instance the controlled operation sent, I think we reported, $10.6 million off-shore over a period of time. That led to the seizure of around $780 million wholesale value of drugs in Australia. And crippled a bikie outfit and led to the identification of some key off-shore players.
MARK COLVIN: In New South Wales the problem, or a major problem, was there was no oversight of the Crime Commission; who oversees the Australian Crime Commission, makes sure that these things are above board?
NICK MCKENZIE: The Crime Commission faces oversight on a number of levels. It has a parliamentary committee which oversights a lot of what it does. It has oversight from a board; so each state police commissioner across Australia sits on a board and oversights the agency. It has rigorous internal oversight.
Of course, a rule in law enforcement is if people are willing and keen to abuse the system they can do it. But I think it's fair to say that the ACC is probably one of the most scrutinised agencies in the country.
MARK COLVIN: What were the operations that it broke? You've already talked about them in very general terms, just go through them in a bit more detail.
NICK MCKENZIE: So Operation Dayu was the umbrella operation, if you like, involving a number of different aspects, including the undercover money laundry. A program designed to really measure the size of Australia's criminal economy; to come up with, for the first time, a true measure of how much drug money is marching off-shore. And that operation smashed the existing estimates and really revised thinking; so police are now saying we've got a multibillion dollar drug problem.
It also discovered the way that bikie clubs in Australia are tapping into a drug pipeline from Asia to get vast amounts of drugs and to suddenly get a massive influx of wealth and power. And around the time that these bikie outfits were getting this access to this drug pipeline, the bikie wars across the country were flaring, and some people say there's a strong correlation.
MARK COLVIN: We associate the bikie gang's largely with speed in the past. So when you say they had a pipeline of drugs into Australia, was that a pipeline of pseudoephedrine, which you have to have to make speed?
NICK MCKENZIE: One of the great inspirations for the book 'The Sting' was the program 'The Wire'. And one of the rules of 'The Wire' if your listeners aren't familiar with it, is the drug trades are dictated by demand and supply. And you've got to think of bikie outfits involved in organised crime, and drug outfits involved in organised crime, they run like businesses. And where there is easy access to precursor chemicals that are used to make a range of drugs and there is a demand for that product, what the market wants it will get.
Groups like the bikies will go out of their way to meet that trend.
MARK COLVIN: So it was speed?
NICK MCKENZIE: There was speed, there was ice, cocaine, heroin, ecstasy. Often different ethnic groups, for instance the Vietnamese organised crime outfits in Australia are often associated with ice and heroin distribution, and this was the case in some aspects of this operation. Bikies have been well known for moving speed around the streets. But they're into whatever makes a dollar and the bigger dollar the better.
MARK COLVIN: Alright, at the end of this process, when you turn on the news and police are showing off a haul of $10 million worth of speed or $20 million of cocaine, do you look at that in a different light now, do you look at that as just a pinprick in terms of the overall market?
NICK MCKENZIE: Indeed, it's a drop in the ocean. And perhaps what inspired me more than anything to write the book was encountering law-enforcement official after official saying, 'it's not working, and what the public is getting is not the truth'. And if only the agencies would speak publicly and tell the parliament and tell the public how big this problem is and how the strategy - I mean if you'd like to call it a soft war on drugs, as some people do in Australia, that's a failure.
We spend around 75 per cent, the Federal Government that is, on the law enforcement side of things, and the remainder on harm reduction and trying to get people to stop using drugs at all before they become involved. Is that balance right? And some would say the elephant in the room is prohibition. The debate's got to be there. At the moment all…
MARK COLVIN: You're saying really, if Australians knew the truth there might be greater pressure for decriminalisation at least so as to make the prices lower and leave less incentive for organised crime?
NICK MCKENZIE: It's a very complex argument when you get into the argument about decriminalisation, but at the very least let's have it.
MARK COLVIN: Melbourne Age reporter, Nick McKenzie, who's book is called 'The Sting'.
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