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Chapter 6: The great social security conspiracy case

Published in:
Wayward governance : illegality and its control in the public sector / P N Grabosky
Canberra : Australian Institute of Criminology, 1989
ISBN 0 642 14605 5
(Australian studies in law, crime and justice series); pp. 93-112


Along with his role in the dismissal of the Whitlam government and the mysterious loss of his trousers during an overnight stay in Memphis Tennessee in 1986, former Prime Minister Malcolm Fraser will perhaps best be remembered for the quip 'Life Wasn't Meant To Be Easy'. It was a message which many Australians found neither comforting nor inspiring when, as Australia's economic decline continued in the late 1970s, increasing numbers of people became dependent on public welfare payments. The vast majority of Australian welfare recipients were both deserving and honest, but as is always the case with programs which dispense public benefits, the Social Security system was subject to abuse.

Australian governments have traditionally shown less tolerance of alleged 'dole bludgers' than of those who, often at much greater cost to the Treasury, defraud the Commonwealth in the course of evading taxes. Not long after the Fraser government came to power, it was decided to 'crack down' on abuses of the Social Security system.

Toward the end of 1976, the Sydney office of the Department of Social Security (DSS) learned of an alleged arrangement under which medical practitioners would assist members of the Greek community to obtain invalid pensions fraudulently, in return for payment. The matter was called to the attention of the Health Department and then to the Commonwealth Police (COMPOL).

In December of 1976, COMPOL were advised that DSS had been authorised to provide information to COMPOL to assist in the investigation of the alleged fraud.

The suspected fraud appeared to have been facilitated by a number of 'agents', (in Greek, mezasons, or intermediaries) residents of the community who were fluent in both Greek and English and who, in return for a fee, provided advice and assistance to those unable to communicate in English. It was suspected that a number of unscrupulous agents were assisting members of the Greek community to obtain sickness benefits or invalid pensions fraudulently by coaching them to contrive symptoms of psychiatric illness and to present themselves to those local medical practitioners who would, in return for a fee, accept their complaints uncritically and endorse their applications for a benefit. Consistent with the inclination in Australian law enforcement circles to regard organised crime as the root of all evil, there was even some suggestion that the alleged enterprise was controlled by a secret Greek underworld Organisation known as the Kolpo.

On 16 September 1977 the Acting Commissioner of the Commonwealth Police wrote to the Director-General of Social Security regarding 'an ongoing fraud allegedly of great proportions which has been perpetrated against the Department of Social Security'. The allegations came from an informant, who estimated that eight medical practitioners and ,at least 500 persons of Greek extraction' were involved, at a cost to the revenue of between $2.5 million and $5 million per year.

The Acting Commissioner suggested that the cooperation of the informant could be secured for a cash reward of $30,000, and sought the advice of the Director-General regarding a proposal to:

  1. compile a list of those in receipt of pensions fraudulently obtained, and of those medical practitioners involved;
  2. initiate detailed procedures necessary to ensure successful penetration of the medical conspiracy by an agent; and
  3. arrange for the issuance of search warrants for doctors' surgeries for records of invalid pension patients (Harper, L. pers. comm. to Secretary, Department of Social Security, 16 September 1977. Commonwealth Police Reference no. 76/7307, obtained under the Freedom of Information Act 1982).

The government's response to the suspected fraud was designed to be firm. It would involve the full force of the criminal law, rather than lesser administrative penalties. A high profile 'crackdown' with maximum publicity would have, it was felt, the greatest deterrent effect. Not only would those caught defrauding the government be disinclined to offend again after having their fingers burned, but members of the general public who might be tempted to try their hand at dole fraud would be disinclined to take the risk.

On 5 October 1977 a First Assistant Director-General of Social Security wrote to the Deputy Secretary of the AttorneyGeneral's Department, and said:

The Minister for Social Security has agreed for COMPOL to undertake investigations outlined in the Acting Commissioner's memorandum of 16 September, 1977 (Corrigan, D. 1977, pers. comm. to F. J. Mahoney, O.B.E., 5 October, [Department of Social Security Reference no. 75/165631, obtained under the Freedom of Information Act).

On the same day Corrigan wrote to the Director of the NSW Office of the Department of Social Security and requested that he 'please provide COMPOL with any assistance necessary' (Corrigan, D. 1977, pers. comm. to R. Dowell, 5 October, [Department of Social Security Reference no. 75/165631, obtained under the Freedom of Information Act).

The operation which eventuated was known as 'Don's Party', after the officer in charge of the investigation, Detective Chief Inspector Don Thomas. It involved early morning raids on some 160 homes and five doctors' surgeries by a team of over 100 officers of the Commonwealth Police. 'Don's Party' was the largest coordinated operation conducted to date by that agency. In order to ensure that the raids received maximum publicity, reporters from the Sydney tabloid The Sun were alerted in advance and invited to attend.

Initially, 181 people, virtually all of Greek ethnic background, were arrested and charged with conspiracy to defraud the Commonwealth.

On 3 April 1978, eighty-three of the accused appeared in Central Court, Sydney. On the steps of the courthouse, Chief Inspector Thomas held a news conference and jubilantly referred to his operation as 'the biggest breakthrough in the history of the police force'. Indeed, Thomas revealed that the 'party' was not yet over. He heralded the possibility of a further thousand arrests, and the extradition of a further 300 people from Greece. The publicity, as intended, was massive. Headlines blared 'Police Seek 1400 More Pay Cheats' and 'Cheats Live Luxury Life in Greece'. It was also announced that the Commonwealth Police had been stationed at all major airports to prevent others connected with the alleged fraud from leaving Australia. The Minister for Social Security was advised by the Commissioner of COMPOL that a second wave of raids would take place in Sydney the following weekend.

As it happened, these further arrests were not to eventuate. But prosecutions were begun against those arrested thus far, and a total of 669 social security recipients had their benefits withdrawn and their payments cancelled.

Unfortunately for Chief Inspector Thomas, his police colleagues, and the Department of Social Security, 'Don's Party' was something less than a smashing success. The legal costs entailed in prosecuting 180 alleged co-conspirators were massive. As the majority of the accused were people of very modest means, the cost of their legal representation was borne by the Australian government as well. The mass arrests resulted in only a handful of convictions, and outrage in the Greek community. Over the following five years, conspiracy charges were withdrawn against all but five suspects. The cost of these abortive legal proceedings reached $10 million.

But the real losers in the operation were those who were wrongly implicated in the conspiracy. Most were born in Greece, with elementary formal education, and with limited ability to speak or understand English. A number had not adjusted well to life in Australia; they tended to come from village backgrounds and coped poorly with the stresses of urban living. Many had worked for a number of years in heavy labouring jobs, and had suffered disabling physical injury from industrial accidents. A number also suffered psychiatric illness, thereby compounding these difficulties.

For a person unable to communicate in English, unfamiliar with the Australian criminal justice system, and characterised by something less than robust mental health to begin with, the experience of 'Don's Party' was traumatic.

Although the raids on doctors' premises had been conducted pursuant to search warrants, no such formalities were followed in the course of raids on patients' homes. It was generally assumed that non-Engiish speaking migrants would be ignorant of their legal rights, or at least too frightened to invoke them. Many of the suspects experienced extreme distress as they were taken into custody in front of their families and neighbours. The suffering of spouses and children of the arrestees was no less acute. According to one authoritative account, the typical suspect

was intimidated by the statements and conduct of the police in that they pressed him for answers to their questions and their number and physical size were overbearing. He was apprehensive that he might suffer physical violence. He believed that the police were laughing and joking about him and that they were making derogatory remarks about his Greek nationality (Australia 1986, p. 55).

When identification photographs were taken of the arrestees, a number included a sign with the word 'Greece' written on it. Many of the suspects were detained in police custody for a number of hours until friends or relatives were able to arrange bail money. The task of raising $1,000 cash on a weekend is daunting enough for an invalid pensioner. It was even more difficult for those whose bank passbooks had been confiscated. Without having been convicted of any crime, they were subjected to treatment which could only be regarded as punitive.

The condition of the cell was disgusting. The cell was overcrowded. There was insufficient room for him to sit or lie down with any measure of comfort. The cell was putrid. It did not contain private toilet facilities nor was he given access to private toilet facilities. Some of those in the cell had the appearance of a vagrant or common drunk (Australia 1986, p. 56).

The experience of incarceration, combined with the uncertainty regarding one's future income, not to mention the outcome of the criminal process, was to take its toll. Prior to 'Don's Party', the typical suspect

had been nervous and anxious. After his arrest his condition immediately took a turn for the worse. He was extremely frightened of anyone in authority. He was acutely and severely apprehensive for his well being and that of his family. He was stricken by grief. The change in his mental health was sufficiently grave to require treatment additional to that which he had been having at the time of his arrest.

[H]e is a man who is insecure. He anxiously anticipates the reaction of those in authority whenever he comes into contact with them in his day-to-day affairs. Seeing a policeman reminds him of what occurred in the conspiracy proceedings (Australia 1986, pp. 59-60).

One person, who had been receiving psychiatric treatment at the time of his arrest, committed suicide. The experience of those who were not the subject of criminal charges, but whose benefit payments were suspended nonetheless, was almost as traumatic. On 1 April 1978 the Director-General of Social Security gave directions to suspend payments to those pensioners whose names appeared on a list prepared by COMPOL. The suspensions were sudden and unheralded. They were implemented without the recipients having been accorded any opportunity to defend themselves against allegations of impropriety. The administrative procedures which underlay many of these suspensions were of questionable legality. Some pensioners were left without any source of income for as long as eight months. The standard procedure of giving three months' notice of cancellation and the continuation of payments pending the outcome of an appeal, were not followed. As a result, many of those whose benefits were cancelled faced severe financial hardship, and some had to resort to scavenging in garbage cans in order to survive (Cashman 1985, pp. 228-9). Tenants were threatened with eviction, and home-owners, unable to meet mortgage payments, were forced to sell their homes. Subsequent medical examinations of those pensioners who had returned to Greece were based upon criteria more restrictive than those applying in Australia at the time. Many were unable to afford the cost of returning to Australia to avail themselves of the right of appeal.

Others no doubt recalled Chief Inspector Thomas' having heralded further arrests. Such events would be difficult enough for mainstream Australians, much less for poor migrants, unable to communicate in English, and already suffering psychiatric problems.

'Don's Party' was preceded by more than the usual police investigation, and it was far from flawlessly executed. A doctor suspected of complicity in the alleged fraud was not prepared to write the appropriate medical report for an undercover police officer of Greek ethnicity who sought to obtain a pension fraudulently. One of the persons charged in the conspiracy, a Mr Nakis, was granted an indemnity and gave evidence for the Crown as a co-conspirator during committal proceedings. Only subsequently, during defence cross-examination of Chief Inspector Thomas, did Nakis' full role in the investigation become apparent. Nakis was the person who had originally approached the Commonwealth Police in 1977, claiming that he was prepared to provide information in return for a pardon and a cash reward. After some negotiation regarding the amount, an agreement was reached some time prior to the early morning raids. Rather than a co-conspirator who chose to co-operate with police after his arrest, Nakis had been acting as a police agent in the course of the investigations.

Not only did Nakis' role as a police agent raise questions about the possible entrapment of some suspects, it cast doubt upon some of the evidence central to the Crown case. A taped conversation between Nakis and a police officer which was introduced in support of the conspiracy charges was in fact a conversation between two police agents, both acting on the instructions of Chief Inspector Thomas. Thomas introduced the tape in evidence, allowing the assumption to be made that Nakis was someone other than a police agent.

Other means employed by police to collect evidence were called into question. It was alleged that in the course of the raids, police seized personal documents, passports, bank statements and other documents without warrant. Hundreds of medical records were seized from doctors' surgeries. Chief Inspector Thomas advised that in March 1978 he received authority from Senator Withers, at the time the minister responsible for the Commonwealth Police, to install listening devices in the surgeries of two doctors suspected of complicity in the fraud. Such eavesdropping clearly constituted an intrusion on the confidentiality of communication between doctor and patient. In addition, a number of telephone conversations involving police agents and alleged conspirators were recorded without a warrant and without the knowledge of the other party to the conversation.

The police claimed to have been under the impression that such practice was within the law; the Solicitor General of Australia subsequently advised that such a practice contravened the Telephonic Communications (Interception Act) 1960-1973 (Cwlth).

The circumstances giving rise to 'Don's Party' were varied and complex. The Commonwealth Police, a relatively new body whose future directions were the subject of consideration by the Federal government, were greatly concerned about demonstrating their competence. In light of the impending visit of Sir Robert Mark, former Commissioner of the London Metropolitan Police, for the purpose of advising the Federal government on police Organisation, senior COMPOL officers saw it as imperative to put 'runs on the board'. The Department of Social Security faced growing criticism in the mid 1970s for its lack of efficiency in the administration of welfare benefit programs. The 1975-76 Report of the Commonwealth Auditor General estimated overpayments of unemployment benefits at $40 million. The report called attention to what were regarded as inadequate checks and controls for benefit eligibility. All of this was not well received by the coalition government, which was at best unenthusiastic about the welfare system and at worst antipathetic. In any event, it was much less tolerant of abuses of the welfare system than of abuses of taxation and medical benefits systems.

Patrick Lanigan, a senior public servant with a reputation for toughness, became Director General of the Department of Social Security in 1977, and made control of benefits abuses a high priority.

The strategy adopted, that of mass arrests and conspiracy prosecutions, was fundamentally misconceived. Under the most favourable evidentiary circumstances, the logistics of prosecuting 180 co-conspirators would still be daunting. In the case in question, the evidence left much to be desired.

But the police were involved in a 'trawling' operation. The plan was to charge all suspects initially with conspiracy, confer indemnity on those who were prepared to give evidence against the doctors, then withdraw conspiracy charges against the other pensioners and proceed against them with statutory charges under the Social Security Act 1947 (Cwlth). Even by the most charitable interpretation of police strategy, the pensioners were pawns in a game.

The Department's enthusiasm to implement a highly visible 'crackdown' combined with over-zealous policing, led to a selection of suspects which proved to have been overinclusive. Many alleged conspirators were charged simply because they were pensioners who appeared to have a name of Greek origin, and who had been treated by one or more of the doctors at the centre of the police investigation. For the purpose of laying criminal charges, the police should have exercised greater care in evaluating the evidence available.

For its part, the Department should have been more rigorous in the evaluation of evidence on the basis of which it terminated benefit payments. It could, at any time, have requested the attendance of any beneficiary for a medical review. Such internal controls were not employed. Rather, DSS relied upon a list of names provided by COMPOL, and acted in the absence of any medical or other evidence. Deference to police investigators proved as disastrous to administrative justice as it was to criminal justice.

Yet another strategic shortcoming was the focus on suspects of exclusively Greek ethnicity. Not only was it perceived as discriminatory, it provoked outrage amongst members of one of Australia's largest minority groups. The resulting political damage to the coalition government was substantial. A Greek newspaper referred to the 1979 New Year's message of the Minister for Immigration and Ethnic Affairs as reminiscent 'of a mafia, which kills and then sends flowers to the funeral of its victims' (Kelly 1979).

The prosecution was marred by an apparent lack of planning, as well as an episode of questionable propriety. The Commonwealth Police simply did not have the staff to arrest and charge 1,000 people. Manpower limitations and the mountain of paperwork confined the operation to 181 arrests and subsequent proceedings. The prosecution stalled early on when the police were unable to provide particulars of the charges to the defence. Many months passed, during which the defendants, free on bail, were required to report regularly to local police stations.

The Department of Social Security, having become increasingly embarrassed by its involvement in the case, sought to distance itself from the prosecution, and was disinclined to proceed with any lesser charges under the Social Security Act. This locked the police into proceeding with conspiracy charges, despite the inadequacy of evidence. The prosecution case was thus dependent on the testimony of Nakis, and the deception that Nakis was in fact a co-conspirator, rather than a public agent who stood to profit from a huge reward for incriminating as many of the accused as possible.

As the defence began to focus on Nakis' precise role in the investigation, Chief Inspector Thomas was placed in a position where, under cross-examination, he would have to reveal the nature and duration of his relationship with Nakis. Taking advantage of an adjournment, Thomas requested an urgent (and most improper) conference with prosecution lawyers on 2 November 1979, during which he revealed that he had known Nakis as early as September 1977, at least six months prior to the April 1978 raids. Counsel for the Crown regarded Thomas' withholding of this information as outrageous, but nevertheless chose not to disclose it on the next day of committal proceedings (Chobocky 1987). Thomas later denied that the meeting took place. On subsequent cross-examination, Nakis refused to answer further questions on the grounds of potential self-incrimination. He flew back to Greece, first class, at the expense of the Australian tax-payer. In the words of Senator Don Grimes:

The Attorney-General's Department, through its senior officers, were involved in negotiations about paying a reward to the informant in this case. The prosecution, who were being instructed by the Attorney-General's Department, claimed that they were not informed about the reward or that there was an informant. In fact, they thought Mr Nakis was just another Crown witness until later in the case. It seems to me that the circumstances are that senior officers of the Attorney-General's Department either deliberately did not tell the prosecution of this, in which case they are likely to be guilty of a considerable breach of justice, or they didn't do so because of incompetence or inadvertence, in which case the capacity of senior people in the Attorney-General's Department who are charged with upholding justice in this country is in question. I can see no other alternative (Grimes 1987).

Nakis was not the only Crown witness who failed to live up to expectations. Anastassia Artopolou was flown in from Greece to testify, but her evidence was so discredited that the Crown had her stood down after nine days of testimony.

In late 1981, the government withdrew charges of conspiracy against Ill defendants. Four doctors were eventually committed for trial on conspiracy charges. At the conclusion of committal proceedings, the magistrate, Bruce Brown, was scathing in his criticism of police practices in the case:

I propose to bring the circumstances of these actions by Detective Chief Inspector Thomas to the notice of the relevant Attorney-General, with a view to proceedings being taken against him for conspiracy to pervert the course of justice, or for perjury, or for both ... Turning again to the Nakis-Thomas revelation, I am of the view that the evidence has established the highest impropriety by the then Detective Chief Inspector Thomas. That he permitted Detective Theodorakis to go about his undercover duties unaware of the secret agreement between Thomas and Nakis, is nothing short of scandalous. That he contrived the second and third records of interview that he conducted with Nakis is a matter of grave concern - no doubt done for the purpose of improving the quality of the evidence (quoted in Chobocky 1987).

Federal Attorney-General Gareth Evans pre-empted further developments when he notified the Magistrate that he would not propose to take any further action against Thomas.

But the magistrate himself was accused of improper conduct. His decision to commit the doctors for trial was challenged in the Federal Court. It was alleged that he had made two telephone calls to the senior official in the Commonwealth Attorney-General's Department who was directing the prosecution case. Mr Justice Fox of the Federal Court found the magistrate's private and confidential communication of his views to the solicitor for one party constituted a denial of natural justice. The decision to commit the doctors for trial was quashed on 30 May 1985, more than seven years after 'Don's Party' had taken place.

Of 181 persons initially charged with conspiracy to defraud the Commonwealth, four were convicted on that charge. Three defendants (all patients) pleaded guilty to the charge against them. All were placed on good behaviour bonds. One defendant, a doctor, was tried and convicted on a conspiracy charge and sentenced to a term of imprisonment. He appealed successfully, but was tried and convicted a second time.

A further thirty-three alleged conspirators were convicted on substantive charges of imposition. These charges involved minor irregularities, some bordering on the trivial. Eight were fined, and the remainder placed on good behaviour bonds.

According to the official version of events, 'Don's Party' and its aftermath was almost exclusively a police operation. On 19 February 1979, Dame Margaret Guilfoyle, Minister for Social Security at the time, denied having seen the letter of 16 September 1977 outlining the COMPOL proposal for extensive investigations. Dame Margaret further maintained that the Corrigan letter of 5 October 1977 ('The Minister for Social Security has agreed for COMPOL to undertake investigations outlined in the Acting Commissioner's memorandum of 16 September 1977') was written without her knowledge and consent.

In a minute to the Director-General of Social Security dated 11 February 1979 and entitled 'Alleged Invalid Pension Fraud' (obtained under the Freedom of Information of Act), Corrigan replied:

I would certainly not have advised that 'The Minister for Social Security has agreed . . .'without a clear understanding of advice to me that this was the position.

In the same minute he went on to reveal another difficulty experienced by the Department:

At the time the correspondence was handled we were concerned to prevent any leak of important minutes to the Minister and this matter was dealt with verbally because of that concern.

The government continued tobe embarrassed by 'Don's Party' and its aftermath. Dame Margaret Guilfoyle, in replying to parliamentary questions, informed the Senate that none of the alleged conspirators had been photographed holding a sign on which the word 'Greek' was written, nor had any telephones been tapped. Later, she conceded that the word in question had been 'Greece' and that phone calls had been recorded by police agents without the knowledge or consent of the other party.

The extent to which federal Cabinet may have been involved in, or was at least aware of, events leading up to 'Don's Party' remains a matter for speculation. Certainly much of the business of Cabinet is trivial compared to an operation involving scores of arrests, the termination of hundreds of pensions and the targeting of members of a single ethnic group for criminal prosecution. One may have to wait thirty years, until the expiry of the standing embargo on Cabinet documents, before the question is definitively answered. But some interesting clues exist: on 19 December 1979, Patrick Lanigan, Director General of Social Security, wrote a confidential letter to Sir Geoffrey Yeend, Secretary of the Department of the Prime Minister and Cabinet. The letter was obtained under the Freedom of Information Act. In the middle of a lengthy discussion of the police operation, three blank spaces appear, each bearing the notation:

This section has been deleted because the information is exempted under Sect. 34 of the F.O.I. Act.

Section 34 refers to the exemption of Cabinet documents, in addition to:

a document the disclosure of which would involve the disclosure of any deliberation or decision of the Cabinet ...

The coalition government was defeated in the elections of March 1983. On 31 January 1984, the Attorney-General of Australia, Gareth Evans, and the Minister for Social Security, Don Grimes, announced the appointment of a judicial inquiry to determine the appropriate compensation for those persons who had been wrongly prosecuted as a result of 'Don's Party'. The inquiry was headed by Dame Roma Mitchell, who was granted the powers of a royal commissioner.

In the Letters Patent issued 9 February 1984, the Australian government accepted liability, not only for any acts and omissions of its public servants, but also for those of the police and of ministers of the crown.

The government maintained that the purpose of the inquiry was restitutive, and it was declared at the outset that the inquiry would not be a witch-hunt into what went wrong nor a general review of the case. The inquiry was limited to those cases involving persons who had been the subject of criminal charges; other beneficiaries whose payments had been suspended or cancelled were left to seek redress through administrative avenues or through civil litigation of their own motion.

The Mitchell Inquiry reviewed submissions from individual claimants, as well as relevant files held by the Department of Social Security and the police. Public hearings were held in both Sydney and Athens to enable the legal representatives of claimants to make oral submissions.

The police and social security files contained material which reflected adversely upon a number of the claimants. It is interesting to note the inquiry's evaluation of these materials:

Where Counsel Assisting considered that such evidence was relevant and of probative value it was brought to the attention of the claimant's legal representatives and an explanation was sought from the claimant in relation to it. I report that in the majority of cases satisfactory explanations were received for events and circumstances which might otherwise have reflected adversely on the veracity of the claimants (Australia 1986, p. 24).

The report of the Mitchell Inquiry was presented to the Governor-General of Australia on 30 April 1986. it recommended the payment of compensation totalling $6.1 million plus an additional sum of $1.24 million for legal costs that had thus far been borne privately by the medical practitioners who had been implicated in the alleged conspiracy.

Redress for those who managed to escape prosecution, but whose social security benefits were suspended, also proved to be a long, drawn out process. A year after the termination of benefits, a Sydney psychiatrist lodged a complaint with the Commonwealth Ombudsman on behalf of a patient. The complainant contended that the benefits had been wrongfully suspended. The Ombudsman commenced a formal investigation in December 1979. Three years later, the complainant had yet to be notified of the outcome of the investigations. In December 1982, the Public Interest Advocacy Centre (PIAC) in Sydney inquired on behalf of the complainants, and was notified that the investigation was still ongoing. Meanwhile, by early 1983 a number of complainants were still not in receipt of benefits; the more fortunate were able to rely upon the support of family and friends.

The Public Interest Advocacy Centre, which sought to proceed against the Department of Social Security, was reluctant to do so prior to completion of the Ombudsman's inquiry. Meanwhile the deadline for the commencement of action to recover damages was approaching.

In keeping with the practices of the Ombudsman's office, a draft of the report was forwarded to the Department of Social Security for its comment in March 1983. By this time, nearly five years had elapsed since the benefit payments were terminated. When the PIAC, acting for the complainants, sought to obtain details of the case from the Ombudsman's office, it was advised 'it is only on completion that the Ombudsman is in a position to give a complainant particulars of the results of his investigation' (Cashman 1985, p. 228).

As the continuing delay on the part of the Ombudsman's office was impeding the progress of legal action to recover damages, PIAC sought to obtain a copy of the draft. The Ombudsman's office refused, pursuant to the provisions of the Ombudsman Act 1976 (Cwlth) which were interpreted as imposing strict requirements of secrecy. PIAC then lodged a formal request for the draft and related documents, under the Freedom of Information Act. This too was refused, again on the grounds that disclosure was prohibited by the Ombudsman Act. An FOI request to the Department of Social Security was refused, on the grounds of Section 16 of the FOI Act, that the subject matter of the document in question was more closely connected with the functions of another agency - the Ombudsman's office.

A request was then made of the Minister for Social Security, who, in his previous capacity as Opposition spokesman on social security matters, had expressed considerable concern for those unjustly victimised by the cancellation of pensions. The Minister advised that the Ombudsman's draft report was not in his possession. An overture to the Prime Minister, the minister responsible for the Ombudsman, was similarly unsuccessful.

An appeal to the Administrative Appeals Tribunal resulted in a decision which held that while the Ombudsman was not entirely outside the ambit of the FOI Act, the secrecy provisions of the Ombudsman Act were grounds for exemption from FOI. The implications of this decision extended well beyond the present case, given that some 200 other pieces of Commonwealth legislation contained secrecy provisions. The matter was then appealed to the Federal Court, which held that secrecy provisions of the Ombudsman Act did not in themselves preclude disclosure under FOI.

The Ombudsman's office did not take the decision lying down. Under the Administrative Decisions (Judicial Review) Act 1977 (Cwlth) it sought to raise additional grounds of exemption from FOI such as legal professional privilege (s. 42), material obtained in confidence (s. 45), and material which might have an adverse effect on the proper and efficient conduct of an agency (s. 42(l)(d)).

These efforts by the Ombudsman inspired the following response from Mr Justice Sheppard of the Federal Court of Australia

... a public official is not entitled to scratch his head every time he loses a round and say: well, I will think of something else, and put this up as a barrier. That is not the way that the thing should be allowed to go on ... It's just not on for litigation to be conducted in this way (Cashman 1985, p. 231).

In July 1984 His Honour handed down his decision. The Ombudsman was directed to allow access to that part of the report containing truly factual material. The remainder, nearly a third of the document, was held to be a deliberative process document, and thereby exempt.

The Ombudsman's report was never published, but a copy was obtained by The Canberra Times and summarised in a front page article (Coyle 1984). The report was a critical condemnation of the Department of Social Security. It maintained that the decisions to suspend benefit and pension payments to clients in Greece and Australia were unreasonable and unjust. The actions of the Department were faulted for not having been based upon any formal determination of guilt, nor having accorded the beneficiaries any right of reply. The normal procedure of allowing a three-month grace period between the announcement of a decision to terminate benefits and the actual cessation of payments was not followed - nor was the practice of continuing payment pending the outcome of appeals. In addition, the Department failed to keep appellants informed of the progress of their appeals. In the words of the Ombudsman:

There was no evidence of forethought being given to the impact of suspension before the decision was made.

... in any event suspension at large before proof of guilt of those affected by the suspension is a reversal of the normal concept of justice in our society.

Justification rests on the belief of group guilt, and the action constituted a penalty in advance of assessment of all the pensioners in the light of their individual circumstances (Commonwealth Ombudsman 1984, pp. 90-2).

The Ombudsman recommended that back payments and compensation for loss of fringe benefits be made to some pensioners, and that airfares be refunded for those who had returned to Australia for the purpose of appeals.

The Department of Social Security was wounded by the Ombudsman's report. But rather than display contrition, counsel for the Department at one stage referred to it as 'one of the most prejudicial reports of any Commonwealth Officer which I have read' (Cashman 1985, p. 235).

In June of 1985 the government announced that compensation would be paid to persons whose benefits were discontinued in addition to those individuals whose circumstances were reviewed by the Mitchell Inquiry.

No disciplinary proceedings, much less criminal charges, were brought against police officers or public servants as a result of the conspiracy case.

A Welfare Rights Centre was established in Sydney in 1983 to provide a first line of defence against future infringement of the rights of welfare benefit recipients. Because of the vigilance of organisations such as this, it is unlikely that any abuses on the scale of 'Don's Party' can occur in future.

For its part, the Department of Social Security in dealing with cases of suspected fraud, now prefers to proceed with substantive charges under the Social Security Act and the Crimes Act 1914 (Cwth) rather than under general conspiracy charges. The establishment in 1984 of the office of Director of Public Prosecutions has provided the Department with an added awareness of evidentiary requirements in prosecution cases.

In keeping with the unfortunate Australian habit of referring to non-Anglo-Saxons in terms of their ethnic origin, 'Don's Party' and its aftermath became known as the 'Greek Conspiracy Case'. The total cost to the Australian tax-payer approached $100 million, a sum vastly in excess of that which was originally alleged to have been fraudulently acquired.

A decade after 'Don's Party', the only real winners appeared to be those members of the legal profession whose good fortune it was to have become involved in the various legal proceedings which were as lucrative as they were protracted. Political commentator Mungo MacCallum referred to the case as a Bleak House type picnic for the legal profession. The case culminated in what was arguably the longest and most expensive committal hearing in the history of the English speaking world. It may not have been entirely coincidental that two of the major protagonists, Don Thomas and Patrick Lanigan, whose careers were not enhanced by the raids and their aftermath, both resigned their positions and joined the New South Wales Bar. In retrospect, Thomas concluded:

I'd certainly conduct the case in that way again, but I think that I would have the politicians put everything they said on paper before I started (Thomas 1987).

*The author gratefully acknowledges the contributions of the Public Interest Advocacy Centre, Peter Cashman and Roger West in the preparation of this chapter.

References

  • Australia 1986, Commission of Inquiry into Compensation arising from Social Security Conspiracy Prosecutions: Report - Volume I, (Dame Roma Mitchell, Commissioner), Australian Government Publishing Service, Canberra.
  • Cashman, Peter 1985, 'The Ombudsman - Another View', Canberra Bulletin of Public Administration, vol. XII, no. 4, pp. 228-39.
  • Chobocky, Barbara 1987, Witch Hunt, Documentary Films Ltd., Sydney.
  • Commonwealth Ombudsman 1984, Report Pursuant to Section 15 of the Ombudsman Act 1976 on a Complaint by Dr Y. Lucire about the Actions of the Department of Social Security, Ombudsman's Office, Canberra.
  • Coyle, K. 1984, 'Pensions Cut Condemned : Ombudsman Reports on Greek Social Security Case', The Canberra Times, 17 October, p. 1.
  • Grimes, Don 1987, Interview in Chobocky, B., Witch Hunt, Documentary Films Ltd, Sydney.
  • Kelly, Paul 1979, 'Conspiracy Case : A Political Powder Keg', The National Times, 24 November, p. 3.
  • Thomas, Don 1987, Interview, in Chobocky, B., Witch Hunt, Documentary Films, Ltd., Sydney.