Sussan Ley (Farrer, Liberal Party, Shadow Minister for Justice and Customs) Share this | Hansard source

I am pleased to speak on the Crimes Legislation Amendment (Serious and Organised Crime) Bill (No. 2) 2009. I would like to make some preliminary remarks in order to place this bill in its full context, which is transnational organised crime and Australia’s response from the perspective of our law enforcement agencies. We need to understand the environment in which organised crime operates in the modern world. Those who work in the field combating organised crime often describe it as a threat, no less damaging and just as deliberate as national security. The CEO of the Australian Crime Commission, John Lawler, stated in an address to the Financial Review Defence Conference in September this year:

… in the last two decades alone, organised crime groups have:

(a)

contributed to the fall of the Japanese government through massive systemic corruption,

(b)

been behind activities that represent roughly 12 per cent of Italy’s entire economy, and

(c)

taken control of most of Russia’s 200 banks and half of its financial capital.

Organised crime is deliberate with far-reaching consequences. Current Australian Crime Commission intelligence suggests the cost of organised crime is between $10 and $15 billion each year. A significant proportion of this is being sent offshore and illicit drug trafficking represents the source of approximately half of these funds. Modern-day organised crime involves the laundering of billions of dollars using complex corporate structures and financial instruments.

Our agencies are having some success in this fight. The Australian Crime Commission’s task force Gordian, which went from May 2005 to June 2007 and investigated networks and structures used by organised crime groups, is a good example. It investigated how those groups financed criminal enterprises, laundered money and evaded tax. As a result, 16 criminal syndicates have been disrupted and 73 persons charged for laundering what is alleged to be in excess of $93 million and for drug and other offences. This has significantly disrupted the activities of an organised crime syndicate with well-developed channels allegedly used to siphon the profits of drugs to South-East Asia. In this case, the money launderers had infiltrated an international airline and international banks.

The challenge that we face is that when you place increasingly sophisticated organised criminal syndicates in today’s unpredictable and ever-changing business environment there are opportunities for criminals and there are gaps in intelligence. Criminals are able to hide their activities and remain undetected within an industry and white collar criminals are able to mask their illegitimate activities behind perfectly legitimate ones. The landscape is constantly changing. We do not know the identity of all of the criminal groups operating within our jurisdiction. It takes time, resources and expertise to understand and untangle criminal economic movements.

Legitimate businesses may unwittingly provide facilities and financial instruments that can be used for money laundering or fraud. High-level criminal groups can expand operations quickly into an area, carry out their activities and then move on into something else. The Australian Crime Commission has an important intelligence-gathering function. This intelligence is shared with partner agencies, including the AFP, the state police forces and the Australian Customs and Border Protection Service to name a few. The Australian Crime Commission is looking for the criminal footprint in datasets and where there are opportunities for intervention and where the weaknesses lie. It is not just about arrests and seizures but about collecting information.

Part of this intelligence collection involves data matching. It might, for example, show that those on the ASIC database of company directors may also be known identities within, say, outlaw motorcycle gangs. There is also the example of the high rollers at our casinos. Some may be money launderers, for example. An individual—and this is from real life—completely off the radar of law enforcement spent $13 million at a casino in one year. Further investigation finds that he is collecting Centrelink benefits. This instance led Centrelink to perform more such data matches with the ACC of its customers and those who the casino reports as dealing in cash amounts above $10,000, according to its obligations with AUSTRAC.

This money finds its way offshore. There are three ways that this can happen. Criminals can use the regular financial system, which should be picked up by AUSTRAC through the reporting requirements that entities such as remitters have. There is also trade based money laundering. For example, an academic took a segment of trade based data, looked at the invoices and found that seven per cent of the total was under invoiced. The proceeds of crime were moving from one country to another. The third way is called ‘cuckoo smurfing’. This is when criminals replace legitimate money intended for legal transfer into Australian bank accounts with the proceeds of crime. The original funds are then used overseas. We should consider the impact of potentially billions of dollars going offshore in terms of lost jobs, lost projects, lost infrastructure and lost revenue.

The lifeblood of serious and organised crime is money. We have to identify and attack those criminals who are generating the most illicit wealth. Literally billions of dollars every year leave the Australian economy. This criminal wealth reappears in the legitimate economy. The movement of money between the two creates vulnerabilities for criminals and the opportunity for law enforcement to identify and attack organised crime through its finances. The profits are extremely lucrative. They are estimated by the Australian Crime Commission to generate $200 from every $1 invested. So examining the real-time money flows allows us to pursue money laundering offenders.

Investigators need a range of capabilities, including telephone intercepts, covert sources, surveillance and analytical capacity. They need adequate resources to do their job properly. That is the operational perspective. The legislative perspective involves parliaments providing the right legislative environment. This bill is part of the comprehensive national response to combat organised crime.

Criminologist John Walker has stated that we are seeing a failure of traditional policing to fight the drugs trade. When you consider the statistics on drug use, the flow of drug money offshore and the drugs that are clearly slipping into this country through a border protection net that is full of holes, you can sense the frustration of our police services in dealing with what is rapidly becoming an economic problem. The introduction of the unexplained wealth provisions in the bill before us recognise an unfortunate fact: those sitting at the boardroom table of organised crime groups are not the ones going to jail or even going to court.

As a member of the Joint Committee on the Australian Crime Commission, I was part of that committee’s investigation of, among other things, the confiscation of the proceeds of crime. While all Australian jurisdictions have civil forfeiture regimes—that is, the confiscation of assets is based on a civil rather than a conviction standard of proof—the Northern Territory and Western Australia go one step further, allowing the deputy police prosecutors to apply to the courts for a confiscation order if a person has unexplained wealth. This means that in those jurisdictions it is not necessary to demonstrate on the balance of probability that the wealth has been obtained by criminal activity. Instead, it places the onus on an individual to prove that their wealth was acquired by legal means. As members of the committee, we heard both sides of the argument for and against unexplained wealth provisions.

There is, I should add, some support in international law for the adoption of such provisions at Commonwealth level from the Interpol General Assembly, which resolved in 1997 that unexplained wealth is a legitimate subject of inquiry for law enforcement institutions in their efforts to detect criminal activity and that, subject to the fundamental principles of each countries domestic law, legislators should reverse the burden of proof and use the concept of reverse onus in respect of unexplained wealth. The Police Federation of Australia argued strongly for unexplained wealth levels at the Commonwealth level. I will quote from their submission to the inquiry, because it sums up the case very well:

Do Australian police know who is involved in organised and serious crime in Australia? Do we know who they are? The answer is yes. Can we prove beyond reasonable doubt that these criminals are involved directly in those crimes? The answer is no. Are we aware that these criminals possess or have effective control of unexplained wealth? The answer is yes. Can these criminals or those holding the assets and wealth for these criminals explain on the balance of probability that they legally obtained that wealth or assets? The answer is no. We do not have to link anything to a crime. It is about them on the balance of probability explaining that they have got legally obtained wealth … We have not got any legislation in Australia to deal with that at the Commonwealth level … Unexplained wealth is the easiest way as a crime prevention method to stop further crime, because, if the individuals who are holding onto these assets cannot explain them … the tendency is to just hand it over because they do not want to get into a debate about whether they are involved in criminality or not.

Arguments against unexplained wealth laws had as their main concern the reversal of the onus of proof. The Law Council stated that such laws undermine the presumption of innocence, infringe on the right to silence, have insufficient appeal rights and may be applied in an arbitrary fashion. The Australian Council of Civil Liberties stated that, from their point of view, existing confiscation laws are working adequately.

I now turn to the specific provisions of the bill before the House. This bill is a very important one. It is intended to implement a national response to organised crime. All members of the coalition are acutely aware of the great cost including human costs that organised crime imposes on society. Our record is a proud one of developing and implementing innovative methods to defeat this national scourge. However, we are also conscious that the measures used to combat organised crime have the potential to sweep up the innocent in their net. Great powers given to our law enforcement authorities, despite our best intentions, are also capable of producing injustice and oppression if the use of those powers is not properly circumscribed and subject to effective oversight. When introducing significant new anti-crime measures, as legislators, we must always weigh up the potential for and consequences of abuse of those measures. The key proposals of this bill are criminal asset confiscation and unexplained wealth.

Schedule 1 amends the Proceeds of Crime Act by introducing unexplained wealth orders to the confiscation processes. This targets wealth that a person cannot demonstrate to have been lawfully acquired. If a court is satisfied that an authorised officer has reasonable grounds to suspect that a person’s total wealth exceeds the value that has been lawfully acquired it can compel the person to attend court to prove on the balance of probabilities that the wealth was not derived from offences with a connection to Commonwealth power. If the person fails to meet this onus, the court must order them to pay to the Commonwealth the difference between their total wealth and their legitimate wealth. Restraining orders are available in aid of this order and in advance of such an order.

At the time of applying for a restraining order, the DPP need not prove that the property is subject to the person’s effective control but must state the grounds for such a suspicion. If these requirements are met, the restraining order must be made even if there is no risk that the property will be disposed of or otherwise dealt with. It may also apply in relation to property that is not yet in the possession of the suspect. Property may be excluded from the scope of the order if the court is satisfied that it belongs to another person and is not under the suspect’s effective control.

A restraining order will cease to apply if the DPP has not applied for an unexplained wealth order within 28 days or if an unexplained wealth order is refused and avenues of appeal are closed or otherwise disposed of. The bill also provides for time limited asset-freezing orders in aid of the Proceeds of Crime Act. These apply for three days and are directed to accounts held by financial institutions.

Schedule 2 amends the regime applicable to non-conviction based orders. Currently there is a limitation period which precludes confiscation if offences are not detected until more than six years after the offence was committed. The review recommended extension of the limitation period to 12 years but the bill proposes removing the time limit altogether. Amendments are also proposed to ease the recovery of legal costs by legal aid commissions from restrained assets.

As to controlled operations, assumed identities and witness identity protection, the bill proposes amendments to the Crimes Act 1914 in response to the High Court’s decision in Gideon v Commissioner of the New South Wales Crime Commission (2008), which placed in doubt the protection of participants in a controlled operation. A controlled operation is one in which undercover law enforcement officers are authorised to do certain things that would otherwise be illegal in order to obtain evidence of a serious offence. The amendments to the assumed identities regime will introduce mutual recognition provisions to permit undercover officers lawfully to obtain identity documents in other jurisdictions. The witness identity protection scheme applicable to undercover officers will enable certificates issued in one jurisdiction to be recognised in other jurisdictions.

In regard to joint commission, the bill proposes to amend the Criminal Code Act 1995 to cover circumstances in which there is an agreement to commit an offence and an offence is committed under that agreement. Recent court decisions have raised doubt that the common-law principle of joint criminal enterprise is encapsulated in the code. The concept is broader than conspiracy, procuring or complicity and is intended to ensure that full criminal liability attaches to participants.

As to telecommunications interception and criminal organisations, the bill proposes to amend the Telecommunications Interception and Access Act 1979 to include in the definition of ‘serious offence’ associating with, contributing to, aiding and conspiring with a criminal organisation or a member of that organisation for the purpose of supporting the commission of prescribed offences. These are recently introduced state and territory offences commonly known as the bikie laws. Telecommunications interception will be made available to state and territory law enforcement agencies for investigation of these offences.

The provisions of this bill relating to undercover operations and joint commission of offences make relatively technical amendments. However, the provisions relating to unexplained wealth raise significant civil liberties concerns and have generated substantial criticism. The unexplained wealth provisions are invasive. It is important that this bill should be placed under close scrutiny to ensure that adequate safeguards exist and that the arguments in favour of the proposals are properly articulated and justified.

The bill was referred to the Senate Legal and Constitutional Affairs Legislation Committee, which delivered its report on 17 September. The evidence to the committee included detailed submissions from the Law Council of Australia and all of the principal Commonwealth law enforcement and prosecution agencies. Significant concerns were expressed, in particular about the unexplained wealth provisions, by the Law Council, Civil Liberties Australia and members of the committee across party lines. Particular concerns were that an unexplained wealth order was mandatory rather than discretionary; the only link to any wrongdoing was an authorised officer’s suspicion that a person’s wealth was linked to any Commonwealth offence, state offence with a federal aspect or foreign offence; and the safeguards against abuse of these powers were very limited.

The committee recommended quite extensive amendments to the bill. The most important of the committee’s recommendations are that a court should have a discretion to refuse to make an unexplained wealth order; the ground upon which an officer suspects that a person’s wealth exceeds his or her lawfully acquired wealth must be specified in any supporting affidavit; and, in relation to joint commission of offences, there should be safeguards where an accused person terminated his or her participation and took reasonable steps to prevent the commission of an offence.

The government has circulated amendments which purport to give effect to some of these recommendations, excluding those relating to joint commission of offences. However, it is still not clear whether the safeguards proposed are adequate. The sole ground for the exercise of any discretion by a judge not to make an unexplained wealth order is if it is ‘not in the public interest’ to do so. Indeed, some aspects of the legislation have been tightened, in particular those relating to hardship caused to dependants by the making of an unexplained wealth order.

Despite our heartfelt support for measures designed to combat organised crime, and the fact that these measures will undoubtedly assist our law enforcement agencies in that vital task, there is still a real risk that these laws are open to abuse. In the course of consultations on this bill, we have had many examples of the great benefit they would be in the investigation of the kingpins of organised crime. That is not in dispute. We could hear many more examples and we would agree in each case that unexplained wealth orders would be extremely useful. But what we need to hear is what would happen if the innocent were caught up in the process by an overzealous prosecutor. These things happen. We live in a society where the right to privacy is respected and where ordinary people have the right to live their lives without explaining their lifestyle to the authorities or anyone else or having their assets frozen or confiscated on nothing more than an officer’s suspicion. This is a society that operates under the rule of law, and we on the coalition side will ensure that the rule of law is respected. Organised crime must and will be brought to heel, but it must not be done at the cost of ruining innocent lives.

We are confident that the appropriate balance can be struck. The government’s amendments are a welcome start. The coalition have further amendments for which we will seek the government’s approval, failing which we will move them in the Senate. I thank the House.

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