A remarkable Australian narcotics ring led by N.S.W. police officers became the first major group ever arrested in the United States for smuggling Asian heroin. Convinced that most of America’s heroin was being supplied by what was known in popular parlance as the ‘Marseille connection’, U.S. narcotics agents devoted most of their efforts to disrupting the flow of drugs along the Turkey-Marseille-New York corridor and hardly ever encountered Asia-based smuggling operations.
Alerted by Australian Commonwealth Police in 1966, U.S. narcotics agents began investigating the movements of Australian couriers moving between Sydney, Hong Kong, and New York. Then, in January 1967, a joint Australian-American police operation made arrests in New York, Miami, Honolulu and Sydney, netting fifteen couriers and organizers, eleven of whom were Australians. Subsequent interrogations discovered that the ring had operated for only six months but had moved at least 45 kilograms of unadulterated No. 4 heroin worth U.S.$22.5 million between Hong Kong and New York. Arriving in Hong Kong from Sydney, couriers were loaded with 5 to 6 kilograms of heroin in corsets and specially-sewn vests, and then flew to New York through a maze of international air routes taking care to conceal their Hong Kong stopover through the use of a duplicate passport.
Although initially organized by four N.S.W. police officers on a freelance basis, the Sydney ring, known in the local press as The Corset Gang’, soon became integrated into the export operations of one of Hong Kong’s ‘Big Five’ Chiu Chow Chinese syndicates and the supply network of the American Mafia. Demonstrating the capacity of Australian dealers to develop close contacts with both the American Mafia and Asian heroin merchants, the origins and operations of Australia’s first international narcotics ring merits some close study.
The central figure was John Wesley Egan, then a twenty-nine-year-old N.S.W. Special Branch officer. A handsome, well-built man with a high IQ of 137, Egan quit Sydney Boys High after passing the Intermediate Certificate and joined the N.S.W. police as a cadet. Working with a man he would only identify as ‘Sergeant X’, a senior Special Branch officer who also owned a Kings Cross nightclub, Egan began smuggling watches and learned the ‘clandestine arts’ in which the Special Branch was so expert.
After Customs discovered the watch racket and ‘Sergeant X’ was dismissed from the police, Egan, who was not implicated in the case, began looking for another business opportunity. Over a beer one day in 1966 at the Royal Oak Hotel in Double Bay, Egan’s friend George B. Hopes, forty-four, a member of the Painters and Dockers Union and well connected to the Sydney milieu, suggested that they might try heroin smuggling. Egan made a telephone call to New York and spoke to a man he later identified as ‘Don’, a former CIA operative he had met in the course of his Special Branch work then believed to be ‘connected to the Mafia biggies who controlled drugs in the U.S.’ With ‘Don’s’ assurance that there was a customer waiting, Egan purchased a kilogram of pure heroin in Sydney through one of Hopes’ contacts, a Sydney import dealer named Charles T. Bennett, and flew to New York. With a $6,000 profit from his New York trip, Egan purchased another kilogram of heroin and Hopes flew off to New York, returning four days later with $28,000 in cash. Taking periodic leave, Egan began making regular flights to New York to arrange sales. Within four months his air fares with Qantas amounted to $46,000 and, having exhausted all his leave, he resigned from the N.S.W. police.
Egan moved to New York in mid-1966 with a partner, Bryan J. Hill, who had also resigned from the N.S.W. police. At its peak Egan’s smuggling network was a complex but efficient and profitable enterprise. While his Sydney agents recruited ‘clean skins’, usually N.S.W. police officers on leave, with the promise of $1,000 for the seven-day run, his Hong Kong agent, a young New Zealand exporter named Glenn Reid, dealt with the local Chiu Chow, heroin merchants and loaded up the couriers when they arrived from Sydney. Usually keeping about twenty couriers in various stages of motion between Sydney and New York, Egan used the ‘shotgun’ technique which involved booking three or more couriers, not known to each other, on the same flight with a ‘supervisor’ riding on the same plane to make sure none absconded. While the couriers cleared customs in New York, Egan watched from the observation deck to make sure there were no arrests and then returned to Manhattan where he met them and took delivery.
Dealing with a select number of major black dealers, Egan packed the heroin in a briefcase and made the exchange in a public place. Egan later claimed that the blacks were simply ‘fronts’ for Mafia syndicates: ‘This way, Mafia men could never be directly linked to the selling of heroin’. After deducting expenses, the operation was earning $80,000 a week. Initially at a loss as to what to do with so much cash, Egan at first bought new suitcases and stacked the money in his closet, but later discovered large denomination American Express Travellers Cheques a more convenient way to save.
By late 1966, after only six months in the business, John Wesley Egan had $250,000 in various Sydney safe deposit boxes and had begun to contemplate his retirement. But it was already too late. A clerical employee in the Department of Customs had discovered anomalies in the ring’s numerous passport applications and filed a complaint with Commonwealth police, who in turn contacted the U.S. Bureau of Narcotics. Drinking one evening at Sydney’s Tatter-sail’s Club, Egan was approached by a N.S.W. detective who said quite simply: ‘They’re on to you’. Almost immediately Egan phoned Hill and ordered him to collect outstanding accounts and close the business. Flying to Hong Kong the next day, he instructed Glenn Reid to cancel all orders and personally flushed $200,000 worth of heroin down a toilet. He then flew to New York, met Hill and, eluding a police surveillance team, fled to Miami where they planned to make their escape back to Australia via the Bahamas.
Since neither Egan nor any of his couriers had yet been apprehended with heroin in possession, he was still confident that he could quit the business and return to Sydney without facing charges. But then the unexpected happened. Instead of destroying all the heroin as he had been ordered, Glenn Reid had saved two kilograms and was arrested clearing U.S. Customs at Honolulu.Apparently deciding to co-operate with the U.S. Bureau of Narcotics, Reid got a message to Egan asking him to call. Foolishly, Egan did just that and within hours he was arrested. Although Egan jumped bail in New York and escaped to England where he remained in hiding for three years, he was eventually kidnapped by American authorities and returned to the United States where he served out an eight-year prison sentence. Commenting on the case, a spokesman for the U.S. Bureau of Narcotics said: ‘It is the most unusual drug case we have ever investigated. Most of the heroin that comes to the United States comes from the European area. This is a new twist to the racket.’
Egan’s career in crime is illustrative of the ease with which Australians could enter the international heroin trade in the late 1960s. International heroin syndicates were business-like organizations willing to deal with anyone capable of meeting their needs. More importantly, the ‘Corset Gang’s’ operations revealed the capacity for corruption within the N.S.W. police. Beyond the level of simple corruption, Egan, Bryan Hill and the anonymous ‘Sergeant X’ were ample proof that there were officers in the N.S.W. police who were willing to use their uniform and law enforcement experience to become entrepreneurs in crime. Thus, by the late 1960s it was evident that, in addition to a growing demand for drugs, New South Wales had a police force with the requisite tolerance for corruption to sustain a high level of drug trafficking. But it was also clear that the Sydney drug market was not yet highly developed and heroin demand was still slack. In its initial runs the gang carried Sydney heroin to New York, indication of weak demand in New South Wales, and later did not find it worthwhile to bring Hong Kong heroin to Sydney.
from Drug Traffic by Alfred McCoy