The Woodward Royal Commission

Despite sensibilities blunted by Sydney’s shock-horror school of journalism, the New South Wales public was quite genuinely aroused by the news of Mackay’s disappearance. In Griffith itself there was an ‘immediate conclusion’ that Mackay was dead and his death was ‘linked with his campaign against drug trafficking’. Ethnic tensions implicit in the anti-marijuana campaign came to the fore, and for several days Griffith Italians remained at home waiting nervously for signs of retaliation by the Australians.

Mackay’s anti-marijuana campaign had already captured the attention of the Sydney press. In the days following his disappearance, sharing none of the reservations of the police, the press labelled it a ‘Mafia’ killing. On 18 July The Sun expressed grave concern that ‘gangland murder should now be a part of the nation’s illegal drug industry’. The Sydney Morning Herald ran a long profile of the town under the headline, ‘Griffith — Marijuana Capital?’ The Australian featured an article bannered, ‘Griffith — In the Bloody Grip of the Mafia’, which began: ‘Call it what you like — the brotherhood, the society of honor, the family or the Mafia. It is flourishing in Australia and every level of authority chooses to do nothing about it.’

The N.S.W. government, already dallying with the idea of a drugs Royal Commission, was forced into action. Meeting with his police commissioner to discuss the Mackay case on 9 July, Premier Wran told the press of his decision to form a Royal Commission into drugs. Four days later Mr Wran expressed strong concern over ‘the sinister circumstances’ surrounding the Mackay disappearance and announced a $25,000 reward for information leading to a solution of the mystery. Despite these gestures, Mr Wran seemed reluctant to actually form the Royal Commission and less than two weeks after the Mackay murder lost the initiative to the Federal government when Prime Minister Fraser established a Commonwealth Royal Commission. Responding to pressures from the N.S.W. Opposition and a refusal by Commonwealth Police to entrust confidential files to allegedly corrupt N.S.W. police, the federal cabinet decided that a separate investigation was in order.Prompted by the Federal initiative, Mr Wran announced the formation of a State Royal Commission a week later under Mr Justice Woodward. With Mr William Fisher, QC, assisting as counsel, the Drugs Royal Commission held its first hearing on 10 August 1977 — only three weeks after the disappearance of Donald Mackay.

Shifting its venue to Griffith during the first week of September, the N.S.W. Drugs Royal Commission began what would become a near-fixation with cracking the Mackay mystery, at times taking on overtones of an anti-Italian vendetta. Setting the tone for the months of hearings to follow, the Commissioner, escorted by Mr Fisher, and Detective Sergeant Parrington, toured the parking lot of the Griffith Hotel followed by a horde of journalists. Among its first witnesses the Commission heard Mrs Barbara Mackay in camera. Following her testimony she gave an interview to the press which lent credence to the ‘Mafia’ thesis that the Commission itself was later to adopt with such enthusiasm. ‘If this Commission does not succeed you can write Griffith off’, said Mrs Mackay. ‘It would become a Mafia town, or at least a controlled town.’

In the midst of Griffith’s racially charged atmosphere, it is difficult to interpret the meaning of Mrs Mackay’s remarks. Griffith was already well on its way to becoming an Italian, in fact Calabrian, dominated community. Italians already occupied the prime agricultural land and were also coming to dominate the town politically. Many successful Italian farmers had begun to cash in their building society accounts and put up lavish Mediterranean-style villas near the town centre. None of these traits endeared the Italians to the native Australians, many of whom began to see themselves as the Riverina’s dispossessed. No longer able to shout ‘dago’ or ‘spag’ at a passing Italian on Saturday night, the native Australians muttered ‘marijuana’ each time a new villa appeared and whispered ‘Mafia’ as an explanation for the Calabresi’s growing political influence. In this sort of atmosphere, the use of the term ‘Mafia’ by Mrs Mackay, the media and the Royal Commission was probably based more on ethnic stereotypes than on hard evidence.

After nine months of hearings, William Fisher placed the imprimatur of official approval on the ‘Mafia’ thesis in the course of reviewing the evidence against Antonio Sergi and his business partner Robert Trimboli. The structure of Griffith’s cannabis cultivation was ‘consistent with the Society Honorata’s known origins’. Evidence of ‘common funds and common personnel and common method of operation’ added up ‘to the view you are looking at a secretive organization based on tribal or clannish loyalties . . . which probably has organizational links over most of Australia’. Made in open hearings before an attentive press gallery, Mr Fisher’s remarks on the Onorata Societa, or ‘Mafia’, were page-one news in Sydney’s tabloids. The Council for Civil Liberties called a press conference the following week and blasted the Drugs Royal Commission as a ‘Laurel and Hardy act’, charging that the Mafia statements constituted a ‘slur on the Italian community’ without any basis in the Commission’s evidence.

Using a painstaking ‘paper-chase’ method to track down all assets beyond income, Mr Fisher established clear evidence of both affluence and organization at the lowest levels within the Griffith marijuana trade, even if he did not confirm the existence of a nationwide Calabrian ‘Mafia’. By summing up the value of all the ornate furniture, garish chandeliers, and neo-baroque brickwork with which Griffith’s small circle of alleged Calabrian cannabis farmers had filled their ‘grass castles’, the Royal Commission showed clearly they had acquired money which they could not have earned from legitimate agriculture. Francesco Barbaro, a proprietor of a 9 hectare Griffith farm and married to Antonio Sergi’s sister, had an average nett annual income of $399 between 1969 and 1972. Showing the signs of sudden affluence in 1973-4, Barbaro built a $190,000 ‘shell’ for his house in 1975 and filled it with such luxuries as costly furniture and $8,000 in lighting fixtures. The supposed cannabis wholesaler for the Riverina District, Antonio Sergi, showed assets totalling $2,649,792; and his partner, Sydney produce distributor Robert Trimboli, had even larger assets amounting to over $3 million.

Speaking at the Royal Commission’s last public session in November and December 1978, Mr Fisher summarized the evidence against the alleged principals in the Griffith marijuana trade gathered in some sixteen months of investigations. For almost two decades after his arrival in Griffith from Calabria in 1952, Antonio Sergi lived the ‘very modest’ life. Mr Fisher sought to explain the ‘unbelievable suddenness’ of Sergi’s rise as a product of his role as the Riverina buyer for the area’s large marijuana crops. Examining the bank accounts of Detective Sergeant John Ellis, the country policeman whose sympathetic testimony was instrumental in reducing the sentences of the four Calabrian cannabis cultivators from gaol terms to fines in 1974, the Commission found that he had some $55,000 worth of assets in excess of income.

Despite an impressive amount of digging and a great mass of detail about the financial transactions of the suspect cannabis growers, Mr Fisher failed to corroborate his earlier claims of a powerful, nationwide Italian Onorata Societa. Instead, he had come full circle back to Griffith where he found a small network of Calabrian peasant farmers cultivating cannabis at the bottom rung of the distribution ladder.

The Royal Commission’s final report, released in November 1979 after costly delays, was the logical fulfilment of these months of misdirection. After two years of investigation, 321 days of hearings, 565 witnesses, thousands of pages of transcript and expenditures running over $2 million, Mr Justice Woodward’s Royal Commission had simply failed to come up with a satisfactory analysis of drug distribution in New South Wales. The report alone runs to a massive 2,080 pages, one of the longest in the history of N.S.W. royal commissions. Bound into three heavy volumes, the Report seems, at first glance, an impressive achievement. There are complex Italian kinship charts, data-filled tables of income and expenditure, eye-catching graphs with undulating curves, and endless lists of money, men, dates and places.

Once again we learn not to judge a book, or a Royal Commission report, by its cover. Much of the Woodward Report is a scrapbook of bits borrowed from other royal commissions, paraphrased from Australian or American legislative enquiries, lifted unacknowledged from police reports or, in one case, simply plagiarised from a published book. Instead of rising above the ruck of partisan Parliamentary debate and assuming the usual Olympian tone of detachment one has come to expect from N.S.W. Royal Commissioners, the Woodward Report delights in bashing the commission’s unworthy critics and heralding its unappreciated brilliance. Admitting only successes, the Commission shirks responsibility for its major admitted oversight, the spotty coverage of the heroin problem, by blaming the Federal Bureau of Narcotics for not cooperating.

The Commissioner masquerades in his report as the lone cowboy riding into a town out west armed only with intellect, innovation and ingenuity to run out the local bad guys who have bamboozled the doddering old sherriff and eluded the bespeckled newspaper editor. ‘I was being asked to do’, writes Mr Justice Woodward puffily at the outset of his report, ‘what all the enforcement agencies of Australia . . . have been trying to do without marked success, for some years.’ Disregarding the worthless counsel of ‘self-styled “investigative reporters” ‘ and finding ‘no helpful suggestions’ from other quarters, the Commissioner discovered, as he does not hesitate to tell us, that ‘I had to draw on the ingenuity of my own staff to develop innovative investigative techniques.

It appears, however, that the only approach with even a hint of novelty was what the Commission report refers to as the ‘paper trail’ method. While marijuana may go up in smoke and heroin disappears into the veins, the profits accruing from their sale remain the only traceable part of the transaction. Among his staff of thirty-nine, therefore, the Commissioner retained ten ‘experienced and reliable . . . investigating accountants’.

With a full 25 per cent of his staff accountants, the Commissioner tracked down every cheque, title, truck, TAB bet, auto, brick and cash loan involving the narrow circle of Griffith’s suspect Cala-brian-Italians. Not only did these financial investigations very quickly become repetitive and wasteful, but they are hardly ingenious or novel. New York District Attorney Thomas Dewey pioneered the ‘paper chase’ method in his syndicate investigations of the 1930s; the Internal Revenue Service used a tax audit to gaol Chicago mafia boss Al Capone; and investigative accountants attached to Robert Kennedy’s various organized crime enquiries of the 1950s and 1960s refined the techniques which are still used.

Hypersensitive to public criticism, the Commissioner comments in his introduction that ‘criticisms were plentiful but none were constructive’. Still wincing from an earlier slap by the Council for Civil Liberties which had compared the diminutive Mr Justice Woodward and his portly counsel William Fisher to a ‘Laurel and Hardy act’, the Commissioner dismisses their ‘vociferous’ criticisms with a sniffle and a note that the Council ignored his invitation to appear. Remarkably, the section on the disappearance of Griffith anti-marijuana campaigner Donald Mackay concludes, not with analysis, but with a rebuttal to a minor news item that appeared, buried in the back pages of the Financial Review, alleging that Mrs Mackay was not happy with the Commission’s progress.

Running throughout the report are superficial or unsubstantiated statements about the character of drug abuse in the State or the nature of the society which has spawned the drug problem. ‘Modern society has tended to increase its respect for financial affluence expressed in terms of money’, observes Mr Justice Woodward on page two of the report, ‘without regard for the source of income of the person concerned’. Popular, and questionable sociology of that kind is hardly an auspicious introduction to a $2 million report.

Stripped of its pseudo sociology, second-hand analysis and speculative enquiries into aspects of drug treatment and cannabis legislation, the report boils down to just two things — an investigation of marijuana growing in Griffith, and the distribution of heroin in Sydney. The close investigation of the Griffith marijuana industry springs from the Royal Commission’s near fixation with cracking the mystery of Mackay’s disappearance, something, as the report itself states, completely outside its terms of reference. In fact, the terms of reference make it clear that the commissioner was assigned three separate but related tasks. First, he should enquire into the traffic in illegal drugs, and second, investigate the identity of persons involved. Finally, he should recommend any changes necessary in State drug enforcement laws.

Although these terms gave him considerable latitude, Mr Justice Woodward chose to define his brief rather narrowly. Instead of a wide-ranging enquiry into organized crime as Mr Justice Moffitt had done in 1974, Mr Justice Woodward chose to interpret ‘improper activities’ to mean the Mackay murder.

The essence of these three volumes can be summarized in two sentences. The marijuana traffic in eastern Australia is controlled by a highly-organized group of Calabrian-Italians based in Griffith who were linked to a secret society, called L’Onorata Societa in Italian or N’Dranghita in Calabrian, and were ‘probably’ responsible for the ‘murder’ of Donald Mackay. In sharp contrast to the cannabis trade, the importation and distribution of heroin is the work of ‘many hundreds of small importing ventures’ or criminal organizations that are ‘ill defined, loosely structured’, and in no way ‘highly organized’, ‘monopolistic in structure’, or ‘under the control of a single “Mr Big” ‘.

Both of these theories — and they remain just that even after two years’ investigation — can be criticized on several grounds. Despite the enormous effort expended in probing the small circle of suspect Griffith Calabrians, there is not a word about what happened to those tonnes of marijuana when they reached Sydney. It is improbable that a small group of recently landed Italian peasants living in a remote country town had the social contacts to either predict the sudden boom in cannabis use among Sydney’s middle-class in the mid-1970s, or to handle the distribution once the demand developed. We are given no information about the identity of those groups handling the statewide and interstate distribution of Griffith’s tonnes of cannabis. Until contrary evidence can be produced, there is little reason to doubt that the Griffith Calabrians are the bottom rung of the cannabis marketing structure — the functional equivalent of the opium growing hill tribesmen of Southeast Asia’s Golden Triangle region.

But, more importantly, there is a marked imbalance in the report, in terms of both emphasis and standards of evidence, between the sections dealing with marijuana and those with heroin. Although heroin has now become by far the most serious drug of abuse in the State during the past two years, the investigative resources allocated to the heroin traffic are dwarfed by those devoted to the cannabis trade.

There are as well some curious differences in standards of evidence throughout the report. In general, any ethnic Australian who came under the Commission’s notice was subjected to rigorous examination. Using hearsay, inference or simple associations, the Commission usually concluded that the ethnics were involved in some kind of organized crime operation characterized by hierarchy, discipline and a wider network of contacts. Take the case of Andrew W. Lowe, a Sydney-born Chinese arrested in 1976 and convicted for trafficking in heroin. Although he admits frankly that the ‘evidence does not establish the extent of that organization’, the Commissioner then goes on to claim that Lowe is a ‘significant figure in a large drug smuggling organization’ and his arrest ‘exposed only a small portion of a much larger organization’.

Italians seem to suffer similarly. Even the smallest of Griffith’s Calabrian marijuana farmers were subjected to an almost inquisitorial examination of their finances, friendships, relations and antecedents. But Murray S. Riley, a former N.S.W. police sergeant and native-born Australian, was courteously exempted from public examination or the publication of embarrassing background details, even though he is currently serving a ten-year prison sentence for his role as the principal in the illegal importation of $46 million worth of Thai cannabis in 1978. The Commissioner’s unexplained dismissal of any American organized crime involvement in Australia’s drug trade does little to explain the police surveillance photos of Riley’s alleged San Francisco meetings with known American crime personalities in the months prior to his arrest.

Whether because of ethnic favouritism or its differing attitudes towards the marketing structures of the two drugs, the Commission judges Italians involved in marijuana growing by a rather rigorous standard of organized crime analysis, while it favours Australians prevalent in the heroin traffic with far more guarded judgements. The evidence for the operation of L’Onorata Societa at Griffith does not appear terribly strong. Much of the Commissioner’s information about the society seems to come from several reports written fifteen years ago, one by an American narcotics agent, after the Melbourne market murders involving several Calabrian-Italians. Copies of these reports have been circulating privately for some time and a Sydney investigative journalist had already published a summary containing much the same information as the Woodward Report did some twenty months later.

Aside from allegations that the Griffith Calabrian group has the power to instil fear and impose a code of silence, the only new direct evidence Woodward offers for his assertion that a ‘criminal organization of the “Mafia” type’ is operating in Griffith is a vague, inconclusive transcript of interview with one Vincenzo Ciccarello, owner of a farm on which one of the Calabrian marijuana plantations had been concealed. Asked by the Royal Commission if he knew of ‘any organized criminal activities within the Italian community’, he answered, ‘Yes’, but did not care to elaborate.

Most of Royal Commission’s evidence on the existence of some kind of Calabrian crime syndicate at Griffith comes from tracing the intricate web of marriage, friendships, and business dealings which made the Calabresi appear — in the eyes of the Commissioner — a closely interlinked network of criminal associates. The Commission’s documentation of these links is incredibly detailed and quite convincing. Clearly, there was some kind of criminal organization in Griffith even if there was no formal L’Onorata Societa.

When the report turns to analyze the drug dealings of native Anglo-Irish Australians, it suddenly loses its aggressive punch and almost self-consciously strives to avoid terms like ‘hierarchy’, ‘discipline’, ‘organized criminal group’ or ‘Mafia’ which are applied so readily to Italians and Chinese. A careful reading of both the report and the 2,849 page transcript makes it clear that, if the Commission had applied the same standards of judgement, it would have come to the conclusion that native Australian criminal syndicates were tightly inter-woven and closely disciplined. In several cases the Royal Commission had clear evidence before it of a criminal hierarchy among native Australians but simply chose to ignore it.

If the evidence for some Griffith Calabrian ‘Mafia’ in the marijuana fields consisted of (1) an old police report, (2) a participant’s testimony and (3) analysis of personal linkages, then there is similar, if not stronger, proof for the operation of Australian organized crime at the apex of the State’s drug distribution networks.

First, the old police report. In 1974 the N.S.W. Royal Commission into Organized Crime and Clubs, under Mr Justice Moffitt, presented a brilliant report demonstrating much of what Mr Justice Woodward seems to deny — that there are powerful, native Australian organized crime syndicates operating in N.S.W. Mr Justice Moffitt concluded that Australian organized crime figures, linked to American Mafia syndicates in New York and Chicago, had penetrated the State’s thriving club industry and its poker machine business. Mr Justice Moffitt concluded his report with a warning to the State government that the joint gambling ventures between Australian criminals and international syndicates, which were also involved in narcotics, might eventually link Australia into the international drug traffic. Significantly, many of the Sydney personalities named in the 1974 Moffitt report figure prominently in the Drugs Royal Commission report five years later.

In contrast to the weak testimony from the Italian fanner Cic-carello about the Calabrian ‘Mafia’, the Drugs Royal Commission gathered, and ignored, some convincing evidence of an organized crime hierarchy at the apex of the so-called ‘Bangkok connection’ involving rugby league star Paul Hayward and businessman William Sinclair. A Crown witness named Edwin Smith, half-brother and assistant to the group’s alleged Sydney distributor ‘Mr BL’, gave extensive and soundly argued evidence that there was a powerful group whom everyone involved in the Bangkok connection group feared and obeyed. He said that Mr BL had called this group the ‘Mafia’, and had observed that this invisible control group was able to command both Mr BL in Sydney and Sinclair in Bangkok. Evidently unwilling to probe the implications of Smith’s testimony, Commissioner Woodward hinted that he wanted to avoid analyzing the implications of the remark: ‘I suppose that to some of these people, any bosses of organized crime or any crime syndicate are Mafia, whether they are triad Mafia or anything else’. ‘I would think so, your Honour’, said William Fisher. ‘I would not think that “Mafia” was an accurate description of anybody who might be controlling an import export operation in Bangkok: Triad Mafia, but not Mafia, unless you use the term generically to mean a conspiracy.’ Caught up in semantics, the Commissioner and his counsel missed the point — a co-conspirator in a major heroin case was providing evidence of hierarchy, control and discipline, capable of inspiring ‘fear’ and as strong, if not stronger, than anything the Calabrians had to offer.

Finally, the commission did not pursue its analysis of linkages between various Australian drug dealers with the same determination as it did those among the Italians. Both the Commission report and transcript contain ample documentary evidence linking all of the significant Australian figures involved in the traffic into a closed network as tight as anything the Calabrians have to offer. While the Commission illustrated Calabrian links with charts and graphs, it avoided any similar charts or parallel conclusions when it came to the native Anglo-Irish Australians.

How do we account for Mr Justice Woodward’s failure to understand organized crime among native Australians? Although Mr Justice Woodward is obviously familiar with the Moffitt report on organized crime, he decided to ignore its approach. Woodward draws upon the Moffitt Report for almost all of his background material on Australian crime figures involved in the drug trade, but overlooks much of its pioneering contributions to the analysis of organized crime in Australia. Instead of starting with serious study of organized crime structures as Moffitt did, Woodward borrows the old shibboleth of ‘Mr Big’ from the Sunday tabloids of the 1960s. Finding conclusively that there is no ‘Mr Big’ in drugs, Woodward leaps to the conclusion that the heroin traffic is consequently disorganized, a bit of logical gymnastics that almost defies analysis.

The use of the ‘Mr Big’ analysis leads Mr Justice Woodward into confusion. For example, at several points in the text Mr Justice Woodward contradicts himself on the question of whether any ‘monopolistic control’ exists in the N.S.W. heroin market. On page 24 the Woodward Report says that ‘I have found heroin importation and trafficking is . . . not in any respect monopolistic in structure’. On page 338 the Report states ‘importers and distributors are able to exert a form of monopolistic control over the price and distributional aspect of their product which is not open to those involved in the marijuana trade’. Then, only five pages later, the report reverses itself again and says that the absence of a ‘Mr Big’ means that the ‘pre-requisites of successful monopolistic commodity control . . . are not observed in an examination of heroin trafficking in New South Wales’.

Similar confusion seems to account for the Commission’s insistence that there are no ‘hierarchically structured, permanently-established groups’ involved in the N.S.W. heroin trade. On the one hand, the Commissioner admits that there are impenetrable smuggling techniques, like the use of shipping containers, available to sophisticated trafficking groups, and admits that 95 to 99 per cent of the heroin entering Australia goes undiscovered, leaving a lot of room for major syndicates to operate undetected. On the other hand, he adopts six heroin groups, whose ‘operations are featured by mistake and ineptitude’, to illustrate the operation of heroin trafficking in N.S.W. Instead judging the heroin traffic by those dealers successful enough to remain in business, he judges it by those whose arrest is testimony to their incompetence.

A close reading of both the Drugs Royal Commission transcript together with the Moffitt Report into organized crime yields a portrait of the N.S.W. drug traffic very different from that Mr Justice Woodward presents. Mr Justice Woodward seems to be saying that there are two different kinds of drug trafficking in New South Wales — one a highly organized marijuana trade controlled by some kind of ‘Mafia’, the other a chaotic heroin traffic sustained by a horde of individual smugglers and some incompetent, ad hoc criminal groups. Instead, the evidence seems to indicate the existence of a limited number of large-scale financiers and drug distributors who — to feed and profit from drug markets — affiliate with lesser groups of suppliers to pull in domestic cannabis from the Riverina through the Calabrians, Thai marijuana from Bangkok through smugglers like Murray Riley and Southeast Asian heroin from Bangkok or Singapore through groups like the murderous New Zealand syndicate. Indeed, there is convincing evidence that a limited number of criminal syndicates, all interrelated through the Sydney milieu, dominate Australia’s drug traffic.

A prime example of the Royal Commission’s narrow perspective occurred on 10 November 1977. During the Commission’s hearings that day at Griffith, Mr Fisher questioned tax agent Vincent Ferraro, a Calabrian migrant, about the sale of some units to Mr Giovanni Sergi, a Griffith Calabrian farmer, for $100,000. Speaking before State Parliament the same day, Mr John Dowd, MLA raised the matter of questionable corporate practices by the Nugan Group Ltd, Australia’s largest produce wholesaler, and Nugan Hand investment bankers, Australia’s fastest growing finance company, pointing out that the company had made payments to people in the Griffith area which should be of interest to the Drugs Royal Commission.

Responding to the allegations with a full-page advertisement in The Australian, the company’s chairman, Kenneth Nugan, denounced Mr Dowd’s remarks as ‘nothing short of despicable’, and denied ‘any association with people being investigated’ in the Drugs Royal Commission: ‘I was a very close friend of Don Mackay’.

Regardless of the accuracy of Mr Dowd’s allegations, it is significant that a matter involving large-scale marijuana distribution was raised in Parliament, while the Royal Commission was restricting its investigation to the level of cultivation.


from Drug Traffic by Alfred McCoy