Queensland Criminal Justice Commission Report on Gaming Machine Concerns and Regulations

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    A report by the Queensland Criminal Justice Commission on Gaming Machine Concerns and Regulations published ahead of their introduction in the Australian State. The report contains references to persons with business interests in Papua New Guinea.

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  • CRIMINAL JUSTICE COMMISSION

    QUEENSLAND

    REPORT ON
    GAMING MACHINE CONCERNS
    AND REGULATIONS

    May 1990

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  • FOREWORD

    This report is dated 30 May 1990 and represents the state
    of knowledge on this topic of this Commission as of that
    date. This topic is receiving continuing attention from
    the Commission.
    This report has been prepared in part from Intelligence
    material and as such contains confidential information on
    persons and organisations. While every care has been
    taken to ensure the reliability of information this
    Commission can take no responsibility for information
    from other sources.
    This report does not represent what will be the normal
    format of Reports by the Commission.
    The Commission has not sought to carry out the
    consultation process which will be a part of the
    preparation of its normal reports. Having regard to the
    announced decision of the government to introduce poker
    machines in Queensland the Commission has limited its
    study to the description of perceived problem areas and
    steps which might usefully be taken to minimise those
    problems.

    SIR MAX BINGHAM Q.C.
    (Chairman)
    JAMES BARBELER
    DR JANET IRWIN
    JOHN KELLY
    PROFESSOR JOHN WESTERN

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  • INDEX

    SUMMARY OF RECOMMENDATIONS 1

    SUMMARY OF MATTERS OF CONCERN 5

    THIS REPORT 8

    THE INTRODUCTION OF POKER MACHINES INTO QLD 8

    Organised crime concerns 9

    General crime concerns 9

    PREVIOUS INQUIRIES 10

    South Australia Select Committee 10

    Connor Report 10

    Wilcox Report 11

    NSW Gaming Inquiry 11

    REGULATION 11

    Existing regulatory systems 12

    Nevada Gaming Commission 14

    GOVERNMENT INVOLVEMENT IN INDUSTRY 16

    Government acting as purchasing agent 18

    GAMING MACHINE INDUSTRY IN AUSTRALIA – HISTORY 20

    CRIMINAL INTELLIGENCE CONCERNS – MANUFACTURERS 24

    AINSWORTH CONSOLIDATED INDUSTRIES 25

    INTERNATIONAL GAMING TECHNOLOGIES 32

    UNIVERSAL AUSTRALIA 35

    OLYMPIC AMUSEMENTS 36

    OTHER MANUFACTURERS 40

    Bally Corporation 40

    Intermark Imagineering 41

    Rufflers/Vanguard 41

    Leisure and Allied Industries 42
    Queensland Gaming Machine
    Sales and Service 43

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  • ILLEGAL ACTIVITIES RELATED TO MANUFACTURERS 43
    Manufacture 43

    Corruption of regulatory authorities 44

    Inadequate machine security 46

    Industrial espionage 48
    Undisclosed interests 49

    Criminal associations 50
    Money laundering/tax evasion 51
    Supply 52

    Supply to the illegal industry 52

    Secret commissions and related matters 52
    Maintenance 54

    ILLEGAL ACTIVITIES – CLUBS AND HOTELS 56
    Registered Clubs 56

    Poker machine theft in NSW 56
    Control of Clubs 59

    Seagulls Club 59

    Licensing 61

    Detection of offences 61
    Other matters 62

    Publicans 62

    OTHER ILLEGAL ACTIVITIES 63
    Illegal gaming machines 63

    Jones/Melides 66

    McPherson/Freeman 66

    Olympic Amusements 67
    Duros 67
    Pakis family 67

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  • INDUSTRY GROUPS, LOBBYISTS AND CONSULTANTS 67

    Registered and Licensed Clubs Association 68

    Poker Machine Council 68

    Licensed Clubs Association 69

    Club Managers Association 69

    Unions 69

    Consultants 70

    APPENDIX ONE – EXPRESSIONS OF INTEREST 71

    APPENDIX TWO – THE CASPALP DONATIONS 81
    REFERENCES 97

    BIBLIOGRAPHY 104

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  • 1

    SUMMARY OF RECOMMENDATIONS

    Licensing

    That a single regulatory authority with its own
    enforcement capability and responsibilities be
    established for the casino and gaming machine industries.

    That such an authority be accountable to Parliament.
    That the Nevada Gaming Commission/ Nevada Gaming Control
    Board be examined as a suitable model for such an
    authority.

    That the authority and other costs of regulation be
    funded by levies on the gaming machine industry.

    That the relevant authorities in other states and in
    particular New South Wales, Victoria and the Australian
    Capital Territory be informed of what is proposed in this
    state and that Queensland support moves to closer
    national liaison between gaming authorities.

    That all participants in the gaming machine industry be
    required to be licensed by the authority under an
    established principle that participation in the industry
    is a. revokable privilege and not a right.

    That licensing be recognised as fundamental to limiting
    criminal involvement in the gaming machine industry. As
    such, the risks to reputation and business be assumed by
    applicants for licensing and the regulatory authority be
    enabled to act on reasonable suspicion. The authority be
    able to refuse or revoke licences or impose conditions on
    their issue or renewal.

    That those specifically required to be licensed are;
    Manufacturers/ distributors of gaming machines.
    Owners/directors of establishments operating gaming
    machines

    Managers of establishments operating gaming machines

    Gaming machine supervisory staff

    Gaming machine technicians and servicing agents
    Consultants to the gaming machine and associated
    industries
    Junket operators – organisers of gambling tours (if
    applicable).
    That approvals be required for each type of gaming
    machine.

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  • 2

    That approval be required for each premises where gaming
    machines are to be installed and that consideration be
    given to allowing public objection or comment prior to
    approval.

    That no manufacturer of gaming machines be licensed to
    sell gaming machines into Queensland until the regulatory
    authority is confident that the nature of all interests
    in the company is understood and that there is no
    involvement by known criminal or suspect identities or
    interests; and that the company has no record of criminal
    or suspect involvements or criminal or suspect activity.

    That the fact of a premises being a licensed hotel or
    club must not constitute an automatic right to take up an
    entitlement to install gaming machines.

    That premises with a record of criminal or suspect
    associations or activity or considerable evidence of
    criminal or suspect associations and activity not be
    approved for the installation of gaming machines.
    That no licensed establishment be approved for the
    installation of gaming machines until the regulatory
    authority is satisfied with the internal procedures of
    the establishment and that the authority be able to
    require improvements in internal procedures to detect
    fraud and theft.

    That no gaming machines be installed in any licensed
    hotel until the regulatory authority is confident that
    the true nature of ownership of the hotel is known and
    that it does not include criminal or suspect
    involvements.

    That no gaming machines be installed in any licensed
    clubs until the directors, secretary manager or executive
    officer have been found clear of any criminal
    involvements and licensed.

    That gaming machines be subject to a full technical
    analysis of all security aspects prior to approval.
    That the potential security and revenue benefits of
    machine linking technology be examined before any
    specifications are drawn up for gaming machines permitted
    in Queensland.

    Government acting as purchasing agent
    Manufacturers, suppliers and individual machines required
    to be licensed in normal way.
    Manufacturers to explicitly state machine prices,
    including any financing packages, discount scales,
    maintenance scales etc. Manufacturers to prepare
    brochures including all required information in a
    standard format.

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    Manufacturers to be restricted to dealing only with the
    government purchasing agency. Manufacturers not to be
    permitted to conduct any promotional activity in
    Queensland licensed establishments or offer any
    inducement or make payment for any purpose to any person
    connected with any Queensland licensed establishment.

    Licensed establishments to be restricted only to dealing
    with government purchasing agent. Approved
    establishments make orders from range of approved
    machines, those orders transmitted to manufacturer by
    government agency.

    The installation of gaming machines and removal of any
    trade-in machines to be supervised and certified by the
    purchasing agency.
    Licensed establishments to make payments to government
    agency for transmission to manufacturer or supplier.

    Licensed establishments be responsible for arranging
    finance and notifying all details of same to purchasing
    authority. Licensed establishments be not permitted to
    accept any finance packages arranged by, on behalf of or
    in association with any gaming machine manufacturer or
    supplier.

    The government purchasing agency to be independent of but
    fully accountable to the gaming regulatory authority.

    Enforcement

    That, in accordance with recommendations in the report of
    the (Fitzgerald) Commission of Inquiry, the gaming
    industry regulatory authority be responsible for
    investigation and enforcement of the licensing system and
    offences.
    That the authority be given some legal protection against
    actions arising from the performance of its functions,
    that it be enabled to act on reasonable suspicion, that
    detection of serious criminal offences and involvements
    result in automatic procedures in relation to licenses
    and that decisions of the authority stand during any
    period of appeal, if appeal is permitted.

    That all staff of the authority be vetted prior to
    appointment and subject to probity checks during and
    subsequent to employment with the authority.

    That while investigative and enforcement staff not be
    required to be police officers some effort be made to
    acquiring from interstate the services of some police
    with expertise in the gaming machine industry.
    That initially at least the Criminal Justice Commission
    provide and supervise the intelligence requirements in

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  • relation to gaming machine regulation.
    That cash analyses of gaming machines to no less a
    standard than that adopted for poker machines in NSW be
    required in Queensland and that the regulatory authority
    be adequately resourced to analyse and investigate
    anomalies.
    That a list of persons proscribed from employment in the
    gaming machine industry be drawn up and that it be a
    regulatory offence for any licensed establishment to
    employ any person from this list. That this list include
    known offenders, persons found unsuitable during
    licensing procedures, persons reported as having been
    dismissed for serious dishonesty by licensed
    establishments and other persons notified by the
    intelligence division responsible for gaming.
    That an ancillary list contain the names of persons able
    to be employed within the industry but not in any
    capacity related to the operations of gaming machines.
    That all licensed establishments be required to report
    for inclusion on at least this list all persons detected
    in or dismissed or reported for dishonesty of any form.
    That it be recognised and clearly stated that licensed
    establishments will retain a primary responsibility for
    the initial detection of offences and anomalies on their
    premises and that there be obligations for all such
    matters to be reported to the authority.
    That the authority have an educational responsibility to
    licensed establishments and be adeqdately resourced to
    fulfil this function.
    That discussions be initiated with the Poker Machine
    Council of NSW on the topic of relations between licensed
    establishments, their organisations and regulatory
    authorities. That consideration be given to encouraging
    the council to extend its activities or establish a
    related organisation in Queensland.

    That consideration be given to discussing with relevant
    unions the procedures that will follow from detection of
    criminal offences or involvement on the part of any of
    their members and the operation of the proscribed persons
    list.
    That all approved licensed establishments be required to
    prominently display a notice stating the approval and the
    number of machines approved and that each approved
    machine prominently display notice of such approval.
    That the regulatory authority make unannounced spot
    checks of licensed establishments and that police be
    enabled to act as agents of the regulatory authority in
    this regard.

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    SUMMARY OF MATTERS FOR CONCERN IN THE GAMING MACHINE
    INDUSTRY

    Association/activity Regulation/enforcement

    Corruption of regulators by Licensing manufacturers
    manufacturers/dealers to exclude those with
    record of criminal activity
    or involvement.
    Probity checks on
    regulatory authority
    members and staff.

    Undisclosed criminal Licensing made dependent on
    interests full disclosure of all
    pecuniary interests,
    particularly in the case of
    manufacturers/ hotels.
    Criminal associations Licensing precondition to
    participation in industry;
    record of criminal or
    suspicious association/
    congregation with or in
    company/individual/premises
    to be grounds for non-
    issue/revocation of
    license; listing of
    proscribed persons by
    regulatory authority;
    intelligence liaison with
    relevant authorities.
    Money laundering/
    tax evasion Licensing; investigation by
    regulatory authority;
    liaison with related
    authorities.
    Payment of secret
    commissions Government acting as sole
    purchasing authority;
    approved licensed
    establishments to buy only
    from government;
    purchase/price information
    publically available;
    prohibition on junket-type
    promotions/ revocation of
    licences/ prosecution.
    Illegal industry Intelligence liaison with
    other relevant authorities;
    Proscribed persons list to
    exclude undesirables;

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  • require approved
    establishments to display
    approval and no of machines
    approved; require approved
    machines to carry approval;
    spot checks and machine
    counts by regulatory staff;
    automatic confiscation non-
    approved machines;
    examination illegally
    manufactured machines to
    determine source of
    components; procedure for
    verifying trade-in machines
    returned to manufacturer;
    review of penalties for
    supply/operate non approved
    gaming device.
    1 Theft/fraud by technicians Licensing to exclude
    undesirables; proscribed
    persons list to exclude
    undesirables;
    employers/licensed
    establishments to report
    suspected misconduct;
    procedures for supervision
    of technicians to be
    established; record of
    services/jobs to be kept by
    licensed

    establishments/employers.

    Inadequate machine security Tests on machine security
    prior to approval; listing
    of fraud/theft and
    breakdowns correlated with
    machine type. Regulatory
    authority to have power to
    require rectification or
    recall by manufacturer;
    machine cash analysis;
    machine not able to be
    operated with analysis
    counters disconnected.
    Machine manipulation See inadequate machine
    security above; adequate
    supervision in licensed
    establishments; industry
    training programmes;
    machine cash analysis;
    proscribed persons list;
    licensed establishments to
    be notified of known poker
    machine cheats and required
    to report incidents.

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    Fraud/theft/tax evasion machine cash analysis
    machines returns at no less than
    current NSW standard;
    adequate analysis
    resourcing of regulatory
    authority; adequate
    investigative resourcing of
    regulatory authority;
    consideration to be given
    of computer surveillance
    implications of machine
    linking technology.
    Fraud/theft licensed
    premises See theft from machines
    above; licensing to exclude
    undesirables; proscribed
    persons list to exclude
    undesirables;
    establishments to show
    adequate internal
    procedures to
    prevent/detect fraud/theft;
    establishments to notify
    all dismissals relevant to
    proscribed persons list;
    establishments not to
    employ persons on
    proscribed persons list;
    establishments invited to
    consider pecuniary
    interests registers for
    directors/management; NSW
    Poker Machine Council to be
    approached re distribution
    of manuals/operations in
    Queensland; industry
    training programs.

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  • THIS REPORT

    This report of the Criminal Justice Commission is written
    on the basis that the Commission accepts that it is the
    policy of the State government to introduce gaming
    machines into licensed establishments in Queensland.
    Accordingly it does not canvass the issue of whether
    gaming machines should be introduced into Queensland.
    The report is also limited to discussion of the
    relationships between gaming machines and criminal
    activities and concerns and how best these concerns may
    be met in Queensland. Other issues, such as the
    economic, revenue and social consequences if any of the
    introduction of gaming machines have not been addressed
    in this report.

    THE INTRODUCTION OF POKER MACHINES INTO QUEENSLAND –
    CRIMINAL INTELLIGENCE CONCERNS

    The current proposal is to introduce gaming machines into
    Queensland casinos, hotels and registered clubs by about
    September 1990. It is also proposed that gaming machines
    be purchased by the State government and leased to
    licensed establishments by a formula relating to liquor
    sales.

    The introduction of gaming machines concerns this
    Commission in two respects. Firstly there are long
    established and well documented links between the legal
    and illegal gaming machine industry and organised
    criminal interests. Secondly the establishment of a
    gaming machine industry dealing in high cash turnovers in
    numerous locations can be expected to contribute to an
    increase in general criminal activity.

    The best possible regulatory system can be expected to
    moderate rather than eliminate increased criminal
    activity. To quote Mr Murray Wilcox QC following an
    exhaustive 1983 inquiry which recommended against
    permitting poker machines in Victoria:
    “beneficial factors are outweighed by three
    major objections (including) the certainty of
    increased criminal activities in Victoria as a
    direct result of the introduction of poker
    machines. The extent of the likely increase
    depends directly upon two factors: the number
    of premises in which machines are permitted and
    the stringency of the controls imposed.
    Depending on those factors crime will increase
    to a degree ranging from significant to
    serious. There is not merely a risk of
    increased crime. Under any scenario crime will
    increase.” (Emphasis in original)(1)

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  • Organised crime concerns
    Historically, both in Australia and overseas, some
    manufacturers of gaming machines have often been
    shown to be linked with syndicated or organised
    criminal interests. The nature of these links has
    included patterns of criminal or suspect activity by
    companies or their principals, disguised ownership
    by criminal interests, patterns of association with
    criminal identities and employment of criminal or
    suspect persons. In addition there is the
    possibility of organised criminal activity on the
    periphery of the industry including involvement in
    entertainment, security, prostitution and money
    laundering.

    The industry’s record also raises legitimate
    concerns over the possibility of the compromisation
    and/or corruption of public officials and others,
    particularly the elected officers and management of
    registered clubs.
    An illegal gaming machine industry can be expected
    to establish itself alongside the legal industry.
    In Australia the illegal industry is closely
    connected with organised crime and some links can be
    demonstrated to licensed manufacturers.

    Queensland has had recent experience of an illegal
    gaming machine industry with the diversion of legal
    in-line amusement machines to illegal purposes.
    This illegal activity involved a large number of
    persons, including machine suppliers, technicians
    and registered club personnel. Some of those
    persons, particularly those in the licensed clubs,
    will now become involved in the poker machine
    industry.

    The illegal in-line industry in Queensland is known
    to have involved corruption, payment of secret
    commissions, standovers, tax evasion and
    falsification of records. A number of principals in
    the industry were prominent in or well connected
    with organised crime. (2) The Queensland industry
    was basically dominated from Sydney and there are
    strong indications that payments in relation to the
    operation of the industry in this state were made to
    some of the most notorious of Sydney criminal
    identities. (3)

    General crime concerns
    The use of gaming machines will produce a several
    hundred fold increase in the flow of cash through
    both small and large scale organisations, many of
    which currently have inadequate provisions to

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    protect against fraud or theft by directors,
    management, staff, members or customers. The greater
    wealth of such establishments combined with relative
    naivety on the part of many of their managements
    will inevitably lead to an increase in fraud and
    theft.

    Historically, whatever the level of control, the
    clearing and maintenance of gaming machines poses
    perennial problems.

    Additionally, some clubs and hotels in Queensland
    have previously come to notice as localities where
    criminals or suspect persons congregate and/or
    illegal activities take place.

    PREVIOUS INQUIRIES

    Casino and gaming machine gambling have been the subject
    of a number of previous inquiries in Australia. The
    basic findings of more recent inquiries are summarised
    below.

    South Australian Select Committee

    In April 1982 the South Australian House of Assembly
    appointed a select committee to examine various
    issues related to casinos. The committee
    recommended that if the House chose to introduce a
    Casino Bill that an inspectorate be set up within
    the government. The casino operators, suppliers of
    goods and services and all persons involved in
    gaming operations would be required to be licensed.
    (4)

    Connor Report on Casinos 1983

    Mr Justice Xavier Connor was appointed to head a
    board of inquiry into the question of whether
    Victoria should have a casino in May 1982. All
    matters to do with slot or poker machines were later
    deleted from his terms of reference and made the
    subject of a separate inquiry under Mr Murray Wilcox
    QC. Mr Justice Connor reported in April 1983
    recommending against the introduction of any type of
    casino. If however the government chose to
    introduce casinos he recommended a licensing
    authority whose decisions were not subject to
    appeal. The authority would grant, suspend or
    cancel licences in respect of casinos, their
    employees, service industries and unions. An
    integral or independent “investigation, surveillance
    and auditing branch” would investigate applicants
    and be responsible for security and prosecutions.
    The Victorian Government decided against the
    introduction of casinos. (5)

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  • Wilcox Re•ort on Poker Machines 1983
    A Board of Inquiry into Poker Machines under Mr
    Murray Wilcox QC was established in march 1983 and
    reported in November 1983. Mr Wilcox QC recommended
    against the introduction of poker machines into
    licensed clubs. If the government chose to
    introduce poker machines he recommended an
    independent statutory control authority acting also
    as a licensing board and equipped with its own
    investigative and enforcement staff. His preferred
    option was for competitive tenders to be called for
    the supply of gaming machines built to control
    authority specifications. Licensing should be
    required for all persons directly involved in gaming
    activities and others, such as club directors, could
    be required to show they were fit and proper persons
    by being required to apply for a license. The
    Victorian Government decided against the
    introduction of poker machines.(6)

    NSW Gaming Inquiry 1985

    In 1984 the NSW Cabinet appointed Mr J. Lloyd Jones
    to head a Committee of Inquiry into Gaming in that
    State. The committee reported in August 1985 and
    recommended the establishment of three types of
    gaming houses ranging from an international standard
    casino to “ethnic coffee shop and cafe type
    establishments”. The committee recommended that
    these be controlled by a Gaming Commission and a
    system of strict licensing to ensure the fitness of
    all persons, places and games involved. (7)
    From the viewpoint of this Commission the most striking
    feature of previous inquiries is the common conclusion
    that, if gaming is to be introduced at all, it be under
    the control of a regulatory authority and that those
    involved in gaming be subject to some procedure of
    licensing.
    This Commission also notes that the policy of the State
    Branch of the Australian Labor Party as set out in 1985
    and 1988 was for a Licensing and Gaming Authority to be
    established. (8)

    REGULATION
    There is a consensus that the optimum gaming regulatory
    system is based on a philosophy that participation in the
    industry is a privilege and not a right. Its core is an
    independent, accountable regulatory authority equipped
    with intelligence and enforcement capabilities and in
    close contact with similar reputable bodies nationally
    and internationally. This body is responsible for
    vetting and licensing all participants in the industry.

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    The authority can act on reasonable suspicion and its
    procedures are to a great degree automatic. Its
    decisions stand during any period of appeal if appeal is
    permitted. Such an authority needs a degree of legal
    protection.
    There is a concern interstate that any regulatory system
    adopted in Queensland be compatible with systems proposed
    or established in other states. Organised criminal
    interests will undoubtedly exploit any weaker regulatory
    system to the detriment of all.
    Queensland’s existing Casino Control Division could be a
    suitable starting point for establishment of a general
    gaming control authority. However this Commission is of
    the view that the gaming regulatory authority should be
    separate from the revenue authority. Experience in New
    South Wales where until recently the revenue authority
    was the sole regulator does not inspire confidence that
    sufficient or necessary attention was paid to excluding
    crime or criminality. The regulatory deficiencies of the
    NSW Department of Finance and the desirability of
    separating the regulatory function and the revenue
    function were also dealt with in the Victorian Inquiry.
    (9) There are also obvious dangers in having a Minister
    ultimately responsible for decisions on who should and
    who should not operate in the industry. As Mr Wilcox QC
    noted:
    “The decision of a control authority to cancel, even
    to suspend, the licence of, say, a licensed club
    having twenty, thirty or forty thousand members (as
    do many New South Wales clubs) is likely to be an
    unpopular decision; however well deserved the
    penalty. It will be a brave minister who is
    prepared to take such a decision, especially if the
    club is situated in a politically sensitive
    electorate. The better solution, it is suggested,
    is for disciplinary decisions to be made by an
    independent statutory body, perhaps subject to
    review by a court.” (10)
    This Commission is of the view that any gaming regulatory
    authority should be accountable to Parliament rather than
    to a Minister or department. After establishment, the
    authority could, and should, be funded by levies or fees
    upon the gaming machine industry.

    Existing regulatory systems
    Gaming machines are generally legal in New South
    Wales and the Australian Capital Territory. In
    addition gaming machines are legal in casinos in
    Queensland and the Northern Territory. Tasmanian
    and South Australian authorities, initially at
    least, excluded gaming machines from their legal
    casinos. In Victoria gaming machines are currently

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    being introduced into a facility known as TABERET,
    scheduled to open in July.

    New South Wales has the longest established system
    of regulation which has been progressively tightened
    over a number of years. A need is perceived for
    further tightening of the system and there are
    proposals now being prepared to replace or
    amalgamate a number of authorities with a single
    gaming authority.
    Currently there is a requirement for amusement
    device dealers, sellers and technicians to be
    licensed to operate in the industry. This function
    is performed by the Superintendent of Licences and
    the Licensing Court.

    Applicants for licences are investigated by the
    Licensing Investigative Group within the NSW police.

    Approval is also required for new gaming machines
    after they have been subject to technical analysis
    by the Licensing Investigative Group from the Liquor
    Administration Board.

    Cash flow analysis of poker machines and a lower
    form of analysis of approved amusement devices are
    required to be submitted to the Liquor
    Administration Board.
    Taxation returns are required to be made to the
    State Treasury which can and has investigated cases
    of persistent and serious shortfall.

    Suspected misdemeanours in the industry are
    investigated by licensing police in various regions,
    by the Licensed Gaming Squad (formerly Task Force
    Two) or by treasury officers as mentioned above.
    Quite apart from considerations that local licensing
    police may have been compromised to a greater or
    lesser extent in their dealings with local clubs and
    hotels (the subject of a current ICAC inquiry), this
    multiplicity of enforcement agencies is considered
    less than ideal by both some of the regulators and
    some of those regulated.

    The Australian Capital Territory has a central
    liquor and gaming authority which also acts as a
    purchasing agent for gaming machines through a
    tender system. The ACT system is currently more
    demanding than NSW in terms of acceptable gaming
    machine specifications and recording but also
    accepts the licensing judgements of companies and
    individuals made in NSW. The ACT system, which is
    the only one to combine liquor licensing and gaming
    machine licensing, has an enviable record in many
    respects. However what is feasible in respect to a
    relatively small number of licensed establishments
    under fairly close supervision in a single city may

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    not be suitable for a large number of often very
    poorly supervised establishments geographically
    dispersed in a large State such as Queensland.
    Both poker machines and casinos were rejected in
    Victoria following two comprehensive inquiries in
    the early 1980s. However the Victorian Government
    has accepted a proposal from the State TAB to
    develop gaming machine facilities in premises in the
    Menzies on Rialto Hotel. This facility, to be known
    as TABERET, will incorporate 220 video gaming
    machines and is scheduled to open at the end of
    July. The machines themselves do not accept cash
    but will be operated through cards encoded with a
    cash balance, a concept that this Commission
    suggests is worthy of further examination. None of
    Australia’s traditional gaming machine manufacturers
    are involved in this project. There are proposals
    to establish TABERETs in a number of regional
    centres. TABERETs are in effect small casinos
    without any live gaming component.
    The Criminal Justice Commission has been in
    communication with responsible officers engaged in
    similar studies in both Victoria and New South Wales
    and all parties are anxious to liaise on mutual
    matters of concern in respect to criminal
    intelligence on the gaming machine industry.

    NevadaGaming_cgmaission
    Nevada, USA has represented the model case for the
    evolution of modern gaming regulatory systems. The
    NSW system, the most developed in Australia, is most
    likely to further evolve from the current
    multiplicity of authorities towards institutions of
    the Nevada type.
    The Nevada Gaming Commission consists of five part-
    time salaried commissioners appointed by the
    Governor for four year terms. The function of the
    commission is to render final decisions on actions
    and recommendations of the Nevada Gaming Control
    Board, which is in effect its enforcement and
    investigative arm.

    The philosophy adopted by the legislature in setting
    up the Gaming Commission was that:
    “The continued growth and success of gaming is
    dependent upon public confidence and trust that
    licensed gaming is conducted honestly and
    competitively and that gaming is free from
    criminal and corruptive elements. Public
    confidence and trust can only be maintained by
    strict regulation of all persons, locations,
    practices, associations and activities related
    to the operation of licensed gambling
    establishments and the manufacture or

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    distribution of gambling devices and equipment
    must therefore be licensed, controlled and
    assisted to protect the public health, safety,
    morals, good order, and general welfare of the
    inhabitants of the state, to foster the
    stability and success of gaming and to preserve
    the competitive economy and policies of free
    competition of the State of Nevada.” (11)

    Licensing is deemed to be “a revokable
    privilege 4.. no person is deemed to have
    acquired any vested rights therein”
    “An application for a state gaming licence is
    seeking the granting of a privilege, and the
    burden of proving his qualification to receive
    any licence is at all times on the applicant.
    An applicant must accept any risk of adverse
    public notice, embarrassment, criticism, or
    other action of financial loss … with respect
    to an application and expressly waive any claim
    for damages as a result thereof. An
    application for a license … shall constitute
    a request to the Board and Commission for a
    decision on the applicants suitability,
    character, integrity, and ability to
    participate or engage in, or be associated
    with, the gaming industry in the manner or
    position sought …” (12)

    Detailed information on the system of gaming
    regulation in Nevada is being gathered by this
    Commission.

    Another example of gaming regulation often quoted is
    that of New Jersey, USA. It is not separately dealt
    with here because it is essentially derived from and
    similar in operation to that of Nevada.
    However, while the regulation of legal gaming in
    Nevada and New Jersey is considered relatively
    “state of the art” there are other problems. The
    chairman of the New Jersey Commission has stated
    that there is evidence of organised crime attempting
    to come in through the back door through legal and
    illegal service and supply industries and labour
    unions. (13) Midway through the 1980s the Las
    Vegas Police Department expressed its concerns in
    this manner:

    “The open-city status of Las Vegas has
    attracted at least eighteen Mafia families to
    Southern Nevada. Today organised crime has
    reached into almost every segment of our
    community. The traditional Mafia plays a
    dominant role in Las Vegas and often aligns
    itself with other non-traditional syndicates
    that are also rising in prominence.

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    These criminal activities include arson,
    illegal bookmaking, escort services,
    pornography, loan sharking, narcotics
    trafficking, gaming, unions, street crime and
    legitimate businesses.”(14)

    GOVERNMENT INVOLVEMENT IN INDUSTRY

    The rationale for government ownership of gaming machines
    appears to be that the current presumed widespread
    corruption of club officials through secret commission
    and other deals by manufacturers and their agents can be
    avoided. Extreme care would have to be taken that public
    officials are not compromised or corrupted instead.
    From a criminal intelligence point of view it is
    extremely desirable to insulate machine manufacturers and
    suppliers from the personnel of licensed establishments.
    The proposal that machines be purchased by the State
    Government and leased back to clubs has met opposition
    from the industry on (presumably) commercial grounds.
    This is beyond the concern of this Commission but some
    security difficulties can be anticipated in the areas of
    market attractiveness, rapid changes in technology and
    maintenance requirements.
    The industry is essentially gimmickry – every licensed
    establishment is going to want the biggest, brightest,
    best and gaudiest machines. The Commission’s only
    concern with this tendency is that if the government
    cannot or will not have these machines for lease, the
    illegal industry well might fill the gap in either
    authorised or alternative venues.
    While purely commercial considerations are beyond the
    concern of this Commission it is pertinent to point out
    that the technology of gaming machines is currently in a
    phase of rapid development. The best gaming devices now
    from the point of view of machine security may not be as
    secure in a relatively short period of time.
    One form of new technology now coming on stream is
    machine linking computer technology designed basically to
    accumulate large jackpots from a number of machines in a
    number of premises. It is worth noting that the Nevada
    Gaming Control Board has found that this technology also
    has promise in the computer surveillance of linked gaming
    machines and the detection of irregularities and possible
    offences. This technology system and its potential law
    enforcement and treasury applications warrants further
    examination in Queensland.
    The state of the art system in this regard is known as
    MEGABUCKS, developed by the IGT company. It is currently
    being introduced in NSW, purely as a new game and without
    deliberate exploitation of its self-monitoring potential.
    In the course of this inquiry the commission has
    deliberately not made any direct inquiries of any gaming

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    machine manufacturer, but it anticipates that IGT would
    willingly supply information of the possible security
    implications of its system on request.
    There would also appear to be no reason why other
    computer technology companies, even those outside the
    gaming machine industry as it is presently constituted,
    could not develop surveillance machine linking systems.
    Another form of new technology is various forms of
    coinless gaming machines. Victoria’s TABERET scheme
    utilises such a system with gaming machines operated by
    cards encoded with cash credits. Any system which limits
    the number of localities where there are direct dealings
    in cash is likely to have some limiting effect on
    criminal activities.
    This Commission recommends further examination of the
    existing and emergent technologies of gaming machine
    linking and surveillance and the coinless operation of
    gaming machines. It is concerned that proposed methods
    for the supply of gaming machines could restrict future
    options for the utilisation of technologies which could
    limit criminal activities.

    There is a view expressed in NSW that poker machines are
    losing popularity to other systems such as keno and this
    is another technology related issue that might bear
    consideration. This Commission has no information and no
    views as to whether this is in fact the case but it notes
    that suspect persons and companies have been involved in
    the development of keno gaming systems and machines.
    Further study will be devoted to this topic if necessary.

    The ideal of insulating clubs and hotels from
    manufacturers and their representatives may be difficult
    to reconcile with the ongoing need for maintenance of
    machines. A large proportion of machine technicians are
    direct employees or are sub-contracted to manufacturers.
    This system has arisen and is likely to persist because
    of the perceived need to protect commercial
    confidentiality on the part of manufacturers.

    In this regard it should be noted that the AINSWORTH
    organisation inserted an advertisement in the Courier-
    Mail on 251189 announcing its intention to expand into
    Queensland. the advertisement invited applications for
    “200 new jobs” in the sales and service areas. A fair
    interpretation from the advertisement is that the
    AINSWORTH organisation sees service and sales as
    interlinked enterprises.
    “Sales/service technicians who feel they have the
    commercial and interpersonal skills and drive to
    succeed in a Sales environment in the hotel and club
    industries are invited to apply.” (15)

    The government may be able to preserve the advantages of

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    preventing the worst excesses of manufacturers and
    preserving its central supervisory role on machine
    purchase and installation without incurring the above and
    other risks associated with actually owning machines by
    acting in the role of a machine purchasing agent rather
    than a machine owner.

    The ACT system adopts the practice of inviting
    manufacturers who meet NSW licensing requirements to
    tender to supply machines meeting or exceeding set
    specifications for a particular period at a particular
    price. Clubs then order and pay for machines on offer
    from the various manufacturers through the Gaming and
    Liquor Authority (GALA). The weakness in this system is
    the absence of any restrictions on manufacturers or their
    representatives lobbying the clubs to place orders for
    their machines. It may also not prevent kickbacks or
    secret commissions to club officials – although the
    machine prices are governed by initial tender trade-in
    prices may be subject to under the table agreements.
    This Commission is aware of allegations that this has
    occurred and that this is only one of a number of dubious
    or potentially dubious arrangements. (16) Mr Wilcox QC
    noted in his 1983 Victorian inquiry that “If I am correct
    in my conclusions stated above that a manufacturer
    normally makes more profit from a sale to the territory
    than he does in New South Wales, it follows that there is
    a greater surplus available to be used in an illegal way
    in the Australian Capital Territory than there is in New
    South Wales.” (17)
    The only way to overcome such potential problems is a
    general ban on any company promotional activity in this
    state save general media advertising and the provision of
    promotional brochures and material to the government
    purchasing agency for supply on request to licensed
    establishments. The dangers inherent in not prohibiting
    such activity are quite serious – this Commission has
    extracted from a recent industry publication photographs
    of an organised crime identity and other suspected
    foreign persons in attendance at a recent AINSWORTH trade
    event attended by persons from NSW clubs and NSW
    regulatory authorities. (18)

    Suggestions as to how the government may act as a
    purchasing agency are set out below.

    Government acting as purchasing acrent

    Manufacturers, suppliers and individual machines
    required to be licensed in normal way.
    Manufacturers to explicitly state machine prices,
    including any financing packages, discount scales,
    maintenance scales etc. Manufacturers to prepare
    brochures including all required information in a
    standard format.

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    Manufacturers restricted to dealing only with the
    government purchasing agency. Manufacturers not
    permitted to conduct any promotional activity in
    Queensland licensed establishments or offer any
    inducement
    or make payment for any purpose to any person
    connected with any Queensland licensed
    establishment.

    Licensed establishments restricted only to dealing
    with government purchasing agent. Approved
    establishments make orders from range of approved
    machines, those orders transmitted to manufacturer
    by government agency.

    The installation of gaming machines and removal of
    any trade-in machines to be supervised/certified by
    the purchasing agency.
    Licensed establishments to make payments to
    government agency for transmission to
    manufacturer/supplier.

    Licensed establishments be responsible for arranging
    finance and notifying all details of same to
    purchasing authority. Licensed establishments be
    not permitted to accept any finance packages
    arranged by, on behalf of or in association with any
    gaming machine manufacturer or supplier.

    The government purchasing agency to be independent
    of but fully accountable to the gaming regulatory
    authority.

    The need for gaming machine manufacturers and suppliers
    to be thoroughly examined for connections to organised
    criminal interests or any pattern of illegal activities
    remains, regardless of which entity actually owns the
    machines.

    This Commission recommends that any government purchasing
    authority undertake independent research on the
    manufacturing costs and current pricing of gaming
    machines in New South Wales and the Australian Capital
    Territory. Restrictions on manufacturers promotional
    activity in Queensland should permit gaming machines to
    be supplied into this market at a significantly reduced
    cost and this Commission believes it desirable in
    relation to criminal as well as economic grounds that
    such savings be reflected in gaming machine prices in
    this State.
    In this connection it is important to note that the
    Victorian Board of Inquiry on Poker Machines found that
    the machines were over-priced, with the most graphic
    example being the supply by the AINSWORTH group of
    machines to IGT at a price of less than $2500 landed in
    Nevada at a time when the Australian price of equivalent
    machines was in the order of $6500 or more. Mr Wilcox QC

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    commented:
    “I believe, however, that as a general statement I
    am able to say that poker machines are more
    expensive in the Australian market than they ought
    to be. I am prepared to assume that the material and
    labour costs as asserted by the manufacturers are
    reasonable for the work involved, but I consider
    that the “on costs”, particularly those costs
    variously referred to as administration expenses,
    marketing expenses and agents’ commissions,
    represent an unreasonable impost upon clubs who
    purchase these machines. It must be remembered that
    the rationale of club movement … is that no
    individual ought to be making a profit out of club
    activities. The payment of excessive commissions to
    poker machine agents represents, in my view, a
    departure from this principle. … Further, the
    apparent widespread practice of “entertaining” club
    managers and directors, even if not falling within
    conduct which one would regard as improper is an
    expense which clubs purchasing poker machines should
    not have to bear.(19)

    THE GAMING MACHINE INDUSTRY IN AUSTRALIA

    A brief historical overview (20)

    Poker, fruit and slot machines for gaming were first
    imported into Australia prior to the World War 1 and the
    first domestic manufacturer of note, NUTT & MUDDLE, set
    up business in 1948. Until 1956 the use of machines for
    gaming in any public place was illegal. During their
    illegal phase the machines were installed in a very large
    number of public places, principally clubs, hotels and
    cafes. Proceeds were shared between the owner of the
    machine and the owner of the premises, an arrangement
    persisting still in the illegal industry which has
    continued to thrive despite legalisation. Proceeds were
    also shared, it is now known, with a number of
    politicians, treasury officials and police and, on one
    celebrated occasion, members of a hospital board who
    consented to give the machines an air of charitable
    respectability.
    One person prominent in the supply of poker machines and
    other illegal entertainments to American servicemen
    during the Second World War was Sydney businessman Jack
    ROOKLYN; later ROOKLYN pioneered the expansion of the
    Australian gaming machine industry into east Asia, began
    a formal association with the American company BALLY in

    BALLY mounted a major push into NSW clubs in the late
    1960s at about the same time that certain Sydney criminal

  • Page 28 of 114

  • 1968 and became the principal of BALLY AUSTRALIA Pty Ltd
    in 1971.

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    identities were moving into the industry. Walter DEAN,
    formerly noted as suburban barber to Leonard Arthur
    MCPHERSON, became the president of South Sydney Juniors,
    then the largest club in Australia. DEAN formed a string
    of companies to supply services to the club at exorbitant
    rates in partnership with a disgraced ex-police officer
    Murray Stewart RILEY and political string-puller William
    Charles Garfield SINCLAIR, provided unknown “consultancy”
    services to the CLUB 33 illegal casino, and stood over
    union officials who resisted being bought. (21)

    The activities of BALLY and associated developments in
    the club industry became apparent to the then
    Commonwealth Police in the early 1970s but were
    apparently not perceived by NSW authorities until some
    time after they had also become apparent to the media,

    Aninvestigation was ordered and a NSW police team
    produced three consecutive reports, the first concluding
    that there were some problems and the last concluding
    that any problems were greatly exaggerated. The scandal
    over these reports led the Askin government to form a
    Royal Commission under Mr Justice Athol Moffitt.

    Justice Moffitt concluded that BALLY was connected to US
    Mafia figures; that the operations of BALLY in Australia
    posed a considerable risk of organised crime
    infiltration; that he had been lied to in relation to an
    unorthodox business relationship entered into between a
    BALLY executive and one of the police investigating
    BALLY; that McPHERSON may have been associated with at
    least some of the activities of his former barber; that
    McPHERSON and his associates had recently begun to
    entertain some criminally connected American visitors;
    and that special measures were needed to police gaming
    machines and clubs. Almost no specific action was taken
    in response to Moffitt’s report and a significant number
    of those mentioned went on to assume further notoriety in
    a succession of royal commissions into the expanding
    trade in illicit drugs.

    In the year that the Moffitt report was issued the
    Queensland government approved the introduction of “in-
    line” amusement devices into Queensland clubs following a
    short lobbying campaign by one Arthur Anthony ROBINSON,
    then and now known as an illegal baccarat school, sly
    grogging and nightclub entrepreneur. The Queensland
    Justice Department was apparently aware that ROBINSON was
    associated with BALLY’s Australian affiliates and were
    also aware of the Moffitt report and its recommendations.
    (22) BALLY machines supplied by affiliated companies or
    ROBINSON went on to dominate the Queensland in-line
    machine market. Instances are known where potentially
    competing machines failed to win approval or were
    approved and then had approval withdrawn. One such case
    involved the emergent Australian poker machine
    manufacturer, AINSWORTH CONSOLIDATED INDUSTRIES. (23)
    Continuing criminality in the gaming machine and club

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    industry in New South Wales induced some action on one of
    Moffitt’s proposals in 1978 – a special policing unit on
    clubs was set up as Task Force Two. The unit had two
    matters on its initial agenda: poker machine cheating on
    a huge scale by well organised gangs of “patrons” armed
    with wire, coin blanks and other sophisticated tools; and
    apparent illegalities in the sale of poker machines by
    the AINSWORTH group of companies.

    AINSWORTH then held about 75 percent of the NSW or only
    legal market in Australia and saw its future expansion
    prospects in Nevada, New Jersey, Queensland, South
    Australia and Victoria. A consultant to the industry,
    Edward Phillip VIBERT, was instrumental in the
    establishment of the AUSTRALIAN CLUB DEVELOPMENT
    ASSOCIATION, purportedly an independent lobby derived
    from state associations of registered clubs to lobby the
    Queensland, Victorian and South Australian governments
    for the introduction of poker machines.

    Leonard Hastings AINSWORTH and some of his senior
    executives can be shown to have paid VIBERT, paid for the
    ACDA, at least some of its staff and its newspaper, paid
    a political donation in Queensland and most probably one
    in Victoria, and paid a consultancy fee to former Liberal
    MLA and Queensland Registered and Licensed Clubs
    Association president Colin LAMONT. While some of this
    activity may fall within the parameters of lobbying some
    matters do not: VIBERT was in effect an employee of
    AINSWORTH but pretended otherwise and arrangements were
    made for the Queensland political donation to be invoiced
    as non-existent “advertising” while the Victorian
    donation appeared to have been dressed up as payments for
    “research”. Queensland Police investigated the donation
    in this state and referred the matter to the Solicitor-
    General who found no offence in law in the absence of any
    compliint. (See Appendix Two)

    Task Force Two formed the view that the ACDA was a
    “deception” and after a long and troubled investigation
    charged AINSWORTH and VIBERT accordingly. VIBERT was
    also charged in relation to alleged secret commissions
    paid in connection with the supply of poker machines to
    the ETTALONG BEACH WAR MEMORIAL CLUB. VIBERT was found
    guilty of this charge and acquitted on appeal. AINSWORTH
    and VIBERT were committed for trial on reworded
    conspiracy charges which were later no-billed. This
    sequence of events was later examined by the NSW
    ombudsman Mr Mastermann QC; his report detailed apparent
    attempts to bribe and other impediments put in the way of
    the investigation by a succession of suspect persons, .
    criminal identities and others.
    In 1982 a select committee of the South Australian
    government examined the gaming machine industry in
    connection with a proposed casino bill. This committee
    was the first in Australia to recommend licensing as a
    prerequisite for participation in the gaming industry
    under the principle that a license was a privilege and

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    not a right. It also recommended that the onus of proof
    of suitability for a licence should lie with the
    applicant and that the licensing authority should be
    enabled to act on the basis of reasonable suspicion. The
    committee also broke new ground with the following
    recommendation, probably inspired by developments in New
    South Wales:
    “(There is a need) to ensure that there is no chance
    that organised crime can influence the police or
    political system which is always susceptible to
    corruptive influence. Corruption usually occurs in
    this context by a failure to prosecute. It is
    essential that if a breach of the rules or
    regulations is detected then disciplinary action is
    automatic and not held up by police inactivity or
    government delay.” (24)
    BALLY and AINSWORTH interests were singled out for
    particular criticism by the committee.
    In 1983 Mr Wilcox QC chaired a Victorian Board of Inquiry
    which recommended that poker machines not be introduced
    into that State. Mr Wilcox drew extensively on the
    Moffitt report and queried the executives of BALLY
    AUSTRALIA at length on the topic of whether Jack ROOKLYN
    had, as claimed, severed his links with the company. Mr
    Wilcox was also scathing in his report on the proprieties
    of the AINSWORTH organisation and its efforts to have
    poker machines introduced into. Victoria and Queensland.

    Mr Wilcox was also critical of the state of gaming
    machine regulation in New South Wales, stating that
    millions in revenue were being lost through inadequate
    controls, machine manipulation, machine malfunction,
    fraud and theft.
    The criticism came at an opportune time; the New South
    Wales government introduced a requirement for licensing
    in 1984 setting up the Superintendent of Licenses Office
    with its own investigation section and transforming Task
    Force Two into a Licensed Gaming Squad. Those operating
    in the industry were permitted to keep operating under
    provisional licences. This was recognised as an
    accommodation to reality rather than an ideal system.
    Although the licensing system in New South Wales has won
    some acclaim and has been adopted as the basis for entry
    into the gaming machine industry of the Australian
    Capital Territory some drawbacks are conceded and the
    system is currently undergoing review which will probably
    lead to a further tightening of restrictions. One
    drawback is a multitude of regulatory and enforcement
    authorities and there are some proposals to amalgamate
    these into a single gaming authority. This is however
    likely to be a lengthy process.
    The (Fitzgerald) Commission of Inquiry in Queensland
    examined the in-line machine industry and a number of
    persons are now before the courts on corruption related

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    charges as a result. In his report Mr Fitzgerald stated
    that:
    “All gambling establishments, legal and illegal,
    need to be stringently controlled. This might be
    easier if they are legal and regulated rather than
    covert and illegal … Gambling can certainly harm
    individuals and the community, but that is of no
    relevance to the decriminalisation debate since
    there are many legal ways for inveterate gamblers to
    indulge their whims.
    Law reform in respect of illegal gambling needs to
    be approached in a comprehensive, considered way.
    It is inherently difficult. Until a comprehensive
    review is undertaken, narrowly focused piecemeal
    action including expanding the legal means of
    gambling is inadvisable.”
    (25)

    CRIMINAL INTELLIGENCE CONCERNS – MANUFACTURERS

    The major manufacturer/suppliers of poker machines in New
    South Wales are the companies AINSWORTH CONSOLIDATED
    INDUSTRIES, INTERNATIONAL GAME TECHNOLOGIES, UNIVERSAL
    AUSTRALIA, and OLYMPIC VIDEO GAMING. The world’s largest
    poker machine manufacturing company, BALLY, has not
    applied for licensing in New South Wales and another
    American company INTERMARK IMAGINEERING INC has not been
    successful in its attempt to gain a licence. There are
    other smaller “boutique manufacturers” with a minuscule
    proportion of the market.
    AINSWORTH, IGT and UNIVERSAL divide about 90 percent of
    the market fairly equally between them. The Victorian
    based company OLYMPIC is enjoying substantial growth and
    currently has about 10 percent of the market.

    All companies supplying machines on to the NSW market are
    required to meet fairly stringent licensing conditions –
    however the system, which has had some notable successes,
    is not proof against naivety, corruption or political
    interference.

    In all known jurisdictions where gaming machines are
    permitted to the extent contemplated in Queensland it is
    considered fundamental that the manufacturers and their
    agents be examined for any connection to organised crime
    or criminal identities or any pattern of organised
    criminal activity.

    Mr Wilcox QC went further in his Victorian inquiry and
    proposed a higher standard of licensing which warrants
    consideration in this State:
    “My view is that it should not be sufficient for a

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    licensee merely to show an absence of criminal
    convictions in its senior management or for the
    licensing authority to be unaware of any dishonesty,
    or association with criminals, by top management.
    Given the propensity of the poker machine to attract
    criminals and the critical role of manufacturers in
    the industry, it is my view that Victoria, and a
    Victorian licensing authority, should settle for no
    less a standard than that manufacturers would only
    be entitled to a licence if they were able to
    demonstrate, by their record and their attitude,
    that they were likely to be active and willing
    partners of the poker machine regulatory authority
    in the setting and maintenance of rigorous
    controls.” (26)
    Mr Wilcox considered the three major manufacturers of
    that time, Nutt and Muddle, Ainsworth and Bally and found
    that all would have had difficulties meeting such
    criteria. Indeed, all would have had difficulty meeting
    the lower standard requiring only that there be no
    criminal activities or associations.
    Inquiry after inquiry overseas as well as in Australia
    has found questionable associations or activities within
    the gaming machine manufacturing industry. It goes
    without saying that throughout and long after these
    inquiries the companies and individuals involved have
    persistently maintained that they were without taint and
    that any findings to the contrary have derived from
    error, malice or worse. The possibility of the
    introduction of poker machines in Queensland has again
    brought this variety of propaganda to the fore and in
    some circles, notably the club-industry and some sections
    of the media, it has been taken seriously. (27) This
    Commission is of the view that the findings in relation
    to the gaming machine industry and its personalities of
    Mr Justice Moffitt and Messrs Wilcox, Mastermann and
    Fitzgerald were not in error or derived in any other
    manner than from examination of the evidence.
    A number of new manufacturers have entered the industry
    in recent years and information in regard to those
    companies is scanty compared to those which have been the
    subject of previous inquiries. Accordingly, the
    discussion below makes no pretence of being a complete or
    representative picture of the poker machine manufacturing
    industry in Australia today. It is as comprehensive as
    the information available to the Commission allows and
    will be updated as further information comes to hand.

    AINSWORTH CONSOLIDATED INDUSTRIES
    AINSWORTH CONSOLIDATED INDUSTRIES is the central
    company of a group linked with the AINSWORTH family,
    once notable manufacturers of dental equipment.
    Manufacture of poker machines began in 1953, three
    years before the machines were legalised in NSW

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    clubs. The AINSWORTH group has for many years been
    controlled by Leonard Hastings AINSWORTH, son of the
    company’s founder. The company was the chief
    beneficiary of the decline of NUTT & MUDDLE and the
    difficulties of BALLY AUSTRALIA following the
    Moffitt Royal Commission and by the late 1970s it is
    estimated that the AINSWORTH group had about 75
    percent of the market in new poker machines in New
    South Wales.

    The group looked to other markets, both in Australia
    and overseas, just as its activities were starting
    to fall under some degree of scrutiny from the newly
    formed Task Force Two, itself a consequence of the
    Moffitt Royal Commission finding of widespread
    illegality in the industry. The group’s activities
    were also canvassed in Queensland and Victorian
    police inquiries, the Victorian poker machine
    inquiry and, following an AINSWORTH complaint, by
    the NSW Ombudsman.

    The police inquiries followed a contorted and
    confusing path, due to an underlying political
    motivation in Queensland and a prolonged attempt to
    subvert the NSW investigation from both inside and
    outside the NSW police force. Central to some of
    these investigations was a seemingly independent
    lobbying organisation known as the AUSTRALIAN CLUB
    DEVELOPMENT ASSOCIATION (ACDA). Its executive
    director and the chief spokesman for what was often
    described as “the poker machine lobby” was a
    consultant, Edward Phillip VIBERT. After hearing
    extensive evidence from VIBERT and making some
    inquiries, Mr Wilcox QC described him as “a
    plausible rogue intent on earning a multi-million
    dollar commission and ready to use anybody and any
    material, however false or misleading, to achieve
    his goal”. (28) The organisation and VIBERT
    maintained, for as long as they could, a public
    stance of independence of any of the poker machine
    manufacturers.

    The findings of these various investigations,
    necessarily complex and interrelated, are set out
    below.
    On testimony to the Victorian Inquiry an
    AINSWORTH executive conceded that in 1967
    spending money” had been paid to some club

    officials but these small payments had been
    stopped when this was found to be illegal. Mr
    Wilcox QC noted that “I am somewhat surprised
    at there being any doubt in anyone’s mind that
    the payment of any “spending money” to any club
    official in consideration of the purchase of a
    poker machine would be illegal”. (29) In
    respect of more recent payment or possible
    payment of secret commissions by the AINSWORTH
    organisation the topics of George CRAGEN, the

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    Penrith Leagues Club and consultant Wilton WEIR
    are dealt with separately in this report.

    In the late 1970s AINSWORTH bought into the
    MURRAY RIVER POKER MACHINE COMPANY PTY LTD, an
    agency for all brands of poker machines.
    According to corporate documents the owners
    were Murray McCOOKE and his wife. There was an
    agreement that the share capital would be
    divided McCOOKE 25 percent, VIBERT 25 percent
    and AINSWORTH 50 percent although the books
    would show McCOOKE 50 percent and VIBERT 50
    percent. McCOOKE was unaware of a further
    agreement that VIBERT would hold his interest
    in trust for AINSWORTH, giving AINSWORTH an
    effective 75 percent of a company selling his
    competitors products. The Victorian Inquiry
    was told that similar arrangements had been
    entered into with other poker machine agencies.
    The Victorian report stated “Mr AINSWORTH has
    demonstrated, by his conduct in respect of the
    Murray River company, a willingness to disguise
    his involvement in an enterprise if he regards
    such disguise as being beneficial”. (30)

    AINSWORTH sought to purchase one of his
    principal competitors, the ailing NUTT & MUDDLE
    company, but this was blocked by the Federal
    Court on application from the Trade Practices
    Commission that this would lead to a near
    AINSWORTH monopoly on the industry.
    Subsequently there were attempts by less than
    reputable persons and organisations to purchase
    the company. There were connections between
    these persons and the AINSWORTH group.
    Englishman Mr W.R. RUFFLER, whose Australian
    company would appear to have shared an address
    with the Kings Cross TEXAS TAVERN and its owner
    Harry CALLEIA, stayed with AINSWORTH while
    negotiating over the company and used the
    deregistered accountant O’BRIEN (see below) and
    a Melbourne solicitor used by AINSWORTH. (31)
    CALLEIA, who has criminal connections and is
    involved with the VANGUARD amusement machine
    company (see below) has been listed as an
    associate of AINSWORTH. Melbourne criminal
    identity Mark Alfred CLARKSON was also involved
    in efforts to purchase NUTT & MUDDLE at the
    same time as he was involved in actions which
    would appear to have been designed to frustrate
    the Task Force Two investigations into
    AINSWORTH and VIBERT. (32) NUTT & MUDDLE was
    subsequently taken over by the STANLEE group
    which had no obvious connection to AINSWORTH.
    A senior AINSWORTH officer, George CRAGEN (also
    investigated by Task Force Two) joined the
    STANLEE group as the new general manager of
    NUTT & MUDDLE. The company continued to
    decline and later, almost defunct, was absorbed

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    into the AINSWORTH group.

    AINSWORTH used the services of a deregistered
    Victorian accountant Kevin James O’BRIEN,
    convicted in 1975 and again in 1976 of numerous
    counts of fraud including conversion, forgery
    and uttering. It is not clear that AINSWORTH
    knew of these convictions at the time he
    employed O’Brien’s services but it is known
    that O’BRIEN’s services continued to be used
    after they did became known. AINSWORTH accounts
    involving millions of dollars administered by
    O’BRIEN were not among those revealed by
    AINSWORTH executive Peter CLAREBROUGH in
    response to questions from the Victorian
    inquiry and when the inquiry discovered the
    Victorian accounts and queried them
    CLAREBROUGH was prevented by AINSWORTH from
    completing evidence he was then giving the
    inquiry. Mr Wilcox QC doubted the reasons given
    for this and in his report said: “On the face
    of the matter, it appears to me strange that a
    large Sydney-based organisation, having no
    significant commercial association with
    Victoria, should retain the services of an
    accountant operating out of premises in an
    outer Melbourne suburb.” (33)

    AINSWORTH funded and can be shown to have
    approved, budgets and programmes of the
    Australian Club Development Association. The
    ACDA, through VIBERT, declared itself to be an
    independent association deriving from the club
    industry.

    AINSWORTH, at the behest of VIBERT, made three
    donations totalling $30,000 during the election
    year of 1980 to a Queensland account under the
    title CASPALP, described as an ALP promotional
    fund connected with the then opposition leader .

    Mr Ed CASEY. Some $20,000 of this amount was
    paid into accounts of the Queensland Branch of
    the Australian Labor Party. The disbursement of
    the remaining $10,000 is not known but no
    officer of the ALP has entered any complaint in
    relation to this money. (This issue is dealt
    with separately in the Appendix 2 to this
    report.)(34)

    In correspondence with CASEY, VIBERT proposed
    that the donations be covered by invoices
    purporting to cover advertising in ALP
    publications and this suggestion was followed.
    (35)
    This was investigated for the Queensland Police
    on the instructions of then Commissioner LEWIS
    by Detective Inspectors INGHAM and BRADBURY who
    lunched with Queensland criminal identity Paul

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  • – 29 –

    MEADE at the TEXAS TAVERN restaurant Kings
    Cross (belonging then to Harry CALLEIA) before
    they were due to attend a raid on AINSWORTH
    premises with NSW police of Task Force Two.
    (36)
    AINSWORTH and some of his senior staff were
    forewarned of the raid and the presence of ‘
    Queensland detectives. Investigations of the
    origin of the leak were inconclusive but among
    the possibilities considered were that CALLEIA
    advised AINSWORTH of information received from
    INGHAM and BRADBURY or that senior officers of
    the NSW police had advised an AINSWORTH
    executive. (37)

    Between January and March 1982 the AINSWORTH
    group paid four amounts totalling $40,000 to
    the polling organisation ANOP, purportedly for
    market research. While a minimal amount of
    market research (less than a dozen pages
    according to VIBERT) was done for the
    supposedly independent ACDA there is no doubt
    that these invoices were false. Task Force Two
    alleged that this was a disguised donation to
    the Victorian ALP and there appears to be no
    compelling reason to doubt this. Mr Murray
    Wilcox QC placed “little weight” on VIBERT’s
    denials.(38)

    While president of the Registered Clubs
    Association of Queensland Colin LAMONT received
    payments totalling $30,000 from AINSWORTH under
    arrangements drawn up by VIBERT. LAMONT states
    that he declared these consultancy fees both to
    the taxation commissioner and to the Registered
    Clubs Association, which saw no conflict of
    interest. (39)

    AINSWORTH and VIBERT were charged in NSW with
    various counts of conspiracy in 1982 in
    relation to an alleged “deception” that the
    ACDA was an independent organisation. They
    were committed for trial.
    VIBERT was also charged and committed for trial
    on charges relating to secret commissions
    allegedly paid in relation to his role as a
    consultant and the installation of AINSWORTH
    poker machines at the Ettalong Beach War
    Memorial Club. He was found guilty but
    acquitted on appeal.
    This Commission is aware of information which
    may be relevant to VIBERT’s acquittal which
    falls under the provisions of Section 2.19 (2)
    (b) of the Criminal Justice Act 1989.

    Between VIBERT’s sentence and appeal, all other

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    charges against VIBERT and AINSWORTH were no-
    billed. This was a matter of some controversy;
    the committal had taken several months, the
    magistrate had added additional conspiracy
    charges and the majority of NSW law officers
    involved told the ombudsman they believed the
    case a strong one which should have gone to
    trial. The no-billing of these charges was
    aired in the NSW parliament and press.(40)

    AINSWORTH and VIBERT entered a succession of
    complaints with the NSW Ombudsman against two
    NSW officers, Dets HANRAHAN and CLARK.
    The Ombudsman, Mr Masterman QC, found that
    HANRAHAN and CLARK had spoken to members of the
    NSW opposition in contravention of police rules
    but recommended no penalty because their
    actions were a response to a justifiable belief
    that their investigations into AINSWORTH and
    VIBERT had been tampered with.(41)
    Mr Masterman QC also found that:

    HANRAHAN was justified in a belief that
    AINSWORTH employees and others were
    trying to bribe him.

    That Victorian criminal identities and
    suspect current and former NSW police were
    involved in these attempts.

    That AINSWORTH and others had
    foreknowledge of some police raids and
    actions.
    That AINSWORTH’s evidence on the existence
    of a diary note referring to a luncheon
    engagement with senior NSW police was
    deceptive and that his evidence in other
    respects was unsatisfactory.(42)

    AINSWORTH appealed the Ombudsman’s decision but
    this appeal was rejected. AINSWORTH has taken
    civil action against one of the detectives.
    LAMONT and others have suggested on the public
    record that detectives of Task Force Two were
    corrupted by the BALLY organisation. (43) This
    appears to derive from an inference that police
    action in relation to AINSWORTH served the
    interests of BALLY and or Jack ROOKLYN (who are
    treated as identical for the purposes of this
    argument). There is no evidence of corruption
    on the part of NSW detectives in Task Force Two
    and a considerable body of evidence to the
    contrary. Any examination of the evidence
    leads to questions about relationships between
    AINSWORTH, his executives and associates and

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    suspect former NSW police, criminal identities
    and former senior NSW police. It would appear
    from the evidence that investigations into the
    AINSWORTH organisation were fully warranted.
    This commission is aware of other matters of
    complaint in relation to AINSWORTH where the
    course of investigation has been unusual.

    AINSWORTH, LAMONT and other spokesmen blame the NSW
    . police and the Wilcox inquiry for problems in
    relation to his export operations, which at one
    stage included exports to Nevada through one William
    Silas REDD, an alleged associate of syndicated crime
    through the BALLY company. AINSWORTH’s ties with
    REDD were severed when REDD’s company, INTERNATIONAL
    GAMING TECHNOLOGIES, expanded from the manufacture
    of video gaming machines into the manufacture of
    poker machines (see below).

    AINSWORTH also exported slot machines to four Macau
    casinos controlled by Stanley HO. HO and his family
    were extensively mentioned during the inquiry into
    relationships between dismissed former NSW Deputy
    Police Commissioner Bill ALLEN, Jack ROOKLYN and
    Abraham SAFFRON. (44)

    Information that AINSWORTH companies were illegally
    exporting a gaming machine component into
    Czechoslovakia and China was received from Hong Kong
    in 1985. The AINSWORTH executive named was
    Graham/Graeme D FULLERTON.(45)
    FULLERTON has since left the AINSWORTH organisation,
    apparently on amicable terms. When he joined
    AINSWORTH, FULLERTON for some time maintained his
    links with LEISURE & ALLIED INDUSTRIES, a Perth
    based amusement machine company. In this period
    both FULLERTON and LEISURE & ALLIED were linked in
    some manner, most probably in regard to the supply
    of machines, with Abraham Gilbert SAFFRON. (46)

    An alleged conspiracy whereby a bank officer
    pressured clubs in financial difficulty to engage
    the services of a consultant who recommended
    purchases of AINSWORTH machines was referred to the
    AFP. Some references have been made in Federal
    Parliament to the banking aspect of this
    investigation.
    The consultant, now deceased, was a director in some
    of the ESSINGTON group of companies. (47)

    AINSWORTH Consolidated Industries’ share of the NSW
    poker machine market has contracted to about 30
    percent.
    Licensing of AINSWORTH
    AINSWORTH was granted approval for a casino
    licence in New Jersey on the condition that he

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    divest himself of all interests in all the
    AINSWORTH group of companies.
    AINSWORTH is currently not licensed to operate
    in Nevada.
    AINSWORTH NOMINEES were granted an Amusement
    Device Dealers Licence by the NSW Licensing
    Court in 1985. The granting of the licence was
    unsuccessfully challenged by the NSW
    Superintendent of Licences.
    The Victorian inquiry report said the following
    in relation to AINSWORTH being licensed to
    operate in that state:
    “It is conceivable that the company may
    persuade a licensing authority that,
    whatever its past misdeeds, it should now
    be regarded as suitable to be licensed.
    It is not for me to make those decisions.
    Consistently with my role as I see it, I
    record simply that I am not confident, on
    what I have seen, that more intense
    scrutiny of Ainsworth’s affairs would lead
    a licensing authority to be satisfied, to
    the necessary standard, of the probity of
    either the company itself or of its
    principal” (48)
    Comment

    This Commission recommends that the AINSWORTH group
    of companies not be permitted to participate in the
    gaming machine industry in Queensland.

    INTERNATIONAL GAMING TECHNOLOGIES P/L

    This company was established in Nevada by one
    William Silas REDD, born 16 November 1911. REDD,
    the claimed inventor of the draw poker machine, was
    the former owner of BALLY DISTRIBUTING CORPORATION
    in Nevada. He was a confirmed associate of a number
    of syndicated crime figures.
    IGT was formed in the late 1970s and it and another
    REDD company, SIRCOMA P/L, have been investigated by
    the FBI in relation to the distribution of illegal
    gaming devices. IGT was the American distributor of
    ARISTOCRAT poker machines, manufactured by AINSWORTH
    in Australia while AINSWORTH distributed IGT video
    gaming machines in Australia. This arrangement
    collapsed; possible causes appear to be AINSWORTH’s
    own development of video gaming technology and
    concerns by IGT over the possible theft of
    componentry. IGT moved into the production and, in
    the US, operation of poker machines.

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    In October 1980, a New Jersey hearing examiner found
    that the relationships among REDD, IGT and BALLY
    DISTRIBUTING were such that all should be considered
    a single entity for a regulatory purpose. This was
    overturned on appeal.
    The company became a public company in 1981 and REDD
    ceased to be sole owner.
    IGT was intensively investigated by Licensing police
    in New South Wales and a number of conditions were
    put on the company obtaining a licence. These
    included REDD severing all proprietary connection
    with the company. That the company was willing to
    fulfil these draconian conditions is an interesting
    comment on how significantly the Australian market
    is perceived. (49)
    The company now appears to be well regarded by
    regulatory authorities. It is, as previously noted,
    a pioneer in machine linking technology and has
    shown a willingness to explore and contribute to the
    regulatory and enforcement implications of this
    technology. This system is currently being marketed
    as IGT MEGABUCKS.
    This commission has some concern with two former
    AINSWORTH personnel now with the company.
    The former managing director and current vice-
    chairman of IGT (Australia) is a Mr Peter
    CLAREBOROUGH aka CLAREBROUGH, a former senior
    AINSWORTH executive who left the employ of that
    company in December 1985.
    CLAREBOROUGH appeared before the Victorian
    Board of Inquiry in 1983 and was the witness
    withdrawn by AINSWORTH when the inquiry queried
    undisclosed bank accounts operated by Kevin
    James O’BRIEN.
    Ombudsman Mr Masterman QC formed the view that
    part of Mr CLAREBOROUGH’s evidence before him
    on his foreknowledge of NSW police raids was
    not true. Officer HANRAHAN also gave evidence
    of a telephone call from a person claiming to
    be CLAREBOROUGH who said he was ringing on
    behalf of Len AINSWORTH to make HANRAHAN an
    offer “which would make him very happy”- a
    payment of $500,000 to any nominated bank
    account in return for certain specified
    evidence at the trial of AINSWORTH, the offer
    to be verified by a call to one of two senior
    police officers. Mr Masterman QC was satisfied
    there had indeed been such a call but it was
    not possible to verify whether the caller was
    indeed CLAREBOROUGH or whether the two senior
    police were involved. (50)

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    CLAREBOROUGH retired from active management of
    IGT Australia in about mid-1989 in favour of Mr
    Dean McCLAIN, formerly Director of Sales (Las
    Vegas). CLAREBOROUGH however remains vice-
    chairman of the board and a Scott CLAREBROUGH,
    described as his son is Gaming Development
    manager of IGT Australia.
    One of IGT’s principal salesmen for the
    MEGABUCKS system in Australia is a George
    CRAGEN who is probably identical with a former
    AINSWORTH employee of that name.
    CRAGEN also faced the Victorian inquiry
    although at that stage he had moved from being
    a divisional manager with the AINSWORTH
    organisation to a position as general manager
    of the newly taken over NUTT & MUDDLE. He told
    the inquiry that in 12 years with AINSWORTH he
    was aware of only two incidents where AINSWORTH
    mechanics had been dismissed for dishonesty
    (CLAREBOROUGH was aware of 13 dismissals in the
    period 1980-83). He was cross examined on a
    memo he had written to AINSWORTH advising that
    a mechanic who may have had something to fear
    from Treasury inquiries into machine shortfalls
    had announced a retirement due to ill health
    but was expected to “effect a miraculous
    recovery in the next few weeks (sometime after
    the heat goes out of the Treasury inquiry)”.
    (51)

    CRAGEN was believed by NSW police in 1981 to
    have issued a cheque for $10,000 to the
    secretary-manager of the 729 club by way of a
    secret commission, allegedly on behalf of
    AINSWORTH. Police investigations into this
    resulted in a meeting between the investigating
    officer, a former police officer and another
    police officer where, according to the
    investigating officer, it was stated that
    CRAGEN was quite prepared to “help” him
    financially if the investigation did not
    proceed. Ombudsman Mr Masterman QC questioned
    all parties to the incident and “accepted in
    broad terms” the account of the investigating
    officer. (52)

    IGT has, since its establishment, acquired about 30
    percent of the Australian poker machine market.
    This share will probably grow due to the company’s
    current pre-eminence in machine and site linking
    technology.
    Comment
    This Commission would need to conduct further
    research on IGT to be satisfied that operations by

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    the company would be an acceptable risk in
    Queensland. It has reservations in relation to the
    vice-chairman Peter CLAREBOROUGH and the sales
    executive George CRAGEN.

    UNIVERSAL AUSTRALIA

    This company had its origins in a juke box and game
    machine rental company UNIVERSAL LEASE CO Ltd,
    founded by Kazno OKADO in Japan in 1967. The
    company diversified into restaurants, night clubs,
    hotels and slot machines, and started distribution
    of machines in Nevada in 1983.

    In 1986 the company formed a joint venture with the
    small Australian manufacturer PACIFIC POKER MACHINES
    to form UNIVERSAL AUSTRALIA INC.
    This Commission has no adverse knowledge of PACIFIC
    POKER MACHINES and its directors, some of whom were
    formerly distributors for the BALLY organisation in
    Australia. No final conclusions can be drawn
    without specific inquiries in New South Wales.
    UNIVERSAL was apparently approved by NSW authorities
    without any of the drama attaching to the AINSWORTH
    or IGT applications. Nothing adverse is known by
    this Commission about UNIVERSAL although it would
    seem prudent to undertake inquiries with Japanese
    authorities before permitting the company to begin
    any operations in Queensland.

    UNIVERSAL has expanded the share of the market held
    by the older PACIFIC company to about 30 percent.

    Licensing

    UNIVERSAL AUSTRALIA was licensed by NSW
    authorities after inquiries were made in Japan
    and of the Nevada and New Jersey Gaming
    Authorities. The company itself was said to be
    co-operative in supplying information however
    some difficulty was found in checking
    information with authorities in Japan. No
    serious adverse finding has been made in
    relation to the company to the best knowledge
    of this Commission.

    Comment
    The information to hand on UNIVERSAL AUSTRALIA is
    too limited to permit any judgement on whether the
    company should be permitted to operate in
    Queensland.

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    OLYMPIC AMUSEMENTS

    OLYMPIC has its origins in a Victorian amusement
    machine manufacturer linked with two Greek
    businessmen Nicholas BALAGIANNIS, born 230247, and
    Nick MITRIS, born 020544.

    According to an interview between BALAGIANNIS and
    NSW police, BALAGIANNIS came to Australia from
    Greece in 1965. In the early 1970s he became the
    proprietor of the MONTE CARLO amusement billiard
    room in Frankston and sold a half share in this
    business to MITRIS in 1973. In 1979 this business
    was sold to an Arthur MITRIS. In the early 1980s
    MITRIS and BALAGIANNIS imported amusement machines
    from Japan before beginning assembly and manufacture
    under the OLYMPIC name. (53)

    Victorian and NSW police have long believed or
    received information that OLYMPIC AMUSEMENTS has two
    faces, supplying both legal and illegal machines and
    markets. Reputedly it was BALAGIANNIS who handled
    the illegal side. BALAGIANNIS was convicted of
    lending a contrivance for gaming in the Dandenong
    Magistrates Court on 010982.

    In interviews with NSW police both BALAGIANNIS and
    MITRIS said that they had both draw poker and other
    amusement machines in about 30 premises in Victoria.
    Video draw poker machines are illegal in Victoria.
    (54)

    Angelo DUROS, a well known manufacturer and operator
    of illegal amusement devices in New South Wales is
    believed to have provided some input into OLYmPIC’s
    early manufacturing operations. Nick MITRIS told NSW
    police in 1984 of recent dealings between
    BALAGIANNIS and DUROS. (55)

    BALAGIANNIS and MITRIS also told police they had
    interests in the BUCK ROGERS amusement centre in
    Melbourne. (56) Their interests are not disclosed
    in any corporate documents relating to the BUCK
    ROGER premises.
    The general manager of the poker machine
    manufacturing arm of the company in NSW is former
    Victorian police officer David John WADE, born
    160653, who is married to a niece of BALAGIANNIS.
    WADE left the Victorian police on 210584, on medical
    grounds. He stated to NSW police that he was
    suffering from cancer. He told NSW police that
    departmental charges against him and others in 1972
    for allegedly destroying police documents had been
    dismissed and that he had been exonerated in a
    number of internal investigations prior to his
    retirement. (57)

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    Investigations by this Commission indicate that
    WADE’s account of the 1972 charges is essentially
    correct but it would be more correct to say that the
    later internal investigations were principally not
    brought to any conclusion. The Commission’s
    knowledge of these internal investigations is set
    out below.
    WADE and a subordinate officer Lucio PEPE, born
    100856, were investigated in relation to a
    complaint from a prostitute that she had been
    “loaded up” with a small quantity of heroin on
    or about 100482. This investigation was
    discontinued.

    WADE and two subordinate officers Lucio PEPE
    and Ian FLEMING were investigated in relation
    to allegations that they had been bribed to
    supply certain information in relation to an
    investigation. The internal investigation was
    discontinued after the death (from natural
    causes) of one of the complainants.

    WADE and two subordinate officers Lucio PEPE
    and Ian FLEmING were investigated in relation
    to an allegation that they had travelled
    overseas in June 1982 with one Athos
    MANDYLARIS, born 140748, a Greek nightclub
    owner. This investigation was discontinued.

    WADE and a subordinate officer Lucio PEPE were
    investigated in relation to an allegation that
    they had attempted to induce the victim of a
    crime to offer a reward. WADE was officially
    on leave at the time. One of those allegedly
    involved in this incident was reputedly active
    in the illegal gaming industry. This
    investigation was discontinued.

    WADE was investigated in relation to an
    allegation that he had solicited a bribe from a
    business proprietor in the tow truck industry.
    The complainant withdrew the complaint on the
    grounds it would not be the best course for his
    business for it to continue.

    WADE was investigated in relation to
    allegations that he had “loaded up” some tow
    truck drivers charged with possession of small
    quantities of heroin. These charges were
    withdrawn. No result is known for this
    internal investigation.
    WADE, a subordinate Lucio PEPE and others were
    investigated in relation to an allegation that
    a gold bracelet and $1000 had gone missing
    during a raid on gaming premises. No result is
    known for this internal investigation.

  • Page 46 of 114

  • – 38 –

    Comment

    It must be emphasised that this Commission
    has no knowledge as to whether there were
    grounds for investigation of WADE in
    relation to any of the above allegations.
    The Commission does however have grave
    concerns over the number and nature of the
    allegations and with WADE’s associations
    with PEPE, MANDYLARIS and FLEMING (see
    below). The possibility exists that
    WADE’s retirement from the Victorian
    police was not unassociated with the
    indeterminate result of a number of these
    investigations.

    WADE can be shown to have associations with Athos
    MANDYLARIS, Lucio PEPE, Victor UMEK and Ian FLEMING.
    This Commission has concerns in relation to these
    associations which are spelt out below:

    Athos MANDYLARIS, born 140748 in Greece, is a
    nightclub owner with a conviction for carrying
    a loaded firearm in a populous place. He was a
    known associate of and has associates in common
    with former insurance broker and suspected drug
    trafficker James PINAKOS. PINAKOS, who is now
    known to have handled cash in quantities
    considerably in excess of what was generated by
    his business, disappeared following a suspect
    transaction. His mutilated body was found at
    Rye on 180789.
    WADE, PEPE and FLEMING, all then officers of
    the Victoria police, travelled overseas with
    MANDYLARIS in 1982.
    Lucio PEPE, born 100856, was a former Victorian
    police officer subordinate to WADE and was
    involved in a number of the alleged incidents
    for which WADE was investigated. In 1984 PEPE
    was also identified as one of the principals of
    CAA AMUSEMENTS, a Victorian company, with his
    brother Vincent PEPE, his brother in law
    Laimond SPROGIS and a Con ALEXOPOULIS. (Con
    ALEXOPOULIS D’ANDREA). This company has been
    the subject of allegations of the making of
    threats to secure the placement of amusement
    machines. PEPE and others were convicted of
    offering a bribe to a police officer who had
    seized some illegal gaming machines but this
    conviction was set aside for reasons unrelated
    to the facts of the case on appeal. In related
    police departmental proceedings WADE appeared
    as a witness for PEPE. On 301189 PEPE and
    another Victorian police officer Victor UMEK
    were arrested on a cannabis plantation of 2000
    plants at Sale in Victoria. A search of PEPE’s
    home showed that he was in possession of WADE’s
    business and silent telephone numbers in Sydney

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    and the telephone number for WADE’s father.
    David WADE, company manager, was one of those
    listed as prepared to support PEPE’s bail
    application. PEPE and UMEK pleaded guilty to
    charges in relation to this crop on 070590.
    Counsel for PEPE told the court that he
    intended to call WADE as a character witness
    but that WADE had not arrived and his
    whereabouts were unknown. PEPE and UMEK were
    sentenced to terms of imprisonment.

    Victor UMEK, a former Victorian police officer
    subordinate to WADE, was involved with Lucio
    PEPE with the cannabis crop mentioned above.

    Ian Grant FLEMING, a former Victorian police
    officer subordinate to WADE, allegedly
    travelled overseas with WADE, PEPE and
    MANDYLARIS in 1982. On 070382 FLEMING was
    charged with improper conduct after being found
    during the investigation of the murder of
    prostitute Dale Andrea LOCKWOOD to have been
    working as a driver for an escort agency.
    FLEMING was found guilty of a disciplinary
    charge and sought workers compensation and a
    medical discharge from the Victoria Police.
    WADE provided some support for these
    applications. FLEMING also later volunteered
    the names of WADE and PEPE as two officers
    supportive of him.(58)

    OLYMPIC were investigated by the CUSTOMS department
    in relation to a number of incidents in the early
    1980$ and Nicholas BALAGIANNIS charged by the
    Customs department with six counts of smuggling, six
    counts of evading payment of duty, five counts of
    making a false entry, seven counts of producing an
    untrue document, and one count of making a false
    statement. On 260686 BALAGIANNIS was convicted of
    six counts of smuggling, six counts of producing an
    untrue document and one count of making a false
    statement. (59)
    WADE’s name made its way on to a list of
    “”Principals in the Prohibited Amusement Device
    Industry of NSW – 1989” but it is not known on what
    basis his name was included other than “Parts
    supplier”. BALAGIANNIS features on a similar
    Victorian list of identities dated 1980.(60)
    WADE told journalists in 1988 that he had evidence
    of a plot to keep any new gaming machines from
    replacing in-line machines in Queensland clubs.
    This conspiracy allegedly involved BALLY, corrupt
    dealings between NSW and Queensland police, and “a
    bagman who had been planted in his organisation as a
    spy”. (61) This Commission has not seen the detail
    of these allegations and can make no comment on
    their content except to point out that they are

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    nearly identical to allegations made by AINSWORTH
    and LAMONT, a lobbyist connected with AINSWORTH.

    The business name OLYMPIC AMUSEMENTS was registered
    in Queensland on 250184 by one Jack MAOUDIS of 82
    Davrod St, Robertson. MAOUDIS was thought by
    Queensland police to be identical with a Jack
    KYRIAKOU, born 200231, who has a minor conviction
    for false pretences at Tully in 1958. It is not
    known at this stage whether MAOUDIS has any
    connection with the Melbourne-based company OLYMPIC
    AMUSEMENTS. The MAOUDIS-registered business name was
    deregistered on 250187.

    OLYMPIC AMUSEMENTS, which is the smallest of the
    major manufacturers, currently has about 10 percent
    of the NSW poker machine market. OLYMPIC is an
    aggressive advertiser and promoter of its wares and
    has engaged the services of Queensland footballer
    Wally LEWIS to promote its machines, with an obvious
    eye on the new market in this State.
    This Commission is aware of further information in
    regard to OLYMPIC AMUSEMENTS and its principals
    which falls under the provisions of Section 2.19 (2)
    (b) of the Criminal Justice Act 1989.

    Comment

    This Commission recommends that OLYMPIC AMUSEMENTS
    not be approved for participation in the gaming
    machine industry in Queensland.

    OTHER MANUFACTURERS

    There are other manufacturers which include some
    operating in a smaller way in Australia and some
    operating in a large way internationally but not yet or
    not now in Australia.

    Some of these latter companies may be interested in a new
    market opening up in Queensland.
    Below are brief notes on companies which may become of
    relevance.

    BALLY CORPORATION

    BALLY is the world’s largest manufacturer of gaming
    machines and once had a considerable presence in the
    Australian market. This evaporated following
    revelations and adverse comment before the Moffitt
    (NSW) and Wilcox (Vic) inquiries and the company now
    has no organisational presence in this country. The
    public face of BALLY in Australia has been Jack
    ROOKLYN; following the withdrawal of BALLY from the
    poker machine market ROOKLYN concentrated on the

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    illegal in-line machines in Queensland, a market
    which he was able to dominate through the company
    QUEENSLAND AUTOMATICS. BALLY, ROOKLYN and their
    associated companies have a very poor record in this
    country and ROOKLYN is currently before the courts
    on corruption charges.
    BALLY internationally now claims to have purged
    itself of its US syndicated crime links after many
    years of pressure from Nevada and New Jersey gaming
    authorities. Whether this is so or not is a
    judgement that need not be made until or unless
    BALLY indicates an interest in re-entering the
    Australian or Queensland markets.

    There is no indication that the BALLY organisation
    has any desire to raise the ghosts of its past in
    this country.

    INTERMARK IMAGINEERING INC

    One Nevada company, INTERMARK IMAGINEERING INC,
    which was refused a license in NSW, did in the
    recent past have a minimal presence in Queensland.
    In New South Wales the company’s registered office
    was established in premises owned by former NSW
    police officer and suspected crime figure Keith John
    KELLY. (62) The company is a shareholder in the NSW
    registered company SILVERBAY P/L along with the
    KELLY company Australian Computer Equipment Supplies
    P/L. The directors of SILVERBAY are KELLY, Michael
    James COURTNEY, Patrick Percy RENSON-SMITH and Paul
    Bruce HARDIN. COURTNEY is involved in organised
    criminal activities and was prominently mentioned in
    the NSW BCI report (known as the Shelley Report)
    into the activities of the TERRY’S IMPORTS group of
    companies. (63) HARDIN’s father Bruce HARDIN was
    involved in Sydney illegal casinos and in SP
    bookmaking with George FREEMAN. (64)

    In Queensland, KELLY is an associate of former
    police assistant commissioner Tony MURPHY and had
    business interests in common with businessman Ronald
    Anthony McCONNELL. These business interests
    formerly included the supply of gambling equipment
    to illegal casinos operated by Gerald() BELLINO.
    KELLY and McCONNELL have come to notice in this
    ,

    state for efforts to have their then company awarded
    casino equipment supply contracts to Jupiters
    Casino. (65)

    MUFFLERS/VANGUARD GROUP of COMPANIES
    The RUFFLER group consists of English-based
    companies with interests in gambling and gambling
    equipment. They first came to notice in Australia
    in relation to a bid to take over the NUTT & MUDDLE

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    poker machine company in Australia. Victorian
    criminal identity Mark Alfred CLARKSON, now in jail
    for fraud offences, was associated with another bid
    to take over the company. During this period there
    is evidence of links between both RUFFLER and
    CLARKSON and persons involved in activities relating
    to Leonard AINSWORTH and his companies. The
    AINSWORTH group had earlier been blocked from taking
    over NUTT & MUDDLE by Federal Court action initiated
    by the Trade Practices Commission. (66)

    An Australian company W.B. RUFFLER Pty Ltd was
    registered to the TEXAS TAVERN premises at 44
    Macleay Street, Kings Cross. TEXAS TAVERN owner,
    Harry Joseph CALLEIA, has illegal gaming convictions
    and is an associate of organised crime identities.
    CALLEIA, aka CALLEIH or CALLEIGH and often confused
    with Harry GALEA, is the principal of the VANGUARD
    group of companies, which include VANGUARD
    AMUSEMENTS and CALYPSO AMUSEMENTS. VANGUARD was
    mentioned before the (Fitzgerald) Commission of
    Inquiry as one of the suppliers of illegal in-line
    gambling machines in Queensland. VANGUARD or some
    person associated with it was allegedly responsible
    for making payments to Leo McQUILLAN (deceased) of
    the LICENSING COMMISSION and by way of secret
    commission, to personnel of at least one club. (67)

    Those mentioned before the Fitzgerald Inquiry as
    having some connection with VANGUARD machines were a
    Harry GALEA (possibly confused with Harry CALLEIA),
    Paul MEADE (deceased) and Kevin KENT (Qld
    bookmaker). MEADE and one GALEA (again possibly
    confused with CALLEIA) were shown to be in contact
    with Sydney organised crime identities during NSW
    Operation DAZZLER. Frederick “Paddles” ANDERSON
    (deceased) alleged that MEADE was behind in payments
    to himself and McPHERSON to operate gaming machines
    in Queensland. (68)

    This Commission is aware of further information in
    connection with MEADE and associates which is the
    subject of current proceedings.

    LEISURE AND ALLIED INDUSTRIES

    A long-established amusement device manufacturer and
    operator which withdrew its application for a
    licence in New South Wales following enquiries in
    Western Australia in relation to directors of the
    STEINBERG family.
    Director Malcolm David STEINBERG, born 211239, is
    known as an associate of Abraham SAFFRON. The
    company employed Graeme FULLERTON in various senior
    capacities, for some time simultaneously with his
    employment with AINSWORTH. In this period FULLERTON
    is also known to have visited premises used by

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    SAFFRON.(69)
    STEINBERG and/or LEISURE & ALLIED is believed to
    have interests in amusement machines and/or parlours
    in Brisbane.
    This Commission is aware of further information in
    relation to another director of LEISURE & ALLIED
    which falls under the provisions of Section 2.19 (2)
    (b) of the Criminal Justice Act 1989.

    QUEENSLAND GAMING MACHINE SALES AND SERVICE PA

    A company of this name was registered on 141287,
    giving as its address the third floor of 210 Queen
    St, Brisbane. The directors of the company are
    currently listed as Chevel David COONAN, born 120247
    of Sydney and Maurice James HOWE, born 050547, of 3
    Banks Street, Ashfield, Sydney. The secretary is an
    Ian Richard PHILLIPS, also apparently born on
    120247, giving his address as 21 Vale Street, Kelvin
    Grove. COONAN is a director of INSTANT COMPANIES
    P/L, which has come to notice on a number of
    occasions in connection with shelf companies used by
    criminal identities. There are indications that
    COONAN’s involvements may go beyond the mere
    provision of corporate services. With regard to
    this company it is unusual that a shelf company
    director remains listed more than two years after
    the company’s creation. A Maurice James HOWE, birth
    date not known, is adversely known by this office
    for organised criminal associations, but there is no
    certainty that this is the Maurice James HOWE
    associated with this company.

    ILLEGAL ACTIVITIES: MANUFACTURE SUPPLY AND MAINTENANCE
    OF GAMING MACHINES

    1. Manufacture

    The issues of concern here are that some gaming machine
    manufacturers in Australia have had a propensity for
    cultivating and on occasion corrupting persons
    responsible for their regulation; that inadequately
    secure machines have been produced; that a degree of
    industrial espionage which sometimes transgresses into
    criminality takes place between manufacturers; that
    there may be undeclared interests in such companies; that
    criminal elements are employed or associate closely with
    such companies; or that they form vehicles for money
    laundering or tax evasion.
    Most of the examples of these practices spelt out below
    relate to either the BALLY or AINSWORTH groups of
    companies. Apart from illustrating what can go on in

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    this industry examples of BALLY transgressions are most
    likely to be only of historical interest. The AINSWORTH
    group might suffer some disproportionate attention
    because it is long established and well studied. However
    there is also real cause for concern in view of the
    AINSWORTH group’s long and often questionable lobbying
    for the introduction of poker machines into this state.

    Corruption and cultivation of regulatory
    authorities.

    The Moffitt Royal Commission of 1974 dealt
    extensively with the great reluctance of the NSW
    police to pursue allegations of misconduct by the
    BALLY group within NSW clubs. By contrast the then
    Commonwealth police were vastly more efficient
    investigators. Mr Justice MOFFITT provided what may
    have been some explanation for these differences in
    investigative aptitude in finding that the then head
    of BALLY AUSTRALIA had entered an unorthodox
    business arrangement with one of the police
    investigating BALLY and that he had lied about this
    arrangement before the Royal Commission. (70)

    Something of the same pattern has been discernible
    in investigations into the AINSWORTH group of
    companies by Task Force Two of the NSW police. The
    NSW Ombudsman Mr Masterman QC found that junior
    police who persisted with this investigation were
    justified in believing that there were attempts to
    bribe them and otherwise impede their investigation.
    Senior police, some of whom have since come under
    grave suspicion or worse of misconduct, were or
    appeared to be in close or convivial contact with
    AINSWORTH or his senior executives. Former and
    serving police and criminal identities were among
    those engaged in various actions which could be
    construed as attempts to buy off or otherwise impede
    the investigation. (71) Finally, both this and other
    investigations into AINSWORTH, his associates and
    companies have not proceeded in any usual manner and
    in some cases have not proceeded at all. There may
    be quite proper explanations for each apparent
    diversion from the expected course of justice but a
    number of such incidents, taken together, give rise
    to questions. (72)
    The AINSWORTH companies also conducted their
    campaigns to have poker machines introduced into
    Queensland and Victoria in an indirect and deceptive
    way. Ostensibly independent lobby organisations were
    set up, spokesmen for which received AINSWORTH money
    and instructions at the same time as they publicly
    decried any connection with AINSWORTH. A proposal
    for political donations amounting to $30,000 was
    accompanied with instructions as to how AINSWORTH
    CONSOLIDATED INDUSTRIES was to be invoiced for
    $30,000 in advertising in “party newspapers,
    pamphlets and brochures”. Another payment of

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    $40,000, this time ostensibly related to market
    research, may well have been a party political
    donation in Victoria. As in any lobbying enterprise
    the aim of the campaign was to cultivate those who
    were in power or who might ascend to it. The
    lobbying activities of the AINSWORTH organisation
    are such as to give rise to concern over what other
    commercial or political activities would be
    considered acceptable by the company.(73)
    The campaign to have poker machines introduced into
    Queensland in the early 1980s failed, possibly not
    least because the illegal in-line machine industry
    proposed and cultivated the opposite viewpoint and,
    according to evidence before the Commission of
    Inquiry, backed up its case with some corruption of
    public officials. (74)
    In the illegal side of the industry major suppliers
    and operators Leslie William JONES and members of
    the PAKIS family have been known to boast of police
    protection. These claims may or may not be truthful
    but there has been at least one period where it
    seemed to the competitors of JONES, notably one
    Angelo DUROS, that the weight of enforcement was
    falling heavily and seemingly almost exclusively on
    them. JONES and his partner Gregory John MELIDES
    are reliably believed to have paid politicians and
    others outside of Australia to protect illegal
    gaming machine operations.(75)
    Historically, overseas as well as in Australia,
    elements of the industry have shown a predisposition
    to compromise or corrupt regulatory authorities.
    There is a great deal of money involved, a lot to
    gain and, realistically, often little chance of
    getting caught. Any regulatory mechanism in
    Queensland must take this historical tendency into
    account.
    New South Wales has suffered to some extent from a
    multiplicity of regulatory authorities. It has also
    suffered from the tendency by some in the industry,
    particularly in recent years the AINSWORTH group of
    companies, to use every legal and possibly other
    avenues to frustrate investigation and regulation or
    their consequences.

    Participation in the gaming industry should be
    considered as a privilege and not a right.
    A single gaming authority with its own thoroughly
    and continually vetted intelligence and
    investigative staff should be established. The
    authority should be accountable to the parliament,
    not the executive.
    Disqualification of operating rights should follow
    automatically from detection of prescribed offences
    rather than as the result of a court process.

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    Operating rights may be able to be restored
    following an appeal process through the courts with
    the gaming authority indemnified against any action
    for costs or damages.
    The South Australia Select Committee into the Casino
    Bill 1982 was the first in Australia to recommend
    measures based on the principle that participation
    in a gaming industry be a privilege, not a right.
    The committee proposed reversing the onus of proof
    by requiring any applicant to demonstrate his
    company’s suitability and lack of connection with
    organised crime and giving the licensing authority
    the ability to act on reasonable suspicion.
    The committee stated: “There is a need to ensure
    that there is no chance that organised crime can
    influence the police or political system which is
    always susceptible to corruptive influence.
    Corruption usually occurs in this context by a
    failure to prosecute. It is essential that if a
    breach of the rules or regulations is detected then
    disciplinary action is automatic and not held up by
    police inactivity or government delay.”(76)

    Inadequate machine security
    The older, mechanical poker machines were
    notoriously vulnerable to poker machine cheats armed
    with sophisticated equipment like wire and
    automotive washers. Folklore attests that some such
    gangs of cheats operated continuously and
    exclusively in such a manner for more than 20 years
    and claimed their equipment holding “vests” as a tax
    deduction. None of this is verifiable but it can be
    said that the newer generation of video and
    microprocessor technology poker machines are less
    vulnerable to outside interference.
    However the claims of poker machine lobbyists extend
    to claims that the new generation of machines are
    manipulation proof. Part of the argument advanced
    has been that poker machine cash analysis of the
    type possible on new machines and mandatory in NSW
    and the ACT has greatly reduced the problem of
    player cheating. The response of Mr Wilcox of the
    Victorian inquiry to this claim was that “as the
    (NSW) Department of Finance made clear to me, all
    that percentage analysis did was to highlight that
    there were very large discrepancies between actual
    poker machine revenues and the revenue which ought,
    theoretically, to have been produced”. (77) The
    Victorian inquiry heard from NSW detectives that
    cheating on microprocessor machines was sometimes
    easier than on older models: a practice known as
    “yo-yoing” involves no more than jiggling a coin
    attached to a thread through the coin acceptor.
    Manufacturers constantly devise new anti-yoyo

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    devices; cheats just as regularly devise new methods
    of overcoming these safeguards. An Ainsworth
    machine, of which /2,000 examples were produced
    between 1979 and 1983, was found to have a design
    fault which allowed unearned credits to be
    accumulated through certain simultaneous actions
    with a coin and the collect button. More recently a
    new machine simply accepted the wrong denomination
    of coin.
    While the ACT required that machines be inoperative
    when coin counters were disconnected, at least some
    manufacturers were defying normal rules of economy
    of production by separately turning out similar
    machines to the less demanding NSW standards. It
    has also been found that some counters themselves
    could be manipulated through simple electrical
    pulses. An alligator clip and a piece of wire are
    hardly very sophisticated but there have also been
    instances where machine software or componentry has
    been manipulated or even exchanged with units more
    generously inclined to jackpots and payouts. This is
    by no means an exhaustive list of methods of
    cheating the modern poker machine.
    There has been evidence of organised cheating, which
    has involved the production of specialised tools
    (more in the era of mechanical or electro-mechanical
    machines); the involvement and co-operation of
    groups of people; and the allotment of cheating
    areas or “runs”. Some arrested cheats have been in
    possession of names or other evidence suggesting a
    much wider criminal conspiracy perhaps taking a cut
    from the cheats – this is organised crime by any
    definition. It would be folly to anticipate, as
    some in the industry would have us believe, that
    poker machines installed in Queensland would be
    immune to either manipulation or the attentions of
    professional cheats.

    Effective supervision and safeguards imposed by
    licensed establishments themselves will always be
    one of the main obstacles to amateur or professional
    poker machine cheating. Industry attitudes that
    cheating is either insignificant or always the
    problem of other manufacturers, pubs or clubs are
    unlikely to lead to the development of effective
    safeguards.

    The newer generation machines do seem to have
    shifted the balance to a large extent away from
    external cheating to internal theft – the machine
    that is proof against dishonest club staff and
    technicians has not yet been invented, although
    industry propaganda has once again been known to
    claim otherwise.
    At the most mundane level some new generation
    machines have still accepted the wrong denomination
    of coin or other objects. Other problems that have

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    arisen in New South Wales in the recent past include
    machine counters that could be manipulated through
    simple electric pulses.
    Some degree of machine irregularity to account for
    slow counters and the like is allowed in New South
    Wales. However criminals working from the inside
    have been known to exploit their knowledge of this
    margin (currently about two percent) for skimming
    operations of various types.
    Microprocessor based technology is also vulnerable
    to component switching by technicians working in
    tandem with accomplices who “play” rigged machines.
    As a general rule the more machines have to be
    attended by technical staff the greater the risks.
    Once again supervision and safeguards in licensed
    establishments themselves are one of the,,first and
    most significant lines of defence against such
    depredations and naivety and blind optimism that
    machines will not be interfered with is an
    impediment to the development of effective
    safeguards. There are, fortunately, encouraging
    developments within the industry. In New South
    Wales some club industry personnel have formed a
    Poker Machine Council which has gone some way to
    redressing the balance between manufacturers and
    purchasers of poker machines. The council has been
    able to have addressed the problems of poorly built
    and/or designed machines. The council has also
    developed educational materials for use within
    clubs, lobbied government in relation to
    shortcomings in the regulatory structure and formed
    an effective and complementary relationship with NSW
    police squads investigating poker machine related
    crime. (78)
    On balance, if responsible sections of the industry
    show themselves capable of addressing these
    potential problems they should be allowed and
    encouraged to do so.
    A listing of instances of fraud/theft and breakdowns
    correlated with type of machine should be kept by
    any central gaming authority. The list should also
    include all non-authorised/illegally placed
    machines. Manufacturers should be queried/advised
    of any apparent problems. Any responsible
    association within the industry should also be
    advised. The gaming authority should have the power
    to require rectification of any problem or have
    machines recalled at manufacturer’s expense.

    Industrial espionage
    In a highly competitive and gimmickry industry the
    theft or poaching of secrets and plans from

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    companies is an ever present concern. It is
    probably more a concern of the companies themselves
    than law enforcement or regulatory authorities.
    However one instance is known where it appears that
    a senior executive of a company was involved in the
    organised criminal theft of material from another
    company. It is not known whether other company
    executives or principals were involved but that
    possibility exists.

    AINSWORTH executive Graeme FULLERTON resigned from
    the company after investigations commenced into the
    apparently organised theft of components from IGT
    machines in Nevada. It appeared to be an amicable
    if unexpected resignation.(79)

    The 1984-85 Annual Report of the NSW Licensing
    Investigative Section includes industrial espionage
    in its list of “criminal aspects” of the industry in
    these terms: “Planted or subverted employees with
    access to commercial and financial knowledge and
    technological know-how.” (80)

    Undisclosed interests
    Regulatory authorities and other agencies on at
    least three continents spent more than a decade in
    the effort to discern who owned what in the BALLY
    CORPORATION. The fact of a hidden Italian American
    syndicated crime link is now generally conceded.
    Gaming authorities have forced substantial changes
    to BALLY’s corporate line-up but there is still far
    from universal confidence that every vestige of
    Mafia ownership and involvement in the company has
    been removed.

    In October 1980 a New Jersey hearing found that
    relationships between BALLY, IGT and IGT founder
    William Silas REDD were such that these should be
    considered a single entity for the purpose of
    regulation. This decision was later reversed on
    appeal. REDD was required to relinquish all
    proprietary connection with IGT before the company
    could be licensed to operate in New South Wales.

    Similar concerns are aroused by the Victorian
    inquiry’s consideration of the Murray Valley Poker
    Machine Company where it was shown that Leonard
    AINSWORTH had acquired a majority, but completely
    hidden, interest in the company. In a similar way
    AINSWORTH funded, controlled and directed the
    activities of the supposedly independent lobby
    organisation AUSTRALIAN CLUB DEVELOPMENT
    ASSOCIATION.
    This serves to illustrate the great care that must
    be taken in evaluating the real ownership of
    companies involved in the gaming machine industry.

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    It is worth noting the patterns that emerge in the
    illegal gaming machine industry in New South Wales
    where a notable criminal identity Leonard Arthur
    McPHERSON is known as “Mr 10 percent”.(81)
    NSW Authorities have stated their concerns with “The
    utilization of local trust and offshore banking and
    trust facilities to hide the origin of monies
    received or obtained”. This has been found to
    include trust accounts with Swiss and Liechtenstein
    banks and the comment is made “These trusts are open
    ended trusts with unknown beneficiaries.” (82)

    No company in the gaming machine industry should be
    licensed until regulatory authorities are totally
    confident that the true nature of interests in the
    company is known.

    Consideration should be given to not issuing any
    provisional licences to cover the period of
    investigation as experience has shown that pressure
    has been brought to confirm provisional licences
    despite adverse reports.

    Criminal associations

    The former international and casino operations
    manager for the AINSWORTH group was one Graeme
    FULLERTON, born 200642. At the time of his
    employment FULLERTON had ’19 convictions including
    felonious possession of pistol, possess implements
    for housebreaking, false pretences, larceny, shop
    breaking and stealing. Prior to and for some time
    after joining the AINSWORTH organisation, FULLERTON
    was a senior executive and company secretary with
    LEISURE AND ALLIED INDUSTRIES and as such was noted
    to have had business dealings with Abraham Gilbert
    SAFFRON. FULLERTON is said to have left the
    AINSWORTH organisation on amicable terms following
    the commencement of a Nevada investigation into the
    theft of components from IGT gaming machines. (83)

    The Victorian Wilcox inquiry into poker machines
    highlighted the presence in the AINSWORTH
    organisation of Kevin James O’BRIEN, born 100432.
    O’BRIEN, convicted in Victoria of a number of fraud
    related offences, was employed by AINSWORTH in the
    late 1970s to restructure his company group for tax
    advantages. According to Wilcox AINSWORTH retained
    the services of O’BRIEN despite becoming aware of
    his criminal record. AINSWORTH CONSOLIDATED
    INDUSTRIES was later assessed with tax and penalty
    liabilities of more than $20 million.(84)
    The NSW Ombudsman records that a number of criminal
    identities were associated with attempts to bribe
    investigators of Task Force Two or frustrate their
    investigations into AINSWORTH and poker machine

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    consultant Edward Phillip VIBERT. These included
    Mark Alfred CLARKSON, born 231150, a non-practising
    Victorian barrister who had been acquitted of
    conspiracy to murder (with Christopher Dale
    FLANNERY) under controversial circumstances and was
    later convicted of a number of company frauds.
    CLARKSON and Victorian pornographer and SAFFRON
    associate Gerald GOLD made offers of bribes to
    members of Task Force Two, ostensibly on behalf of
    AINSWORTH and VIBERT. Another intermediary in this
    process was former NSW police officer Keith John
    KELLY, named in the public reports of the Joint Task
    Force as an associate of drug trafficker Murray
    Stewart RILEY and the NUGAM family. (85)

    A record of association with or employment of
    criminal or suspect identities should be sufficient
    grounds for refusal of a licence to manufacture,
    supply or operate or service gaming machines in
    Queensland.

    Money laundering, tax_evasion.

    LEISURE AND ALLIED INDUSTRIES and the AINSWORTH
    group have both incurred tax and penalty liabilities
    in the $10 – $20 million range. To what extent this
    is indicative of systemic behaviour on the part of
    these companies is not known.

    There is no information to hand suggesting that
    money is laundered through gaming machine
    manufacturers. It is set down as a possibility to
    beware of. It is known that the books of AINSWORTH,
    BALLY and QUEENSLAND AUTOMATICS have at least
    periodically not reflected the true nature of the
    transactions they purport to describe. In one case
    relating to AINSWORTH neither that company nor a
    large finance company possessed documentation to
    cover a sizeable transaction.(see Penrith Leagues
    Club under Secret Commissions – below)

    The 1984/5 Annual Report of the NSW Licensing
    Investigative Section, NSW Supt of Licences. Office
    states that it has identified the following
    “criminal aspects” in this area:

    3. Utilisation of local trust, and offshore
    banking and trust facilities to hide the
    origin of monies received or obtained.
    4. Links with major drug distributors.
    5. Planted or subverted employees with access
    to commercial and financial knowledge and
    technological know how.
    7. Large scale income, customs and sales tax
    evasion/avoidance.

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    9. Falsification of financial documents.

    The precise basis for this listing is not yet known
    by this Commission but it does illustrate matters of
    considerable concern.(86)

    2. Supply
    The activities of manufacturers and their agents are yet
    more dubious when the distribution and supply of machines
    is considered. Among the criminal and undesirable
    activities known or very reliably believed to have
    occurred are the diversion of machines to illegal uses
    and markets; and a variety of forms of conduct which
    verge on or amount to being secret commissions and
    corrupt inducements to club officials.

    Supply to ).ttLLLULqA.AlAn,112trx
    Clubs and hotels have in effect been supplied with
    more than their legal requirement of gaming
    machines. This has varied from instances of
    deliberate oversupply to instances where unwanted
    “trade-in” machines are simply not retrieved by the
    manufacturer and these machines have continued to be
    used by the club.

    Manufacturers have also been known to supply
    machines for an illegal market. This Commission is
    aware of one such alleged case involving the
    AINSWORTH group and of alleged cases concerning
    OLYMPIC VIDEO GAMING which fall under the provisions
    of Section 2.19 (2) (b) of the Criminal Justice Act
    1989. OLYMPIC is additionally known to be involved
    in the illegal industry in Victoria.

    There are also allegations that the legal
    manufacturers have supplied parts to the illegal
    industry.
    A running list of unauthorised and illegally placed
    machines should be kept and the gaming authority
    authorised to interrogate manufacturers and take
    appropriate action. Sample illegally manufactured
    machines to be dismantled for analysis of their
    origins. (See above – inadequate machine security.)

    Secret commissions and related matters
    Various manufacturers are alleged or known to have
    engaged in the offer of inducements of one sort or
    another to buy gaming machines. These inducements
    have included or are alleged to include payments in
    cash or in kind such as holidays, supply of
    unauthorised machines and various kickbacks. Some

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    transactions proceed in a highly unusual manner
    which raises questions.
    As an illustration the following transaction
    involving the AINSWORTH companies and the PENRITH
    LEAGUES CLUB in New South Wales is set out in some
    detail.
    In September 1985 the Licensed Gaming
    Investigation Squad learned that the Penrith
    Leagues Club was in the process of purchasing
    100 Micro Star poker machines from AINSWORTH
    INDUSTRIES. This was an unusually large order
    which had not been referred to the squad
    although documentation had been lodged with the
    Liquor Administration Board. It was found that
    the club was to pay $720,000 for the machines
    less a “discount” of $99,000 and a trade-in on
    old machines of $90,000. The club, then in
    debt to the tune of $11,391,647, was to finance
    the machines through ESANDA FINANCE at 14
    percent interest with 24 monthly payments of
    $25,475. It appeared that the club was to pay
    $6800 per machine for machines that were then
    generally selling in a price range of $4800 –
    $5200.

    Inquiries conducted at ESANDA showed that the
    total repayment expected of the club was
    $701,400. The actual interest rate was 19
    percent, but five percent of the interest, or
    $23,000, was being paid by AINSWORTH under an
    arrangement used by the company for some time.
    In some instances AINSWORTH had-made such
    payments by cheque, however in this case the
    amount had been deducted from ESANDA’s payout
    figure which was $507,000, not $530,000.
    Senior management at ESANDA were totally
    unaware of this arrangement and no
    documentation was found at either ESANDA or
    AINSWORTH INDUSTRIES to cover this transaction.

    A perusal of the contract between AINSWORTH,
    ESANDA and the club showed only 90 poker
    machines listed on the schedule, in contrast
    with the 100 indicated in Statutory
    Declarations lodged by the club with the Liquor
    Administration Board (LAB). The club was
    queried and confirmed that the purchase was for
    100 machines. However a manager of AINSWORTH
    INDUSTRIES, Mr D.P. CLEARY attended at the LAB
    with a letter indicating that the sale was for
    90 poker machines. When questioned CLEARY
    apologised and amended the letter to read 100
    machines.
    Subsequent investigations showed that the South
    Sydney Juniors Club was also involved in a
    similar transaction with AINSWORTH

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    INDUSTRIES.(87)
    This sort of Byzantine transaction poses obvious
    problems for regulatory and law enforcement
    authorities. Even the description adopted by
    investigators is complex – ” The purchase of large
    amounts of poker machines for prices way above
    ordinary with no effective discount “. There is
    room in such contorted transactions for any number
    of corrupt arrangements.
    In the language of the industry, it is the person in
    a club ultimately responsible for ordering machines
    who is most likely to be offered “a big drink”.
    Although most machines have some equivalent of a
    list price in reality it is only the smaller clubs
    who buy at this price. In the industry talk of
    various forms of secret commissions _ from cash to
    paid holidays to private trade-in agreements to
    extra machines installed for private benefit is
    legion but details are few.
    The new and relatively inexperienced club industry
    in Queensland probably needs to be made aware of the
    risk of being taken for a ride by manufacturers and
    machine suppliers. The risks include the dumping of
    obsolete machines. In one instance quoted within
    the NSW industry, representatives of a Queensland
    club were quoted a price of $16,000 a machine for
    poker machines normally sold at about $9000.
    As in NSW all details relating to the purchase of
    any gaming machines should be provided to the
    regulatory authority by both company and purchaser.
    In addition it would be useful to remove much of the
    cloak of secrecy in the industry in relation to
    prices quoted and prices paid. At the time of
    seeking approval to licence any new machine the
    manufacturer/supplier should be required to set out
    the price structure for the machine and any
    discounting schedules. The prices of repair
    contracts for all machines should also be quoted.
    Prospective machine purchasers should be entitled to
    make inquiries of this information. Departures from
    the price schedule should be justified by the
    manufacturer.

    Most of the above suggestions remain relevant if the
    government purchases machines or acts as a
    purchasing agency.

    Maintenance
    All indications suggest that poker machine technicians
    are major participants in skimming from poker machines.
    The time that machines are down for service or listed as
    malfunctioning is when they are at their most vulnerable.
    Any discrepancy in figures at such a time is prone to be

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    put down to symptoms of machine malfunctioning. This is
    well known to technicians and others and there have been
    a number of convictions of technicians for theft. Most
    of these cases involve outright theft, where technicians
    have been caught scooping out coin hoppers or in
    possession of coins in bags. There is a knowledge that
    there are forms of theft that are much more technically
    sophisticated and more rarely detected. The swapping of
    electrical components is one such, where the machine is
    fitted up by a technician with componentry basically
    designed to milk it, then played by an associate for all
    it is worth and then “repaired” with the correct
    componentry.

    The manipulation of machine counters as an aid to
    undetected theft is known to occur to an unknown but
    probably significant extent. With some machines this was
    apparently a simple enough procedure to be followed by
    even those without much in the way of technical
    expertise.

    Possibly of more concern are skimming operations
    conducted by a group of persons of whom a technician is a
    key member. Most usually the other parties to these
    criminal conspiracies are club personnel, often with
    quite responsible positions.
    Although many technicians are in fact employees of poker
    machine manufacturers there is no great body of evidence
    to suggest that the companies themselves participate in
    any thefts by their technical employees. The degree of
    competitiveness between manufacturers tends to militate
    against any such tendency as rival representatives make
    great capital of the dishonesty of opposition technical
    employees. Even companies which have themselves not
    e n j o y e d a n e a s y r e l a t i o n s h i p with NSW gaming detectives
    are reported to have been uncharacteristically co-
    operative in investigations into technicians. One
    related matter where company transactions may need to be
    looked at is in the matter of maintenance contracts
    although this is often more a commercial than a criminal
    consideration.
    All technicians should be licensed and such licensing
    should include checks of criminal records and probity.
    Substantive complaints should result in automatic
    disqualification and the entering of the offender’s name
    and details onto a register of persons not eligible for
    employment in any enterprise operating gaming machines.
    The employers of technicians and club managements be
    required to report any cases of suspected misconduct to
    the regulatory authority with some penalty being attached
    to any failure to report a misdemeanour. The employers
    of technicians and clubs be required to keep a record of
    jobs performed by each technician, such record to be
    available if required to the regulatory authority.

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    ILLEGAL ACTIVITIES – CLUBS AND HOTELS

    Registered Clubs

    Poker machines will give many if not most clubs in
    Queensland a several hundred fold increase in cash
    turnover. This will be combined with inexperience,
    ambitious expansion programs, a grave shortage of
    qualified staff and an influx of itinerant labour. Club
    directors often elected as a matter of formality and
    managers of whom some are little more than bartenders
    will be elevated to being the directors and executives of
    mini-casinos. In all but a very few of the larger and
    more professional clubs in Queensland accountability is
    more a matter of trust than design.
    Examining a similar scenario in Victoria in 1983 Mr
    Murray Wilcox drew the blunt conclusion that “crime will
    increase
    to a degree ranging from significant to serious”. (88)
    Organised crime, however defined, will find great
    attraction in Queensland clubs and will be seeking a cut
    of the action. More significant in monetary terms
    however will be an increase in general crime most
    particularly fraud and theft within the club industry.
    The problem is one of great temptation combined with
    little experience and inadequate or non-existent
    controls.

    Queensland does not currently possess and will have to
    develop an adequate enforcement capability to deal with
    criminal activity in clubs. As “knowing the rorts” is
    going to be an essential component of successful law
    enforcement in this area consideration should be given to
    attracting some police expertise from specialised units
    in New South Wales. A well regarded and effective squad
    provides a point of contact for clubs that perceive that
    they have problems. Such a unit should also have
    educational responsibilities to the club industry and a
    built in capability for this task.

    This commission is of the view that the blind optimism
    expressed recently by Mr Lamont of the Registered and
    Licensed Clubs Association is totally unjustified. (89)
    This degree of naivety is alarming, especially when it is
    considered that many of the moves to reduce criminal
    activity in clubs will of necessity have to be initiated
    within the industry and that clubs themselves will need
    to detect a significant proportion of the criminal
    activity that effects them.

    Poker machine theft in NSW
    The most exhaustive study of fraud and theft in
    registered clubs was undertaken by the Victorian
    Board of Inquiry into Poker Machines in 1983. Some

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    changes in the forms of criminal activity have
    undoubtedly taken place since then, if only because
    of the virtual disappearance of mechanical and
    electro-mechanical poker machines. However the
    Victorian Inquiry was in a position to take an early
    look at the developing modes of theft from micro-
    processor machines as well.

    The inquiry drew heavily on the work of the NSW
    Poker Machine Task Force. Mr Wilcox QC invited Task
    Force witnesses to estimate the proportion of clubs
    in which there was recurring dishonesty involving
    money and club personnel. Their estimate was that
    there was dishonesty in about 50 percent of clubs,
    which, misreported as a statement that 50 percent of
    club personnel were dishonest, drew much criticism
    during the inquiry. Mr Wilcox QC commented that:

    “I found their estimate of 50 percent to be
    highly disturbing. I bear in mind that this is
    impressionistic, not empirical, material. The
    officers were not subject to cross-examination
    on their estimate. It is no doubt correct to
    say that they see the clubs where there are
    problems and not those free of criminal
    activities. Notwithstanding all that, this was
    a carefully considered estimate by three men
    whom I thought to be reliable and who are as
    well placed as anyone to make an assessment.
    It is not lightly to be discounted. But even if
    the level of criminal activity is only one half
    of that, 25 percent of all clubs, it is at a
    level unmatched, so far as I am aware, by any
    other lawful industry in Australia. Leaving
    aside percentages, the evidence which I have
    been able to gather does support the view that
    criminality in the poker machine industry in
    NSW exists in a variety and extent different
    from that in other industries and to a degree
    which most people, knowing and considering the
    facts, would be likely to find unacceptable.”
    (90)
    The Victorian inquiry also approached the NSW
    Department of Finance which had then had a poker
    machine percentage analysis system in operation for
    four years. After a study concentrating on larger
    clubs the Department had drawn up a list of 200
    clubs where actual income was so grossly below
    estimates of what it should have been that
    inspection was warranted. A manual published by the
    Department for the club industry stated:
    ‘From information extracted from the poker
    machine revenue analysis returns submitted by
    clubs it is apparent that revenue from clubs
    poker machine operations is many millions of
    dollars below the level that ought to be
    obtained.”(91)

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    The department has never estimated how many millions
    were lost to clubs and revenue. Another estimate,
    from survey data collected by an AINSWORTH
    subsidiary company in relation to about 50 percent
    of the poker machines in NSW, produced a figure of
    between $14.6million to $14.8 million for the
    difference between actual and expected revenue. The
    precision of this figure is probably misleading –
    not all potential losses due to dishonesty were
    recorded and some of the quoted losses were due to
    other reasons like machine malfunction with the
    potential to either increase or decrease the
    discrepancy.

    Consultant E.P. VIBERT, then also attached to the
    AINSWORTH organisation told the inquiry that his
    estimate of the maximum stolen from poker machines
    was $80 million a year. Commented Mr Wilcox QC:

    “It is a surprising situation that nobody can say,
    even to within several millions of dollars per year,
    how much money is dishonestly stolen from clubs. …
    It is not difficult to imagine the public reaction
    if the Commonwealth Treasury or a mutual life
    assurance society were to announce that it had
    compiled its accounts for the year and that it had
    discovered a deficiency, which might be $80 million
    or “only” $14.8million but which could not be
    quantified, some substantial but unknown part of
    which was certainly due to criminal activities.”
    (92)

    The extent of theft from and within NSW clubs can
    still not be precisely quantified but several
    factors would most likely have interacted to reduce
    its incidence at least marginally since the
    Victorian study. These factors are the retirement
    of most old mechanical and electro-mechanical poker
    machines in favour of micro-processor units, more
    professionalism and concern over security in clubs,
    and more stringent regulation. However discussions
    by this commission with NSW authorities indicate
    that theft involves a very large amount of money and
    loss to revenue. Whereas once the major concern was
    with player cheating it is now focused on club
    management and staff.
    This Commission sought to obtain from New South
    Wales the current situation in relation to crime in
    clubs. Unfortunately crime statistics are no longer
    separately collated for gaming machine related
    offences. However the extent of criminal activity
    in relation to poker machines is described as
    considerable and as support for this, it was pointed
    out that the NSW Police Department has maintained
    the specialist squads dealing with licensing
    investigations and registered clubs investigations
    during a period when many other specialist squads

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    have been disbanded in accordance with the
    regionalisation policy.

    Control of clubs
    Clubs, in Queensland as in NSW, are basically permitted
    to manage their own affairs. Only in the case of very
    obvious problems and not always then do authorities step
    in. Seagulls Rugby League Football Club, at Tweed Heads,
    one of the largest clubs in Australia, is a case in
    point.

    Seagulls Club
    Seagulls R.L.F.Club had as its initial president one
    Vincent RAGE, a liquor merchant who supplied the
    club. The initial secretary was a part-time
    bookmaker and SP bookmaker Colin HAYES. In the
    early 1970s the licensing court found the club to
    have been run in an extremely lax manner and
    suspended the licence for a month. The club
    appealed and the appeal judge imposed a three month
    suspension, commenting that “On the kindest possible
    view, the board seemed to have devised a system of
    such looseness and laxity, so unsupervised, so
    contrary to all accountancy procedures that it
    positively begged to be taken advantage of. And
    when the club’s witnesses went into the witness box
    the position became even worse.” The club’s
    members, possibly through disinterest, permitted
    HAGE to continue in office. HAYES continued as
    secretary and, by some accounts, as the club’s
    resident SP bookmaker.
    In the early 1980s HAGE fell victim to a palace coup
    and was replaced by an organised crime identity,
    nightclub owner, bookmaker and SP bookmaker Jack
    MEEKIN who had as his deputy a Queensland police
    inspector. HAYES continued as secretary until he
    too fell out with the new board. Soon afterwards,
    for the first time in his career, he was apprehended
    by Queensland police and charged, later giving
    contradictory evidence to the Fitzgerald Commission
    of Inquiry on whether he knew of a protection system
    in operation for SP bookmakers. This did not
    prevent him being returned to the position of club
    secretary when another palace coup restored HAGE to
    the presidency.
    The police inspector, suddenly affronted by the SP
    activities of the former secretary HAYES, laid a
    complaint with NSW authorities. This inspector, it
    was suggested by a Queensland court, was at the very
    least insufficiently diligent in investigating an
    attempted murder connected with persons associated
    with the club. He is now before the courts on
    charges of official corruption which include the
    protection of SP bookmakers.

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    The state of play at this stage is that the club,
    for the second time in its history, has appealed a
    NSW Licensing Court decision to suspend its licence.
    For the second time, HAYES has been removed as
    secretary and NSW Licensing authorities have begun
    proceedings aimed at establishing whether HALE and
    one other club official are fit and proper persons
    to be associated with the club. Seagulls, it should
    be noted, won several best club awards during this
    period.(93)

    Gilbertian comic opera scripts such as the above are
    scarcely appropriate for the boards and management of
    institutions with the temptations and cash turnover of
    small casinos. Many clubs of course have ethical and
    professional management very careful with their internal
    procedures and accounting and very quick to inform the
    relevant authorities of any potential problems. But many
    do not and they can and have included some of the largest
    and best known of NSW clubs. In 1974 Mr Justice Moffitt
    found that organised criminal interests had virtually
    taken control of the then largest club in New South
    Wales, South Sydney Juniors.

    “What has happened in clubs such as the Motor Club,
    the Mariners Club and South Sydney Juniors gives a
    clear indication of what can happen. Directors come
    and go to fill casual vacancies. Persons outside
    the club decide who shall be directors and what
    shall be done. They arrange employments of some
    persons. Vital persons, such as security employees,
    have been so selected. It would seem it is open for
    such persons, in effect, to be “owners” of the club,
    just as there were concealed gangster owners of many
    of the licensed casinos of Las Vegas and just as
    American gangsters owned or at least had an interest
    in some English clubs, where membership was
    itinerant and, for a nominal sum, procurable at the
    front door. … There is little to prevent a board
    of directors being elected in a NSW registered club
    and acting upon the direction of the “owner”.(94)

    The Victorian Board of Inquiry examined Moffitt’s
    findings and found them no less relevant a decade later.

    “Mr Justice moffitt’s findings and in particular his
    assessment of the particular vulnerability of large
    . clubs render it likely, in my view, that there is
    considerably more criminal activity than the club
    industry would care to admit.” (95)
    Queensland clubs are not, despite the sanguine assurances
    of their lobbyists, totally free of the problems of
    member apathy, reckless or indifferent management or
    criminal associations. However, in any foreseeable
    circumstance, clubs will continue to control their
    internal affairs including gaming operations. Measures
    designed to improve the education of club personnel about

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    criminal behaviour, improve professionalism and
    accountability and exclude undesirable persons will be
    vital to any effort to moderate criminal activity. Clubs
    will need incentives to bring forward any problems to the
    notice of regulatory authorities. In New South Wales, as
    the Victorian inquiry noted, this does not always happen:
    “(Task Force Two) asserted that it was traditional
    in the club area that if a manager had been
    dishonest he would be permitted to resign, to avoid
    any reflection on the club, and to obtain a job
    elsewhere, usually with a reference provided by the
    defrauded club” (96).
    Some measures which may assist in the regulation of clubs
    are listed below.
    Licensing

    Registered clubs, their chief executives and gaming
    machine supervisory staff must be licensed before
    any entitlement to gaming machines is taken up.

    Licenses must be regarded as a privilege, not a
    right. Regulation will inevitably break down if
    there is an understanding that clubs and hotels are
    automatically entitled to gaming machines just by
    virtue of being licensed premises.

    The detection of unnotified illegal activity in
    which any club executives are involved should result
    in suspension by some automatic procedure. Such
    suspension should stand during any period of appeal
    and the regulatory authority indemnified from any
    actions resulting from the exercise of its
    responsibilities in this regard.

    It should be a requirement that a club must
    demonstrate that its internal procedures are
    adequate before it is granted a license.

    The regulatory authority may set conditions on the
    granting of a license which can include non-approval
    of individual board or management members and
    requirements to upgrade internal mechanisms to a
    suitable standard.

    Detection of offences
    Cash analysis returns from gaming machines should be
    no less rigorous than those currently required from
    poker machines in New South Wales. The returns
    should be provided to a unit within the regulatory
    authority which is adequately resourced to analyse
    returns. Anomalies must be recorded and cross
    referenced in relation to the club and any
    responsible individual. In the normal event
    anomalies should be notified back to the club but

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    the regulatory authority would have the
    discretionary ability to notify only its
    investigative unit. While it probably should not be
    a statutory requirement clubs should be required to
    notify any suspected frauds to the regulatory
    authority. Clubs should be presented both with
    incentives for notification of suspected problems
    and penalties for non-notification of detected
    offences.
    The regulatory authority should have responsibility
    for compiling a list of prescribed persons which
    would cover persons refused licenses, persons
    convicted of offences, persons known to be involved
    in offences. Clubs should be required to notify the
    names of all staff sacked for any form of
    dishonesty: in severe cases these persons to be
    entered onto the proscribed persons list and in
    other cases this information to be recorded. Clubs
    to seek identification when hiring staff and vet
    staff via the prescribed persons and ancillary list.

    A specialist enforcement unit to be established to
    monitor, enforce and advise on criminal activity in
    regard to gaming machines and licensed
    establishments. This to have an educational
    responsibilities and capabilities within the
    industry.

    Other matters

    There will be a need for tertiary courses
    specialising in training for club management.

    PUBLICANS

    Current proposals for the introduction of gaming machines
    into Queensland include provisions for the installation
    of gaming machines into hotels.
    Hotels in New South Wales have been permitted to install
    a restricted number of draw poker machines or “Approved
    Amusement Devices (AAD). These machines are less
    complicated than poker machines and the returns that
    publicans provide to the Liquor Administration Board do
    not include the same detail or analysis as the returns
    from poker machines. The best known abuse is a practice
    known as “writing up bodgy jackpots” or, in effect,
    publicans or hotel staff paying themselves jackpots under
    false names. As an indication of the potential scale of
    this activity it was suggested that a dishonest publican
    in a busy hotel could “write up” $300 per machine per
    week without incurring undue risk of detection. With 10
    machines and under ideal conditions this could amount to
    a “skim” of $3000 per week.

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    New South Wales is moving to tighten reporting
    requirements for draw poker machines.
    As a general principle reporting provisions for gaming
    machines installed in hotels should be identical with
    those for gaming machines in registered clubs.
    The hotel gaming machine industry in general is less
    regulated in New South Wales than are poker machines and
    registered clubs. There is little doubt of considerable
    organised crime involvement in the industry. A number of
    hotels have been found to have more than the prescribed
    number of draw poker machines installed and it is often
    an open question as to whom these machines benefit. The
    illegal gaming machine industry will be covered in more
    detail below.
    The president of the Registered and Licensed Clubs
    Association of Queensland, Mr Colin Lamont, has been in
    contact with the commission and for that matter, with the
    press, alleging that an undesirable person has been or
    will be buying up hotels with the intention of installing
    front men to hold the licences and conduct hotel trade as
    a cover for this person’s interests in gaming machines.
    Mr Lamont was not able to provide any specific details
    apart from a name. While this commission is very
    cautious of any information from Mr Lamont similar
    practices to the one described by him must be considered
    at least a possibility.
    Publicans and hotel managers must be licensed for the
    purpose of installing poker machines in hotels. Such
    licensing requirements should be no less stringent than
    those required of the secretary/managers or executive
    officers of registered clubs and additionally should
    include keeping up to date a register of pecuniary
    interests in such hotels.

    OTHER ILLEGAL ACTIVITIES

    1. Illegal gaming machines

    In general an illegal gaming machine industry has existed
    or co-existed with a legal industry since the invention
    of the slot machine in the late 19th century. The
    industry adopts two forms, involving either the use of
    gaming machines which are themselves illegal or through
    the illegal adaptation of some “legal” amusement machine
    for gambling. Historically, organised crime can be shown
    to be heavily involved in the manufacture, distribution,
    financing and placement of gaming machines. The
    persistent difficulty facing gaming regulatory and other
    law enforcement authorities is in drawing the line
    between the legal and illegal industries.
    One of the most studied illegal gaming machine industries
    of recent times was that of Pennsylvania, USA. In its
    1989 Annual Report, the Pennsylvania Crime Commission

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    devoted a chapter to “The Video Poker Industry: A Benign
    Investment with Malignant Implications”:

    “The illegal video poker industry in Pennsylvania
    permeates the organised crime subculture. Across
    the Commonweatlh, video poker machines are located
    in taverns and private social clubs. State Police
    have seized literally thousands of these machines as
    illegal gambling devices. Nonetheless, this illicit
    industry is flourishing.”(97)

    In the course of this prosecution, the
    government proved “beyond a reasonable doubt” that
    an enterprise-known as La Cosa Nostra exists, and
    that this organisation engaged in violence,
    gambling, narcotics and loansharking. Nowhere was
    this relationship found to be more illustrative than
    in the Crime Commission’s probe of racketeering in
    Chester. … The video poker industry in Chester is
    controlled by the Scarfo LCN Family … This
    combine operated a video poker vending company known
    as Star Amusements, which provided tavern owners
    with loans in order to place their machines in those
    establishments. They also employed violence against
    competitors who stole locations or “stops” from this
    firm. In one particular instance, the Gotti/Gambino
    LCN Family of New York City intervened in a video
    poker dispute.

    “The money generated from this racket was laundered
    through Atlantic City casinos, and used in
    loansharking and narcotics operations in both New
    Jersey and Pennsylvania. Clearly, the relationship
    between La Cosa Nostra and the video poker industry
    was demonstrated in this investigation.”(98)

    “While there is little argument that narcotics
    trafficking and predatory crimes represent higher
    priorities on a local level, the fact remains:
    illegal gambling is a significant revenue producer
    to criminal syndicates and entrepreneurs, and it is
    often used to corrupt public officials. Gambling
    revenues are invested in other illicit enterprises,
    such as narcotics and loansharking, as well as
    legitimate businesses. … the role of La Cosa
    Nostra in the illicit video poker industry is
    significant, given the revenues that these machines
    generate coupled with a very low risk factor.
    Historically, LCN has invested its resources in this
    lucrative industry, notwithstanding the
    proliferation of legal forms of gambling.”(99)
    “As a result of the Pennsylvania Crime Commission’s
    inquiry into this industry, it has been determined
    that legitimate amusement machine vendors cannot
    extend to prospective customers the amount of loans
    that illegal video poker machine vendors are able to
    extend. This has created for the illegal vendors an
    “edge”, against which the legal vendor cannot

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    compete. Ultimately, the illegal video poker vendor
    will control the industry through economic
    dominance.” (100)

    Queensland’s most recent experience of illegal gaming
    machines was with the “in-line” machines dealt with
    extensively during the Commission of Inquiry. In this
    case although the machines were by and large legal they
    were almost exclusively applied to an illegal use. Of
    the several companies supplying this market in
    Queensland, QUEENSLAND AUTOMATICS and VANGUARD appear to
    have been controlled by or linked with organised crime
    figures as does the group of companies controlled by one
    time BALLY distributor Anthony ROBINSON Snr. These
    companies are now variously known to have been involved
    in the corruption of public officials, standover tactics,
    taxation fraud and the payment of secret
    commissions.(101)
    In importing a legal gaming machine industry Queensland
    is likely to also import an illegal gaming machine
    industry; in character, this is likely to be very
    similar to the in-line industry. An unlicensed gaming
    machine can look very similar to a licensed gaming
    machine and can closely resemble an innocuous amusement
    machine. Often the only defence in authorised premises
    is to physically count machines and compare the count to
    the number authorised.
    Licensed establishments should be required to prominently
    display their authorisation for gaming machines, such
    notice to prominently indicate the number of gaming
    machines authorised. Approved gaming machines should be
    required to prominently carry a distinctive symbol of
    that approval in a form that cannot be easily duplicated.
    The illegal gaming machine industry is linked to
    organised crime in Sydney and Melbourne and there are
    some indications of links to syndicated or organised
    criminal activity in the United States, the United
    Kingdom and Japan. In turn, Australian criminal
    entrepreneurs themselves have for many years operated
    illegal and semi-legal gaming machines in Indonesia, the
    Philippines and the Pacific Islands. (102) It would be
    very surprising indeed if this industry paid no attention
    to a developing market in Queensland.

    The industry supplies illegal gaming machines to clubs
    and more significantly hotels in excess of their legal
    entitlements and also supplies machines to premises (ie
    cafes, illegal casinos) where gaming machines are not
    permitted. In New South Wales the most predominant
    feature of the industry is the supply of illegal draw
    poker machines to hotels and unauthorised premises.
    Any analysis of the illegal gaming machine industry
    raises the question as to what involvement legal
    manufacturers have. The machines have to come from

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    somewhere and many of the illegal poker machines found
    are trade-ins which should have been returned to
    manufacturers by clubs. As noted previously, the OLYMPIC
    group are suspected of supplying machines and parts to
    the illegal market. This Commission is aware of
    information in this regard in relation to the AINSWORTH
    group which falls under the provisions of Section 2.19
    (2)(b) of the Criminal Justice Act 1989.
    Below is a brief description of some of the elements of
    the illegal industry in New South Wales and Victoria. It
    should be noted that one principal in this industry is
    already resident in Queensland.
    JoneLMelides
    The largest known grouping in the illegal industry
    is apparently headed by Leslie William JONES, born
    261239, and Gregory John MELIDES, born 050235. Both
    are closely associated with Leonard Arthur
    McPHERSON, born 190521, and George David FREEMAN,
    born 220135 (deceased), who allegedly collect
    payments from the industry and may have other
    involvements.
    JONES aka Les YATES aka BEST IN THE WEST was last
    noted as resident at 33 The Corso, Isle of Capri.
    He has claimed to have police protection in NSW and
    is considered the largest operator of illegal
    machines in NSW. This Commission has no knowledge
    as to whether his claims of police protection are
    correct. A JONES associate Redento GRISSILLO, born
    080431, is involved with illegal amusement devices
    in Melbourne and also with elements of organised
    criminal activity in the Calabrian community.

    JONES is involved in the Cabramatta area of Sydney
    with persons involved in the ’14K Triad and
    Vietnamese gang leaders. Some of the considerable
    violence between Vietnamese has been linked to the
    placement of illegal gaming machines. Bi DINH aka
    JOHNSON, born 250657, is thought to be JONES’
    principal collector. Some of those involved at this
    level with the placement of gaming machines are also
    suspected of involvement in narcotics. This
    Commission is aware of additional information on
    this topic which falls within the provisions of
    Section 2.19 (2) (b) of the Criminal Justice Act
    1989.

    MELIDES is a machine manufacturer and part of his
    output is devoted to operations in the Pacific
    basin.
    McPHERSON/FREEMAN

    Leonard Arthur McPHERSON is known within the
    industry as Mr Ten Percent. He is believed to
    collect monies on a regular basis from a number of

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    operators, thought to include Leslie JONES, Greg
    MELIDES, Angelo DUROS, and Redento GRISSILLO.
    George David FREEMAN, now deceased, was allegedly
    involved with McPHERSON in the industry.
    This commission is aware of further information
    falling within the provisions of Section 2.19 (2)
    (b) of the Criminal Justice Act 1989.
    OLYMPIC AMUSEMENTS
    Victorian legal manufacturer involved and suspected
    of involvement in supplying parts and/or machines to
    illegal industry – see above.
    DUROS
    Angelo DUROS, born 150124, has long been a major
    NSW/Victorian manufacturer of illegal gaming
    machines and may have been associated with the
    formation of OLYMPIC A M U S E M E N T S . There is no
    evidence that he is active in Queensland as yet.
    PAKIS family
    George PAKIS, born 131028, and his son Jack PAKIS,
    born 160373, are significant rivals to the
    JONES/MELIDES group. There are risks that the
    antagonisp between JONES and PAKIS could result in
    violence. One threatened instance of violence to
    JONES on the Gold Coast is known. There is as yet
    no evidence that the PAKIS family are moving any of
    their other operations to Queensland.

    INDUSTRY GROUPS, LOBBYISTS AND CONSULTANTS

    Industry_groups
    Regardless of what measures are taken by government and
    regulatory authorities, a basic responsibility for the
    prevention of criminal activity on their premises lies
    with the licensed establishments themselves.
    NSW experience has been that while there are sections of
    the club industry who enthusiastically engage in criminal
    activity there are also others engaged in efforts to
    improve the industry. This latter tendency, if and when
    it arises in Queensland, should be encouraged.
    In NSW, while some of the industry associations have on
    occasion obstructed reform of the industry, one
    organisation, the POKER MACHINE COUNCIL of NSW has
    contributed a great deal. Interestingly membership of
    the council is by invitation only and it makes no claim
    to be representative of the industry. Various of the

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    industry associations are discussed below.
    Registered and Licensed Clubs Asso iations

    The principal industry association. Its form and
    the degree to which it represents clubs varies
    greatly from State to State.
    In NSW the RCA can claim to represent about 95-98
    percent of the club industry and basically acts as
    an employer group in industrial matters and as
    industry representative in discussions with
    government.

    A prominent member of the NSW RCA, Roger Maxwell
    COWAN, born 091135, long term secretary manager of
    the Penrith Leagues Club has come to the notice of
    NSW police on a number of occasions and has been
    unsuccessfully prosecuted once. COWAN has business
    interests in Queensland.

    In Queensland the corresponding association is known
    as the REGISTERED & LICENSED CLUBS ASSOCIATION. It
    has been dominated since the early 1980s by Colin
    LAMONT, a former Hong Kong police officer and
    Queensland Liberal MLA. The association’s office is
    currently in LAMONT’s residence.

    LAMONT, while president of the RLCA was paid an
    amount of $30,000 by the AINSWORTH organisation.
    LAMONT states that this money was in respect of a
    consultancy, that it was declared to the taxation
    commissioner and the RCA, and that the RLCA saw no
    conflict of interest.

    An analysis of the newspaper CLUB NEWS and public
    statements made by or attributed to LAMONT raises
    the question of whether it is the poker machine
    lobby and in particular AINSWORTH that is being
    represented rather than licensed clubs.

    LAMONT and, presumably, the RCLA have pushed a
    public line that since the demise of the BALLY
    organisation in Australia there has been no
    organised crime influence on the industry. This is
    at best naive wishful thinking not shared by NSW
    regulatory authorities or significant proportions of
    the NSW industry. It is alarming as the official
    view of an organisation which should be a part of
    efforts to keep crime out of the industry.

    Poker machine council
    A NSW body formed in 1982, in part because of
    dissatisfaction with the Registered Clubs
    Association. It was established by Mr Jim HENRY –
    (executive officer North Sydney Leagues Club) for
    invited club representatives only. It contains

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    representatives of a large proportion of larger
    clubs in NSW but does not claim to be representative
    of the industry as a whole. The council has
    supported licensing of those in the gaming machine
    industry, has acted as a liaison between clubs and
    responsible police units and government bodies, has
    raised issues relating to gaming machine security
    with manufacturers and has produced a manual for the
    guidance of club directors and managers. An
    interesting feature of this manual is that the
    council was able to have some of the costs met by
    AINSWORTH and the manual distributed by the
    REGISTERED CLUBS ASSOCIATION, both of which
    organisations have been critical of the
    council.(103)

    This commission has had discussions with Mr Henry
    and it is apparent that such persons within the
    industry do have a contribution to make in
    minimising criminal activities and concerns in the
    industry. Any extension of the Poker Machine
    Council’s educational activities and operations to
    Queensland would be welcomed by this Commission.

    Licensed Clubs Association

    A small organisation of clubs, strongest in the ACT.
    This is not to be confused with the REGISTERED CLUBS
    ASSOCIATION,
    It is not significant in Queensland although
    Registered and Licensed Clubs Association President
    LAMONT has used the name.

    An association of this name in South Australia was
    one of the front organisations used in the VIBERT
    fronted and AINSWORTH backed lobbying campaigns for
    poker machines.

    Club Managers Association
    An organisation acting for club managers. It has an
    associated educational function in the CLUB
    INSTITUTE and an industrial function in relation to
    disputes between clubs and management. Its aims are
    to increase the professional status of management
    and pursue matters detrimental to management. Jim
    HENRY, mentioned above, is prominent in this
    association and is the publisher of its magazine.

    Unions
    Various unions, including the FEDERATED LIQUOR TRADE
    EMPLOYEES UNION currently the subject of
    investigations, operate in the industry and will
    have expanded memberships as a result. Experience
    in NSW is that unions have acted to prevent clubs
    sacking dishonest or suspect employees.

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    Experience in the United States is that the unions
    themselves have been heavily infiltrated by
    organised crime. These potential problems need to
    be guarded against.
    This commission suggests that discussions be held
    with the relevant unions to explain potential
    problems and, if possible, work out in advance
    procedures to be followed. See the discussion of
    the proscribed persons listing proposal above.

    Consultants
    The introduction of poker machines into Queensland
    is likely to produce a rash of persons identifying
    themselves as “consultants” to the industry. Some
    will no doubt be genuine, others little more than
    con-men or disguised salespersons.
    Others are no doubt likely to arouse the interest of
    this Commission in that they are or are associated
    with criminal identities, are engaged in criminal
    activity, or promote services offered by
    organisations with criminal connections.
    Various actions of AINSWORTH consultants Edward
    Phillip VIBERT and Colin LAMONT have been dealt with
    above. VIBERT is currently employed out of the
    industry and is currently not considered a potential
    problem. The other “consultant” of note in recent
    history was one Wilton WEIR (now deceased), who
    worked in the Club Advisory and Management Section
    of HUNGERFORD, HANCOCK and OFFNER (H,H&O) and was
    also a director of various companies in the
    ESSINGTON group.(104)
    This Commission is aware of information relating to
    WEIR and the AINSWORTH group of companies which
    falls under the provisions of Section 2.19 (2) (b)
    of the Criminal Justice Act 1989.
    Consultants to the gaming machine industry and those
    consultants offering services with respect to gaming
    operations in licensed establishments should be
    licensed. These consultants should be required to
    notify all their companies, agreements and payments
    from the industry or at least be required to keep
    such records available for inspection by regulatory
    authorities.

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    APPENDIX ONE

    In April 1990 the State Department of Administrative
    Service called for expressions of interest from companies
    interested in the supply, delivery, installation and/or
    repair or maintenance of gaming machines in licensed
    clubs and hotels throughout Queensland.
    Expressions of interest closed on 100590.

    On the past record of the industry there can be no
    grounds for assuming that those nominated, either in the
    expressions of interest or in corporate documents,
    represent the real interests behind any company or
    individual. A fuller process of investigation must
    include inquiries into shareholdings, sources of capital,
    corporate associations and the existence and content of
    any trust deeds as a bare minimum.
    This commission has not had the time or resources to make
    any more than a brief initial check of the suitability of
    these companies and individuals. The companies and the
    results of these initial checks are set out below in the
    order in which their expressions of interest were
    received.

    MACHINE SUPPLIERS

    I.G.T. Australia Pt Ltd.
    286-288 Coward St, Mascot NSW.
    IGT has been discussed in the main body of this
    report. This Commission has reservations in respect
    of two IGT executives.
    Ainsworth Nominees Pty Ltd
    389-395 Newman Road, Geebung.

    Ainsworth has been discussed in the main body of
    this report. This Commission recommends against
    Ainsworth being permitted to supply gaming machines
    into Queensland.
    glympigyidgg_gamipq
    Unit 5, 5-15 Epsom Rd, Rosebery NSW.
    Olympic has been discussed in the main body of this
    report. This Commission recommends against Olympic
    being permitted to supply gaming machines into
    Queensland.

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    Toll Systems Technology Pty Ltd
    6 Commercial Centre, Rocklea Market.
    This company was registered on 060287. Its current
    directors are listed as Terry BROWN, born 061041, of
    5 Joslin St, Birkdale; Albert PAULY, born 240440, of
    Aberdeen Rd, Mcleans; Daniel Michael RYAN, born
    060449, of 1 Ribblesdale Court, Joyner; Allan John
    OVERDEN of 20 Vanessa St, Sunnybank; David PRINCE,
    born 240854, of 9 Oriana Cres, Yeronga and Edward
    Lindell TEICHELMAN, born 300434, of 35 Claremont St,
    Birkdale.
    The original response to the call for expressions of
    interest came from a company Action Leisure
    Technology, of 21 Smith St, Capalaba. This company,
    formerly known as ACTION MANUFACTURING, was
    registered under its current name on 271186. The
    listed directors are Alan John OVENDEN of 20 Venessa
    St, Sunnybank and Edward Lindell TEICHELMAN of 111
    Thomas St, Birkdale (formerly Kings Cross, NSW) and
    the current secretary is Dianne Lynne TAYLOR of 48
    Avalon Rd, Sheldon. This commission has no adverse
    knowledge of Action Leisure Technology or any of its
    current directors. It does however have some
    concerns arising from one Peter James O’ SULLIVAN of
    6 Wangarah St, Bracken Ridge, being listed as a
    director from 210786 to 121186. The concern arises
    from O’SULLIVAN’s listing as secretary of INTERMARK
    GAMING (A’asia) Pty Ltd. INTERMARK and its
    Australian connections are dealt with in the main
    body of the report.

    This Commission recommends further investigation of
    Action Leisure Technology Pty Ltd. If investigation
    discloses links with the INTERMARK group this
    Commission would be of the view that the company not
    be permitted to supply poker machines into
    Queensland.

    Palazzo Ptv Ltd
    Office 1, Pokon Dve, Tanah Merah

    This company was registered on 260687 and has
    registered offices in Sydney and in The Mansions, 40
    George St, Brisbane. Its directors since
    registration have been Johannes, Jacobus BAND of 5
    Archery St, Forestdale, Perth, WA and Markku Wilhelm
    SUOMINEN of 1 Ronald St, Shailer Park. SUOMINEN is
    known to this Commission but not adversely.
    This Commission recommends further investigation of
    Pajazzo P/L prior to the company being permitted to
    operate in the gaming machine industry in
    Queensland.

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    Milwell Pty Ltd
    PO Box A560, Sydney South, NSW

    This is a Sydney company in relation to which this
    Commission has not yet conducted any inquiries.
    This Commission recommends full investigation prior
    to this company being permitted to operate in the
    gaming machine industry in Queensland.

    Sunstate Gaming Inc
    20 Duntroon St, Brendale
    This business was registered on 050190 in the name
    of Dennis Keith LEVER. It shares premises with a
    company Bingo Sales Pty Ltd, registered on 140379.
    The current directors are listed as Denis Keith
    LEVER and Pamela Frances Mary LEVER of 261 Wyampa
    Rd, Bald Hills, Allen Keith LEVER of 16 Sefton Av,
    Clayfield, Neil William MADDERS of 24 Nanellan St,
    Arana Hills and Peter Thomas KENEALY of 28 Goodchap
    St, Aspley. This Commission has no adverse
    knowledge of any of these persons.

    This Commission recommends further investigations of
    Bingo Sales Pty Ltd prior to the company being
    permitted to operated in the gaming machine industry
    in Queensland.

    Queensland Gaming_Corporation Pty Ltd
    35 Sandgate Rd, Albion
    A Michael SOLOMON identified himself as the manager
    of this company to the Sunday Mail in February. The
    company has advertised itself as “your Queensland
    based and owned gaming machine manufacturer and
    distributor”. No company of this name had been
    registered prior to 060490.
    On 240583 a Michael J. SOLOMON, Manager, LEISURE &
    ALLIED INDUSTRIES of 35 Sandgate Road, Albion was
    mentioned in an adverse manner in the diaries of
    former Queensland Police Commissioner Sir Terence
    LEWIS. While the Commission has no knowledge of
    whether there is any foundation in the allegation
    made in the diaries, there is an obvious need for
    further inquires to be made.
    The Commission would also like to further explore
    the links if any with LEISURE & ALLIED INDUSTRIES, a
    company discussed in the main body of the report.
    On current information this Commission recommends
    that LEISURE & ALLIED INDUSTRIES or any affiliated
    company not be permitted to operate in the gaming
    machine industry in Queensland.

    In the light of the above concerns, this Commission

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    recommends further and careful investigation of
    Queensland Gaming Corporation prior to the company
    being permitted to operate in the gaming machine
    industry in Queensland.
    Matricsea Pty Ltd
    12 Gyranda St, Carina Heights.

    Matricsea is a family trust company registered on
    220989. the directors are John McPHIE, born 020731,
    and Linda Hilda McPHIE, born 240941, both of 14
    Gyranda St, Carina Heights. This Commission has no
    adverse knowledge of this company or its directors.

    This Commission recommends further investigation of
    the company prior to it being permitted to operate
    in the gaming machine industry in Queensland.
    Power & Power
    Solicitors for Paolo Annechini Amusement Machines Pt Ltd
    This Commission currently has no information in
    relation to this company.

    Universal Australia Pty Ltd
    23-27 Bourke St, Alexandria NSW.

    Universal has been discussed in the main body of
    this report. The Commission has no adverse
    knowledge of universal but feels that further
    inquiries should be conducted of Japanese
    authorities and gaming regulatory bodies
    internationally prior to the company being permitted
    to operate in the gaming machine industry in
    Queensland.
    Alpetros (No 140)_ Pty Ltd
    c/o Grasso, Series and Romano,
    217 George St, Brisbane.

    This company was registered on 301089 and the
    directors are two solicitors Rosario Giraldo GRASSO,
    born 261146, of 16 Florentine St, West Chermside and
    Alfio Michele ROMANO, born 190256, of 15 Seafern
    Ave, Sunnybank Hills.

    As the possibility exists that the current directors
    of the company may not be the intending operators
    this Commission recommends further inquiries in the
    relation to the nature of the ownership of this
    company.

    G a m i n
    2 Musgrave St, West End.
    Company registered on 200688 listing “manufacturing,
    importing/exporting all types of gambling machines”
    as its principal activity. Its registered office
    since 271189 has been c/o Messrs ROUYANIAN & CO,

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    Level 1, 123 Logan Road, Buranda. The directors of
    the company are David John DEHGHANI, Sidney Slavish
    DEHGHANI and Robert Saivish DEHGHANI, all of 28
    Chateau St, Calamvale. This commission has no
    adverse knowledge of any member of the DEHGHANI
    family. Advertisements by the company indicate it
    will be importing Sigma brand gaming machines from
    Japan. This Commission has conducted no inquiries
    into the manufacturers of Sigma gaming machines.

    This Commission recommends that further inquiries be
    conducted prior to this company being permitted to
    supply gaming machines into Queensland.

    REPAIRERS

    Happy Time Amusement Machines
    Repairer
    39 Hansford Rd, Coonbabah
    This company was registered on 301184 and its
    directors since that time are listed as Robert and
    Miriam DECOLLE of 39 Hansford Rd, Coombabah. The
    Commission has no adverse knowledge of the company
    or its directors.

    This Commission recommends further investigation of
    Happy Time Amusement Machines prior to the company
    being permitted to operate in the gaming machine
    industry in Queensland.
    SED Amusements
    58 May St, Bundaberg

    A Bundaberg business of this name was registered on
    150781 and deregistered on 211185. Those then
    carrying on the business were Rodney Durnford and
    Robyn Gail CROSTHWAITE of 16 Tarakan St, Bundaberg.
    It will be necessary to establish the current status
    for this business before undertaking any further
    • investigations in relation to it having any role in
    the gaming machine industry in Queensland.

    Havway Pty Ltd
    171 Lindsay Rd, Buderim

    Havway Pty Ltd was registered on 031088 and its
    directors since soon after that date have been Brian
    Natal and Mary Elizabeth VIDULICH of 171 Lindsay
    Rd, Buderim. The Commission has no adverse
    knowledge of the company or its directors.
    This Commission recommends further inquiries prior

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    to this company being permitted to operate in the
    gaming machine industry in Queensland.
    R.J. Street

    This Commission currently has no information in
    relation to this person.
    Nc Industrial Electrics
    NQ Industrial Electrics is a business of Morco
    Holdings Pty Ltd, which was incorporated on 311282.
    The current directors are Grant Kingsley O’BRIEN,
    born 150660, and Shona Anne O’BRIEN, born 030261,
    both of 11 Pine St, Andergrove 4750. This
    Commission has no adverse knowledge of this
    business, company or its directors.

    This Commission recommends further inquiries prior
    to this company being permitted to operate in the
    gaming machine industry in Queensland.

    Kennel Vending

    This Commission currently has no information
    regarding this company.

    AG Beswick

    This commission currently has no information
    regarding this person.

    Douglass Electronics Pty Ltd
    6/144 Montague Rd, South Brisbane

    This company came into existence on 080188 and
    operates in Queensland and South Australia. The
    current directors are John Gerard DOUGLASS, born
    040840, of 13 Strathford Av, Albany Creek and Donald
    Henry David FORD, born 211131, of 57 Faringdon St,
    Robertson. FORD replaces Michael Vincent BAKER,
    born 300646, who resigned from the board in
    February. This Commission has no adverse knowledge
    of this company or its directors.

    This commission recommends further inquiries prior
    to this company being permitted to operate in the
    gaming machine indusatry in Queensland.
    Downs Amusements

    This business was registered on 300983 to David Paul
    MORAN, born 160357, of 14 Talinga St, Toowoomba.
    This Commission does have adverse knowledge of
    MORAN, dating back to 1972. MORAN should be
    interviewed in relation to this matter and his
    company investigated in the normal manner prior to
    any decision on whether he is a fit and proper
    person to be permitted to operate in the gaming

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    machine industry in Queensland.

    Kent Entertainment P/L
    8 Phillip St, Spring Hill
    The company Kent Business Machines Pty Ltd has been
    in existence since 1966. The current directors are
    listed as Kenneth John TOWNSEND, born 260834, and
    Delia Agnes TOWNSEND, born 230239, both of 59 Pullen
    Road, Everton Park. Documentation referring to Kent
    Amusements Pty Ltd was found on the premises of
    Queensland Automatics but this Commission has no
    reason to draw any adverse conclusions on the
    company with respect to this. This Commission has
    no adverse knowledge of the company or its
    directors.
    This Commission recommends that further
    investigations be carried out prior to this company
    being permitted to operate in the gaming machine
    industry in Queensland.

    Ian Lavers Poker Machines
    27 Walter Road, Gunnedah NSW
    This Commission currently has no knowledge of this
    company. The company originally applied for
    doucments under the name of IAN LAVERS GAMING which
    is not known to the NSW Department of Business and
    Consumer Affairs.
    Odin Technics
    PO Box 123, Aitkenvale
    Odin Technics is a business of Brimstone Pty Ltd of
    57 Leyland St, Garbutt, Townsville of which the
    current directors are Garth Leslie and Susan Joy
    SCHMIDT of 576 Ross River Road, Townsville.
    This Commission recommends that further
    investigations be carried out prior to this company
    being permitted to operate in the gaming machine
    industry in Queensland.
    Kwickasair Computer Delivery

    This Commission has not conducted any invesigations
    in respect of this company.

    Burdekin Amusements
    9 Palmetto Court, Broadbeach
    This business was registered on 291183. Those
    carrying on the business are listed as Alan Edward
    and Margaret Grace DAVIDSON of 9 Palmetto Court, Rio
    Vista, Surfers Paradise and Patrick Joseph and Jill

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  • – 78 –

    FARRELL of 10 Gordon St, Ayr. The Commission has no
    adverse knowledge of this business or those
    involved.
    This Commission recommends that further
    investigations be conducted prior to this company
    being permitted to operate in the gaming machine
    industry in Queensland.
    Brisbane Automatic Machine Company
    22 Lucy St, Albion
    This business, registered on 210289, is in the name
    of Wayne Lawrence McINERNEY of 22 Lucy St, Albion.
    The business address is stated as 861 Ann St,
    Fortitude Valley, which are premises formerly
    belonging to the company Queensland Automatics owned
    ultimately by Jack ROOKLYN.
    This Commission recommends that a careful
    investigation of this company be conducted prior to
    it being permitted to operate in the gaming machine
    industry in Queensland.
    Computer Maintenance of Australia
    226 Moggil Rd, Taringa
    This company was established on 060582 and operates
    in all states. The directors since the last board
    change in May 1988 have been John Achillies BAIKIE,
    born 020542, of 47 Lockville St, Wahroongha NSW;
    Walter James LAMBERTH, born 240436, of 7 Bangalla
    Place, Forestville NSW; Stuart MULVENNA, born
    020953, of 266 Moggill Rd, Taringa; Gregory Thomas
    LOUDOUN of 23 Limosa St, Bellbowrie; and Barry
    Gordon TRAISE of 20 Aurora Cres, Kenmore, This
    Commission has no adverse knowledge of this company
    or any of its current directors.
    This Commission recommends that further
    investigations be conducted prior to this company
    being permitted to operate in the gaming machine
    industry in Queensland.

    ON-LINE MACHINE MONITORING

    Computer Game Pty Ltd
    This Commission has not yet received any information
    regarding this company which is registered in New
    South Wales.

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    OTHER COMPANIES

    The following companies are among those that requested
    documents but made no submission in the allotted time.
    Those examined by the Commission are listed below.

    Murray_ River Poker Machine Company Pty_Ltd
    84 Batten St, North Albury
    This Commission as yet has no information on the
    current directorships and shareholdings in this
    company. It notes however that Leonard Hastings
    AINSWORTH is known to have held an undisclosed
    interest in this company as discussed in the main
    body of this report.
    This Commission recommends that a very thorough
    investigation of this company be undertaken prior to
    permitting it to operate in the gaming machine
    industry in Queensland.

    Morrison and Bailey Pty Ltd
    34 Chester St, Fortitude Valley
    MB (Queensland) Pty Ltd was registered on 170578
    and describes its principal activity as “fund
    raising printing retailers”. Its current directors
    are listed as Brian John CLARK, David Malcolm
    McQUESTIN, Bryan John McKENDRICK and Edmund
    Alexander ROUSE, all of Launceston, Tasmania. The
    current secretaries of the company are Ronald Andrew
    FARRELL of Launceston and John Edwin KELLY of 345
    Springwood Rd, Springwood.

    ROUSE recently pleaded guilty to a charge of
    bribery in Tasmania.

    Robert 011ington
    333 Howe Parade, Garden City, Victoria.
    This Commission has adverse knowledge of a Robert
    Frank OLLINGTON, born 210357, of Victoria and also
    of other persons in the OLLINGTON family. Part of
    this information concerns charges in relation to
    illegal gaming and involvement in illegal gaming.

    If this person is identical to the Robert OLLINGTON
    above, this Commission would recommends against
    OLLINGTON being permitted to operate in the gaming
    machine industry in Queensland.
    Navtronics
    8/245 Bayview St, Runaway Bay.
    This business name was registerd on 071287. The
    business is operated by George Colin GIBSON of 58

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    Lae Drive, Runaway Bay and Ronald David MAHER of Ben
    Hogan Crescent, Parkwood. A Christian Everest
    THOMSEN of 12-14 Albert Aft, Broadbeach is listed as
    a “resident agent” for the company.
    This Commission is aware of information in respect
    of THOMSEN which would require careful further
    investigation.

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    APPENDIX TWO: THE CASPALP DONATIONS

    In 1980 AINSWORTH DISTRIBUTORS (NSW) Pty Ltd made
    payments totalling $30,000 into an account under the name
    of CASPALP PROMOTION FUND which was connected with the
    then Leader of the Opposition, Mr Edmund CASEY.
    Following the receipt of a complaint on 23 April 1990
    this complaint is being processed by the Commission in
    the normal way. Because of its relation to the gaming
    machine industry the matter of the CASPALP donations had
    already received some attention from the Commission
    before the complaint was received. The known
    circumstances of the donations are set out below:

    THE DONATIONS AND THE POLICY CHANGE
    Caspalp Promotion Fund
    An account named Caspalp Promotion Fund was established
    on 060379 with the Minerals House (George Street) Branch
    of the Commonwealth Bank. The signatories to the account
    were Edmund Den(nis) CASEY, chairman, Leslie John YEWDALE
    (vice-chairman) and Malcolm James McMILLAN (secretary).
    Communications with respect to the account were to be
    made to 1 Henderson Street, Mackay. On 120880 McMillan
    was deleted as one Of the signatories to the account.

    To the best of this commission’s knowledge the
    establishment of this account predates any AINSWORTH-
    backed lobbying efforts to have poker machines introduced
    into Queensland. There is no document which, on the face
    of it, contradicts Mr CASEY’s subsequent claims that the
    establishment of this additional account was related to
    the split in the State ALP and the desire of one faction
    to have a means to deal with monies out of view of the
    other faction.

    The formation of the ACDA

    On 25 June 1979, representatives of the clubs
    associations of Queensland, Victoria and South Australia
    met at the Twin Towns Services Club, Tweed Heads, with
    self-described club industry analyst Edward Philip VIBERT
    and AINSWORTH CONSOLIDATED INDUSTRIES executive Graeme
    FULLERTON. The meeting endorsed VIBERT’s proposal to
    form the AUSTRALIAN CLUB DEVELOPMENT ASSOCIATION and
    appointed VIBERT as executive director of the association
    which was to lobby for the introduction of poker machines
    in the member states. The minutes of this meeting, which
    make no reference to the funding of the ACDA, were an
    exhibit before the Victorian Board of Inquiry into Poker
    Machines. (105)
    On current knowledge it appears that this meeting

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    originated from developments within the Licenced Clubs
    Association of Victoria or the offices of the AINSWORTH
    organisation rather than in Queensland. Victorian clubs
    apparently approached all poker machine manufacturers for
    information and assistance for their long-standing but
    “intermittent and half-hearted” campaign to have poker
    machines introduced into that state. (106) In the LCAV
    letter to AINSWORTH, VIBERT’s name was mentioned. At
    some stage between the receipt of the LCAV letter and the
    initial ACDA meeting AINSWORTH and VIBERT reached an
    agreement that AINSWORTH would underwrite a campaign
    headed by VIBERT to the tune of at least $150,000 a year
    for five years. (107) This was exclusive of the salary or
    consultancy of about $100,000 AINSWORTH was already
    paying VIBERT. There was an additional agreement that
    VIBERT would receive a commission on every AINSWORTH
    machine sold into Queensland, Victoria or South Australia
    during his lifetime. (108).
    ACDA lobbying and the ALP policy on poker machines

    On current information available to this commission
    VIBERT’s first lobbying efforts in Queensland appear to
    have been in September 1979. The first document
    indicating activity in Queensland is a letter to a
    Liberal Party State vice-president dated 190979. An
    attachment to this letter sets out as one of the
    suggested guidelines for the introduction of poker
    machines that “The machines must be manufactured in
    Australia and 80 percent of the content must be
    Australian made. Poker machine companies must set up
    assembly, warehousing, service and sales divisions within
    the state.” Of the three major manufacturers then
    supplying the NSW market the AINSWORTH group was the
    manufacturer most clearly favoured by this suggested
    guideline.

    At some presently unknown time in 1979 ALP deputy
    parliamentary leader Jack Houston and tourism spokesman
    Ray Jones commenced what was later (and not necessarily
    correctly) described as “a six month investigation of
    poker machine operations and administration in NSW and
    Canberra”. The process was later said by CASEY to have
    taken six months which would mean it began in about June.
    (109) When later interviewed by police CASEY said it
    began after an ALP conference in Rockhampton in February.
    (110) It is not known who was contacted during the
    course of this investigation. There is no record of the
    HOUSTON/JONES study team coming into contact with VIBERT
    but this must be considered at least a possibility. There
    is no suggestion that there would have been impropriety
    in such contact – indeed it is likely that VIBERT’s name
    would have been raised during any such investigation as a
    person to make contact with.
    The “investigation” produced a policy which was approved
    by the ALP administrative committee and then the State
    Council on Sunday, 091279. There is an undated press
    statement announcing the policy. It has no letterhead

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    and a copy was attached to an AINSWORTH Ltd internal
    memorandum of 111279 from VIBERT to L.H. AINSWORTH and
    two of his senior executives. This statement includes
    that “machines would be Queensland assembled and
    distributed, providing at least 200 jobs, with at least
    85 percent of parts Australian made”.
    VIBERT says in the memorandum that
    “What is especially important is the manner in which
    the leader of the Labour Party announced the policy.
    A copy of his statement is attached. I hope you
    will read into this all of the good things we would
    have wanted him to say. … CASEY appeared on radio
    and television and said many of the things that are
    in the press release.”
    VIBERT told the Sydney Morning Herald (070582) that he
    played no part in the ALP decision to change its policy
    to favour poker machines. In the NSW interview, CASEY
    said his first contact with VIBERT was “either very late
    in 1979 or early in 1980”. (111). On the material
    available to the Commission it is not possible to say
    whether CASEY had any contact with VIBERT prior to the
    announcement of the ALP policy. Casey has said however
    that no influence “whatsoever” on the ALP policy on poker
    machines.(112)
    Comment
    The possibility that VIBERT had some input into the
    policy or the ALP decision to amend its policy
    cannot be excluded on the information currently
    available to the Commission. At the time the policy
    was changed there appears to have been no discussion
    of the poker machine lobby providing any financial
    assistance to the ALP.

    Arranging the donations

    On an unknown date in early March 1980 it appears that
    CASEY met with VIBERT to discuss the club/poker machine
    issue in relation to the forthcoming state election.
    VIBERT “confirmed the areas of discussion and agreements”
    in a letter to CASEY dated 130380. If there is any
    reference in this letter to campaign donations it is
    extremely oblique and is contained in the following
    passage:
    “As you explained, it is inevitable that your stand
    on poker machines will alienate hotels and they will
    certainly finance Liberal and Country Party
    candidates. I am discussing this with the club
    movement and the ACDA and will report back shortly.
    As you can imagine, I am not being helped by the
    seeming desire of the party to “self-destruct”, but
    I am certain that this will be overcome soon but it
    will make my proposals fall on deaf ears for the

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  • – 84 –

    next couple of weeks.”

    Nevertheless, just over a week later on 250380 VIBERT
    wrote to AINSWORTH expressing optimism at a Labor victory
    in the State election due by late 1980. VIBERT enclosed
    a copy of his “Private and Confidential” letter to CASEY
    (presumably that of 130390) and proposed the following:
    “I would like a decision on support for their
    campaign. At this stage, I would propose a $10,000
    contribution with another promised for
    July, if all is going well ($10,000) and a
    further $5000 in September.
    “I am certain that the stronger it looks that Labor
    may win seats from Liberals and NCP, the better our
    chances of persuading the Liberals and NCP to
    support poker machines.”
    It is not currently known what meetings, discussions or
    correspondence occurred between VIBERT and CASEY during
    April 1980. CASEY had the following discussion with
    officers of the NSW Police:
    “L.H. Was a donation discussed between you
    and Vibert prior to it being made?
    CASEY Yes.
    L.H. Discussed personally or by mail?
    CASEY Personally.” (113)
    This discussion would seem also to have been referred to
    by VIBERT in the following Letter to CASEY on 020580.
    “Further to our discussions, find enclosed drafts of
    how the invoices to Messrs AINSWORTH should read.
    As explained, the commitment is broken into three
    payuments of $10,000 – one now, one in June and one
    in August. These payments are to be split into two
    invoices covering the year’s advertising and
    promotional costs.
    “Please send them to me -c/o Box 142, Beaconsfield,
    marked ‘For the personal attention of Mr T. Vibert’.
    Also, indicate exactly how the cheques should be
    made out – we don’t want them going to the wrong
    party!”
    Two “Draft only” invoices for $5000 were attached, made
    out to AINSWORTH CONSOLIDATED INDUSTRIES and dated
    January 1980 (March 1980) “To advertising in Labour Party
    newspapers, pamphletts and brochures for the months of
    January and February (March and April).
    A confidential internal memorandum from VIBERT to
    AINSWORTH dated 080580 on money owed to VIBERT sets out
    that VIBERT was to contribute $15,000 to the ALP

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    donation, with this been drawn from his “commission” of
    $93,250 from sales made to the Ettalong War Memorial
    Club. (VIBERT had ostensibly acted as an “independent”
    consultant to this club).

    On 230580 VIBERT directed an internal memorandum to
    AINSWORTH in the following terms: “As you know my
    philosophy has been to win Labour, get on side with the
    Liberals and, if necessary, kick Joh’s head in.”

    On 020680 AINSWORTH wrote to CASEY expressing his delight
    at a statement issued in Mt Isa, a copy of which appears
    to have been forwarded by CASEY. This would most likely
    refer to an undated press release, which is on letterhead
    and issued from Mt Isa, setting out the ALP club policy
    and re-iterating elements of its policy on poker
    machines.

    Comment

    On the currently available material it is not
    possible to state definitively whether the
    initiative for the donations came from CASEY or
    VIBERT. VIBERT certainly proposed the donations
    within the AINSWORTH organisation and appears to
    have been responsible for the suggestion that they
    be covered by false invoices. This is consistent
    with the AINSWORTH organisation’s pattern of conduct
    in relation to a suspected political donation in
    Victoria which appears to have been covered by
    documentation for payments that were purportedly for
    market research by an organisation doing such work
    for the ALP (but not, or very insignificantly, for
    AINSWORTH or the ACDA).

    The payments and their disbursement

    On 010780 a cheque for $10,000 drawn on the AINSWORTH
    DISTRIBUTORS (NSW) account was made out to CASPALP
    PROMOTIONS.
    This cheque was deposited on 030780 and represented the
    great bulk of the money in the account at that time. On
    250780 another cheque for $2000 was paid into the account
    from an unknown source. A CASPALP cheque for $2000 cash
    was drawn and used to purchase a $2000.00 bank cheque
    payable to the ALP.

    On 241080 a check for $10,000 drawn on the AINSWORTH
    DISTRIBUTORS (NSW) account was made out to CASPALP
    Promotions. It was deposited on 281080 and the full
    amount used to purchase a bank cheque payable to the ALP.
    On 211180 a cheque for $10,000 drawn on the AINSWORTH
    DISTRIBUTORS (NSW) account was made out to CASPALP
    Promotions.
    It was deposited on 251180 and the full amount used to
    purchase a bank cheque payable to the ALP.

  • Page 94 of 114

  • – 86 –

    The CASPALP Invoices
    On a date unknown, CASPALP PROMOTIONS created an invoice
    dated dated January 1980 for $5000 “To advertising in
    Labor Party newspapers, pamphlets and brochures for the
    months of January and February”. Also created were an
    invoice dated March 1980 for $5000 covering March and
    April, and an invoice dated September 1980 for $10,000
    covering July and August. No other invoices have been
    recovered but a confidential memorandum dated 191180 from
    VIBERT to the AINSWORTH accountant states: “Please find
    attached the July/August invoice, which we paid. A
    September/October one will be due next week, which will
    complete the deal.”
    CASEY was asked about these invoices by NSW police and
    said the following
    L.H. Do you know who prepared these documents
    with Cas Promotions?
    CASEY Possibly by me.
    L.H. By you personally or by office staff?

    CASEY Within my office. But I said they were
    drafts but the dates relate to any
    transaction. (114)
    CASEY also said that there was advertsing for AINSWORTH
    in one ALP publication but that was “not directly” paid
    for with any of the cheques. No ALP newspaper was
    published in that period.
    Comment

    This Commission does not accept that the invoices
    sent to AINSWORTH were “drafts” of any document.
    These invoices are false and may have given
    AINSWORTH CONSOLIDATED INDUSTRIES the means to claim
    a fraudulent taxation benefit. From previous
    correspondence and in terms of AINSWORTH practice in
    Victoria, the instigation for these false invoices
    is most likely to have come from VIBERT. Two of
    the invoices were backdated and there was, in the
    period in question, no Labor Party newspaper. None
    of the material viewed by the Commission apart from
    CASEY’S comment above suggests that the ALP or any
    of its organs performed any advertising services for
    the AINSWORTH organisation.
    Disbursement of the CASPALP Monies
    When the first AINSWORTH cheque was paid to CASPALP the
    account balance was $1089.84. In the period from July to
    the end of November 1980 cheques totalling $47,000,
    including the AINSWORTH $30,000, were paid into the
    account. The balance at the end of the period was

  • Page 95 of 114

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    $1140.10, or virtually the same as the opening balance.
    There appear to have been deliberate efforts made to
    prevent any outgoing payments being traced back to the
    CASPALP account. All outgoing payments were made by cash
    cheque of which the proceeds were at least on occasion
    used to purchase bank cheques. In most cases the
    recipient of the cash or bank cheque cannot be
    determined. The payees listed in the paragraph following
    have been determined from notations on the rear of
    CASPALP cheques.

    Of the $46,949.74 paid out from the account in the period
    in question, it appears that $25,001.20 was used to
    purchase bank cheques to the benefit of the Australian
    Labor Party. $175.55 was used to purchase bank cheques
    for the benefit of the Milano Restaurant and $50 was used
    to purchase a bank cheque to the benefit of a St John’s
    Cathedral dinner. The total monies expended from the
    account during this period which are currently
    unaccounted for total some $21,722.99.

    The largest outstanding withdrawal, some $12,500, was a
    cash cheque used to purchase a bank cheque immediately
    following a $15,000 cheque payment into the account (on
    260980). The pattern suggests the possibility that this
    amount may have been paid to the ALP.

    The remaining money was paid to the benefit of persons or
    organisations unknown. The largest amount was $1019 and
    there were recurring payments of $470.38.
    The application of the AINSWORTH monies is as follows:

    030780 $10,000 Retained in account until
    withdrawn in series of cash
    cheques to the benefit of
    persons or organisations
    unknown.

    281080 $10,000 Used to purchase bank cheque for
    benefit of ALP on 281080.
    251180 $10,000 Used to purchase bank cheque for
    benefit of ALP on 251180.
    Comment

    This Commission is of the view that the
    investigations conducted by the police and the
    material referred to the Solicitor-General did not
    adequately determine the application of funds in the
    CASPALP Promotion Fund Account. In particular, the
    application of some $10,000 of the AINSWORTH
    donations totalling $30,000 is unknown.
    .

  • Page 96 of 114

  • – 88 –

    Statement by Mr Casey
    A document purporting to be the transcript of a radio
    station 41P interview with Mr CASEY on 250680 is
    contained in the police file. The relevant portion
    reads:
    “Tony Bartlett 4IP: Has there ever been an approach
    made either to yourself or your senior Party members
    offering financial assistance to the Party should
    you back the introduction of machines and be
    successful?
    Mr Ed Casey: No, that’s not a consideration at all.
    The Labour Party doesn’t work that way in any
    respect.”
    Comment

    At the time of this interview VIBERT had told CASEY
    that AINSWORTH would be donating $30,000 but the
    first payment of $10,000 had not then been made.
    An AINSWORTH monopoly?

    On an unknown date prior to Christmas 1980 and probably
    prior to the 1980 state election, an ACDA document was
    prepared under the title “Marketing of AINSWORTH poker
    machines in Queensland Clubs”. The author appears to
    have been a Ted GREVSMUHL and the paper was directed to
    VIBERT. Broadly it proposed that Trade Practices and
    other laws be circumvented by the sale of poker machines
    through a body “QUEENSLAND CLUB MANAGEMENT ADVISORY
    SERVICES PTY LTD” which purported to be a consultancy
    service. Passages within the document suggest that
    legislation was also considered a potential way of
    achieving an AINSWORTH monopoly and the passage of most
    concern is set out below.
    “Simply put, I propose the pre-contracting of clubs
    for their entire poker machine installation
    requirements, following the successful completion of
    feasibility studies in such clubs, these to commence
    in July, 1981. These contracts would be designed by
    the ACDA’s lawyers to be unassailable in terms of
    the Trade Practices Act and local Contract Law
    requirements, and be of five years’ duration, so as
    to be current at the time of legalisation. The
    contracts … would be concluded with a Queensland-
    based holding company acting as the “go-between ”
    for AINSWORTHS and other (non poker machine)
    suppliers, and the 694 Queensland clubs at large.
    This would eliminate the need for a large, costly
    AINSWORTH sales team in Queensland, enable the clubs
    to continue their current dealings with ACDA
    Queensland personnel already well known to them, and
    almost conpletely exclude Bally and Nuts from the
    marketplace, if this had not already been achieved
    in the enabling legislation. (Our emphasis). By this

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    means Ainsworth’s commercial advanta•e would stand
    to be almost absolute. (emphasis in original),

    The only element of the announced Labor policy known to
    have any bearing on this statement was the requirement
    that “machines would be Queensland assembled and
    distributed, providing at least 200 jobs, with at least
    85 percent of parts Australian made”. This would have
    the effect of excluding BALLY and probably PACIFIC POKER
    MACHINES, then a small company importing Japanese gaming
    machines. NUTT & MUDDLE would have been excluded if they
    were not prepared to invest in Queensland assembly
    facilities. (Poker machine assembly is not a particularly
    complex industrial operation.)
    Mr Casey’s trip to America

    On 190381 VIBERT wrote to CASEY in relation to “Your trip
    to America” He stated the location of the AINSWORTH
    office in Reno and said the manager had been advised of
    his flight arrival on 220381.

    Mr CASEY replied on 310381, basically thanking VIBERT for
    his efforts in arranging the contact in Reno and
    explained that, while he had telephoned, his party had
    gone no closer to Reno than Las Vegas. In his reply,
    CASEY stated “It was however interesting to note in our
    visit to the various casinos the Aristocrat machines
    featuring very prominently”.

    Comment

    On 200290 the Leader of the Opposition, Mr R.
    COOPER, asked Mr CASEY whether he had ever visited
    the United States and on any occasion made a point
    of inspecting or noting a particular brand of poker
    machine in operation. Mr CASEY answered the second
    part of the question in the negative. This matter
    is included here as being among the matters
    complained of to the Commission.

    THE INVESTIGATION

    On 060382 members of the NSW Police Task Force 2 took out
    a warrant on the home and business office of VIBERT and
    took possession of a number of documents including a file
    containing correspondence relating to donations to the
    Australian Labor Party in Queensland.

    The choice of investigators
    On 050482 Queensland Police Commissioner Terry LEWIS was
    contacted by NSW Assistant Commissioner Bob DAY and then
    by Task Force Two commander Supt Cliff MCHARDY. His diary

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  • – 90

    note reads as follows:

    “A/Comm R. DAY, then Det/Insp Cliff McHARDY, NSW,
    phoned re Task Force 2 investigation when lwhere?)
    Messr’s VIBERT and AINSWORTH have paid secret
    commissions to politicians in Qld and Vic, referred
    to A/C MURPHY, then D/Insps BRADBURY and B. INGHAM
    to go to NSW re same.”
    Comment

    In the view of this Commission this choice of
    investigators may have compromised the
    investigation. On the day of the above notation in
    LEWIS’s diary is another, relating to another
    sensitive investigation being conducted by INGHAM
    and BRADBURY. A study of the records held by this
    Commission indicates that INGHAM and BRADBURY
    jointly performed a number of sensitive
    investigations on behalf of the then police
    administration. BRADBURY served in the Licensing
    Branch with Jack Reginald HERBERT and Anthony MURPHY
    in the period 1968-70. INGHAM and BRADBURY are
    included in a list of police officers and others
    which was included in the report of the Commission
    of Inquiry as Appendices 22 and 23. (115)

    BRADBURY and INGHAM attended Penrith Police Station the
    next day, 060482 and inspected copies of the documents.
    They requested the opportunity of being present should a
    further search be made of AINSWORTH’s premises. (116)
    Also on 060482, Commissioner LEWIS made the following
    note in his diary: “Off 6.3Opm. Had J. HERBERT call on
    request re knowledge of Vibert and Ainsworth re New South
    Wales police inquiry.”

    On 150482 BRADBURY took out a warrant to search the
    premises of the Registered and Licensed Clubs Association
    of Queensland and the ACDA at 247 Adelaide Street,
    Brisbane..

    AINSWORTH’s foreknowled e of olive raid

    On 210482 INGHAM and BRADBURY went to NSW to attend a
    raid on AINSWORTH’s business premises with members of
    Task Force 2. Just prior to the raid they went to lunch
    at the Texas Tavern, Kings Cross, with Mr Paul MEADE, a
    Queensland businessman with Sydney organised crime
    connections. These connections included the owner of the
    Texas Tavern, Harry CALLEIA aka CALLEIH, sometimes
    mistaken for Harry GALEA. MEADE and CALLEIA had joint
    interests in “in-line” gaming machines in Queensland.
    When the raid took place it was apparent that AINSWORTH
    executives had forewarning of the raid and that they were
    aware there would be Queensland detectives present. A
    later investigation by the NSW ombudsman was unable to
    determine the source of the leak beyond one of two

  • Page 99 of 114

  • – 91 –

    possibilities: that CALLEIA had telephoned AINSWORTH or
    that a senior NSW police officer who had spoken with both
    the Queensland officers had informed an AINSWORTH
    executive at another luncheon. The ombudsman inclined to
    the view that the leak emanated from the Texas Tavern
    luncheon, despite the insistence of INGHAM and BRADBURY
    that they had not discusssed the raid over lunch. (117)
    On 040582 BRADBURY executed a warrant on the Geroge
    Street Commonwealth Bank Branch where the CASPALP account
    was located. No documents were seized.
    The Channel 10 interview
    On 060582 and again on the following night Channel 10
    Melbourne and Channel 0 Brisbane broadcast a two part
    special on the poker machine lobby. The journalist had
    obviously obtained possession of some documents relevant
    to the AINSWORTH donations to the ALP. Mr CASEY was
    interviewed on the subject and when the interview began
    he appeared to be unaware that the journalist possessed
    the documents. The relevant portion of the interview is
    as follows:
    “Ian GILLESPIE: In Victoria it has been suggested
    and rumoured that the Poker Machine Lobby put as
    much as $500,000 into the Labor Party Campaign funds
    in that state. I understand that in Queensland
    you’re on record as saying that no money has come
    from the Poker Machine Lobby into Queensland’s Labor
    Party funds.
    CASEY: Well, that sounds an awful big figure to me. I
    was in Victoria at one stage during the campaign, and
    certainly feel that’s an exaggerated figure. In
    Queensland certainly it’s not the case.
    GILLESPIE: There has been no money from the Lobby
    put into Labor Party Campaign Funds.

    CASEY: No.”

    The political context

    On 070582 LEWIS attended a briefing of most of the State
    Cabinet noting it in the following terms in his diary:
    “With A/C DUFFY and D/Insp. BRADBURY and INGHAM to
    Executive Building, briefed 14 ministers on “Poker
    Machines Inquiry”.
    Ainsworth tin clear’
    On 170582 INGHAM and BRADBURY again attended Sydney and
    were booked into the St Mary’s Hotel. A Det Sgt LOWE of
    the NSW Fraud Squad was allocated to assist them. After
    inspecting documents at a Sydney bank Det Sgt LOWE
    introduced them to Gordon ALDRIDGE, a Sydney businessman

  • Page 100 of 114

  • – 92 –

    and the owner of the St Mary’s Hotel,
    ALDRIDGE was one of those involved in and provided the
    venue for a November 1981 meeting at which one of the
    detectives investigating AINSWORTH was allegedly told
    that it could be to his financial advantage not to
    persist with a secret commission investigation into an
    AINSWORTH executive George CRAGEN: the ombudsman
    preferred the word of the detective to that of any of the
    others present at that meeting. (118)

    LOWE was implicated in an October 1981 NSW police
    internal investigation which resulted in a finding of
    misconduct against a Det Sgt Ron SHAW, the brother-in-law
    of AINSWORTH executive George CRAGEN. The investigation
    arose out of an approach made to a Federal police officer
    on behalf of solicitor Morgan RYAN via Gordon ALDRIDGE
    and Det Sgt LOWE. (119)

    After INGHAM and BRADBURY met ALDRIDGE, he apparently
    kept them well entertained; the Ombudsman made mention of
    complimentary liquor, dinner at the Centrepoint Tavern, a
    visit to Rosehill races and a day on the Harbour with,
    among others, Assistant Commissioner DAY and his wife.
    (120) INGHAM and BRADBURY also visited ALDRIDGE’s office
    on three occasions. BRADBURY told the Ombudsman that on
    the first of these visits ALDRIDGE became aware they were
    investigating AISNWORTH and put them in touch with
    AINSWORTH’s solicitor David LANDA. Written questions
    were delivered to LANDA on 180582, according to the
    detectives.(121).

    Also according to the two detectives, Task Force Two
    interviewed AINSWORTH on 190582 and they participated in
    this interview. Their report states that AINSWORTH
    “refutes any suggestion that he had solicited the
    assistance of Mr CASEY in relation to the introduction of
    Poker Machines into Queensland and claimed that the whole
    of those arrangements were made by Mr VIBERT”. In
    response to further questions the report quotes the
    following small speech by AINSWORTH:
    “Gentlemen the donation was made to the Labour Party
    because we knew that they were in favour of the
    introduction of poker machines and they had made
    that a part of their policy in previous years. If
    they were not in favour of poker machines the
    donation would not have been made at all, the
    reason we did not give money for the funding of the
    National and Liberal Parties was for the same
    reason. They were not in favour of the Poker
    Machines. It is as simple as that. I would be
    gravely concerned if I thought that the money had
    found its way into someone’s hip pocket and not used
    by the Labour Party because I am not known for my
    generosity.” (122)
    VIBERT declined to be interviewed at all.

  • Page 101 of 114

  • – 93 –

    AINSWORTH’s diary for 190582 records “10 am D BRADBURY
    want to tape interview – now to see D LANDA Thursday.”
    And at the bottom of the page”Gordon ALDRIDGE Bob DAY
    says Qld people fair dinkum. 5 pm Friday Monday.”
    A letter dated 240582 was subsequently delivered to
    BRADBURY from the office of LANDA containing a refusal on
    behalf of both AINSWORTH and VIBERT to answer any
    questions.
    INGHAM and BRADBURY’s last day in Sydney was 250582.
    AINSWORTH’s diary for this day was later found to include
    the notation: “Gordon rang and said in clear.”
    ALDRIDGE, however, maintained that at no stage did he
    become aware what the Queensland police were interested
    in and could offer no explanation for the entry in
    AINSWORTH’s diary. (123) The ombudsman notes that
    AINSWORTH referred to a subsequent conversation with
    BRADBURY where BRADBURY allegedly said “… Len, how are
    you, I hope you got all that mess straightened out …”.
    BRADBURY denies this conversation occurred. (124).
    Comment
    Given the non-cooperation of VIBERT and AINSWORTH
    this element of BRADBURY and INGHAM’s investigation
    can hardly be considered conclusive and certainly
    cannot justify the “clearing” of AINSWORTH as noted
    in his diary. However the Ombudsman’s investigation
    appears to have been as thorough as was possible
    under the circumstances and any re-investigation is
    probably unlikely to further clarify this issue.
    On 090682 BRADBURY was in Sydney and executed a search
    warrant on the Commonwealth Bank, recovering 11 cheques
    drawn on the account of CASPALP.
    Queensland interviews

    On 140782 CASEY was interviewed by officers of Task Force
    2, An arranged interview with Queensland Police for that
    date did not go ahead due to CASEY’s solicitor having to
    attend another engagement.
    BRADBURY and INGHAM reported on 020882, stating that
    CASEY had not been interviewed and that his solicitor was
    intending to write to the Police Department to the effect
    that CASEY and YEWDALE would not be made available for
    interview and that the ALP had no complaint to make
    against any of its senior members in relation to their
    dealings with party funds.(125) Such a letter is not as
    yet known to this Commission.
    From the NSW Police this Commission has obtained
    transcribed notes of an interview between Det Sgt
    HANRAHAN and Det Snr Const CLARK of the NSW police with
    CASEY and although undated, this is presumably the
    interview of 140782 referred to above. Although some of
    the issues relevant to the Queensland inquiry were

  • Page 102 of 114

  • – 94 –

    canvassed, as mentioned above, the purpose of the NSW
    police interview was related to misconduct by citizens of
    that State and largely in that State.
    Comment

    There is no indication on any of the material yet
    seen by the commission that CASEY was ever
    comprehensively interviewed in the course of the
    Queensland investigation in relation to the
    donations, the change of policy, his dealings with
    VIBERT and AINSWORTH or the disbursement of monies
    in the CASPALP account. Similarly there is no
    indication that YEWDALE, the other signatory to the
    account, was ever interviewed. There is no
    indication that ALP accounts were checked or ALP
    officials interviewed.
    Solicitor General’s comments
    On 030882 the Commissioner of Police referred the file to
    the Solicitor-General.
    On 120882 the Solicitor General wrote to the Police
    Commissioner. The relevant portion of the Solicitor-
    General’s letter is as follows:
    “In view of the very inconclusive nature of the
    present available material, let alone what could be
    regarded as evidence it is pointless to indulge in
    any speculation on what criminal charges might be
    open. Clearly there is no evidence at all in
    relation to any claim of bribery – Section 60 of the
    Criminal Act. There certainly is a complete dearth
    of evidence to indicate any misappropriation by Mr
    Casey of any of the funds which came from the
    Caspalp bank account. . .There is nothing to
    indicate any criminal dealings in respect of any of
    the moneys in the Caspalp bank account, irrespective
    of the source of those monies. Whether any further
    investigation would lead to a different conclusion
    is, once a gain, a matter of speculation.”

    ALP policy
    The Parliamentary Library was asked to check its holdings
    for any mentions of poker machines in ALP policy
    documents from 1977 to the present. The results are set
    out below:
    In the ALP policy speech for the 1980 election CASEY
    announced legalisation of poker machines in licensed
    clubs. (126)
    In 1985 the ALP again amended its policy to allow
    for the introduction of poker machines under the
    auspices of a Licensing and Gaming Authority. (127)

  • Page 103 of 114

  • – 95 –

    The 1988 policy allowed for a Licensing and Gaming
    Authority. Poker machines were not mentioned. (128)

    There have been recent media references to ALP policy
    prior to the 1989 state election being for an inquiry
    into poker machines. No documentary basis for these
    references has been seen by this Commission.
    The AINSWORTH advertisement

    On 251189 or just prior to the 1989 State election the
    AINSWORTH organisation advertised “200 new jobs” in
    Queensland, mainly for service and sales personnel. The
    advertisement stated that “ARISTOCRAT are expanding into
    Queensland”. ARISTOCRAT is the AINSWORTH brand name for
    its poker and video gaming machines.

    Comment

    This advertisement has been referred to in State
    Parliament as evidence of AINSWORTH expecting a
    f a v o r e d p o s i t i o n in the distribution of poker
    machines in Queensland. While the reasons for the
    advertisement and its timing are not known the
    possibility exists that the company was in some way
    responding to announced policy of the then
    government for the installation of Adult
    Entertainment Machines (Gaming Machines) in clubs as
    a successor to banned “in-line” amusement machines.

    The Cabinet decision

    State Cabinet endorsed the introduction of poker machines
    into Queensland on 190390. Mr CASEY, now the Minister
    for Primary Industries, participated in this decision and
    in respect of that participation the Premier made the
    following statement to the media: “Mr Casey has no
    interest in the matter, financial or otherwise, and it is
    quite proper for him to be involved.”(139)

  • Page 104 of 114

  • – 96 –

    CONCLUSION

    The complaint in relation to the Caspalp donations and
    Mr. Casey’s involvement in the March 1990 cabinet
    decision on poker machines was furnished to the
    Complaints Section of the Official Misconduct Division
    pursuant to Section 2.27 of the Criminal Justice Act.
    The Complaints Section has assessed the substance of the
    complaint in the light of the available material pursuant
    to Section 2.29
    The Commission is of the view that the complaint does not
    involve official misconduct within the meaning of
    Section 2.33 on the part of Mr. Casey either in respect
    of his alleged activities in 1980 or his involvement in
    the deliberations of Cabinet in March 1990.

    In view of the matters discussed in this report, the
    Commission does have serious reservations about the
    desirability of further dealings with Mr Ainsworth or his
    companies.

    Another question which arises is as to the desirability
    of members of parliament receiving donations from members
    of the public. The Commission understands that this
    matter is on the agenda for consideration by the
    Electoral and Administrative Review Commission and does
    not wish to intrude improperly upon that consideration.
    It notes, however, that practice in some other places is
    for parliamentarians to be “insulated” from knowledge of
    such donations by their being channelled to the
    organisational side of the party. Such a practice
    obviously has considerable advantages in preserving the
    ability of parliamentary members to exercise independent
    judgments on matters arising for decision. As Fitzgerald
    observed:
    “The possibility of improper favour being shown or
    being seen to have been shown by the Government to
    political donors must also be eliminated”. (130)

  • Page 105 of 114

  • – 97 –

    REFERENCES

    Note: C denotes confidential, restricted or
    secret material listed in the
    Bibliography. “00” denotes confidential,
    restricted or secret material not listed
    in the Bibliography.

    (1) Report of Board of Inquiry into Poker Machines,

    Victoria 1983, (Wilcox Report), Summary of the
    Report – Major findings and recommendations.
    (2) Evidence relating to in-line amusement devices,
    (Fitzgerald) Commission of Inquiry, Queensland.

    (3) Transcripts of telephone conversations,
    Operation A DAZZLER, NSW TRU. (One of AGE
    TAPES) Tape 13, Conversation Ronald Lopez DIAS
    and Frederick “Paddles” ANDERSON on 270679 re
    MEADE being behind in payments to
    ANDERSON/McPHERSON for gaming machines in
    Queensland and offers of payment from ROOKLYN
    to remove MEADE.
    (4) Report of South Australia Select Committee on
    the Casino Bill, 1982.
    (5) E2ort. of Board of Inquiry into Casinos (Mr
    Justice Xavier Connor), Victoria, April 1882.
    (6) Wilcox op cit

    (7) 11.2pr_of the Committee 1::-igujntci/j n –

    in NSW, (Lloyd-Jones) September 1985.
    (8) Old Branch State Policy, 1985.
    Policy Document and Branch Members handbook,
    ALP Qld Branch, October 1988.

    (9) Wilcox 18.01-09

    (10) W i l c o x 1 8 . 0 9

    (11) Nevada Statute, quoted Michele Demery, Susan
    Pins Gaming Control Board, Nevada Style,
    Thesis in Administrative Law, pi,

    (12) Nevada Regulation, quoted Demery, Pins p2-3.
    (13) C. Quoted in Diversification of criminal
    interests within the NSW Gaming Industry,
    interim report 1984, Investigative Staff
    attached to Superintendent of Licenses
    Office, p24.

  • Page 106 of 114

  • – 98 –

    (14) C. Quoted Annual Report of the Licensin•
    Investigative Section, 1984-5,
    Superintendent of Licenses Office, NSW
    (15) Ainsworth Distributors Ltd advertisement,
    Courier-Mail, 25 November 1989.

    (16) 00

    (17) Wilcox 3.45 – 3.50

    (18) This matter falls under the provisions of
    Section 2.19 (2) (b) of the Criminal Justice
    Act 1989.
    (20) Unless otherwise noted the historical account
    is derived from the following:

    Report of the Honourable Mr Justice Moffitt,
    Royal Commissioner, appointed to in wire in
    respect of certain matters x.-
    gi_tingtppaltipripf organised crime in
    clubs, NSW 1974.
    Wilcox, Chapter 4.
    McCoy, Alfred W. Drug Traffic – Narcotics
    and organised crime in Australia, Harper
    and Row 1980 pp 213-337.

    Royal Commission into Drug Trafficking
    (NSW),
    (Woodward Royal Commission) 1979-80
    C. The evidence concerning _Harry
    Wainwri ht Nu an Hand Limited and its
    associated companies and the affairs
    of Murra Stewart Rile Commonwealth-
    NSW Joint Task Force on Drug
    Trafficking (JTF 1).

    Nugan Hand (Part 1), Volume 2 of
    Commonwealth-NSW Joint Task Force on Drug
    Trafficking. (JTF 2)

    1 1 0 a u r r a R i l e ,V o l u m e 3
    of Commonwealth-NSW Joint Task Force on
    Drug Trafficking (JTF 3).

    C. Alle ations b Messrs L.H.Ainsworth &
    E P. Vibert re conduct of •olive
    Ombudsman’s Report No 2, NSW, 14
    October 1986. (Ombudsman)
    Report of a Commission of Inquiry pursuant to
    Orders in Council, (Mr G.E. Fitzgerald, QC), 3
    July 1989.

  • Page 107 of 114

  • – 99 –

    Dicke, Phil, The Road to Fitzgerald, UQP
    1988 pp 249-256, 281-282.
    (22) Evidence to the (Fitzgerald) Commission of
    Inquiry, Colin PEARSON, former under-secretary,
    Department of Justice.

    (23) ( 0 0 )

    (24) South Australia House of Assembl Select
    Committee on the Casino Bill 1982, SA 1982,
    p52.
    (25) Commission of Inquiry Report p 195.

    (26) W i l c o x 4 . 0 4
    (27) For example, Wilcox was wrong, Club News
    (official publication of Queensland Registered
    and Licensed Clubs Association) and Blanch, K,
    Bandits lobb still battling scaremongers,
    Sunday Mail 18 March 1990.
    (28) Wilcox 12.04

    (29) W i l c o x 6 . 4 4

    (30) W i l c o x 4 . 1 5

    (31) W i l c o x 4 . 3 2

    (32) W i l c o x 4 . 3 2
    C. Ombudsman pp66-82
    (00)
    (33) Wilcox 4.10-4.16
    C. Diversification of criminal interests p25.

    (34) ( 0 0 )

    (35) Wilcox 4.19
    (00)

    (36) C. Ombudsman pp30-44
    (00)
    (37) C. Ombudsman pp 30-44

    (38) Wilcox 4.21-4.23

    (39) ( 0 0 )

    (40) C. Ombudsman p101-108

    (41) C. Ombudsman p167
    (42) C. Ombudsman p122

  • Page 108 of 114

  • – 100 –

    (43) Blanch, Ken, Bandits lobby still battling
    scaremongrs, Sunday Mail, 18 March 1990.
    (44) Re•ort of the Tribunal to the Minister of
    Police pursuant to an Inquiry held under
    Section 45 of the Police Requalation

    Alle ations of Misconduct Act 1978, (Allen
    inquiry) Police Tribunal of NSW, April 1982.
    (45) C. Diversification of criminal interests .

    (00)
    (46) C. Diversification of criminal interests
    (00)
    (47) C. Diversification of criminal interests
    (00)
    (48) W i l c o x 4 . 3

    (49) C. Diversification of criminal interests
    (00)
    (50) C. Ombudsmanpp98-100

    (51) Wilcox 4.34-37

    (52) C. Ombudsmanpp12-29
    (53) Record of Interview between Det Sgt R.C.Clark
    and Nicholas Balagiannis 121084.
    (54) R O I ‘ s 1 2 1 0 8 4

    (55) Record of Interview between Det Vincent and
    Nick Mitris, 121084
    (56) R O I s 1 2 1 0 8 4

    (57) Record of Interview between Det Vincent and
    David John Wade, 301084
    (58) 0 0
    (59) Proceedings, Melbourne Magistrates Court
    260686.
    (60)
    . 00

    (61) Blanch, Ken Inquiry may probe 1pokie
    conspiracy’, Sunday Mail 250988.
    (62) The associates of Murray Riley., Volume 3 of
    Commonwealth-NSW Joint Task Force on Drug
    Trafficking (JTF 3).
    Dickie, Phil, blur h ].inked with sus ected
    crime figure, Courier Mail, 22 February 1988.

  • Page 109 of 114

  • – 101 –

    (63) C.-__Lof.,____leActivitjAReor
    Associated BCI
    Sydney 7 June 1981.
    (64) C. Confidential Report – George David
    F reem a n , Crime Intelligence Unit, 7 March
    1977.
    (65) Evidence before Commission of Inquiry
    (66) W i l c o x 4 . 3 1
    C. Ombudsman, pp60-82
    (67) Evidence before Commission of Inquiry
    (68) C. Transcripts, Operation Dazzler.
    (69) ( 0 0 )
    (70) M o f f i t t R e p o r t
    (71) O m b u d s m a n s R e p o r t
    (72) ( 0 0 )
    (73) S e e A p p e n d i x T w o
    (74) Evidence Commission of Inquiry

    Report of Commission of Inquiry pp61-62
    Dickie, R oad to Fitzgerald pp 249-256, 281-282
    (75) ( 0 0 )
    (76) S A C a s i n o R e p o r t p 5 2
    (77) W i l c o x 6 . 1 2
    (78) Poker Machine Nana•er’s Manual, Poker Machine
    Council of NSW, PO.Box 96, Kogarah, NSW 2217.
    (LOoseleaf manual first published 1985)
    (79) ( 0 0 )
    (80) C. NSW Licensing Investigative
    Section,
    Annual Report 1984-85
    (81) ( 0 0 )
    (82) C. Annual Report pp 14-15

    (83) C. Diversification of Criminal Interests
    (00)

  • Page 110 of 114

  • – 102 –

    (84) Wilcox 4.10-4.16

    C. Diversification of Criminal Interests p25

    (85) C . O m b u d s m a n
    (86) C. NSWAnnualReport.

    (87) ( 0 0 )

    (88) Wilcox – Summary of Conclusions.
    (89) Blanch, Ken Bandits lobby still battling
    scaremongers
    (90) W i l c o x 6 . 4 7

    (91) W i l c o x 6 . 0 6

    (92) W i l c o x 6 , 1 0

    (93) Dickie, Phil, Pokies of the North, Courier-
    Mail 010688

    CIB head warned Seagulls
    official on SP bookmaking,
    Courier-Mail 120188.

    Haves finding a ‘repeat’,
    Courier-Mail 010689.
    (94) Moffitt Report 310

    (95) W i l c o x 6 . 4 1

    (96) W i l c o x 6 . 2 6

    (97) Annual Report, Pennsylvania Crime Commission
    1989. p5.

    (98) Annual Report p6.

    (99) Annual Report p7.

    (100) Annual Report p8.

    (101) Dickie, Phil, Pokies of the North
    (102) ( 0 0 )

    (103) Poker machine mama•ers manual
    (104) C Diversification of Criminal Interests.

    (00)

  • Page 111 of 114

  • – 103 –

    Appendix two

    (105) Wilcox 12.05-06.

    (106) W i l c o x 1 2 . 0 3
    (107) W i l c o x 1 2 . 0 4

    (108) W i l c o x 1 2 . 0 4

    (109) Undated press release, December 1979?

    (110) Notes of interview, Casey and Detectives
    Hanrahan and Clark., undated, p3.
    (111 ) Notes of interview, p4.

    (112) Notes of interview, p8.

    (113) Notes of interview,
    (114) Notes of interview p18.

    (115) These police listed Appendices 22 and 23 of the
    Report of the Commission of Inquiry.
    (116) Ombudsman p35

    (117) Ombudsman pp30-44.

    (118) Ombudsman pp12-29

    (119) Ombudsman pp21-22

    (120) Ombudsman pp154
    (121) Report, Bradbury/Ingham 020282.

    (122) R e p o r t , p 5 .

    (123) Ombudsman pp155-6

    (124) Ombudsman p 157.

    (125) R e p o r t , p 8 .

    (126) ALP Policy Speech 111180.

    (127) Qld Branch State Policy 1985
    (128) Policy document and Branch members handbook,
    ALP Qld Branch, October 1988.

    (129) News, Channel 10, 190390.
    (130) Report of the (Fitzgerald) Commission of
    Inquiry p137.

  • Page 112 of 114

  • – 104 –

    BIBLIOGRAPHY
    Public documents

    Report of the Honourable Mr Justice Moffitt,Royal
    Commissioner,_appointed to inquire in res ect of certain
    matters_rtia±iLIELEL11sations of organised crime in
    clubs, NSW 1974.

    Report of Board of Inquiry into Poker Machines, Victoria,
    November 1983 (Mr M. Wilcox QC)

    Report of the Board of Inquiry into Casinos, Victoria,
    April 1982 (Mr Justice Xavier Connor)

    Select Committee on the Casino Bill 1982 Resort, South
    Australia House of Assembly, 12 August 1982.
    Report of the Royal Commission into Drug Trafficking,
    (Mr Justice Philip Woodward) NSW 1979
    Further Report of the Royal Commission into Drug
    Trafficking
    (Mr Justice Philip Woodward) NSW 1980
    Report of a Commission of Inquiry pursuant to Orders in
    Council, Queensland, July 1988. (Mr G.E. Fitzgerald QC)

    Transcript, Commission of Inquiry.
    Report of the Tribunal to the Minister of Police pursuant
    to an Inquir held under Section 45 of the Police
    Re•ulation Alle ations of Misconduct Act 1978, Police
    Tribunal of NSW, April 1982.

    Annual Report, Pennsylvania Crime Commission 1989.
    Nugan Hand (Part 1), Volume 2 of Commonwealth-NSW Joint
    Task Force on Drug Trafficking. (JTF 2)
    The associates of Murray Riley. Volume 3 of Commonwealth-
    NSW Joint Task Force on Drug Trafficking. (JTF 3)
    McCoy, Alfred W. Dru•Traffic – Narcotics and Or•anised
    Crime in Australia, Harper and Row, 1980.
    Dickie, Phil The Road to Fitzgerald, University of
    Queensland Press, 1988.
    Poker Machine Manager’s Manual, Poker Machine Council of
    NSW, (Looseleaf manual first published 1985).

    Confidential documents

  • Page 113 of 114

  • – 105 –

    The evidence concerning Uqrry Wainwright, NuQan Hand
    Limited and its associated com•anies and the affairs
    of Murray Stewart Riley, Commonwealth-NSW Joint Task
    Force on Drug Trafficking (JTF 1).
    Allegations by Messrs L.H.Ainsworth & E.P. Vibert re
    conduct of police, Ombudsman’s Report No 2, NSW, 14
    October 1986.

    Diversification of criminal interests within the NSW
    Gaming Industry, Interim Report 1984, Investigative
    Staff attached to Superintendent of Licenses Office.

    Annual Reports of the Licensing Investigative
    Section, Superintendent of Licenses Office, NSW

    R. C. Clark, The organisation and overlapping of

    and economic analysis, Four Volumes, Australian
    Police Forces Special Study Grants Scheme..
    R.C. Clark, M.C. Rayment, An overview of taming in
    Nevada United States of America NSW Police.
    t o a r g ngQResearchPaersrelaoliinueend
    and a back round to •amin .rocedures in Nevada USA
    Licensing Investigative Unit, NSW.
    Michele Demery, Susan Pins Gaming Control Board,
    Nevada Style, Thesis in Administrative Law included
    in Research Papers.

    Associated Companies, BCI Sydney 7 June 1981.

    Confidential Resort – Geor•e David Freeman, Crime
    Intelligence Unit, 7 March 1977.
    Transcripts of telephone conversations, Operation A
    DAZZLER, NSW TRU. Tape 13, Conversation Ronald
    Lopez DIAS and Frederick “Paddles” ANDERSON on
    270679.
    (better known as one of Age Tapes).

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