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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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• – 17

  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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• – 19 –

  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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• – 20 –

  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.

• Page 29 of 114

• – 21 –

  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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• – 22 –

  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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• – 23 –

  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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• – 25 –

  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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• – 26 –

  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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• – 27 –

  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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• – 31 –

  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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• – 32 –

  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.

• Page 41 of 114

• – 33 –

  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)

• Page 42 of 114

• – 34 –

  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

• Page 43 of 114

• – 35 –

  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.

• Page 44 of 114

• – 36 –

  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)

• Page 45 of 114

• – 37 –

  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

• Page 47 of 114

• – 39 –

  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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• – 52 –

  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

• Page 70 of 114

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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.

• Page 71 of 114

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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,

• Page 83 of 114

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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

• Page 86 of 114

• – 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.

• Page 87 of 114

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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

• Page 88 of 114

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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.

• Page 89 of 114

• – 81 –

  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

• Page 90 of 114

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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

• Page 91 of 114

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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

• Page 92 of 114

• – 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

• Page 93 of 114

• – 85 –

  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

• – 87 –

  $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

• Page 97 of 114

• – 89 –

  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

• Page 98 of 114

• – 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).

• Page 114 of 114