Speech to the Security in Government Conference
02 September 2014
Michael Pezzullo
Chief Executive Officer, Australian Customs and Border Protection Service
Organised Crime and Infiltration in the Australian Public Service: the Case of the Australian Customs and Border Protection Service
E&OE
Today I will limit my remarks to the issue of criminal infiltration, corruption and serious misconduct in the Australian Customs and Border Protection Service ('the Service'). In doing so, I hope to provide a useful case study into the more general topic that is the subject of these conference proceedings. In particular, I want to focus on the integrity challenges that the Service has faced in recent years, what we are doing about them, and the lessons that we have learned along the way.
Customs and border agencies facilitate the movement of goods and people across borders, and as such they have an inherently high exposure to corruption risks. The duties of customs and border protection officers around the world bring them directly into the path of opportunity. Some officers may be tempted to use their discretionary power to gain a benefit. This is a global issue, and not one limited to Australia. Being able to circumvent border controls is a valuable capability for transnational organised crime groups, and they are more than willing to offer inducements to relevant officers or others in cross-border transport and supply chains in order to penetrate border controls. These attempts may occur opportunistically or in a planned and targeted way, and may also involve infiltration of customs and border agencies. In our direct experience, an increasing value is being placed by transnational organised crime groups on border-related law enforcement intelligence and operational information.
Such agencies tend also to have long-standing workforces and sometimes ingrained cultures and work practices. The strong bonds that exist among staff in such agencies may result in sub-cultures of misplaced loyalty, which in turn may lead to a reluctance to report misconduct or cover-up wrongdoing. In recent years, I would also argue that the risk of compromise of customs and border agencies has increased through the proliferation of social networks which devalue the collective good and the power of the state to ensure the collective good, along with increased tolerance in relation to illicit and anti-social behaviour (including recreational drug use).
These tendencies can be exacerbated by a lack of professionalism in such agencies, certainly as compared with other disciplined arms of the state such as the armed forces and police services. Depending on the operating models of such agencies, this lack of professionalism and discipline (in the proper sense of that term), can sometimes be combined with a static and unrewarding workplace, and work duties. In such an environment, while the vast majority of officers probably would not make the choice to act corruptly, there is a higher probability that undervalued, deskilled and disempowered officers will do precisely that.
This can potentially create a perfect storm where corruption almost becomes inevitable – where officers share an allegiance to each other but not to the mission and ethos of the agency; where central standards and disciplines are weak and not enforced; and where internal exploitation of systemic vulnerabilities can occur without detection or sanction.
In corrupt sub-cultures, fidelity to local teams and informal tribal leaders becomes more important than the agency mission, and professional integrity. And waiting in the wings are transnational criminal organisations: powerful and agile, they are increasingly able to capitalise on the way in which globalisation is greatly expanding international communication, cross-border linkages, trade, travel, investment and financial flows. All they need are the keys to the gates of our national borders.
What I have just described in general and abstract terms, is a fair summary of where the Service found itself two years ago when a series of arrests of our officers brought these issues to public attention. All government agencies can learn from our experience, and I would now like to turn to what we did about the integrity challenge that we faced and the lessons that we learned along the way.
To begin with, I cannot stress enough the need for a positive integrity regime that is greater than the elements of rules and regulations that are put in place. It is about creating a strong culture as the fabric that binds the rules and the processes; it means tackling integrity risks before they become a material problem; and truly holding people to account for integrity and professional standards, from the Chief Executive down.
Having set out this context, I would now like to turn to the specifics of how our integrity challenge unfolded, and began to be dealt with. In January 2011, as a result of legislative change, the Service came under the jurisdiction of the Australian Commission for Law Enforcement Integrity (ACLEI), which is the Commonwealth body charged with tackling corruption within specified Commonwealth law enforcement bodies.
As a result of early ACLEI investigations into suspicious conduct by officers of the Service at Sydney International Airport, principally under
Operation Heritage, and the associated Australian Federal Police (AFP)
Operation Marca, and following more than two years' of investigation, eight Customs officers were arrested for a range of corruption and drug importation offences as well as abuse of office, including offering a bribe to a Commonwealth public official, receiving a bribe, and conspiracy to import a commercial quantity of border controlled precursors. Two of these officers have since been convicted and sentenced to seven and eight years respectively for their roles in the scheme. Another 18 people – not all officers of the Service, and including an officer from another Australian Government department—have been arrested for suspected offences relating to the alleged criminal acts.
As many of these matters are still before the Courts, I do not intend to speak about any individual cases.
There were a number of very worrying trends and phenomena that
Operation Heritage uncovered. Some officers used their inside knowledge to defeat surveillance and interdiction systems. This knowledge included information about law enforcement techniques and systemic vulnerabilities. Working together, they manipulated rosters and job placements, thereby increasing their capacity to facilitate the importation of drugs. They used their official positions and made use of friendships and other connections they had developed at Sydney International Airport to gather information relevant to their criminal enterprise, and to cover their tracks.
By observing these individuals over an extended period—and, in particular, by not jumping in too early to remove 'bad apples'—the
Operation Heritage/Operation Marca teams were able to form a detailed picture of the whole network, to understand its methods and the vulnerabilities they exploited. ACLEI found that the criminal conspiracy grew out of a combination of circumstances, including an organisational culture that was frankly naïve to key elements of the corruption and infiltration risk environment, notwithstanding the best endeavours efforts of the management team of the day.
Moreover, no single area in the Service had an overview of concerns being raised about individual officers or the networks that they had formed, within their sub-cultures. This situation led to a lack of confidence among staff that wrongdoing would be detected and punished, and allowed poor standards of conduct to flourish.
Operation Heritage uncovered what can happen when officers take advantage of systemic vulnerabilities in a complex operating environment without adequate safeguards, and a hard-edged and honest view of risk.
If this was not a 'burning platform' for change, then nothing ever would be. For the vast silent majority of the Service, who take great pride and honour in their role, these events were a slap in the face, and as Chief Executive Officer for these past two years, they have been my greatest allies in cleaning up the problem.
By late 2012, with a damning picture of the Service splashed over the media, a frustrated workforce demanding answers and protection of their reputation, and the Government determined to act, I had no choice but to tackle this problem head-on. It was the right and necessary thing to do. That meant methodically entrenching integrity measures into every layer of the Service, and to these measures I now turn.
On 15 February 2013 a number of new powers and measures became available to the Chief Executive of Customs and Border Protection. These included the power to undertake integrity testing, as well as drug and alcohol testing, and to issue Chief Executive Officer (CEO) Orders, which have binding legal effect. On that same day, 15 February 2013, I used this power to issue two CEO Orders, on Professional Standards and the Mandatory Reporting of Misconduct.
On 31 July 2013, the Service commenced random as well as targeted drug and alcohol testing following a successful pilot programme conducted from March to May 2013. All officers of the Service will be tested at least once within three years. Some will be tested more than once during that time. I have been tested, has have all of the senior leaders of the Service. It was very important that we set the example and that we continue to do so. As at 31 July 2014, of the 2,522 tests conducted there have been, regrettably, ten verified positive results, which are being dealt with under the APS Code of Conduct.
In April 2013, the Integrity, Security and Assurance Division (ISA Division) was established to bring together the following functions: legal services and General Counsel; integrity and professional standards; and security, risk, internal audit and assurance. The remit of the Integrity and Professional Standards Branch (I&PS) within Division was expanded to directly manage all disciplinary processes undertaken under the provisions of the APS Code of Conduct. This now provides a more integrated approach to managing end-to-end professional conduct in our workplaces – from fighting corruption and criminal infiltration, and dealing with misconduct, through to drawing the attention of local management to issues which require early intervention.
The National Manager of this Branch (SES Band One) is also the Service's Special Integrity Adviser, reporting directly to me. She has complete independence in terms of her remit, and cannot be fettered in the performance of her duties, except by law and my direction.
The Special Integrity Adviser is also the key conduit to ACLEI and is able to recommend the referral of any matter to ACLEI which meets its legislative remit. I should draw specific attention to this relationship with ACLEI – we call it the
Integrity Partnership. Without in any way either of us fettering the ability of the other to perform our respective statutory duties as Chief Executive and Integrity Commissioner, we have built a partnership which is based on comprehensive disclosure and early notification of matters of concern to ACLEI, and subject to ACLEI's lawful directions, active and joint case management of on-going investigations.
By combining protective security with integrity, risk and assurance functions, we have been able to build a stronger security culture through policy and education, which are backed up by technical controls that protect our information holdings regarding traders and travellers, and our partners' intelligence data. Aligning our systems integrity with personal integrity has meant that it is now much more difficult for corrupt officers to use our systems for personal advantage or hide their activities from observation. It also means we are better protected from information handling accidents.
Restrictions on the use of personal mobile and electronic devices have been introduced in operational workplaces to minimise the risk of operationally sensitive information being communicated outside official channels and systems. The level of the restriction is dependent on the security classification of the relevant work areas and additional restrictions depend on the circumstances present in respective work areas.
On 1 November 2013 a strengthened outside employment policy was instituted which identified a range of high-risk secondary employment situations which could potentially compromise officers or create perceived or actual conflicts of interest. Applications for permission to engage in outside employment in the industries outlined under the policy are assessed on a case by-case basis but are generally not approved. Examples of industries captured under the policy include the private security industry and outside employment in any capacity directly associated with the movement of goods, people, vessels or aircraft across the Australian border.
On 15 January 2014 the Public Interest Disclosure Act 2013 (the PID Act) commenced, replacing the procedures and protections for whistleblowing contained in the Public Service Act 1999. The PID Act works alongside the Service's mandatory reporting requirements.
The Service's employment screening model, known as Organisational Suitability Assessments (OSA) is currently being enhanced to make it one of the most comprehensive in the world of customs and border protection agencies, especially when it comes to detecting and dealing with officers with criminal associations. In essence, the OSA is designed to identify whether an individual's behaviour or circumstances:
- conflict with the Service's mission and core values;
- creates a risk to the integrity of Service or the Australian border; and/or
- creates a risk that they may be targeted, cultivated or coerced into engaging in corrupt activity.
I would like to take this opportunity to strongly welcome the Government's renewed emphasis on protective security, in the wake of recent 'insider' disclosures of very sensitive national security information. I especially commend the focus, which was announced by the Attorney-General earlier today in his keynote speech, on moving to through-life suitability assessments, as distinct from point-in-time security vetting. This is something upon which we have already embarked.
In line with these integrity measures, the Service has introduced a declarable associations policy that requires all officers to avoid, or where that is not possible, mitigate, the integrity risks associated with contact with individuals, groups or activities that present a conflict of interest to the Service's mission. Officers must report these associations as soon as they become aware that they exist. This includes when they become aware that other officers are or may be engaging in a possible declarable association.
In December 2013 Taskforce Pharos was established within I&PS Branch to identify any officers currently working in the Service who pose a significant risk to the integrity or mission of the Service as a result of their on-duty or off-duty behaviour, their associations outside the workplace or their involvement in criminal activities. Officers in the Taskforce work closely with ACLEI, the AFP and the Australian Crime Commission to ensure that ACBPS and its officers continue to be protected from the ongoing threat of corruption. As a lead-generating intelligence activity, using the latest analytics techniques, the Taskforce is focussing on four key priorities: criminal infiltration; criminal associations; drug use and associated activities; and inappropriate use of our information systems.
Regrettably, the deep dive that Task Force Pharos has been able to conduct has confirmed to me that managing integrity risks is an on-going challenge, especially in this day and age when it is apparently 'cool' to associate with gang members and known criminals. A handful of our officers apparently think that they can lie low, after the adverse publicity of recent years, and wait until the heat passes. Well, the heat is not going to go away, as some of these officers have discovered in recent times.
On the more positive side, the Service has also developed a set of Core Behaviours to support the process of cultural change within the Service. These behaviours are based on the APS ICARE model – which is to say we strive for a public service which is Impartial, Committed to Service, Accountable, Respectful and Ethical. The values and behaviours constitute a body of norms that bind us and show that, no matter what level an officer is or which area they work in, there are fundamental common cultural settings that bind all officers in the way they approach their work, and perform their duties.
To further build organisational integrity, the Service is building a culture of transparent decision making which has clear lines of accountability and responsibility within a strong governance framework. This includes revitalising our approach to risk management and generating a better understanding of overall compliance and management oversight needs. By critically examining the effectiveness of control frameworks, we are able to generate improvements in efficiency, support resource allocation decisions and feed into the planning processes to allow the Executive enhanced visibility over emerging risks. This includes integrity risks.
Under the Service's Reform Programme, which was launched in July 2013, we are changing our operating model such that, amongst other things, our officers do not become 'trapped' in the local sub-cultures and work teams of which I spoke earlier. We have introduced a command model, benefitting a disciplined service, and commanders are being held to account for the performance and conduct of their teams. These reforms will be consolidated and extended when the Australian Border Force is established on 1st July 2015, as announced by the Minister for Immigration and Border Protection in May 2014. That is, however, a matter for another day and another speech.
As we all know, corruptibility forms part of the human condition. I doubt very much that it is genetically coded and susceptible to biological analysis. It is a social phenomenon. Our past experiences, personality and associations can all influence our corruptibility. While it is likely to be the case that we all work with mostly honest people, it is naive to think that at some point, or in some circumstance, some of our co-workers won't cross the line.
You can have put in place all the rules and regulations under the sun, but the most fundamental observation that I would make, based on recent real-world experience, is the vital need to create a positive and robust environment through leadership, staff engagement, training, and critically, a conscious culture of calling out misconduct and rewarding the behaviours that make us proud to serve.
In other words, the integrity challenge faced by the Service required more than the establishment of standards and rules. It could only occur on a platform of cultural change and we are zealously committed to embedding an enduring culture of integrity.
I trust that these observations of the recent history of integrity issues in the Australian Customs and Border Protection Service are of interest and perhaps even value to those who might read these remarks.
Thank you for your interest and attention.
