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AFP raids expose Customs scandal

In September last year, the Australian Federal Police swooped on an illegal tobacco smuggling syndicate, Nick McKenzie reports.

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AN ENTRENCHED network of allegedly corrupt customs officers at Sydney Airport has been importing drugs with organised crime figures for several years in one of Australia's most serious corruption scandals.

At least 15 officials in Sydney Airport border security posts are suspected of involvement in serious misconduct or corruption, ranging from criminal association and leaking information to drug trafficking, drug manufacturing, money laundering and bribery. The number may be as high as 20.

A six-month Fairfax Media investigation - done with the ABC's 7.30 program - can reveal that the cell has been exploiting major gaps in airport and customs security to regularly smuggle millions of dollars worth of narcotics and drug money past border controls and on to Australian streets.

Customs.

Corrupt airport baggage handlers are also allegedly involved. The allegedly corrupt cell has been operating since at least 2009 from the international passenger terminal and freight section and is suspected to have imported pseudoephedrine, cocaine, steroids and possibly weapons.

Property, court and business records, social media sites and multiple well-placed sources link members of the allegedly corrupt customs cell to Sydney-based crime figures, including underworld boss Alex "Little Al" Taouil, drug traffickers Joseph Harb and Diego Refojos and members of the Comanchero outlaw bikie gang and Middle Eastern crime groups.

The scandal is regarded as so serious because of the scale of the alleged corruption and the failure of the Customs Service - which was led until August by career public servant Michael Carmody - to read multiple warning signs that the organisation was badly exposed to corruption.

Diego Refojos ... recently pleaded guilty in the NSW District Court to serious drug offences.

Diego Refojos ... recently pleaded guilty in the NSW District Court to serious drug offences.

The customs agency has employed officers with criminal associations and allowed relatively junior officers to wield significant influence over other staff by having the power to manage rosters.

Leaked customs documents dating back to 2007 detail multiple internal warnings that customs lacked the power, resources and ability to detect corruption and that its anti-corruption framework was "outdated and requires revision".

In response to questions sent to customs on Monday, acting customs CEO Mike Pezzullo stressed that the agency had already made major improvements to its corruption-busting system.

Airport customs officer  ... Adrian Paul Lamella.

Airport customs officer ... Adrian Paul Lamella.

But Mr Pezzullo conceded ''more needs to be done'' and revealed he would ''take all necessary action'', including the launching of an agency-wide review of ''workplace culture, management and leadership … to ensure the integrity of our workplace''.

He also said that while customs' ''internal oversight systems'' had helped to identify corruption risks at Sydney Airport in 2011, ''clearly more can be done''.

Fairfax and the ABC have traced drugs seized last March by the NSW police drug squad in an apartment in the Sydney suburb of Woolooware to one of several drug consignments allegedly smuggled past border controls by customs officials at Sydney Airport.

Diego Refojos, 24, recently pleaded guilty in the NSW District Court to serious drug offences connected to the Woolooware raid. It is believed Refojos was linked to several earlier drug importations that have never been recovered by authorities.

It is understood that two allegedly corrupt customs officials were at the Woolooware apartment before the raid, but left before the drug squad arrived.

A small number of customs officers are also suspected to have helped make drugs out of the pre-cursor chemicals they allegedly smuggled into the country.

One of the alleged key players in the cell is airport customs officer Adrian Paul Lamella.

Lamella retained his job at customs despite NSW police alleging in 2008 that they discovered him in a car with two other men and five small bags stamped with Playboy bunny logos and filled with cocaine.

Also, Lamella's customs position and security clearance were not affected when Lamella later admitted using a small amount of cocaine.

Property records also show that in 2010 Joseph Harb transferred his share in a Sydney apartment to Lamella. Harb was arrested in August by federal police and charged with smuggling drugs through Sydney Airport.

For several months Fairfax and the ABC have delayed releasing details of the ''customs in crisis'' inquiry at the request of a joint anti-corruption taskforce, codenamed Marca, run by the Australian Commission for Law Enforcement Integrity (ACLEI) and the Australian Federal Police.

ACLEI and the federal police have refused to provide any detailed comments about Marca because it is an ongoing inquiry, although ACLEI confirmed it was investigating ''corrupt conduct in border environments''.

Court records reveal that taskforce Marca arrested Lamella in Sydney earlier this week and charged him with drug trafficking and bribery.

In August, another customs officer, Paul Katralis, was arrested and charged by Taskforce Marca with drug trafficking and bribery.

But several other allegedly corrupt customs agents at Sydney Airport, including officers with strong links to drug traffickers, are still working for the agency. Broader ethical and integrity failings in customs are not being investigated by Marca.

The revelations will put intense pressure on the federal government to explain why suspected corrupt officers are still working and why there are still gaping holes in airport border security, despite multiple warnings from police and official inquiries, including the 2005 Wheeler report into security problems at Sydney Airport.

While up to 20 customs officers are suspected to have engaged in a range of serious misbehaviour, it's understood a core group of up to 10 customs officers are believed to be responsible for drug trafficking.

A range of well placed sources, including figures at the airport, told Fairfax that their activities include:

Allowing drug-filled backpacks and luggage to pass freely through customs controls;

Allowing drug money to be smuggled through the airport and out of Australia to fund the resupply of drugs to be smuggled back through the airport;

Manipulating staff rosters and using CCTV black spots to allow corrupt activity, including drug trafficking, to go undetected.

A high-level internal customs memo from November 2007 warned that customs' internal affairs unit had ''insufficient case management resources and capability'' and despite calls for anti-corruption reforms ''no action has been taken at this time''.

In 2007, 2008 and 2009, internal memos called for better anti-corruption intelligence gathering, drug and alcohol testing and ''the mandatory reporting of fraud, corruption, serious misconduct and administrative breaches''.

Customs only began introducing many of these reforms this year - and some won't be in place until next year - although in 2011, the agency fell under the jurisdiction of the anti-corruption agency ACLEI.

Mr Carmody resigned from customs in August, after the arrest of Paul Katralis.

The customs anti-corruption reform process has been expedited by the Home Affairs Minister, Jason Clare, who is believed to have been briefed on Taskforce Marca's work this year and raised concerns at customs' failure to have adequate anti-corruption measures in place.

Even the simplest of the changes called for in late 2007 - the renaming of the Internal Affairs Unit - took more than two years to implement.