FAILURE by customs officers using X-ray equipment to detect drugs hidden in shipping containers at Sydney's port was treated as a ''training deficiency'' and not referred to the agency's specialist investigation unit, a report has found.
The Australian Commission for Law Enforcement Integrity investigated the failure by customs officials as well as allegations that senior managers, including the agency's former chief executive, Michael Carmody, sought to cover it up.
Fairfax Media has obtained a September report by a law enforcement integrity commissioner, Philip Moss, which clears Mr Carmody and other senior customs managers of wrongdoing. But he identified shortcomings in the agency's anti-corruption procedures.
Mr Moss, whose investigation was triggered by an anonymous complainant, found that customs officers using X-ray equipment had failed to detect drugs in 11 shipping containers between March and August last year.
The failure was discovered after police gave customs managers information that caused them to review copies of the X-rays.
Mr Moss said the matter was initially treated by customs as a training deficiency. Although some senior customs officers raised the possibility of corruption, the agency's Integrity and Professional Standards Branch was not consulted on how the matter should be dealt with.
Mr Moss said Mr Carmody had been on leave when much of this occurred and only became aware of the failure after it had already been treated as a training problem.
He found Mr Carmody notified the Australian Commission for Law Enforcement Integrity of the failure to detect the drugs and raised the matter with his agency's specialist investigation branch.
Mr Moss had no evidence to suggest corrupt conduct led to the failure to notice the drugs.
In response to questions from Fairfax Media, acting customs chief executive Michael Pezzullo said the agency's policies had been tightened to ensure all failures to identify drugs and other contraband are reported to the Integrity and Professional Standards Branch.
''Our systems need to be continually enhanced and improved such that they can pick up the warning signs and allow resolute action to be taken as required. We need to pick up the warning signs and act on them,'' Mr Pezzullo said.
He praised his predecessor, Mr Carmody, for driving integrity reforms in customs.
Mr Moss also found no evidence to support the suggestion customs staff who tried to raise corruption issues had been disadvantaged in their employment.
But he received statements from ''a number of affected witnesses [who] expressed frustration with a culture that, in their respective views, had insufficient appreciation of corruption risk''.
Appearing before a joint parliamentary committee this month, Mr Moss referred to the ''real and present threat to Australian law enforcement that organised crime poses, particularly at Australia's borders''.
The ACLEI, which oversees integrity in the Australian Federal Police and the Australian Crime Commission, was given responsibility for customs in January last year.
''Our focus has been on customs. There is no question that it continues at the present time and will for the foreseeable future. It is just that the vulnerabilities at the border in an environment in which Customs and Border Protection works are so high,'' Mr Moss told the committee.
Mr Carmody could not be contacted for comment.