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General matters

• Ministerial and AIC leadership changes
• Liaison and Outreach
• Review of Part D of the Protective Security Manual
• Staff Surveys

The Australian Intelligence Community (AIC) continued to grow in size and complexity during the reporting period, and its range of interests and activities has also continued to expand. As a consequence of this continuing growth my office has increased in size and the range of inspection and review activities which we undertake has also expanded.

Global security environment

Australia’s place in the world, as a developed middle-ranking liberal democracy situated on the Asia-Pacific rim, is by its nature complex and challenging.

The global nature of commerce and trade, the participation of significant numbers of Australians in international labour markets, the propensity of Australians to travel far and wide and the global reach of some threats, means that Australia’s national interests cannot be narrowly limited to events occurring in or adjacent to Australian territory.

Against this background traditional or simple notions of state-based threats to Australia’s immediate and broader strategic interests have become increasingly outmoded, as new threats emerge and a variety of new non-state players enter upon the stage.

An example of the convergence of these complex and interwoven strands and Australia’s response to this changing dynamic can be found in the presence of the Australian Defence Force (ADF) in various international theatres, but most especially in Afghanistan.

Another example can be found in the coordinated terror attacks which took place in Mumbai, India in late November 2008, in which two Australians were among the 164 innocent victims who were killed. This atrocity prompted Australia to offer whatever immediate practical assistance it could.

The effect of conflict in far away places such as Afghanistan, Pakistan, Iraq, Somalia and Sri Lanka has also been felt in Australia, as increasing numbers of refugees and asylum seekers look to this country as a place of sanctuary where they might begin a new life.

Another dimension comes from the degree of technological change and interlinking in the current era. As a result of our embrace of these technologies, for everything from social networking, to conducting business, to managing the affairs of state, the possibility of a cyber attack on our defence, governmental, commercial and infrastructure related information networks, becomes both more worrying and more likely.

Key intelligence and security interests

Given the interweaving of domestic and international affairs, it follows that the focus of the AIC agencies in the period covered by this report was necessarily directed towards a variety of targets and interests.

While I am not in a position to detail Australia’s intelligence priorities, in a general sense it can be
said that these interests include:

• the provision of accurate and timely advice to key decision makers, so that they might respond in an informed way to emerging and enduring issues of concern
• the early detection of threats to the interests of Australians at home and abroad
• the countering of activities which are judged to pose a serious threat to Australia’s national interests, where it is possible and desirable to do so
• the provision of support to various ADF deployments overseas
• the sharing of information with AIC and non-AIC agencies, in order to gain a better appreciation of potential threats, and to enhance regional and global security cooperation, and
• sharing skills and building capability within our region to deal more effectively with new and emerging threats to Australia’s defence, economic, foreign relations and security interests.

Defence and security related review activities

In my previous annual report I made reference to the Review of Homeland and Border Security which was undertaken in the second half of 2007-08, by the eminent public servant and recently retired Secretary of the Department of Defence, Mr Ric Smith AO PSM. [1]

Mr Smith’s report, which was delivered to the Government on 27 June 2008, offered an overview of the threats, risks and hazards which Australia confronts in the area of homeland and border security, explored the adequacy or otherwise of existing mechanisms for handling these challenges, and put forward a series of recommendations to facilitate change.

The Government formally incorporated its response to Mr Smith’s recommendations in its inaugural National Security Statement, which was delivered to Parliament by the Prime Minister, the Hon Kevin Rudd MP, on 4 December 2008.[2]

In that response, the Prime Minister accepted the view of Mr Smith that the creation of a Department of Homeland Security was not the right model for Australia but better coordination of existing agencies and cooperative arrangements was needed.

In order to facilitate this necessary change the Government announced the creation of the new position of National Security Adviser (NSA).

The Government announced, via its National Security Statement, that the role of the NSA would be, among other things, to provide improved strategic direction within the national security community; support whole-of-government national security policy development and crisis response; and provide a cohesive national security structure.

The Prime Minister announced the appointment of Mr Duncan Lewis AO, DSC, CSC, as the inaugural NSA, on 4 December 2008.[3] As NSA Mr Lewis holds a position of Associate Secretary within the Department of the Prime Minister and Cabinet (PMC).

On 22 February 2008 (i.e. the same day that the commencement of the Smith Review was publicly announced), the then Minister for Defence, the Hon Joel Fitzgibbon MP, announced the commissioning of a new Defence White Paper, to serve as a planning document for future Defence capabilities.[4]

Work on the Defence White Paper was conducted throughout 2008 and the early part of 2009, and involved a re-examination of Defence strategy, capabilities, business processes and resources.

As three of the six AIC agencies are located within the Department of Defence, the preparation and publication of a new Defence White Paper is naturally of significant interest to those agencies and, by extension, my office.

The Defence White Paper was released on 2 May 2009 and is available via the Defence website.[5]

While the White Paper does not exclusively focus on the Defence intelligence and security agencies, the strategic directions contained in it will necessarily shape the environment in which those agencies and other members of the AIC conduct their business.

Continuing growth of the AIC

In the more than five years I have served as Inspector-General, the AIC has experienced a significant increase in size. This growth has occurred as a consequence of

• the implementation of recommendations contained in various reviews of the AIC agencies which were commissioned in response to changing circumstances, and
• the acceptance by government of a variety of new policy and planning proposals put forward by the AIC agencies to enhance their capability to respond to a changing security environment.

I believe that in general the AIC agencies have done well to cope with the pressures which have resulted from the significant growth which they have experienced in recent years.

Consequential growth of OIGIS

When I began as Inspector-General in March 2004 the office comprised myself and four staff.

Once I had settled into the position and after a period of reflection, I sought budget supplementation to increase the size of this office. My decision to do so was justified on the grounds that the AIC agencies were growing significantly and being afforded increased powers, and that the role of the IGIS was also expanding as new monitoring tasks were assigned to this office.

In the intervening period the growth of this office has been measured, with a view to increasing staff numbers in rough lockstep with the growth of the AIC agencies which we oversee.

In 2005-06 the office comprised myself and six staff. As at 30 June 2008, the office comprised myself and nine staff, while on 30 June 2009, OIGIS consisted of myself and 12 staff.

Staff selection exercises conducted during 2008-09 saw the recruitment of four persons, each of whom have brought with them a range of new skills and talents which I believe greatly enhance the work of this office.

This recruitment activity represents the largest single influx of new starters to the office for at least 15 years.

The additional number of staff has enabled me to largely maintain our inspection program when major inquiries have been undertaken, and also provided me with the flexibility to conduct more in-depth inspection activities as well as to commence some new projects.

Further details about the resources of the office are provided in the ‘Management and Accountability’ chapter of this report.

Acting IGIS arrangement

The then Prime Minister, the Hon Mr John Howard AC, issued an instrument of appointment to Prof John McMillan on 28 May 2007, which authorises Prof McMillan to serve as the Acting Inspector-General of Intelligence and Security whenever I am outside of the country, on an extended period of approved leave, or if I were to be unexpectedly incapacitated.

The above instrument, which has continuing effect, was issued to Prof McMillan in a personal capacity rather as a result of his current appointment as the Commonwealth Ombudsman.

Prof McMillan served as Acting Inspector-General for approximately three weeks during July-August 2008.

I am most grateful to Prof McMillan for his willingness to serve as the Acting Inspector-General, and for the on-going wise counsel and general support which he provides to me.

Ministerial and AIC leadership changes

Ministerial changes

The first Rudd Government ministry was sworn in to office on 3 December 2007 and remained largely unchanged until the resignation of the Hon Joel Fitzgibbon MP, as Minister for Defence, on 4 June 2009. As a consequence of Mr Fitzgibbon’s resignation, the Prime Minister made a number of changes to the ministry and the new ministry was sworn in to office on 9 June 2009.

Those ministerial changes which had a direct impact upon the management and governance of the AIC agencies were the appointment of the then Special Minister of State and Cabinet Secretary, Senator the Hon John Faulkner, as the new Minister for Defence, and the appointment of Senator the Hon Joe Ludwig to replace Senator Faulkner as Special Minister of State and Cabinet Secretary.

As Minister for Defence Senator Faulkner has executive responsibility for the three Defence intelligence agencies, namely DIGO, DIO and DSD.

As Special Minister of State and Cabinet Secretary, Senator Ludwig has portfolio responsibility, among his other duties, for the Government’s integrity agencies, namely the ANAO, the Commonwealth Ombudsman, the National Archives of Australia, the Australian Public Service Commission, and this office.

Senior AIC leadership changes

2008-09 saw a significant turnover of persons in senior leadership positions within the AIC.

This turnover was the result of a mixture of statutory terms of appointment coming to their conclusion, retirements coming into effect, the creation of new overarching management and coordination structures, and consequential vacancies resulting from the above.

AIC agency head changes

In addition to the appointment of Mr Lewis as NSA, changes were made, or foreshadowed, to four of the six senior most leadership positions in the AIC.

The first of these changes occurred on 16 January 2009, when Major-General Maurie McNarn AO retired as the Director DIO, after nearly four years service in that position, and was replaced by Major-General Richard Wilson AO.

On 25 February 2009, the Attorney-General, the Hon Robert McClelland MP, announced that the Director-General of ASIS, Mr David Irvine AO, was to be appointed Director-General of Security (i.e. the Head of ASIO), with effect from late March 2009.[6]

On the same day as the above announcement, the Minister for Foreign Affairs, the Hon Stephen Smith MP, announced that the incumbent Director-General of Security, Mr Paul O’Sullivan, had been appointed to the position of Australian High Commissioner to New Zealand.[7]

In making the above announcement, Mr Smith also announced that Mr Steven Robinson, a long-standing senior officer in the Foreign Affairs portfolio, would serve as Acting Director-General of ASIS from 27 March 2009, pending a decision by the Government on the appointment of a new Director-General of ASIS.[8] Mr Robinson continued to serve as Acting Director-General of ASIS as at 30 June 2009.

On 14 April 2009, the Prime Minister, the Hon Kevin Rudd MP, announced the appointment of Mr Allan Gyngell AO as Director-General of ONA, with effect from 13 July 2009.[9]

Mr Gyngell replaces Mr Peter Varghese, who upon completing his five-year term as Director-General of ONA, has been appointed to be Australia’s High Commissioner to India.[10]

Significant review activities

In 2008-09 my office either had a direct involvement in, or monitored, a number of reviews or issues of public interest or significance.

There were three parliamentary inquiries to which I made a written submission and gave oral evidence. These concerned:

• the requirement for Commonwealth agencies of all sizes to give up a fixed proportion of their annual budget allocation in the form of an efficiency dividend – further details of this are provided in the ‘Management and Accountability’ chapter of this report
• whistleblowing arrangements in the Commonwealth public sector – further details of this are provided in the ‘Parliament and Legislation’ chapter of this report, and
• the concept of an independent reviewer of terrorism laws – this is also covered in the ‘Parliament and Legislation’ chapter of this report.

In addition to contributing to the parliamentary inquiries referred to above, I also contributed in various ways to other formal reviews of matters of interest to this office.

The Australian Law Reform Commission (ALRC) is currently conducting two reviews which fall into this category, namely:

• a review of Commonwealth secrecy laws[11], and
• a review of the Royal Commissions Act 1902 and related matters.[12]

Further detail about these inquiries is provided in the ‘Parliament and Legislation’ chapter of this report.

Another important government initiated review in which I had an interest was that which was conducted by the Hon John Clarke QC, into the circumstances of the arrest of Dr Mohamed Haneef at Brisbane Airport, on 2 July 2007, on suspicion of various terrorism-related activities, and his ultimate voluntary departure from Australia.

In addition to the intense public interest generated by this matter and the role played in it by various government agencies, I had a particular interest in Mr Clarke’s inquiry, as I had initiated an administrative review of ASIO records in respect of Dr Haneef in December 2007.

I met with Mr Clarke in September 2008 to discuss the findings of my administrative review, as well as a range of other matters which were relevant to the terms of reference of his inquiry. Mr Clarke presented the report of his inquiry to the Attorney-General on 21 November 2008.

It is impossible to compress the totality of Mr Clarke’s findings into a few short words. For those readers who wish to read the report, a copy of it is available on the Clarke inquiry website.[13]

Nonetheless, it is appropriate for me to directly quote some of Mr Clarke’s more pertinent observations on the role played by ASIO in this affair, and with respect to my office.

'The consistent advice ASIO provided to government in oral and written form was that the organisation had insufficient information to issue an adverse security assessment on Dr Haneef and had not identified credible information to suggest that he had foreknowledge of or involvement in the UK attacks.”[14]

“In conducting its investigation, ASIO did not question or detain Dr Haneef. Its officers did not participate in and were not present during the interviews with Dr Haneef. Nor was ASIO involved in or consulted about the decision to arrest Dr Haneef on 2 July 2007, the decision to keep him in detention pending charges (although the AFP used some information provided by ASIO for that purpose) or the decision to charge him.”[15]

“The inquiry endorses the Inspector-General’s assessment of the ASIO investigation of Dr Haneef. ASIO maintained comprehensive contemporaneous records of its activities and assessments and sought to engage in frequent communication with other agencies, particularly the AFP. It also regularly communicated (both orally and in writing) to government its assessment of Dr Haneef’s relevance to security. As Mr Carnell commented to the Inquiry, ASIO ‘showed good moral courage in expressing its views’.” [16]

In his final report, Mr Clarke made 10 recommendations aimed at improving the operation of relevant legislation and promoting better cooperation and information sharing between government departments and agencies in their handling of counter-terrorism related matters. Those recommendations which Mr Clarke made that are of most direct interest and relevance to this office are 1 and 4.

Recommendation 1 proposed that the Government consider means by which it could provide more flexibility in how inquiries and investigations involving matters of national security are conducted.

Recommendation 4 proposed that consideration be given to creating a new position of an independent reviewer of Commonwealth counter-terrorism laws.

The Attorney-General formally responded to Mr Clarke’s report, on behalf of the Government, on 23 December 2008.[17]

In that response and in an associated media release, the Attorney-General indicated that the Government had accepted, and was committed to implementing, all of Mr Clarke’s recommendations. [18]

In response to recommendation 1, the Attorney-General indicated that, among other actions, the Government would extend the mandate of this office to enable the IGIS, with the approval of the Prime Minister, to conduct an inquiry under the IGIS Act into intelligence and security issues in Commonwealth departments and agencies which extend beyond, or are outside of, the six AIC agencies. The formal Government response states that:

“The extension of the IGIS’s mandate would also facilitate the IGIS conducting certain inquiries similar to the Clarke Inquiry, and would provide a further option to Government in establishing an inquiry structure that is appropriate to the circumstances of particular cases where the scope of an inquiry predominantly concerns national security.” [19]

In response to recommendation 4, the Government response noted that it mirrored a recommendation made by the PJCIS, that the Government appoint an independent person of high standing as an Independent Reviewer of terrorism law in Australia.[20]

The Attorney-General stated in the Government response to the Clarke and PJCIS recommendations that:

“The Government supports the development of a framework for the regular reviewing of the counter-terrorism legislation through the establishment of a new statutory office in the Prime Minister’s Portfolio, to be known as the National Security Legislation Monitor, reporting to Parliament.” [21]

The Government has subsequently introduced legislation to establish the position of a National Security Legislation Monitor. This is dealt with, in more detail, in the ‘Parliament and Legislation’ chapter of this report.

Terrorism related prosecutions

The Commonwealth also conducted a number of terrorism related prosecutions during 2008-09, in which ASIO had an interest.

The most high profile of these cases was the prosecution of Mr Abdul Nacer Benbrika and eleven other persons linked to him.

Mr Benbrika was charged under the Criminal Code Act 1995 with being a member of a terrorist organisation, directing the activities of a terrorist organisation, and possessing a thing connected with the preparation for a terrorist act.

Mr Benbrika’s co-accused were each charged with similar (but not identical) terrorism related offences that were also contained in the Criminal Code Act 1995.

These matters were tried in the Victorian Supreme Court between February and August 2008, and involved a number of ASIO witnesses being called to give evidence.

On 15 and 16 September 2008 the jury in this matter delivered guilty verdicts against seven of those who had been charged including Mr Benbrika, not guilty verdicts in relation to four of the defendants, and was unable to reach a verdict in relation to the charge made out against one person.

On 3 February 2009 Justice Bernard Bongiorno of the Victorian Supreme Court sentenced Mr Benbrika to 15 years jail with a non-parole period of 12 years. The six other persons who were found guilty received sentences ranging between four and half to seven and a half years imprisonment.

I should note that six of the people have now appealed both their conviction and sentence, and one person has appealed their sentence.

In another significant case Mr Belal Khazaal was tried in the Supreme Court of New South Wales, in August 2008, on two charges of acting contrary to the Criminal Code Act 1995. These charges related to the alleged production and publication by Mr Khazaal of a document entitled ‘Provisions on the Rules of Jihad – short judicial rulings and organisational instructions for fighters and mujahideen against infidels’.

On 10 September 2008 the jury in the above matter found Mr Khazaal to be guilty of intentionally making a document in connection with the preparation for a terrorist act contrary to section 101.5 of the Criminal Code Act 1995.

After a period of further consideration the jury was unable to reach a verdict with respect to a second charge, namely, that Mr Khazaal had attempted to incite others to commit the offence of engaging in a terrorist act. Mr Khazaal has been released on strict bail conditions pending sentencing for the offence for which he was found guilty. It is not yet known whether an appeal will be made.

The trial began in the New South Wales Supreme Court, on 11 November 2008, of several persons who have been charged with one count of conspiring to do acts in preparation for a terrorist act contrary to sections 11.5 and 101.6 of the Criminal Code Act 1995.[22] This matter was still on-going at the conclusion of the reporting period.

Liaison and Outreach

IIRAC

The Hon Arch Bevis MP (Chair of the PJCIS), Mr Mark Dreyfus QC MP and I attended the sixth International Intelligence Review Agencies Conference (IIRAC) in Auckland, New Zealand in October 2008.

An IIRAC has been held approximately every two years since the inaugural gathering in Canberra in October 1997, rotating between the six nations which attended the first meeting (i.e. Australia, Canada, New Zealand, South Africa, United Kingdom and United States of America).

In addition to the core group of six countries, participants at succeeding IIRAC have been drawn from a variety of other countries, at the invitation of the host nation.

The most recent conference provided a valuable opportunity to consider the various purposes served by review agencies, how best to approach the task of review and to mange our respective relationships with the agencies we review and the public.

I wish to sincerely thank the host of the conference, the Hon Paul Neazor CNZM (the Inspector-General of Intelligence and Security for New Zealand) for leading a most interesting and thought provoking conference.

I would also like to recognise the hard work of Mr Neazor’s staff in ensuring the success of the conference and the very significant contribution made by my office manager Ms Jodie Williams, who supplemented Mr Neazor’s team immediately before and during the conference.

Following the above conference, I was very pleased to host delegations from South Africa and the United Kingdom in Canberra.

I met with both delegations on 10 October 2008 and found that the discussions were a useful continuation of the earlier discussions at the conference itself.

An important outcome from successive IIRACs is the forging of relationships with colleagues. Since this conference the NZ IGIS and I have both undertaken review work in connection with the policy and procedures for handling intelligence information on currently serving parliamentarians.

Australia will be hosting the next IIRAC in 2010. My counterparts in New Zealand and Canada will join me on the steering committee planning for the next conference.

On a very sad note, as I was preparing this report I learnt of the death of one of my international colleagues and an active voice in the IIRAC, The Hon Charles D. Gonthier CC QC.

Following an eminent legal career which was capped by his service as a Justice of the Canadian Supreme Court between 1989-2003, Mr Gonthier served as Commissioner for the Communication Security Establishment (the Canadian counterpart of DSD) between 2006 and 2009. He will certainly be missed at the next IIRAC.

International Liaison

In addition to the IIRAC, in 2008-09 I also met with:

• members of the United States Senate Select Committee on Intelligence, in Canberra, on 9 December 2008.
• the Canadian Executive Director of International Assessment Staff, in Canberra, on 21 May 2009.
• a delegation from the Japanese Ministry of Foreign Affairs, in Canberra, on 30 May 2009, and
• the UK Independent Reviewer of Terrorism Legislation – The Rt Hon The Lord Carlile of Berriew QC, in Canberra, on 15 June 2009.

Training

I regard it as essential for new starters and existing staff throughout the AIC to have at least a general knowledge of the role and functions of my office, and the range of activities undertaken.

During 2008-09 my staff and I made 44 presentations to a total of approximately 1500 AIC staff.

The presentations are tailored to each agency or audience but often cover some or all of the history and activities of this office, the importance of agencies acting in accordance with the law and staff acting in an ethical manner and the need for the agencies to maintain public confidence by using their special powers and capabilities judiciously and professionally.

In addition to delivering presentations on the role and functions of OIGIS, members of my staff and I have, as has been the case in previous years, also attended several agency training courses either as participants or observers.

Other speaking engagements

Notwithstanding the fact that OIGIS is one of the smallest budget-funded Commonwealth agencies I still take what opportunities I can to meet community groups and others to promote a better and more widespread understanding of the activities of this office.

To this end, during 2008-09 I spoke at a number of conferences and forums including:

• Police Executive Leadership Program in Sydney (16 September 2008)
• Supreme and Federal Courts Judges' Conference 2009 in Hobart (26 January 2009)
• Graduate Studies in Strategic Defence, Australian National University (12 March 2009), and
• Australian Institute of Administrative Law in Canberra (15 May 2009).

Website

I am pleased to report that a redesigned website for my office was launched with effect from 2 March 2009. The website now contains more information, is better structured and includes the facility for people to lodge complaints to my office online.

The accessibility of the website has been reviewed by Vision Australia. I can confirm that the website conforms to the requirements of the Web Content Accessibility Guidelines 2.0.[23]

I am grateful to staff of PMC and my own staff, especially Mr James Burke, for successfully completing this project after a period of much labour.

Review of Part D of the Protective Security Manual

In the previous reporting period the Protective Security Policy Committee (PSPC) initiated a review of Part D of the Protective Security Manual. The PSM provides standards, procedures and guidance in relation to personnel security practices across the Commonwealth.

The review was initiated as a part of the PSPC’s rolling program of review. In the previous reporting period I accepted an invitation to contribute to the review.

The review took place in the first half of the reporting period and my office also made a contribution to the follow-on development of a Practitioner’s Guide.

Staff Surveys

In recent years I have sought and received copies of AIC agencies staff surveys. In seeking these surveys my purpose is to understand staff perceptions on specific issues such as security or analytic integrity and independence.

It is not the case that I have an interest in all of the elements of the agencies’ staff surveys. However, I do have a general enduring interest in the views of AIC staff across a range of issues. I regard it as important for the Inspector-General to have a sound general appreciation of the issues that concern AIC staff and the areas those staff identify as requiring improvement or change. This appreciation feeds into my general sense of how the AIC is performing in areas relevant to my office.

In considering a range of surveys, I have found that there are a sub-set of questions in each survey that are of interest to my office. I intend seeking ongoing access to AIC agency staff surveys as a ready means gauging staff views on those issues of legitimate concern to my office.

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