As Bally grabbed the lion’s share of the American poker machine market during the 1960s, its links to American gangsters became known to authorities there. The company was described in police intelligence as ‘mafia controlled’.19 One of its leaders, Joseph ‘Doc’ Stacher, was ‘one of America’s most powerful gangsters’.20 Gerardo Catena, a big investor in Bally, was described as a commanding gangland figure.21 In fact, Catena was said to be the controlling influence behind the company.22

  Given these links, it was extraordinary that Bally could set up Australian operations. And it wasn’t only looking at selling poker machines – it was also seeking to extort clubs and harvest their lucrative profits. It intended to bring US funds into the country and offer secret commissions to club officials to induce them to use Bally-made machines. It sought to displace Ainsworth’s Aristocrat Leisure from its own patch. Ainsworth complained about the tactics.23 Bally was part of a new style of US mafia operations: running legitimate businesses while employing criminal methods to extract money.

  Bally employed intimidatory tactics to get a foot into the New South Wales clubs poker machine market. Years later, crime journalist Tony Reeves recalled the climate of fear that pervaded the clubs industry. He was in contact with club managers, many of whom were ‘very scared at what they were seeing … scared that club secretaries were being corrupted by huge secret commissions to install Bally machines. Frightened people would meet me secretly, on park benches or little out-of-town cafes.’24

  Out in Sydney’s underworld

  While Bally was laying the groundwork for a mafia infiltration of Australia, local crime figures began a racketeering business around clubs. The main instigator was Lennie McPherson, who employed a band of young thugs – ‘godsons’ – to do the dirty work.25 Police obtained reports that McPherson was intimidating clubs by acting as a standover man and skimming money from officials. However, police lacked the direct evidence necessary to charge him – and, of course, he’d developed his own system of police protection.

  In July 1972, the press seized upon the issue of underworld figures infiltrating clubs. Two journalists, Tony Reeves and Bob Bottom, together broke the story of Testa’s visit and his invitation to be wined and dined by Sydney’s underworld tsars. Bottom, who in the 1970s and ’80s became Australia’s most indefatigable journalist exposing the burgeoning organised crime industry, followed up with a story headlined ‘Crims grab clubs’. Bottom found that criminals had gained control of four clubs, and that Lennie McPherson was the principal organiser.26

  Along with fellow crime reporters Reeves, David Hickie and Evan Whitton, Bottom believed that crime and corruption in New South Wales, including within the police force, was more organised and more connected to politicians than had been previously acknowledged.27 These connections were also teased out by academic Alfred McCoy in his pioneering 1980 book, Drug Traffic: Narcotics and Organized Crime in Australia.

  A fraught police inquiry

  Following press revelations about the involvement of organised crime syndicates in clubs, the New South Wales police established an inquiry. It would prove a pivotal development, as the months-long investigation opened a Pandora’s box of police ineptitude, lies and potential corruption.

  The task of leading the investigation was given to the head of the Consorting Squad, Detective Inspector Jack McNeill. Although he’d had a long and distinguished record of service, he was a deeply flawed character. A cop of the old school, he liked to hitch his gun into his holster each morning and head off into Sydney’s mean streets rather than sit back and analyse police intelligence. A strict and dictatorial leader, he was guided by his intuition. In short, he was a law unto himself. But McNeill had another strike against his capacity to lead a thorough, independent inquiry: he was immersed in the culture of the New South Wales police, which ridiculed the idea that US gangsters had infiltrated the state.

  McNeill mightn’t have thought too much about the threat posed by the American mafia, but he was keenly aware of the dangers posed by Lennie McPherson. In fact, he was frightened of the prominent underworld figure. He once told a colleague that if he became aware that McPherson was after him, he’d ‘seriously consider leaving the State’.28

  Assisting McNeill were Detective Sergeant Doug Knight and Detective Sergeant BJ Ballard. Ballard was a straight officer keen to please an overbearing boss, but Knight was a more complicated character. He had led a double life on the fringes of the underworld. He was friendly with Raymond Smith, a known criminal who was also an associate of McPherson.

  McNeill put aside his reservations about the infiltration of the mafia into Australia and in August 1972 compiled an initial report, which he submitted to Liberal premier Robert Askin. In tabling the report in the New South Wales Parliament, the premier acknowledged its serious finding that organised crime had infiltrated a limited number of clubs. Although he didn’t mention Bally Manufacturing by name, Askin spoke of the need for a clean-up. He had spoken to club executives, who had assured him they were taking appropriate action.29 Any potential political trouble seemed to have been averted.

  However, over the following few months, McNeill’s team issued several additional reports, which walked back their initial findings. Their investigations culminated in a final report that completely exonerated Bally, dismissing the company’s involvement in organised crime in New South Wales and rejecting the involvement of local underworld criminals. The final report went as far as describing Joe Testa as ‘a normal sort of fellow who in all probability visited Australia on a holiday with no ulterior motive’.30

  With the press probing the report’s inconsistent findings, Premier Askin came under intense political pressure for an official inquiry into the integrity of McNeil’s reports. A young and tireless opposition member of parliament, Labor’s Neville Wran, led the charge. He wanted an inquiry that would also focus on rumours about Askin’s own graft. Not surprisingly, Askin wanted to limit the terms of refence of any inquiry. But that became trickier when the Askin government selected New South Wales Supreme Court judge Athol Moffitt to head the inquiry. Moffitt made it plain that he wasn’t interested in a ‘quick fix’ investigation and pushed for the inclusion of a term of reference dealing with organised crime.

  Three terms of reference were eventually settled on: whether the police reports submitted to the parliament necessitated taking action against anyone involved in organised crime, and whom; whether there had been a cover-up of the manner in which the police reports had been produced; and whether the operations of Bally risked the infiltration of organised crime into Australia. The compromises involved in the tightly worded directions given to Moffitt did constrain his investigations; missing was a general term of reference to examine the existence and the spread of organised crime in the state, and especially whether it had penetrated the political system and the police. Askin had skilfully diverted as much attention as possible away from himself and his government.

  Askin had reason for caution. As we shall see, rumours had circulated about his own allegedly corrupt activities, and he likely worried about what evidence criminals might unwittingly or deliberately give to the inquiry.

  The Moffitt Royal Commission

  When the findings of McNeill’s final report were made public, the obvious question was asked: what explained the dramatic shift in tone from the first report? Had evidence been stifled or nobbled? Was this a cover-up? Moffitt began his inquiry amid an air of intrigue.

  The Moffitt family was steeped in the law. Athol’s father, Herbert, was a judge of the New South Wales Workers’ Compensation Commission and his older sister was a solicitor. After overcoming a childhood speech impediment, Moffitt obtained his law degree at the University of Sydney, and served in the AIF during World War II. He was later involved with the war crimes trials of Japanese officers and soldiers involved in the Sandakan death marches in Borneo, in which 2434 Australian and British soldiers died. Moffitt was appointed a Queen’s Counsel in 1956.31 He was described as intense and diligent, with a brilliant legal mind.32 The report he produced in 1974 was a landmark in Australia’s understanding of the burgeoning problem of organised crime. Moffitt is credited with uncovering ‘a vast can of worms’ that the politicians had hitherto ignored.33

  Unsurprisingly, Moffitt faced multiple hurdles in his quest to establish the truth. Many witnesses, including police officers, who appeared before him gave unreliable testimony. Two key witnesses – Murray Riley, a corrupt ex-policeman, and the criminal Raymond Smith – went missing. Moffitt believed they had done so to avoid being questioned. However, the Moffitt Royal Commission enjoyed one crucial advantage, which he only disclosed years later: Lennie McPherson was a paid ‘supergrass’.34 Lennie always had his eye on coming out on top.

  As organised crime was the subject of McNeill’s reports, Moffitt could hardly avoid confronting the issue. In fact, in one hearing, he blurted out, in noticeable frustration: ‘The burning question in this inquiry is: is American-type crime infiltrating this country?’35

  Moffitt was well aware of the possibility of police corruption, especially as New South Wales had a long history of crooked cops. Between 1962 and 1972, numerous police were dismissed or disciplined, or resigned to avoid charges. Police chiefs and politicians typically responded with the standard line that these were ‘a few rotten apples’ in an otherwise clean force. But this myth had been exploded in sensational fashion in 1971, when brothel owner Shirley Brifman named 34 New South Wales and Queensland police officers who were allegedly engaged in activities ranging from bribery to protection rackets and robbery. Brifman had lived in a dangerous world, consorting with criminals while also paying off corrupt police.

  But she went from receiving police protection to being a police whistleblower. After paying them off for more than a decade, she was arrested, charged and jailed. Journalist Matthew Condon, who spoke with Brifman before her death, explained the desperate situation she had found herself in, in a state riddled with corrupt police: ‘She was tired. Her nerves were shot. She was sick of looking over her shoulder. She would say, “I have to get them before they get me.”’36

  Soon after her interview containing the allegations against police was tabled in the New South Wales Parliament, Brifman was found dead. The police claimed she died of a drug overdose; her family were sure she’d been murdered.37 She was soon to have given evidence against allegedly corrupt cop Tony Murphy. The police officers who were thought to have had connections with her were allowed to retire from the force, ‘hurt on duty’.38

  Moffitt was shining a light into some dark corners, but he lacked a clear term of reference that would allow him to follow his suspicions through. As he lamented in his report: ‘Beyond the fragments there was silence.’39

  Things started badly for Moffitt when McNeill told him that he had lost both his diaries containing the notes of his investigations. And matters didn’t improve when Moffitt discovered that the police had failed to inquire into and report on the many indicators of Bally’s connections to organised crime. Moffitt criticised McNeill’s uncritical acceptance of the testimony of the visiting Bally executives, who returned to Australia after the shock findings of multiple critical reports were made public.

  As the inquiry progressed, the lack of credibility around the Consorting Squad’s investigation of Bally and organised crime in general worried Moffitt. He uncovered that Bally’s Australian manager, Jack Rooklyn, was in contact with Abe Saffron, another notorious Sydney criminal.

  From the 1950s to the 1970s, Saffron was a fixture of Sydney’s underworld. Like Rooklyn, he was son of second-generation Eastern European Jews who ran a modestly successful drapery business. Saffron showed early signs of his own entrepreneurial flair by leveraging the opportunities presented by New South Wales’ antiquated licensing and vice laws: he sold sly grog and bought up hotels, where he used to sell liquor after hours. A small and nuggety man, with a fondness for handmade suits, flashy jewellery and large American-made cars, Saffron made his name and his wealth by building a nightclub empire in Sydney’s notorious King’s Cross. The most famous – or infamous – was the Roosevelt Club, a place inspired by Hollywood films, where ‘women wore long evening gowns and sipped cocktails and … slipped between socialites and gangsters’.40 Other well-known venues Saffron owned included the Pink Pussy Cat, the Pink Panther and Les Girls.

  In equal measure charming and intimidating, Saffron showed how antiquated entertainment laws led directly to corruption and organised crime. Although he was never charged with corruption, it was clear at the time that many of Sydney’s senior detectives were on his payroll, in return for ensuring that his nightclub businesses ran smoothly. Faux raids were conducted on his premises; warning calls were made beforehand to ensure that he could clear out any politicians or well-known businessmen who were enjoying a night out. Saffron was stopped at Perth airport in 1973, and a police search of his belongings found a diary in which were the names and addresses of a New South Wales judge, police officers and a future attorney-general. He was known as one of the ‘invincibles’ of Sydney’s underworld.41

  This reputation had more sinister connotations given later revelations of Saffron’s involvement in extortion and blackmail.42 He was a classic gangster, someone whose activities ranged from legitimate businesses to allegations of serious criminal behaviour, but who beat all charges against him – save for evading taxation, which earned him a prison sentence in 1987, when he was 68 years old.

  Moffitt interviewed Saffron and formed the view that Rooklyn had approached Saffron to see if he could exercise influence over government to take the heat out of the inquiry. Moffitt was suspicious because the two had talked after the first report was released. In one of his damning but elusive findings, Moffitt wrote that in the period when the two were in private talks, ‘there was a lessening of police interest in the inquiry’.43

  At any level, a Rooklyn–Saffron connection spelled trouble for the New South Wales police. But McNeill had never investigated the link. Moffitt’s suspicions deepened. He established that Rooklyn had offered McNeill and Knight an opportunity for a business partnership. The motive was straightforward: ‘he wanted to use them to proclaim in the right quarters that Bally had no criminal affiliations’.44 While both declined the offer, the very existence of private talks between the three was a serious breach of police protocol – the Consorting Squad was consorting with known criminals.

  If these deficiencies weren’t serious enough, Moffitt discovered a more egregious oversight in the police investigation, one that went to the heart of police ineptitude or corruption. In August 1972 – coinciding with the release of McNeill’s report, but likely unconnected to it – Joe Testa made a return visit to Sydney from Chicago, where his connections to the mafia and to Bally had remained intact.

  There are only vague accounts of what happened next. But in what was described as ‘an organised crime summit’,45 a number of high-profile Sydney criminals gathered in a house in Double Bay, including George Freeman and Lennie McPherson – the latter, presumably, the source of the information to Moffitt. More disturbing still was the attendance of a Labor member of the New South Wales Parliament, Albert Sloss, reputed to be a corrupt politician. Unproven accusations of graft against him went back to his days as a Sydney city alderman in the 1950s. Sloss was mentioned in a Commonwealth Police dossier as ‘Mr X’, a member of parliament who met with known criminals on at least three occasions.46 The New South Wales police even had a photo of those attending the Double Bay meeting.

  Moffitt made two crucial points about this meeting. Firstly, that information about its existence had not made it into McNeill’s first report, which Moffitt found ‘almost beyond belief’.47 And, secondly, although McNeill’s Consorting Squad obviously knew the meeting was going to take place, they had not monitored what occurred inside the meeting more systematically. As Moffitt wrote: ‘Here, at least, was a chance, by surveillance procedures, to check one of the suspected avenues for infiltration of organised crime.’48 Sloss’s presence added to the need to know what had occurred. Moffitt asked himself the obvious question: ‘What then is the inference to be drawn from this sorry episode? Does it show that there was some corrupt attempt not to uncover what was happening concerning organised crime?’ He couldn’t draw a definitive conclusion – which was strange, given that McPherson was a paid informant to the commission and had attended the meeting. Lennie had his own red lines he wouldn’t cross.

  But Moffitt had a bigger question to ask: what was he to make of the whole sorry saga of McNeill changing his first report?

  Moffitt confirmed Bally’s links with organised crime. He described it as a mafia-controlled company that sought to use mafia-style intimidatory tactics as it waged a commercial war over the installation of poker machines in Australia. Using the extensive information available to him about the mafia from the United States, he highlighted the threat of the organisation’s newly developed business model: commence as a legitimate business, use the extensive slush funds to buy out the competition and then deploy organised crime methods to accelerate their operations. He saw the threat by Bally in this context – notably, its aim to monopolise the poker machine trade throughout eastern Australia, and the likelihood that it would corrupt officials by using cash or collateral benefits so that legal proof would be elusive.

  Rooklyn’s activities gave Moffitt insight into these methods. Not only did Bally’s Australian manger attempt to co-opt McNeill and Knight, Moffit established that Rooklyn had dealt with the top leaders in the police force, who knew of the conclusions contained in McNeill’s final report – that Bally was ‘clean’ – before the premier or the parliament.49 Moffitt had accused Rooklyn of ‘dishonest silence’.