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Chapter 8: Caught in the act : the ASIS raid

Chapter 8: Caught in the act : the ASIS raid

Published in:
Wayward governance : illegality and its control in the public sector / P N Grabosky
Canberra : Australian Institute of Criminology, 1989
ISBN 0 642 14605 5
(Australian studies in law, crime and justice series); pp. 129-142

At about 8 pm on Wednesday, 30 November 1983, the Manager of the Sheraton Hotel in Melbourne was alerted by a guest to a disturbance on the 10th floor. The Manager entered a lift and upon reaching the 10th floor, he was accosted by a stranger who said 'Come with me, you're not going to get hurt, but come with me.' The Manager retreated back into the lift, the stranger followed and pressed the appropriate button to return to the lobby. The two scuffled while descending. The stranger's repeated insistence that 'nobody would be hurt' was not entirely reassuring. When the lift reached the lobby, the Manager ran out and called for his staff to ring the police. The stranger retreated to the 10th floor.

Shortly thereafter another lift reached the ground floor. A group of hotel employees were gathered near the door of the lift, and the Manager equipped himself with a nightstick - a 30 cm metal rod covered with heavy duty red tape - which was normally kept behind the reception desk. As the lift door opened, a group of men stepped out. Some were wearing masks, some were carrying weapons, ranging from Browning 9 mm automatic pistols to the formidable Heckler and Koch submachine gun. The intruders moved through the lobby into the kitchen, menacing the kitchen staff on the way, and departed in two getaway cars waiting outside a kitchen exit.

One of the cars was stopped by officers of the Victoria Police a short distance from the hotel and its occupants were taken into custody. When other police officers arrived at the hotel, they encountered a bystander, who rather strangely claimed that he could explain everything that had happened, and that he was willing to pay for any damages incurred. Hotel staff may have assumed that they were the victims of an armed robbery; in fact they were unwilling parties to an incident culminating a year of acute embarrassment for the new Hawke Labor government. The episode in question turned out to have been a resoundingly unsuccessful training exercise by officers of the super-secret Australian Secret Intelligence Service (ASIS).

ASIS, unknown to most Australians prior to its having been thrust, reluctantly, into the public spotlight, is Australia's equivalent of the United States' CIA and Britain's MI6. Although its primary function was the collection of foreign intelligence, it was also required, as a result of decisions taken by the Fraser government and continued by their successors, to maintain a 'covert action capability'. While the precise contours of this minor role remain secret, it appears that such a function involved paramilitary activities - for example, the rescue of hostages (Wright 1989).

To this end, a small group of part-time agents were recruited and brought together for periodic training exercises. The ill-fated visit to the Sheraton Hotel was for the purpose of rescuing a 'hostage' being held in a room by two 'foreign intelligence officers of a major power'. In an effort to make training activities as realistic as possible, it was decided to conduct the exercise in a public place, without notifying hotel staff, local police or bystanders. The trainees were equipped with weapons, albeit without live ammunition.

The episode caused considerable distress to a number of unwitting individuals. One member of the hotel staff at whom a submachine gun was pointed gave evidence to the Royal Commission that the experience was so traumatising he afterwards felt 'emotionally unstable', suffered from a 'lack of sleep' and experienced 'recurring headaches' (Australia 1984, p. 30). Moreover, the potential for physical harm to members of the public was substantial. As luck would have it, what could have resulted in tragedy came to be regarded by many members of the public as farce. In addition to the cost of their accommodation, the make-believe captors and their hostage incurred expenses of $70 for alcoholic beverages. Their hotel room door, moreover, had been smashed in with a sledgehammer.

It was apparent to Mr Justice Hope, the Royal Commissioner who was asked to inquire into the matter, that the ASIS blunder arose from serious lapses in planning and supervision of the training exercise. He fixed primary responsibility for these lapses on the ASIS officer (referred to anonymously as 'P/EM'), who was both in charge of the special operations covert action program and manager of the abortive training exercise. The most obvious deficiency was the failure to notify either the Victoria Police or the hotel manager of the exercise. The decisions were conscious ones.

In his testimony before the Royal Commission, the officer expressed concern that disclosure would compromise security of the ASIS special operations program.

The basic reason that crossed my mind when I dismissed the possibility of informing the police was that I was probably concerned about the security of the actual operation itself, not necessarily the Exercise, and was worried that informing the police might cause them to show some interest in our activities in Melbourne at that time and perhaps even identify some of the operatives. But I must say that I dismissed the possibility of informing the police fairly early in the piece and chose myself on this occasion not to inform them (quoted in Australia 1984, p. 26).

The officer also expressed his belief that hotel management and staff would not become aware of the exercise.

[I] didn't envisage that any of the hotel staff or any member of the public would be involved with the team and, in fact, the hotel staff would not even know the team were in the hotel (quoted in Australia 1984, p. 22).

The Royal Commissioner, noting that properly executed covert operations in the real world have contingency plans, faulted P/EM for failing to have any such plans for the Sheraton raid.

These failures in planning effectively meant that, once the final stages of the Exercise had commenced, the trainees were out of control. Nothing short of a specific order from an ASIS officer of P/EM's seniority at least, would have stopped the trainees from completing their assignment with single-minded determination - no matter what reservations any of them may have felt as to the propriety of their conduct (Australia 1984, p. 28).

The Royal Commissioner also called attention to what he perceived to be a lack of skills and experience appropriate to the leadership of such a raid.

I find it difficult to imagine that a real covert operation, similar in nature to the Exercise, would not require the presence of a leader with the experience, capacity and judgement which a military officer would have (Australia 1984, p. 21).

Whilst acknowledging the desirability of a certain amount of realism in training exercises, the Royal Commissioner contended that the degree of realism achieved in the Sheraton operation was excessive.

It simply was not necessary to break down a hotel door with a sledgehammer, to attempt to restrain the Hotel Manager, to carry weapons, and to display them to unwitting members of the public. The authenticity of the exercise would not have been compromised by a greater degree of simulation (Australia 1984, p. 24).

The Minister responsible for ASIS, Foreign Minister Bill Hayden, was absolved of responsibility for the agent's misconduct by the Royal Commissioner. Despite the argument by critics that security intelligence operations should be under strict ministerial control (Toohey 1983a), Mr Justice Hope concluded that Hayden had no duty to inquire into specific details of ASIS training programs, and the Acting Director General had no duty to inform him. 'Having given his general approval for the project ASIS had commenced, the Minister was entitled to believe that the Acting Director General would ensure that special operations activities were conducted legally, properly and safely' (Australia 1984, p. 18).

According to the Royal Commissioner, 'ASIS management recognised only belatedly the requirement for better supervision, closer direction and tighter control' of the covert action program (Australia 1984, p. 23). A decision was taken in early November 1983, to place the program under the control of a 'Directorate of Covert Action and Emergency Planning', scheduled to be established by 1 February 1984. In the interim, P/EM was denied the planning and administrative support which might have prevented breaches of the law arising from the Sheraton exercise.

Although P/EM bore primary responsibility for the planning and execution of the Sheraton raid, he failed to inform his immediate supervisor of the details of the operation, and to obtain his approval for the aspects which the exercise entailed. In giving brief outlines of the operation to the Acting Director General of ASIS and to the agency's Head of Emergency Planning, P/EM implied that the concealed handguns were to be carried and force was not to be used. Authorisation for the mission was granted on that basis.

The Royal Commissioner further criticised P/EM for not making it explicit to the trainees that force was not to be used in gaining entry to the hotel room, particularly as he had assured the Acting Director General that 'doors would not be bashed down' (Australia 1984, p. 37). The trainees thus assumed that the use of force, if necessary, had been authorised. P/EM moreover, was physically present when the trainees began their forced entry, and did not intervene.

P/EM failed to instruct the trainees regarding the use which they could make of the weapons which they were issued, and regarding their interaction with those members of the public with whom they might come in contact. The Royal Commissioner referred to the failure to instruct the trainees adequately as 'deplorable' (Australia 1984, p. 39).

The Acting Director General of ASIS, John Ryan, was faulted for having authorised a training operation to take place in public, in the Sheraton Hotel, involving the use of concealed weapons by trainees. The authorisation moreover, was given in ignorance of whether or not hotel management or the Victoria police were to be made aware of the exercise, or whether contingency plans had been prepared, or of what provisions for supervision had been considered.

The Acting Director General was criticised for not informing the Deputy Director General and the Assistant Director General of his interest in the exercise and of insisting that planning and implementation of the exercise occur through the normal lines of authority (Australia 1984, p. 43).

The immediate supervisor of P/EM was the Assistant Director General (Operations). He had, however, 'only the most general knowledge of the Exercise' (Australia 1984, p. 44). Whilst he apparently expected P/EM would keep him informed, he was criticised by the Royal Commissioner for taking insufficient steps to ensure that this was, in fact, the case. By virtue of the Acting Director General's passing involvement in the exercise, the Assistant Director General was less dedicated to the supervision of his subordinate than was necessary.

The Deputy Director General too came in for criticism for his lack of attentiveness to the covert action program and to the Sheraton raid. In the words of the Acting Director General, Mr Ryan:

[W]hen you run a Branch which includes a section which is engaged in an exercise, or when you run a Division that includes a Branch, that includes a section running an exercise, in my book you're expected to know what's going on (Australia 1984, p. 46).

The Royal Commissioner was more forgiving of the ASIS trainees. The team leader was criticised for not seeking clarification of the potentially illegal aspects of the exercise, and for seeking to restrain the hotel manager. Mr Justice Hope found that the trainees were entitled to assume that they were authorised to carry weapons, but not justified in brandishing them in the presence of members of the public.

In addressing specifically the Sheraton incident, Mr Justice Hope neglected to confront more general issues of accountability of such a traditionally secret agency. However, he may have dealt with these issues in the course of a secret report. But the precise managerial dynamics of just how an agency such as ASIS is mobilised to undertake a particular task, or prevented from engaging in other activities is a vexed issue. It has, for example, been alleged that 'ASIS officers have actually murdered people in Indonesia' (Toohey 1983a).

It has, moreover, been suggested that when the Whitlam government was in office, ASIS

was unaware of the help it was giving to the CIA by lending two officers to help in Chile at the time of the destabilisation project against the democratically elected Government of Salvadore [sic] Allende; (Toohey 1983a).

According to a previously secret document presented to the Fraser government, Mr Justice Hope himself acknowledged that espionage necessitates crime.

We should not allow the use of any euphemisms to cloud the central issue - that ASIS exists to conduct espionage against foreign countries and that to do it successfully ASIS must probably infringe the laws of those countries and certainly be prepared to do so (Toohey 1983b).

One of the getaway cars was apprehended by the Victoria Police a short distance from the Sheraton. in the car the police found one submachine gun, a sledgehammer, a jemmy, and four plastic masks, among other equipment.

The suspects declined to identify themselves on grounds of national security.

At the time of the Sheraton raid, Australian security and intelligence agencies were already the subject of a Royal Commission. This of course, had arisen out of the Combe-Ivanov affair in mid 1983 (Marr 1984). The Commissioner was approached informally on the day following the raid by the Foreign Minister to request that the circumstances of the raid be incorporated into the inquiry.

Mr Justice Hope began collecting evidence on 2 December. Formal hearings began on 12 December and concluded on 12 January 1984. The report was published the following month. Among the requests conveyed by the Prime Minister to the Royal Commissioner was that of exploring 'whether any breach of the law was committed by anyone carrying out or authorising the exercise' (correspondence: Hawke to Hope, 7 December 1983; Australia 1984, p. 76).

The Royal Commissioner remarked that it would be 'oppressive' for him to make specific findings about individuals' possible breaches of the criminal law of Victoria, and to present such findings to the federal government which would not be responsible for prosecution. Rather, His Honour specified those statutory provisions which seemed to apply. The list was embarrassing in its length.

Firearms Act 1958

Possessing a pistol without a licence s.22(l)
Carrying a loaded firearm s.29E(l)
Possession of a machine gun s.32(3)
Possession of a silencer s.34(l)

Crimes Act 1958

Common assault s.37
Burglary s.76(l)
Aggravated burglary (firearm in possession) s.77(l)
Possession of articles for use in the course of burglary s.91(l)
Wilful damage to property s.9
Intentional destruction of another's property s.197(l)
Possession of implement with the purpose of using it to destroy Property s.199
Aid, abet, counsel or procure the commission of an offence ss.323-4

Summary Offences Act 1966

Offensive or riotous behaviour in a public place s.17
Assault s.23
Assault in company s.24

Vagrancy Act 1966

Being found armed with an offensive weapon s.6(l)(e)
Possessing a disguise without lawful excuse s.6(l)(f)
Possessing housebreaking implements s.7(l)(g)
Being found within a building without lawful excuse s.7(l)(i)
Carrying a firearm with criminal intent s.8(a)

Motor Car Act 1958

Failure to provide a driver's licence or refusing to state name and address when requested to do so by a member of the police force s.29

Common Law

Common Assault

The Royal Commissioner saw it as neither appropriate nor as part of his Terms of Reference to make findings or recommendations as to whether specific persons had committed any offence or whether they should be prosecuted.

The Minister for Foreign Affairs on behalf of the Commonwealth government submitted that as

the persons responsible for such breaches of state law as may have been committed in the course of or in relation to the exercise neither intended to commit such breaches as breaches nor committed such breaches for their own purposes but rather in accordance with the directions given to them by persons whom they reasonably believe to be authorised to give such directions, no good purpose would be served by the prosecution of the persons (quoted in Australia 1984, pp. 66-7).

Nevertheless, the Premier of Victoria, upon first learning of ASIS involvement in the raid, claimed that no-one in Victoria was above the law.

Nearly one year after the Sheraton raid, the High Court of Australia dismissed the pleas by the unfortunate ASIS agents that their identities not be disclosed to the Victorian authorities. The Court held that any contract between the agents and the Commonwealth government which forbade that any individual's name be divulged were under the circumstances unenforceable. The names of the agents were duly handed to the Victoria Police. For a while, it appeared that Victorian authorities might proceed, Indeed, state parliament had even passed special legislation to suppress the names of any defendants in proceedings arising from the raid, and to provide for court hearings to be held in camera. To allay concerns that the criminal justice system of Victoria was returning to the ethos of the Star Chamber, the special legislation was specifically limited to the Sheraton incident, and contained a sunset clause which provided for its cessation of operation after two years. But notwithstanding previous remarks to the contrary by Premier Cain that no-one in Victoria was 'above the law', there were to be no prosecutions. Public and private requests by the Commonwealth government not to proceed prevailed in the end. Officially, the Chief Commissioner of Police, on the advice of the state Director of Public Prosecutions, announced that matters would not proceed. It was maintained that as the suspects had worn masks, it was not possible to determine who had done precisely what, and that lack of evidence precluded the laying of specific charges.

There was, however, some justice for the victims of the raid. Shortly after the incident, hotel management initiated legal action on behalf of itself and its employees against the Commonwealth government. In an out of court settlement, Victorian Holdings, a subsidiary of Brick and Pipe Industries Ltd. and manager of the hotel at the time of the raid, received $259,000 in exemplary damages from the government (Australian Financial Review 30 October 1984, p. 81). Employees of the hotel received additional amounts which were not disclosed. It has been reported that the total settlement amounted to approximately $300,000 (The Age 22 March 1984).

The mechanisms of oversight and accountability for Australian security intelligence agencies which were inherited by the Hawke government when it came to power in March 1983 soon proved to be embarrassingly inadequate. Certainly, they were relatively modest compared to those safeguards which had been adopted over the previous decade in the United States and Canada. These sister English-speaking democracies had themselves suffered embarrassing scandals in the 1970s which provided the impetus for significant reforms.

In Canada, the findings of the McDonald Commission that the Security Service of the Royal Canadian Mounted Police had engaged in warrantless entry and electronic surveillance, interceptions of mail, and other abuses led to the abolition of the RCMP security intelligence function and the creation of a new civilian security intelligence agency with a clear legislative mandate. Oversight is currently exercised by an independent Inspector General as well as by the Security Intelligence Review Committee, comprised of three privy counsellors appointed after consultation with the leader of the opposition and the leader of each party in the House of Commons (Rutan 1985).

In the United States, evidence of assassination programs overseas, of illegal entry and surveillance of American citizens at home, and of complicity in the Watergate affair on the part of the Central Intelligence Agency led to the creation of a variety of oversight mechanisms (Flanagan 1985). Both the US Senate and the House of Representatives established permanent bipartisan intelligence oversight committees by the end of the 1970s. In addition, Congress appropriates all funds for US intelligence agencies, thereby exercising a degree of fiscal oversight.

Each US intelligence agency has its own inspector-general. Executive oversight for intelligence activities is assisted by the Office of Management and Budget, and by the Intelligence Oversight Board, a panel of private citizens charged with monitoring, through the inspectors-general of the various agencies, the legality and propriety of intelligence activities.

The final report on Australia's Security and Intelligence Agencies was presented to the Commonwealth government in 1985. While much of it remains secret, the Prime Minister did reveal a number of the report's recommendations which pertained to ASIS. These included the recommendation that ASIS no longer have an 'attack function' and that its agents henceforth be forbidden to carry out 'special political action' in any foreign countries. It was also recommended that the use of weapons by ASIS agents be discontinued, and that the agency's existing supply of weapons and explosives be disposed of. On 22 May 1985, the Prime Minister announced in Parliament that these recommendations had been accepted by the government. Ostensibly, ASIS would thereafter stick to what it did best - the collection and analysis of foreign intelligence.

A representative of the Queensland government is reputed to have recommended that Australian intelligence agents be given special indemnity from prosecution for offences which they might commit during training exercises and operations (Kitney 1985). No such policy has been adopted, however. If the Sheraton case is any precedent, future offenders will be quietly diverted from the criminal process once media attention subsides.

The Prime Minister announced additional steps to improve the oversight and accountability of ASIS and related organisations. Henceforth, the Security Committee of Cabinet would meet regularly, and would develop clear guidelines and directions for security intelligence agencies. The Committee would be assisted by a full-time Secretariat in the Department of the Prime Minister and Cabinet. In addition, the Secretaries Committee on Intelligence and Security, comprised of permanent heads of relevant government departments, would be expanded to include the Secretary of the Attorney-General's Department and of the Department of Special Minister of State.

Following a recommendation of the Hope Report, the government would also establish an Office of the Inspector-General of Intelligence and Security. The Inspector-General and a small supporting staff would perform an auditing function of security and intelligence agencies as recommended in the Australian Labor Party submission to the Hope Royal Commission. The Inspector-General would be approved to act at the request of the Attorney-General, in response to a complaint, on his or her own initiative.

The lack of strict ministerial scrutiny of ASIS activities which Mr Justice Hope found tolerable nevertheless remained troublesome to a majority of government members. While His Honour explicitly recommended against parliamentary oversight of security agencies by means of a bipartisan committee, the spotty record of the agencies in question, combined with a lingering suspicion on the part of many that the agencies were insufficiently accountable under existing arrangements, carried the day. The Leader of the Opposition referred to these additional safeguards as unnecessary, attributing them to 'left wing paranoia'. The fact that it was the government, and not the opposition, which faced the risk of embarrassment from any future indiscretions was not raised in response. Whether the new oversight structures and a narrower mandate for ASIS would succeed in preventing future malpractice by Australian intelligence agents is a question which may be answered in time.


  • The Age 22 March 1984.
  • Australia 1984, Royal Commission on Australia's Security and Intelligence Agencies: Report on the Sheraton Hotel Incident, Mr Justice Hope, Royal Commissioner, Australian Government Publishing Service, Canberra
  • Australian Financial Review, 30 October 1984, p. 81.
  • The Canberra Times, 14 January 1989, p. 1.
  • ibid. 15 January, p. 17.
  • ibid. 16 January, p. 1.
  • Flanagan, S. 1985, 'Managing the Intelligence Community', International Security, vol. 10, no. 1, pp. 58-95.
  • Kitney, Geoff 1985, 'Sheraton Hotel Bungle May Cost ASIS its Covert Raiders', The National Times 1-7 March, p. 3.
  • Marr, David 1984, The Ivanov Trail, Nelson, Melbourne.
  • Rutan, G. 1985, 'The Canadian Security Intelligence Service: Squaring the Demands of National Security with Canadian Democracy', Conflict Quarterly, vol. 5, no. 4, pp. 17-30.
  • Toohey, Brian 1983a, 'Who's in Charge, Bill?', The National Times 2-8 December, p. 2.
  • ------------ 1983b, 'Secret Report: Judge Content for ASIS to Break the Law', The National Times 9-15 December, p. 4.

Additional reading

  • Simpson, B. 1984, 'The Criminal Proceedings Act and the Sheraton Raid', Legal Service Bulletin, vol. 9, no. 4, pp. 194-6.
Last updated
3 November 2017