MICHAEL WEST BUSINESS EDITOR

POLICE and corporate regulators have raided homes and businesses to smash a crime syndicate that launders money through the sharemarket after getting inside tips from leading investment banks.

The crime ring, whose network extends from NSW to Western Australia, uses young people with little means to extract cash from ATMs after successful share trades executed through the Commonwealth Bank’s online broker, Commsec.

Police raided the homes of two employees of Deutsche Bank on April 9 searching for email and phone records and documents in connection with the WA syndicate. They were searching for trades in brewing giant Lion Nathan before an $8 billion takeover bid by the Japanese brewer Kirin.

Shares in Lion shot up from $8 to more than $11 in late April last year when the deal was announced, delivering a stellar profit to those who had bought shares before the announcement. Among those who profited are those with links to organised crime in WA.

Deutsche is not suspected of any wrongdoing and is co-operating with authorities. The bank was, on the same day as the raids, issued with a notice to produce information by ASIC, which it complied with.

In late May last year, regulators from the Australian Securities and Investments Commission were alerted to suspicious trading in Caltex shares. Caltex’s share price rose from $11 to $12 on news that it intended to buy Mobil’s petrol stations.

Another leading investment bank, UBS Australia, has been the subject of preliminary ASIC inquiries in connection with the Caltex trading but has not been issued with a notice to produce. One of its employees is alleged to have provided information to the syndicate about Caltex before the announcement. The bank itself is not suspected of any wrongdoing.

The Caltex deal was later blocked on competition grounds but a taskforce from ASIC homed in on one $500,000-plus trade where parties linked to the crime syndicate had benefited. Sources said the syndicate members relied on young people of little means to remit the cash by withdrawing $1000 amounts – the daily limit – from ATMs.

This was a method, said the source, of laundering money from illegal activities. Police from the Tactical Response Group are believed to have also raided homes in Perth in connection with the irregular trades.

Commsec and Deutsche Bank declined to comment on the investigation.

The trading in Lion and Caltex shares is one part of a wide-ranging investigation into insider trading in which a number of companies and individuals have been issued with notices to produce information. The crime syndicate is believed to have garnered trading tips from a number of sources and traded in many different shares on the stock exchange.

The trading has been conducted through what are thought to be fake company names along with fictitious names of individuals behind them.

Insider trading is hard to prove because tips are mostly provided by word of mouth and there is rarely a paper trail to produce in evidence.

SELMA MILOVANOVIC

A PROMINENT Melbourne criminal lawyer who has appeared in some of the state’s highest-profile trials has been charged with rape.

Alastair Grigor has been charged on summons with rape over an alleged incident that happened in Collingwood in September last year.

It is understood that Grigor – who has acted as defence lawyer for Mick Gatto and in the David Hookes manslaughter trial – met a woman while drinking at the Grace Darling Hotel. The pair exchanged numbers and are understood to have left the pub together.

The Age understands it will be alleged that while Grigor and the woman were walking in a nearby street, he pulled her into a car park. The pair had sex there and Grigor allegedly left.

Police were called and the woman was medically examined. It is understood Grigor, who is expected to defend the rape allegation, told police he had consensual sex with the woman.

Grigor, who has run boutique criminal law firm Grigor Lawyers for the past four years, is a respected and experienced member of Melbourne’s legal community.

Previously he was a senior associate at Galbally Rolfe and commercial litigation solicitor at Maddens Lawyers.

Grigor has acted in several prominent underworld cases as well as the AWB inquiry. He is due to face court later this month.

Source: The Age

DYLAN WELCH AND VANDA CARSON
A MEMBER of one of Australia’s most notorious crime groups has pleaded guilty to his role in a $150 million bank fraud, dubbed Australia’s very own Ocean’s Eleven.

The conspiracy was so named after federal police charged 11 men over the theft of $150 million from the Commonwealth Superannuation Scheme. The men include: a Sydney nightclub owner; an international banker; a fraud investigator; a Telstra worker; and a pensioner.

Jamieson Vincent, 40, pleaded guilty yesterday to money laundering on the first day of a four-week trial. The guilty plea came more than six years after he committed the crime.

He is part of a crime group. Members of that group ran strip clubs, were associated with the Bandidos Motorcycle Club and worked with the late Sydney Mr Big Leonard Arthur ”Lennie” McPherson.

The funds the men tried to pilfer were held by the investment bank JP Morgan. On Christmas Eve 2003 a fake request to transfer $150 million was sent from three members of the group, including a JP Morgan employee.

The money was moved to four accounts in Hong Kong, Switzerland and Greece. Federal police were alerted by a mistake during the Greek transfer and they froze all four accounts.

All the money – except for $3.4 million that was gambled away on a casino boat off Hong Kong – was recovered.

Eight men have since been convicted over the fraud. They include Ernst Hufnagl, a pensioner, Barry Osbourne, a Telstra employee, and Gregory Bourchier, a JP Morgan employee, who were convicted over the conspiracy in 2008.

Five others, including Vincent, have since been convicted of money laundering. Two men, Richard Kurland and Leon Kuris, were acquitted and one man has yet to be tried.

Yesterday in the Sydney District Court Vincent, a short, heavy-set man, stood while the court officer read out the charge against him. When asked how he pleaded, he responded with a sharp ”guilty”.

He sat down and the Chief Judge of the District Court, Reg Blanche, QC, turned to the barrister representing the man who has yet to be tried.

”That leaves just you,” Judge Blanche said.

The final defendant will face a two-week trial beginning on May 31. Vincent will be sentenced on May 14.

JOEL GIBSON
LAWYERS are out of touch with the level of consumer protection in other industries and professions, according to a consumer advocate advising the federal government on reforms to legal regulation.

Carolyn Bond from the Consumer Action Law Centre – the only consumer representative on a government-formed consultative group – said fears that the government’s regulation taskforce is biased against the profession ”may reflect the fact that lawyers are not used to the range of protections that consumers now expect”.

Her comments followed the publication in the Herald of a letter from the country’s nine largest law firms to the secretary of the attorney-general’s department, Roger Wilkins, alleging his drafters displayed bias and prejudice against lawyers in their proposals for increased consumer protection.

Mr Wilkins’s taskforce was accused of foisting unnecessary and unfair constraints on all lawyers for the sins of a few who had been caught overcharging.

But Ms Bond said lawyers needed to be brought into line with other professions and industries.

Lawyers had a special role and obligations but ”many consumer problems are similar to those they have with their mortgage broker or insurance company – and the laws should respect that,” she said.

Many lawyers disagree, among them the NSW Chief Justice, Jim Spigelman, who has argued that the consumer-service provider model has ”become a feral metaphor” for lawyer-client relations.

”Its unthinking application to the legal profession could have serious consequences for the rule of law in this country, unless the centrality of independence of the profession is kept firmly in mind throughout the process,” he has said.

But consumer advocates had a win over lawyers and judges yesterday with the announcement that one of their number would sit on a planned National Legal Services Board setting standards for lawyers.

The Attorney-General, Robert McClelland, said state and federal governments would appoint the majority of the board and consumer expertise would be included.

Lawyers want all the board positions to be appointed by the profession, including any community representative, and a majority of the board to be lawyers.

Impassioned debate about the new rules for lawyers and who will set and enforce them has stalled the drafting,which was to be finished by a Council of Australian Governments meeting in May.

Mr McClelland said yesterday that a draft bill and national rules would go before COAG but the consultation period on them would be extended.

The president of the NSW Law Society, Mary Macken, welcomed the extension. ”It is imperative that there is first extensive consultation and it is not rushed through,” she said.

At a fiery meeting held in December, an advisory group set up by the federal government described the process as rushed and expressed its dismay that the group was seen merely as ”window dressing” and was being ignored.

According to meeting minutes obtained under freedom of information laws, a taskforce representative said the May deadline was a window of opportunity that would close, to which members of the group replied that that was ”rubbish”.

The Chief Justice declined to comment, as did the Law Council of Australia.

It’s nice to see a touch of the old putting its mark on the new year. Would you believe it, a group of big wigs from the lawyer trade unions has come out in opposition to a reform floated within the Commonwealth Attorney-General’s Department that proposes lawyers face disciplinary action for overcharging?

The legal establishment doesn’t much like the idea of discipline for legal practitioners who charge more than is ”reasonable”, ”proportionate” and ”fair” for the reason that those terms are subjective.

Nor is it keen on new regulations being too prescriptive. Between opposing vagueness and prescriptiveness there’s a lot of wriggle room.

However, the sage heads of the law industry gracefully concede that something called ”gross overcharging” could be subject to disciplinary action. In this context disciplinary action does not mean criminal prosecution, although some overcharging is criminal – for example, obtaining and attempting to obtain by deception.

However, consumers need to be reminded that judges in this state in effect did away with the offence of ”gross overcharging”, which is a form of theft. The Court of Appeal has said that if a lawyer does not have the ”intention” of grossly overcharging, then no penalty can be imposed. In the case considered by the appeal judges, a secretary, not the principal of the firm, sent out the vastly inflated bill. It was all a terrible mistake.

This explains why the legal business is opposed to another component of the reform agenda – that all bills sent out to clients have to be signed by a principal of the firm. ”We are opposed to the suggestion ‘to require principals of law practices to take responsibility for the content of bills sent to clients’.”

That would all be too much additional and costly administration. It would also mean that if lawyers were signing the bills they would be unable to argue that gross overcharging was unintentional.

It’s comforting to know the legal profession is in favour of disciplining practitioners who grossly overcharge their clients as long as there is no way the charge can stick.

Professor David Lemmings of Adelaide University, in his landmark study of how the legal culture of England changed between the 17th and 18th centuries, noted that between 1580 and 1640 there was a civil litigation boom. Lawyers charged reasonable fees, typically less than 10 per cent of the amount at stake. The common law was accessible by every man.

Today charges in some cases are getting close to 100 per cent or more of the amount in dispute.

In the first half of the 18th century England was hit by a severe recession. Lawyers responded by concentrating on work that would support higher fees, that is working for the rich.

By 1750, the number of civil cases being pursued was one-sixth of the figure in 1640. Seventy-five per cent of barristers turned away from the common law to the Court of Chancery, which concentrated on commercial disputes and deceased estates.

By 1800 the Court of Chancery was finalising only 30 to 90 cases a year, but creating 5000 to 8000 hearings a year. The perfect make-work scheme for lawyers had been created. Professor Lemmings says: ”There are substantial grounds for suspicion that the 18th century Chancery was operating an elaborate racket in the administration of the law, which amounted to a conspiracy for making the most out of a declining source of work.”

Lawyers had captured control of the process from the judges and the fee machines went into overdrive.

More recently in Britain, research produced the alarming figure that in commercial claims of up to £12,500 ($22,300), litigants were spending £5 for each £1 argued about.

Here’s a final consideration. In 1887 in the English case of Re Hill, a lawyer’s fees were taxed (reduced by the court) to 45 per cent of the amount claimed. The court said this gave rise to an inference of fraud.

In 2000 or thereabouts Cherie Blair, the wife of the then prime minister of Britain, sent out a bill in a legal aid case for £9500.

It was reduced by the billing authorities to 53 per cent of the original amount. She appealed and got it up to 59 per cent. No one suggested that this was fraud.

You have to go back a long way to understand how things evolved in the law and why we’re where we are now.

justinian@lawpress.com.au

Celebrity client … Seinfeld’s Jason Alexander has joined the Jenny Craig weight-loss program in recent weeks. Photo: Getty Images

NEW YORK: Weight Watchers International has sued its rival Jenny Craig, charging that it lied in an advertising campaign that said its weight-loss program was superior to Weight Watchers’.

A television advertisement featured a spokeswoman, Valerie Bertinelli, in a lab coat saying that ”a major clinical trial” had shown that ”Jenny Craig clients lost, on average, over twice as much weight as those on the largest weight-loss program”, which referred to Weight Watchers, a complaint filed in federal court in New York on Tuesday said.

”The Jenny Craig advertisements are false,” Weight Watchers said. ”Jenny Craig did not conduct ‘a major clinical trial’ comparing its product with the Weight Watchers program.”

Weight Watchers, which is based in New York, asked the court to stop Jenny Craig, a unit of the Swiss company Nestle, from using advertisements claiming that its weight-loss program was superior. It also seeks damages.

Weight Watchers said the start of the year was ”a critical time for weight-loss companies” because people sought to stick to their New Year’s resolutions to lose weight.

Julie Safer, a spokeswoman for Jenny Craig, had no immediate comment.

Bloomberg

JOEL GIBSON
Only lawyers have the expertise to investigate other lawyers for alleged misconduct, their professional associations say, and they have asked the Federal Government to reconsider its plan for a national ombudsman to regulate the profession.

A national regulator would be expensive and slow, they argue, and would not be an ombudsman in the true sense of the word.

But the state and federal governments are standing firm, saying confidence in the profession will only improve when lawyers stop investigating their own.

As national regulations are being drafted this month, the chiefs of all state and territory law societies have argued in a submission to a Federal Government taskforce that consumers will lose out if lawyers are stripped of self-regulation.

In NSW misconduct complaints are investigated by the Law Society with the oversight of the Legal Services Commissioner.

Last year one in nine solicitors was the subject of a complaint but 83 per cent of conduct complaints were dismissed, which the law societies say is evidence that ”despite claims to the contrary, there are very few complaints of substance about members of the legal profession”.

Of the complaints investigated by the NSW Law Society in the past five years, 250 have been referred to the Legal Services Commissioner for review, which the law societies argue is evidence of satisfaction at their handling of investigations.

”As far as any of us is aware, and combined our experience of the complaint processes across Australia is very substantial, there is no systemic failure with the current … processes. Claims to the contrary are unjustified,” the law society chiefs say.

They have also denied any need for increased protections against lawyers who overcharge.

The negotiations over new national rules for lawyers are heating up in the lead-up to a May deadline set by the Council of Australian Governments.

Consumer advocates say lawyers are protecting their own turf and are decades behind other industries and professions in accepting independent oversight.

The federal Attorney-General, Robert McClelland, has described the self-regulation of lawyers as ”Caesar judging Caesar”.

Google is investigating whether one or more employees may have helped facilitate a cyber-attack that the US search giant said it was a victim of in mid-December, two sources have told Reuters.

Google, the world’s most popular search engine, said last week it may pull out of the world’s biggest Internet market by users after reporting it had been hit by a “sophisticated” cyber-attack on its network that resulted in theft of its intellectual property.

The sources, who are familiar with the situation, said that the attack, which targeted people who have access to specific parts of Google networks, may have been facilitated by people working in Google China’s office.

“We’re not commenting on rumour and speculation. This is an ongoing investigation, and we simply cannot comment on the details,” a Google spokeswoman said.

Security analysts said the malicious software (malware) used in the Google attack was a modification of a Trojan called Hydraq. A Trojan is malware that, once inside a computer, allows someone unauthorised access. The sophistication in the attack was in knowing whom to attack, not the malware itself, the analysts said.

Local media, citing unnamed sources, reported that some Google China employees were denied access to internal networks after January 13, while some staff were put on leave and others transferred to different offices in Google’s Asia Pacific operations. Google said it would not comment on its business operations.

Google, which has denied rumours that it has already decided to shut down its China offices, said on Monday it contacted the Chinese government last week after the announcement.

“We are going to have talks with them in the coming few days,” Google said.

Google is also still in the process of scanning its internal networks since the cyber-attack in mid-December.

China has tried to play down Google’s threat to leave, saying there are many ways to resolve the issue, but insisting all foreign companies, Google included, must abide by Chinese laws.

Washington said it was issuing a diplomatic note to China formally requesting an explanation for the attacks.

The Google issue risks becoming another irritant in China’s relationship with the United States. Ties are already strained by arguments over the yuan currency’s exchange rate, which US critics say is unfairly low, trade protectionism and US arms sales to Taiwan.

Washington has long been worried about Beijing’s cyber-spying program. A congressional advisory panel said in November the Chinese government appeared increasingly to be penetrating US computers to gather useful data for its military.

Reuters

HEATH GILMORE HIGHER EDUCATION

THE University of Western Sydney is investigating allegations that three women were discriminated against racially when their jobs were culled.

Marian Paap, Cheryl D’Cruz and Shayami Karunaweera were the only long-term employees who failed to gain permanent positions after a restructure of the school of management, college of business, at the university.

Seventeen administration officers lost their jobs in the restructure. Only six of them, including the three Asian-born women, applied for eight new positions at the school. The others took redundancy or found positions elsewhere.

Ms Paap said they had failed to gain a position because they had dark skin and were born outside Australia – two of them in Sri Lanka and the other in India.

She said the university had told them they had poor communication and English skills, but that these shortcomings had not been raised at performance reviews during their careers at the university, which ranged from six to 18 years’ service.

”This is an emotionally draining and very stressful,” Ms Paap said. ”In my life a lot of things have happened, but I never thought I would see this day.

”None of us has ever had a bad performance review. We are applying for basically the same position or new roles where we have the required skills. It appeared to be pre-planned.”

A spokeswoman for the university said the claims made by the women were being investigated, although no formal complaint had been received.

She said the restructure of the school of management and new staffing requirements was the subject of a separate complaint that had already been lodged with Fair Work Australia.

”While the university hasn’t yet received specific details for the complaint from the National Tertiary Education Union, the university refutes claims that poor English and communication skills precluded any of the applicants from the positions,” the spokeswoman said.

”[The university] does follow very strict guidelines which ensure every applicant selected for short listing and interview receives a fair and unbiased panel interview, and appointments are made based on merit.”

The National Tertiary Education Union described the dismissals as outrageous.

The union’s state secretary, Genevieve Kelly, said she ”firmly believed this is a case of racial discrimination”. ‘This is no coincidence that three women of similar racial background have been dismissed.”

Janet Fife-Yeomans From: The Daily Telegraph
IT WAS a chocolate cake worth getting into trouble for.

Moist, rich icing, thickly sliced. And totally legal.

It was baked by magistrate Hilary Hannam and is about to be the centrepiece of a charming, offbeat little ceremony in the Children’s Court at Parramatta.

This is a good news story.

He has spent 88 days in rehab, 54 days in custody.

His height, build and demeanour are threatening enough so that when this big 15-year-old demanded $30 from the man on the train, the robbery victim handed over $50 and didn’t ask for his change.

Then the teenager started the Youth Drug and Alcohol Court’s six-month program.

Today he is graduating. Sober, ashamed and lesson learned.

There is a lot to feel good about in Court 4 of the Children’s Court at Parramatta right now – but there are a couple of things to get through first.
The way they do it here in the YDAC, Magistrate Hannam is sitting around the bar table with the prosecutor, a lawyer and a member of her Joint Assessment and Review Team. It’s informal.

They are trying to find a place in the court’s residential unit for the latest referral, a boy from the troubled fringe suburb of Claymore.

“We can’t let him go back to Claymore, to his mother,” says one.

He has a drug and alcohol problem and is facing a custodial sentence. All prerequisites for the program.

Except the most crucial. He’s not sure if he wants to be there.

He has to want to change his life before he is accepted into one of the 40 places. They will go back and have another talk to him.

“Jake, how are you? Good to see you, fantastic to see you,” Magistrate Hannam greets a 16-year-old walking into the court.

He takes a seat at the bar table, right opposite her. Face to face.

It’s not an easy program – you can be arrested if you stray – but Jake is working his way through it. He has just got his first job ever, as a tradesman.

He loves it but his girlfriend and mum aren’t so keen – the girlfriend because Jake won’t lie to Centrelink and she will lose her single-parent benefit, Mum because she is upholding a family tradition: being on benefits.

She is fourth generation and is afraid of losing her pension now that this son is working. The team has to keep Jake focused. Positive.

“It feels good to earn money, doesn’t it?” says the prosecutor.

“Yes, it does,” Jake is beaming back at all the smiling faces.

“We were all so impressed when we heard about your job.

“You should be so proud of yourself and I’m personally impressed,” says the magistrate.

Jake heads back to work. His care worker is trying to find him a double bed on eBay as he sets up home with his girlfriend. They’re sleeping on a saggy mattress on the floor.

Now it is Mark’s turn. They are all still at the table. He joins them.

“We act as a team and we expect you to speak for yourself, not through your lawyer,” the magistrate says. “We expect honesty from you.”

This is Mark’s first assessment after just two weeks on the program. Mum, Dad and his sister are all here.

“I have the report and what do you think it says?” says the magistrate.

“I reckon I went all right,” says Mark, 17.

He got 100 per cent. Polite, respectful, no behavioural problems.

He has been doing a course on reoffending, is genuinely amazed at how much he hurt his victims by violating their homes. Star pupil.

He will be back in two weeks. Keep up the good work.

Now Hilary Hannam puts on her black gown and morphs back into a magistrate proper as the latest graduate enters the courtroom.

The YDAC works because it can be informal but that is not to say there is no authority evident.

Before the chocolate cake, there is a bit of business.

Mr Big, the 15-year-old, has to be formally sentenced.

He has pleaded guilty to robbery in company, one of the most common offences in the Children’s Court. Mates egging each other on.

It would get them up to 20 years in prison in the adult court.

Then he has the $50 robbery on the train. And he had spat at the transit officer afterwards, which constitutes an assault.

“The reality is that if you did not do the drug and alcohol program you would be in custody,” says the magistrate.

She sentences him to a total of 18 months probation so that he can get some guidance. However, she records no convictions, “So you can get on with your adult life” she tells him. He now gets to go shopping with about $100 to spend and his Juvenile Justice counsellor to help him spend it.

More than a carrot and stick approach to justice, the money is designed to help the young people move on in life.

Most choose to buy their first suit for job interviews, some choose driving lessons, one got a guitar, another a surfboard.

Mr Big looks like his worst punishment is yet to come.

He has to make a speech to the court, a reminder that he is not as grown-up as he appears.

His mother died. His father has remarried and he doesn’t want his son. His grandparents make up for it. They have brought him up and are here today.

He shuffles.

“I would just like to thank everybody for helping me, my grandparents, and thank the magistrate for keeping me in line,” he says as he studies the floor.

Now to chocolate cake. Everyone in court is sentenced to have a slice.

The magistrate slices it, serves it up on plastic plates with white serviettes and Mr Big hands it around.

Proud as punch, his grandad gets up to make a speech. His eyes crinkle as his whole face grins.

“I want to thank the judge and all your staff for the great outcome,” he says. “He’s learned a lesson and thank you for making his life better. We have got him back.”

Just when it seems there is not much to celebrate in the Children’s Court, along comes a surprise.