Clive Small and Tom Gilling are the authors of the bestselling Smack Express and Betrayed. Clive was one of NSW’s most successful detectives and an assistant commissioner of Police before leaving the force. Tom is a highly regarded investigative journalist and fiction writer.

Blood Money

Bikies, Terrorists and Middle Eastern Gangs

By Clive Small, Tom Gilling

Allen & Unwin

Copyright © 2010 Clive Small and Tom Gilling
All rights reserved.
ISBN: 978-1-74237-606-6

Contents

Preface,
Acknowledgements,
About the authors,
Cast of major characters and gangs,
1 Frank Hakim and Louis Bayeh,
2 The Bayehs and the Ibrahims,
3 Danny Karam and his Boys,
4 Michael Kanaan murders his boss,
5 The Darwiches, the Razzaks and the Telopea Street Boys,
6 The Darwiche–Razzak war,
7 Drugs, guns and rocket launchers,
8 The traffickers,
9 Bikies Inc.,
10 Organised crime and terrorism,
Afterword,
Appendix: Politically motivated violence in Australia (1966–2009),
Bibliography,

CHAPTER 1

Frank Hakim and Louis Bayeh

The Lebanese involvement in organised crime in New South Wales began almost 50 years ago and reached a peak during the late 1990s and early 2000s. Sydney’s Lebanese underworld could have been the inspiration for the popular US television show The Sopranos, with embattled crime bosses suffering a range of medical conditions from anxiety and mental instability to memory loss, heart problems and breathing difficulties, gambling addiction and drug abuse.

The original Lebanese godfather, Fayez ‘Frank’ Hakim, was born in Lebanon in 1930 and was about 20 when he arrived in Australia. During the late 1950s and early 1960s he built an extensive network among Lebanese migrants, helping many, and became a prominent member of the Lebanese community. He bought and ran a delicatessen in the inner Sydney suburb of Redfern, across the road from the Redfern courthouse and conveniently close to the New South Wales Police training centre, home of the Gaming Squad, which was responsible for the policing of gambling laws across the state. Hakim befriended many in the local court system and was soon on good terms with members of the squad.

By the mid 1960s Hakim had cemented a corrupt partnership with the Gaming Squad which was to endure for two decades. As a Justice of the Peace he was frequently called upon to sign warrants. In ‘Report on Investigation into the Relationship Between Police and Criminals: First Report’ in 1994, the New South Wales Independent Commission Against Corruption (ICAC) observed that between 1971 and 1979 ‘Hakim signed almost every warrant taken out by the Gaming Squad’ even though the Police ‘Bureau of Criminal Intelligence had quite extensive holdings concerning Hakim, one of which connected him with … illegal gaming premises in … Redfern or East Sydney’. Hakim had been involved in illegal gaming from at least 1974. He admitted to signing warrants from as early as 1966 but denied doing anything wrong.

The corrupt activities of the Gaming Squad were part of a broader enterprise controlled by Leonard Arthur ‘Lennie’ McPherson and George David Freeman — two ‘Mr Bigs’ of organised crime — that provided protection to ethnic-based illegal gambling clubs, casinos, illegal starting price bookmakers and vice operations. Hakim became a senior figure in this operation and reported directly to McPherson.

Louis Bayeh was born in Kafardlakos, a small village in north Lebanon, in 1954 and came to Australia in the late 1960s. Over the next few years his mother and brothers also migrated to Australia. Bayeh had no formal education and can neither read nor write English. Rather than go to school, he worked as a bouncer at various Kings Cross nightclubs owned by Abe Saffron and at illegal casinos and ethnic gambling clubs. While working at these places Bayeh met Hakim — he was about 17 at the time — and they quickly struck up a friendship and business relationship. It was only a short time before Hakim took Bayeh to meet McPherson, who hired him to provide protection, collect debts and supply muscle to resolve disputes. During the 1970s Bayeh was convicted and fined for a number of relatively minor offences. Most related to his work for McPherson.

About two years after meeting Hakim, Bayeh opened his own illegal gambling club at West Ryde. According to evidence Bayeh gave to the Wood Royal Commission into the New South Wales Police Service, he obtained approval for the illegal club from McPherson through Hakim and paid Hakim for protection from both the police and crime gangs. The club operated for about a decade until the early 1980s when it was closed as a result of a police crackdown brought about by revelations of gambling-related corruption involving both police and politicians. Bayeh’s connections had shielded him from the crackdown for nearly two years. He also told the commission that for decades he had paid bribes to around a hundred police, many of whom he used to invite to barbecues at his western Sydney home. He claimed to have showered the notorious and corrupt former detective Roger Rogerson with gifts, including $1000 cash towards his daughter’s wedding.

In 1977 one of Bayeh’s brothers, Fred, was bashed. He had entered the Palace nightclub — one of his Kings Cross haunts — without paying the two-dollar entrance fee, just as he had done many times before. But on this occasion Fred was ordered to pay. He refused. He was taken away and bashed by three bouncers. Louis Bayeh described Roger Brealey, one of the assailants, as a man who, in addition to looking after several clubs, was ‘Abe Saffron’s bouncer’. Bayeh and his brothers had known Abe Saffron, Peter Farr (Farrugia) and Jim Anderson, the owners of the nightclub, for years and had ‘done business’ with them. All three were well-known local criminals.

In evidence to the commission, Louis Bayeh said he confronted Brealey, who told him he had bashed Fred ‘because he refused to pay [the] cover charge’. Not happy with the explanation, Bayeh replied, ‘We know each other for a long time. If you rang me up I give you two bucks. There was no need to break his nose.’ Later he picked up a rifle, and with an accomplice went looking for Brealey. Around four o’clock in the morning they found him: ‘I know Roger Brealey will have a gun … and I was concerned if I come by myself empty handed he will shoot me or will do something, so that’s the reason I brought a rifle … I tell Brealey, “Don’t move or I’ll shoot you.” Then I belt him up with the rifle.’ It was a savage beating. Bayeh broke the wooden butt of the rifle over Brealey’s back and head.

Bayeh knew that his actions would not be forgotten. He had just publicly bashed one of Saffron’s bodyguards. It would be seen as a personal affront to Saffron. Louis Bayeh needed help and protection — fast. He went straight to Hakim who rang Darlinghurst Police. The news was bad: the investigation had been taken over by the Armed Robbery Squad and Bayeh had to be charged.

What had started out as a failure to pay a two-dollar cover charge was now dragging in people at the highest levels of both the police and organised crime. Hakim arranged to meet Louis Bayeh at Wilson’s Restaurant in Cleveland Street, Redfern, the godfather’s preferred meeting place for business as well as pleasure. According to Bayeh, Hakim told him, ‘I [Hakim] go and see Merv Wood [the then New South Wales police commissioner] and explain the situation to him, that [Louis] should be charged with assault, but not with robbery. I [Hakim] go and see Merv Wood and explain everything to him, and he will go and see Abe.’

Hakim later claimed that he had spoken with Merv Wood and that Wood had spoken with Saffron. Hakim told Bayeh, ‘Abe Saffron, he don’t want to get involved. He [Merv Wood] spoke to Abe. He brush him off … He [Abe] don’t want to be involved.’ A few months later Bayeh spoke directly with Saffron and was told the same: Saffron would not get involved because his partners, Peter Farr and Jim Anderson, wanted Bayeh charged.

If Bayeh had to be charged, perhaps the charge could be watered down as he and Hakim had originally discussed. Again Hakim and Bayeh met at Wilson’s Restaurant. According to Bayeh, Detective Rogerson and his partner came in and they went straight to the back of the restaurant with Hakim. They spoke with Hakim for about half an hour before leaving, exchanging pleasantries with Bayeh on their way out. Hakim sat down and said, ‘We can’t do anything, because they have been told to charge you. You have to be charged with assault and robbery.’ The next day Bayeh was charged. Three years later on 10 March 1980 Bayeh pleaded guilty to a lesser charge of malicious wounding. He was placed on a four-year bond and ordered to pay $2500 compensation to Brealey.

Bayeh later told the commission that just before the District Court hearing of the charge he spoke to Rogerson who told him he would receive a fine if he pleaded guilty to the lesser offence. It was not exactly what he had been promised but Bayeh said he was happy with the court result. Most importantly for Bayeh, he had not gone to jail. According to Bayeh, a few weeks after the conviction he met Rogerson and paid him $6000 — the price for his lenient treatment at court. The payment had been agreed at their earlier meeting. From this time, said Bayeh, he and Rogerson became good friends and socialised regularly. Like Arthur ‘Neddy’ Smith, Bayeh always paid Rogerson’s entertainment bills. In return, Rogerson sorted out problems and gave him access to other police.

Despite some of Hakim’s protection networks having been severely damaged as a result of the police crackdown on illegal betting and gambling clubs in the late 1970s and early 1980s, Hakim was a known fixer and was still profiting from those parts of the network that remained intact. Between January and August 1983 the Australian Federal Police’s Operation Spendthrift intercepted more than 7000 calls on Hakim’s home and office telephones. As a result the New South Wales Police Internal Security Unit conducted 26 separate corruption investigations. Six resulted in criminal prosecutions involving police while other investigations resulted in the dismissal or resignation of several police. Meanwhile, Hakim’s troubles continued.

The Labor Government’s corrective services minister, Rex Jackson, was addicted to gambling. Like most gamblers he was not very successful. Money became an obsession and Jackson found a way of making good his losses at the racetrack: he started accepting bribes for the early release of prisoners. The racket didn’t last. In 1984 Hakim and three other men were charged over the early release scheme. Three years later Hakim and his co-conspirators were convicted at the District Court and jailed. Hakim got six and a half years. Jackson was also charged with conspiracy and in 1987 he was convicted and sentenced to ten years’ jail for taking bribes. He was released after three.

It wasn’t only the police who were causing problems for Hakim. In the mid 1980s there was growing discontent among a number of criminal gangs over the lucrative protection and amusement machine rackets in Sydney’s small illegal ethnic gambling clubs. On 15 January 1985 these tensions became the trigger for a gang war.

In his role of approving and organising protection for these clubs on behalf of McPherson and Freeman, Hakim had given permission to Tom Domican and Bill El Azzi, a former police officer and longtime associate of Hakim, to put their machines into a gambling club in Enmore. El Azzi would become a drug trafficker and amphetamine cook and serve jail time. It appears Hakim had ‘forgotten’ that McPherson already had a profitable arrangement with the club and had also ‘forgotten’ to tell McPherson that he had allowed Domican and El Azzi to move in. McPherson wouldn’t tolerate their involvement in the club and sent a group of his musclemen to trash the club, throwing Domican’s amusement machines onto the street.

Christopher ‘Rent-a-Kill’ Flannery, a notorious criminal who moved to Sydney in the early 1980s to escape the violence in Melbourne, declared that he was supporting Freeman and McPherson, although he was not at the trashing of the club. Behind the scenes Flannery was planning to be the last man standing at the end of the gang war. Only a couple of weeks earlier Flannery and Neddy Smith had called on Michael Sayers, another Melbourne criminal who had moved to Sydney, and told him that Flannery was setting up a ‘new’ protection racket. Sayers was an illegal starting price bookmaker and heroin dealer. He was already paying Freeman for protection and when Flannery demanded payment for the same service, Sayers refused. Flannery backed off: he knew he was not yet in a position to take on Freeman.

Flannery’s ambitions and his belief in his own invincibility had grown as a result of his attempted hit on Detective Michael Drury in the kitchen of his Chatswood home. There had not been any retribution from the police: Flannery appeared to have got away with it despite widespread suspicion that he was the shooter. Indeed Flannery still had the support of some police.

Following the trashing of the club and several unsuccessful attempts to negotiate a truce, the gang war exploded. But as in many wars, this one soon became a series of wars within a war. Eventually McPherson and Freeman ordered the murder of Flannery in a bid to restore peace. Flannery disappeared on 9 May 1985, soon after having answered a phone call from Freeman, but the war dragged on and there were several more murders and attempted murders before peace was finally restored.

On 21 February 1985, just over a week after the trashing of the Enmore gambling club, the then Detective Inspector Tony Lauer — later to become police commissioner — led a raid on Hakim’s Redfern office. Hakim was charged with possession of just over a gram of heroin, failure to secure a licensed firearm, having goods in custody of $5000 cash, together with another $1600 cash and a New Zealand passport in the name Strathdee, an unidentified woman. The charges relating to his possession of $1600 cash and the passport were later dismissed, but Hakim was convicted over possession of the $5000 cash and fined $400. In January 1987 Hakim was convicted of possessing heroin and fined $1000, but he beat the charge of failing to secure a firearm.

In 1989, after Hakim complained that police had planted the heroin, the then Police Board referred allegations of corruption by police in Hakim’s arrest to ICAC. The ICAC hearings began soon after Hakim had completed his jail sentence over the early release of prisoners racket. The ICAC Commissioner, Mr Ian Temby QC, found that the heroin had not been planted on Hakim. The explanation for it being in his possession, the commissioner concluded, ‘lies in Mr Hakim’s doubtful memory. I believe that although he expected the police to call upon him at some time, he had simply forgotten that the heroin was there. There was evidence that his serious medical condition, which is of many years standing, has a detrimental effect upon memory.’ It was the same ‘forgetfulness’ that had caused all the trouble at the Enmore Club.

Two years later Lauer became the New South Wales police commissioner. After five years in the job, as the Wood Royal Commission was about to release its first damning report on police corruption, Lauer resigned.

While Hakim’s empire foundered, the career of his criminal protégé Louis Bayeh was on the rise. By the early 1980s Bayeh was well on his way to becoming a major player in the Kings Cross underworld. Around 1983 he went into partnership with McPherson and Kostas ‘Con’ Kontorinakis, buying a share in the Love Machine nightclub. In evidence to the Wood Royal Commission the Lebanese drug trafficker and murderer Danny Karam (see Chapter 3) described Kontorinakis as ‘one of the big figures up the Cross, in the strip — you know, owning nightclubs and that’. It was also alleged that he regularly paid corrupt police.

As a business associate of McPherson and Kontorinakis and a provider of protection to clubs at Kings Cross, Bayeh socialised regularly with local police.

Early in 1983 Detective Roger Rogerson, Bayeh, McPherson and Chris Flannery met at the 73 York Street Seafood Restaurant in Sydney’s central business district. The restaurant, which was owned by one of Rogerson’s close friends, was a popular dining spot for members of Sydney’s underworld. Rogerson and his workmate Detective Bill Duff ate there with Flannery. Rogerson and Neddy Smith both socialised and did business there and, according to Alan Williams (the Melbourne criminal who organised the hit on Detective Michael Drury), it was there that he (Williams), Flannery and Rogerson planned Drury’s murder. Freeman and Flannery also dined and did business there.

According to Bayeh, McPherson suggested the meeting, while McPherson said it was Rogerson’s idea. The purpose of the lunch was for Bayeh and McPherson to meet Flannery. Rogerson outlined Flannery’s background and reputation while Flannery told the others that he was on Freeman’s payroll.

Around the same time as the lunch with McPherson and Flannery, Rogerson introduced Bayeh to Duff. According to Bayeh, he started making corrupt payments to Duff about five months later.

In the mid 1980s Kontorinakis left Kings Cross and moved into Sydney’s business district. He sold his interest in the Love Machine and bought the Eros Cinema in Goulburn Street, which ran private peep shows and had a thriving sex shop. He also invested in several other clubs. But Kontorinakis did not leave crime behind. In 1991 he was one of five men, including McPherson, who bashed an accountant (identified as ‘B’ in the subsequent criminal proceedings) after a commercial dispute between McPherson’s nephew and B. In 1994 Kontorinakis pleaded guilty to maliciously inflicting grievous bodily harm (including a fractured right arm and multiple facial injuries) and was eventually sentenced to three years’ jail.

Between 1997 and 1999 the New South Wales Police Integrity Commission (PIC) investigated the involvement of current and former members of the New South Wales Police Service in improper and/or illegal conduct with Kostas Kontorinakis or his associates. In its report of the investigation, ‘Oslo’, the PIC found that between 1996 and 1998 Kontorinakis paid Rogerson, through an associate, $500 a week for an unknown purpose. Rogerson described the money as repayment of a loan, although the figures did not add up and he could not produce any documentation for the loan. Kontorinakis would neither confirm nor deny that he had paid Rogerson any money.

(Continues…)Excerpted from Blood Money by Clive Small, Tom Gilling. Copyright © 2010 Clive Small and Tom Gilling. Excerpted by permission of Allen & Unwin.
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