Private Security Industry Criminal Infiltration

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Organised crime groups are motivated to infiltrate and exploit the private security industry to gain access to firearms, licensed premises, major events and a range of public and private assets.

Nature of Private Security Industry Criminal Infiltration

Large numbers of private security organisations in Australia offer a range of services and products including:

• acting as bodyguards
• alarm monitoring
• security equipment production
• transportation of cash
• Closed Circuit Television (CCTV) surveillance
• private investigation and provision of risk management and credit control services
• uniformed security guards.¹

They are also involved in helping to secure large, and in some cases critical, assets and facilities such as ports, airports and military installations.

The vast majority of companies and individuals working in the private security industry are legitimate and provide an excellent service to the Australian community.

However, the nature of the industry—with its access to firearms, licensed premises, major events and a range of public and private assets—provides both an incentive and an opportunity for organised crime groups to infiltrate and exploit its activities and operations.

There is significant scope for misconduct and crime by organised crime individuals and groups who successfully infiltrate the security sector, including:

• Fraud. This may include falsifying data readouts on security patrol checks, understating alarm response times, overestimating capacity to deal with multiple calls or exaggerating claims about the effectiveness of products,² or fraudulently gaining Masters Licenses which require probity checks on whether license holders are fit and proper to hold their position. This in turn allows individuals who otherwise would be excluded from the sector to remain active.
• Incompetence and poor standards. People with little or no skills, qualifications or capital may be able to set up businesses within the private security industry. This leaves their clients more vulnerable to burglary, theft, fraud, assault, graffiti, vandalism and other crimes.³
• Under-award payments and exploitation of security staff. To fulfill cut-price contracts, employers may pay security staff below award wages. One way to do this is to hire unlicensed staff and pay them ‘cash in hand’ to bypass the taxation system,⁴ and avoid superannuation and workers’ compensation requirements. Some staff may be overseas workers employed without visas, or recently arrived, poorly educated and lacking required English language skills. They often receive minimal and inadequate training. This not only endangers staff and clients who employ them, but legitimate businesses may find it difficult to compete against such ‘low cost’ operators.
• Corrupt practices. Bribery can occur in purchasing security equipment, or in tendering for security services. In addition, where security firms act as debt collectors or investigators and need information on people such as their whereabouts, assets or contact details, they may bribe public servants or private sector employees to provide information for cash. In extreme cases, information may be used for extortion.⁵
• Violence and associated malpractice. This may involve security staff assaulting patrons or neglecting patron safety, especially in and around licensed premises.⁶
• Insider crime. Security skills and knowledge of clients’ assets and vulnerabilities can be turned against clients. Privileged information may also be useful for extortion and blackmail.⁷
• Misuse of weapons. Misuse of firearms, batons and dogs can kill or seriously injure bystanders, offenders or other security officers. Inadequately secured firearms are also vulnerable to theft by criminals.⁸
• Trade in illicit commodities. Private security firms that control hotels and nightclubs around Australia, and have been infiltrated by organised criminals, can control the distribution of drugs such as ecstasy and amphetamines at entertainment venues.
• Money laundering. Proceeds of crime can be moved through security firms owned by organised crime groups in order to launder them.

Extent

There are over 5000 registered security businesses in Australia and the industry has grown by 41 per cent in the past decade. Full-time and part-time security operators amount to around 90,000—double the number of police officers.⁹

The private contract security sector is characterised by considerable diversity, with a large number of small businesses and a small number of very large businesses. The industry itself appears to be fairly stable, with the larger segment characterised by foreign ownership.¹⁰

It is difficult to determine a percentage figure of criminal infiltration of the industry. However, a recent Australian Crime Commission investigation found a number of examples of criminal influence and organised crime infiltration across all states and territories, including by members of outlaw motor cycle gangs.

Impact

Any infiltration by organised criminals into the private security industry is of concern to law enforcement agencies and has a wide ranging impact such as:

• ‘cash in hand’ payments to employees that avoid the payment of taxes, force down contracting prices and place pressure on legitimate operators who are paying tax, superannuation and employee award rates
• damaging the integrity and reputation of the overall sector despite a resounding number of legitimate operators
• broadening the range of sectors organised criminals can access
• illegal trade in confidential information breaching privacy laws
• businesses that adopt less-than-optimal standards providing security at major public places, especially at critical infrastructure such as airports and maritime ports
• facilitating the trade in illicit drugs
• helping launder the profits of their crimes.

Links to Serious Organised Crime

Organised criminals are motivated by profit and will move into sectors where they identify there is a high profit to be made at relatively low risk. They will always look to target sectors that have the least regulation.

Organised criminals may become involved in the private security industry by owning security firms, being employed as individuals or bribing or corrupting security firms or employees. There is a broad range of crimes they can commit through these methods including fraud, property theft, illicit commodity distribution (such as drugs), money laundering, trespass, assault, misuse of firearms, extortion, tax evasion, welfare fraud, breach of industry regulations and workplace legislation and labour and visa exploitation.

Government Responses

The Australian Government launched the Organised Crime Strategic Framework in November 2009 to ensure Commonwealth agencies are working together to prevent, disrupt, investigate and prosecute organised crime. As part of the Framework, the ACC has produced two biennial classified Organised Crime Threat Assessments (OCTAs) which identify the highest organised crime threats to the Australian community. The OCTA informed the development of the Government’s inaugural Commonwealth Organised Crime Response Plan (OCRP) in 2010 to help prioritise Commonwealth agencies resources against these threats.

Recognising that organised crime is a national issue that requires a nationally coordinated response, the Commonwealth and the States and Territories agreed to the National OCRP 2010-13 in 2010 to strengthen multijurisdictional approaches, coordination, information sharing and joint activities to combat the national threat of serious and organised crime. Preventative partnerships with industry and the community are part of the strategies to respond to organised crime. These organised crime fact sheets describe the breadth and impact of organised crime activities and provide an insight into how industry and the community can help combat organised crime.

Further information on the Organised Crime Strategic Framework and the OCRP can be found at <http://www.ag.gov.au/www/agd/agd. nsf/Page/Publications_OrganisedCrime>.

This fact sheet was developed in collaboration with Attorney-General's Department and Australian Taxation Office.

Endnotes

1. Sarre, R 2010, The Legal Powers of Private Security Personnel: Some Policy Consideration sand Legislative Options. Viewed on 4 May 2010.
2. Prenzler, T & Sarre, R 2008, ‘Developing a Risk Profile and Model Regulatory System for the Security Industry’, Security Journal, 4 August.
3. Ibid.
4. Ibid.
5. Ibid.
6. Ibid.
7. Ibid.
8. Ibid.
9. Prenzler, T, Earle, K & Sarre, R 2009, ‘Private Security in Australia: Trends and Key Characteristics’, Trends & Issues in Crime and Criminal Justice, No. 374, Australian Institute of Criminology, June. Viewed on 13 May 2010.
10. Ibid.