In 1974 the clubs had 1.5 million members, out of a total state population of 4 million; figures for three years later show the club industry as the largest employer in the state, outside of the government.12 Clubs touch on our subject at several places. They help explain, for example, why illegal casinos were so tolerated by many people, who found it difficult to accept that gambling could be sinful in one building but acceptable in another. Australian pro-hibitions in our period – unlike America’s Prohibition or our own later war on drugs – were mainly partial, another instance being betting on horses, legal on course but illegal off. This arguably led to a situation where Australians became used to accepting concep-tual ambiguities (‘cognitive dissonance’ is the current term) and practical compromises regarding the law. Perhaps it is this, rather than rank hypocrisy, that explains how so many church-going citizens were prepared to be involved in or at least tolerate certain forms of criminal activity – mainly betting on the SP – for so long.
Another impact of clubs is that once they started putting on shows in the late 1950s, this drew suburban audiences away from the burlesque shows in Kings Cross. (The club shows were cheaper and closer to home.) It was to find a new audience that the Cross turned to strip shows, which the family-friendly registered clubs could never consider.
The main registered clubs were large buildings – sometimes the largest in their suburbs – providing alcohol, food, entertainment and gambling. By 1971 the pokies were turning over an estimated $1600 million a year, with a profit of $100 million.13
The entertainment subsidised by these rivers of gold was often elaborate, consisting of singers, tame burlesque, and even entire musicals. A booking industry in Sydney provided a constant stream of talent, often well-known names imported from Britain and the United States.
The clubs were run by committees appointed by and from the members so their directors often knew little about managing what were increasingly large and wealthy enterprises. In some cases, these committees appointed managers who proceeded to loot the club by various means, for instance by paying non-existent employees, by paying invoices for non-existent services, and by skimming poker machine profits and the fees paid to booking agencies. The amounts of money were considerable but the managers could not conduct all this theft themselves. They had to deal with (in some cases set up) crooked companies that provided services such as the maintenance of poker machines. By the end of the 1960s, a lot of staff and crooks were in on the racket.
A CHAT WITH MR BIG
In his article, Bottom had claimed that, ‘The operation is believed to be directed by a so-called Mr Big of crime, well known to police.’ Eighteen days after publication, on 12 August, Bottom received a phone call from Lennie McPherson, never afraid to get on the front foot with journalists.
McPHERSON: Is that Mr Bob Bottom?
BOTTOM: Yes.
McPHERSON: I have a few words to say to you … you are the man who wrote a story about me in the Sunday Telegraph.
BOTTOM: What story?
McPHERSON: The story about me taking over the clubs. This is Lennie McPherson here – you know who I am.
BOTTOM: I know the story you are referring to, but how do you know I wrote it?
McPHERSON: I know. I have been told. I’m a man who gets upset easily, and that story has upset me. I’m upset about it and that’s why I’m calling you––
BOTTOM: Now hang on, before you go any further, you want to be sure you have the right man. I don’t know who wrote that story. Who told you it was me?
McPHERSON: I have been told, that’s all. I’m not saying who told me. I know.
BOTTOM: How do you know you have the right information? There was no name on it – it could have been written by any of a number of reporters.
McPHERSON: Do you reckon somebody might have only given me your name to cause trouble?
BOTTOM: I wouldn’t know that, but for your information, I didn’t write the article and would like to know how my name came to be mentioned.
McPHERSON: I won’t tell you who told me. You wouldn’t tell me where you get your information from.
BOTTOM: I understand that, but I would suggest you should make sure of your source.
McPHERSON: What, do you think somebody might have given me your name just to sool me onto you? BOTTOM: I wouldn’t know, but it could be.
McPHERSON: You mean somebody might be using me then …
has somebody got the knife into you?
BOTTOM: Not that I know of, but I do know that for stories of this kind we don’t put reporters’ names on them for the very reason that they don’t get threats.
McPherson told Bottom the story was all wrong.
McPHERSON: I haven’t taken over any clubs but I couldn’t if I wanted to. The police see to that. They won’t even let me into clubs. If I can’t get in, I couldn’t take them over, could I?
BOTTOM: I don’t know. Why aren’t you allowed into clubs then? McPHERSON: It’s the police … it’s that Consorting Act. I’ve been to see superintendents and they say I’m all right. But when I go to the door of a club, the young cops stop me. All my complaining to superintendents does no good. I can’t go anywhere without them hounding me. That’s why I get upset when I read articles like that one the other weekend. Every time they appear, saying it’s Mr Big who’s doing it, the police are out here straight away putting pressure on, asking me all about it. The police are onto me now about this club business. And I’m telling you it’s not me in it at all. As I said, I can’t even get into the clubs. Every time any newspaper says Mr Big, everybody says it’s me. My young boy came home from school the other day and said, ‘Dad, are you Mr Big?’ I didn’t know what to say. I told him no, it wasn’t me, but some kid at school had said I was. The bloody Mirror started all this. I have taken out a writ for $100 000 against them, but it won’t do me any good. I’d probably end up with a verdict and one shilling.
McPherson said that if he actually had done something wrong, he wouldn’t mind if that was published.
BOTTOM: Do you mean you regard yourself as fair game if you are responsible? McPHERSON: I have to, don’t I? This last bit … the club business … it wasn’t me. When these things come up, it’s an easy thing to ring me about, you know. … If you have these stories, if somebody rings me, I’ll put them on the right track.
The conversation ended with a comment unrelated to the story. McPHERSON: I’ve heard that some people are saying I’m involved with drugs. That’s one thing I won’t have. When it comes to drugs, I’m 100 per cent against them … I wouldn’t have anything to do with it. I wanted you to know that I get upset if the wrong things are written about me.14
A HUNDRED DIFFERENT WAYS
Of the little on the record about Lennie McPherson’s life at this time, much comes from what he would later tell the Moffitt Royal Commission into organised crime in registered clubs. It is of course unreliable.
McPherson said that for the previous eighteen years he managed a motel owned by his nephew Norm Foster. He said his work had involved ‘washing the linen, cleaning the flats out each week, putting the dirt tins out twice a week, collecting the rents on the Saturday’ and painting flats as necessary. He denied he was a stand-over man (‘I have never threatened anybody in my life’), said he kept a lot of cash at home ‘in case of somebody ringing me up for bail, or something like that’, and mentioned that ‘I am interested in movies, take a lot of movies, and spend a lot of time as a hobby with it’. He travelled overseas a lot, sometimes with his wife and children, and paid for their tickets in cash.
For his work at the motel he was paid $2080 a year. He agreed his income in 1972 had been $8280, with the extra earned in ‘a hundred different ways’, including importing furniture and ‘artifacts’ such as watches and crocodile handbags. In partnership with a contact in Singapore or Manila, ‘We have sent about thirty paintings here and we have about sixty on the way. We have also a crate of turtles on the way.’ He agreed he sometimes bought ai
r tickets for young women to come to Australia from Manila, as presents. (‘Just gave them a holiday, I suppose. No other reason.’)
He conceded his paperwork was less than perfect: ‘I could possibly have invoices if I looked for them, but I would say as I sell the things the invoices become put away or lost or burnt, whatever suits me.’ Asked if he’d ever thought of keeping account books he replied, ‘Well, I did for a while there but every time I looked for them they would be gone; the kids would be writing in them or something.’
Over the years he had managed to save $10 000. He lived in the house worth $70 000 in Prince Edward Street, Gladesville, and his wife owned another house in the street, paid for by winnings on the TAB, and a property at Minnamurra on the South Coast, which she had paid for with a loan from her mother and other winnings from the TAB. He said he had tried to meet with journalists who had written stories about him in the Daily Telegraph, but ‘when I get there they all disappear’.
THE BARBER OF SOUTH SYDNEY
McPherson’s contact at South Sydney Junior Rugby League Club in Kensington was its president. Walter Dean in his youth had been a barber, with McPherson one of his clients. Dean had taken an interest in politics, both local and the politics of getting himself made president – and chairman of directors – of what was the state’s biggest club.
Dean robbed the club by a variety of means. These included payment for non-existent staff and for services provided (or not provided) by companies he owned, such as Garson Enterprises and the tautological Aesthetic Arts. He did this in cooperation with others including the gangster Murray Riley, and he did it in other clubs too, where Riley and he got themselves appointed to boards or as consultants or even employees.
By the early 1970s, Murray Riley was well launched on one of the more remarkable criminal careers in 20th century Australia. Joining the police in 1943, he was a rower, and in 1950 teamed up with a senior police colleague, the Olympic Gold Medallist Merv Wood (later to be Commissioner). The pair would win medals at both the 1950 and 1954 Commonwealth Games, and at the 1956 Melbourne Olympics, where they took the bronze in double sculling. Resigning from the police in 1962, in 1966 Riley had gone to New Zealand to try to bribe a police officer, with the objective of having some Australian criminals there released on bail, presumably so they could flee the country. The attempt failed, and he’d spent almost a year in prison.
Riley was a friend of Lennie McPherson and his associate Raymond Smith, whose company Club Distributing dealt in poker machines. At South Sydney Juniors, one of Riley’s responsibilities was industrial relations, and on one occasion he unsuccessfully offered a union representative $1000 to call off industrial action.
But the serious money lay in skimming entertainment booking fees. An article in the National Times in 1972 noted that despite Sydney having only one remaining live professional theatre, the city was ‘still one of the world’s greatest popular entertainment centres’. This was because in the clubs, ‘these palaces of splen-dour’, audiences were watching ‘imported acts and bare blonde showgirls’ four or five nights a week, ‘in vastly more comfortable surroundings (than the old theatres) with drinks and food at their elbows’.
In the financial year to June 1971, South Sydney Junior Rugby League Club spent nearly $1.2 million on entertainment, while in the calendar year 1971 St George Leagues Club spent $492 000 and another $92 000 on its band. According to the Registered Clubs Association, Sydney was the second biggest entertainment city in the world if judged by money spent; in addition to the imported acts, clubs provided more than 70 per cent of all employment for local entertainers.15
The Sydney booking agencies that provided the entertainers made a handsome profit from commissions. In 1971 the new Arcadia group, run by Riley and businessman Lionel Abrahams, drove out some of the existing agencies by force and took over the bookings, increasing their own cut of the take.
According to the report of the Moffitt Royal Commission, Lionel Abrahams was attracted to tax evasion, and to the potential of the booking business. His father Joshua was the owner of some of the city’s leading restaurants, including the Captain Cook and Pruniers. Lionel’s main company, which came to be called Arcadia Top Artists, paid seven fictitious employees every week, the proceeds being split between Riley, himself and another director.
Arcadia dealt with the Eddie Cochrane agency of Los Angeles and in London with Royce Gordon Foster and Jock Jacobsen. For Riley and Abrahams, there were plenty of stars, and plenty of overseas trips to check out the talent.
In September 1971 Walter Dean, and possibly Murray Riley and Lionel Abrahams, attacked booking agent Richard Gray at South Sydney Juniors, and physically removed him from the building. The contract with the club, worth almost a million dollars a year, passed to Arcadia. Dean was rewarded for this change.16
The skimming of profits was one of two forms of attacks on clubs at the time. The other was the move by an American poker machine company named Bally to expand its share of the Australian market. This worried local manufacturers, partly because they believed Bally was using tactics such as bribery and intimidation to get its machines into clubs, and partly because Bally’s machines were apparently better than the local models.
With clubs in the news, thanks to Bob Bottom and other journalists and their sources, police were ordered to investigate, and the job was given to the head of the Consorting Squad.
THE LAZY COP
Jack McNeill was one of Sydney’s leading corrupt detectives. We first met him as part of the unsuccessful 1963 investigation into the killing of ‘Pretty Boy’ Walker by Lennie McPherson and Stan Smith. In 1966 he’d been commended for his work with fellow detective Philip Arantz on a major fraud case, and also for his part in the recapture of Ryan and Walker. In his memoir, Arantz said that while working with McNeill he’d found him lazy, egotistical, dishonest, a heavy drinker, and keen to take the credit for the work of colleagues.17 Such qualities were clearly no bar to promotion in the NSW Police Force.
In 1966, McNeill was given the job of forming the Armed Hold-up Squad. It would be home to some of the city’s toughest and also most corrupt cops over the years, including the notorious Roger Rogerson. Two years later, McNeill was awarded the Peter Mitchell Trophy for obtaining the highest marks in the exam for appointment to inspector, which suggests he might have been lazy but was not stupid.
As head of the Consorting Squad from 1970, McNeill had break-fast each morning with the heads of the other squads at their own table in the canteen at the CIB headquarters in the old Hat Factory, in Campbell Street, Surry Hills. It was a table of knowledge, and of power.
In December 1971, five months after Bob Bottom’s story about organised crime in clubs appeared, McNeill was approached by executives from the two Australian poker machine manufacturers, Ainsworth and the charmingly named Nutt & Muddle, and told about a defamation action that had occurred in Britain in the middle of the year. The English distributor of Bally America had sued the owners of the Daily Mirror newspaper, which had published a story claiming the distributor and Bally had criminal affiliations. The jury found in the Mirror’s favour, which suggested Bally America might also be bent.18
The Consorting Squad was responsible for restricting the movements and the meetings of known criminals. In an era when the police force had a much smaller and flatter structure than today, this made Jack McNeill one of the most important police officers in New South Wales.
Bally America had just bought out the company that had previously distributed its machines in New South Wales. The local operator, Jack Rooklyn, received shares in Bally America and became its Australian manager. Bally, which dominated poker machine sales around the globe, believed Victoria and Queensland were about to legalise poker machines, so the time was ripe for increased investment in Australia. Ainsworth and Nutt & Muddle told McNeill not only about the British defamation action, but about alleged improper behaviour by Bally in Australia.
McNeill continued to receive alle
gations from various sources but for some reason did nothing. Possibly he was being paid off by Rooklyn, but it might have been simple lethargy, or even incompe-tence. The NSW Police Force had no experience of gathering intelligence about criminal activity, unless it related to a specific offence.
In comparison, by the mid-1950s the Los Angeles Police Force, covering a city roughly the same size, had an intelligence division with over thirty-five officers focusing on organised crime. Its techniques included the use of electronic listening devices and an enormous filing system. Nothing like that existed in Sydney.
But due to growing interest from the media, more in touch with public sentiment, doing nothing was becoming an increasingly difficult option for the Sydney police.
ARANTZ BLOWS THE WHISTLE
Philip Arantz was not happy. Following the initial, restricted trial of the new system of complete reporting of crime statistics, Commissioner Allan had publicly announced a twelve-month trial across the whole state; this is important in light of claims often made later, that but for Arantz the true state of crime in New South Wales would not have become known. In fact, Allan had set a deadline for the truth to appear. It is arguable that this made sense, because in twelve months the new system would have been tested (which was and is quite normal with the introduction of such systems), and police would be able to provide a full year’s figures.
But this was not good enough for Arantz, who would later tell his superior officer Harold Fulton: ‘It (the release of the true figures) would have eventually happened, but it might have taken another twelve months and I’m concerned with all the victims of crimes that are going to go on in the meantime. I think that there is an urgency … to get something constructive going, quickly, to try and combat crime.’
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