Tracing the Telecard affair

Margo Kingston

Margo Kingston

Co-publisher & editor-in-chief at No Fibs
Margo Kingston is an Australian journalist, author, and commentator. She is best known for her work at The Sydney Morning Herald and her weblog, Webdiary. Since 2012, Kingston has been a citizen journalist, reporting and commenting on Australian politics via Twitter and No Fibs.
Margo Kingston
- 43 mins ago
Margo Kingston

By Margo Kingston and Mike Seccombe
Source: Webdiary SMH
Date: October 22nd, 2000

Peter Reith Telecard Scandal $50,000

DAY ONE

Tuesday, October 10

The Canberra Times reveals a Federal Police investigation into Peter
Reith’s $50,000 phone bill after he gave his number and PIN to son Paul
for private calls. Howard says Reith revealed the fraud to him in May,
nine months after Reith was told, and that he accepted legal advice
from Attorney-General Daryl Williams to send the file to police. Howard
says he wouldn’t give his Telecard to a family member but “I certainly
don’t regard that as a hanging offence”.

Howard says he doesn’t know how the fraud went on for five years and
that it doesn’t matter because “I don’t think people use Telecards any
more”. (Special Minister of State Chris Ellison – the man in charge of
politician’s perks – later reveals that 210 of the 224 MPs have
Telecards.) Howard kept the fraud secret because it was only “an
allegation”. He pre-empts a decision by the Commonwealth Director of
Public Prosecutions, Damian Bugg, QC, whether to prosecute, saying
Reith’s delivery of his Telecard details to Paul was not fraud.

Reith says he “personally stopped using the card in about 1994”.
(Finance sent Reith a new card in a double-sealed envelope for security
on September 9, 1993.)

Reith tells Parliament his son was interviewed by police in July
and “strongly denied” passing on the Telecard details. He admits that
he breached a determination of the Remuneration Tribunal that Telecards
must only be used “personally, to make telephone calls on parliamentary
or electorate business”. He confessed this “quite openly to the PM”. He
tells Parliament that in 1994 he told his son that “if you have some
particular reason to contact me, this is a means that you can use to do
so”.

He says the Finance Department told him of the fraud on August 30 last
year, and he asked for a departmental investigation. When that was
complete in May, “I was the one who wrote to the PM and suggested that
[the police] be brought in.”

He claims to have been unaware his son had made personal calls worth
$950 over five years, and immediately repaid that sum when told about
it. Asked how others got the number, he says, “I don’t know. My
impression is, from talking to the police, that this card ended up like
a telephone booth on the local street corner with the whole
neighbourhood knowing they could make free phone calls. I mean, there
are 11,000 phone calls from about 900 different locations.” He refuses
to repay the $50,000 because, “I don’t believe that I can be held
responsible for the payment of moneys for which I had absolutely
nothing to do with.”

DAY TWO

Wednesday, October 11
Damian Bugg reports he will prosecute no-one. As taxpayer anger mounts,
Howard commissions legal advice from Solicitor-General David Bennett,
QC, on whether Reith and son or anyone else has a civil liability to
pay, and Howard tells Reith to do so if Bennett so finds. Howard says
Reith made a mere “error of judgement” and denies the Government
pressured the DPP for an early verdict. Reith says, “I am sorry that my
card has fallen into the hands of people unknown to me.”

Reith admits staffers also used his card in breach of the law, but says
Finance forgave him because they were work-related calls. (Ellison
refuses to confirm or deny Reith’s claim.)

DAY THREE

Thursday, October 12

Bugg says he cleared Reith because he gave the Telecard numbers to his
son to ring only his father, and only when Peter Reith was not at home
or in the office. Bugg says this is an “emergency” exemption to the law
of fraud, a claim attacked by other lawyers as an invention. Bugg’s
finding contradicts Reith’s claims in a series of interviews that he
gave his son the card to call home and family.

Bugg exonerates Paul Reith because he thought his calls “would be
debited to the.personal component of his father’s telephone account”.

Labor accuses Bugg of risking a collapse in public confidence in the
legal system after he refuses, without reasons, to release his full
report.

Reith claims that police and his son have told him “the card was
stolen”. He blasts his Government’s administration of Telecard
payments, claiming Finance told him it would have paid a $1 million
bill with no questions asked. (Ellison refuses to comment.)

The Herald Sun reports that Telstra warned the Government of the high
volume of calls on Reith’s Telecard before August last year. Finance
Minister John Fahey tells Parliament there are no records of previous
warnings. Howard effectively admits he would have kept the scandal
under wraps in the absence of prosecutions. Howard says, “I as a
taxpayer am angry about it and I understand why Australians are angry
that $50,000 one way or another should have been racked up and they’re
left with the bill. I’m trying to get to the bottom of what has
occurred.”

DAY FOUR

Friday, October 13
Reith tells Sydney radio, “I think everybody is entitled to know,
including me, exactly what has happened and what is the legal advice.”
In the morning he maintains his refusal to pay up and Howard starts
distancing himself from Reith. After talks with Howard, Reith says
he’ll repay the $50,000 because the furore is undermining the
Government’s “reputation”. Howard says Reith “behaved in a commendable
fashion” and “retains my full confidence”.

DAY FIVE

Saturday, October 14

Howard’s office announces that Bennett has found neither Peter or Paul
Reith civilly liable to repay the bill.

DAY SIX

Sunday, October 15

Attorney-General Williams releases Bennett’s advice, revealing that
Miss X lived with Paul in a house owned and frequented by Peter in
1994, when Paul was using the card. She says Paul gave her the details.
She then lived with Mr Y, who says she gave him the Telecard details in
lieu of rent. She denies it. Bennett believes Paul, not Miss X. He says
Reith and son are liable for Paul’s calls, but nothing else. He
reserves his decision on whether Miss X or Mr Y are civilly liable.

Reith ignores Bennett’s finding of civil liability for Paul’s calls,
saying Bennett “completely clears me of any civil liability”. He says
that “from my point of view all along it’s been just as equally likely
she got it from me” and claims X and Y “have set out to illegally use
the card … knowing that it was the wrong thing to do”. He admits he
knew X. “I was in and out of the house but I think I met her but, I
mean, if I met her again I wouldn’t know where she was, I wouldn’t know
if I saw her again.”

DAY SEVEN

Monday, October 16:

Reith refuses to rule out claiming a tax deduction for his $50,000
payment as a work expense.

Howard tries to put the scandal to bed. “He’s repaying the money and I
sort of think we’ve gone over and over it ad nauseam and there’s
probably nothing more to be said.” But Reith has more to say. Although
Bugg has let everyone off the hook criminally at this point, Reith
accuses Miss X and Mr Y of fraud, claiming it was obvious to him from
the beginning that Miss X started the cycle of fraud.

DAY EIGHT

Tuesday, October 17:

Howard says Reith will not claim a tax break for the $50,000. Miss X
identifies herself as Ingrid Odgers, says she lived with Paul from
April to August 1994, and exposes errors and omissions in Bennett’s
opinion and the police investigation. She says she was warned off using
the card by a government official about October 1994 – a statement not
included in the police report.

She says if investigators looked at her bank records, they would show
she paid rent to Mr Y, rather than paying him with the Telecard number,
as alleged by Bennett. She claims Paul Reith gave her the Telecard
numbers and “insisted” she use them, and says she told this to family
members who would corroborate her version if police bothered to
interview them.

The Government asks Bennett for a new report.

Reith admits Finance asked him to pay the $50,000 a year before, and
again takes credit for insisting the police be called in, a claim
Howard corroborates.

DAY NINE

Wednesday, October 18: Bennett’s new advice is released. He
acknowledges errors by him and investigation failures by police but
says they do not change his view that Paul is more credible than Miss
X. He says Mr Y is Dr Song Lim.

Reith says after giving his son the Telecard details he “never thought
about it again” until details of its misuse were brought to his
attention five years later.

DAY TEN

Thursday, October 19: The AFP reopens its investigation and the DPP re-
examines its report in the light of new evidence. The Federal
Opposition calls for a full judicial inquiry. The Herald obtains
confidential briefing notes from Finance to Ellison showing the
Government was alerted to likely fraud on Reith’s Telecard in July
1998, more than a year before any investigation was begun.

It reveals a 1998 alert from Telstra to Finance on Reith’s Telecard,
contradicting Fahey’s contrary assurances to Parliament. It crushes
Howard and Reith claims that they insisted the police be called in,
revealing that Ellison was told last September that police action was
likely – and much sooner than actually occurred.

The confidential documents reveal that at least two unauthorised users
of the Reith Telecard were “former staff of Mr Reith”.

Howard again refuses to stand Reith down, in spite of the fresh police
investigation, saying he still has his full confidence. Labor demands a
judicial inquiry.

DAY ELEVEN

Friday, October 20: The Democrats back Labor’s call. Neither Fahey or
Ellison will comment, Deputy Opposition Leader Simon Crean accuses
Fahey of misleading Parliament.


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Comments

  1. Reith said “I am sorry that my card has fallen into the hands of people unknown to me.” I interpret this to also signify that Reith would not have been sorry if his card had fall into the hands of people known to him, namely his son and his son’s acquaintances who were known to him.

  2. One rule for the ‘in crowd’! Another for the ‘on the outers’!

  3. Tracing the Telecard affair http://t.co/ltm9Nxc0ld
    #NoFibsArchive

  4. .@greensjeremy @Peter_Reith LIED re children overboard http://t.co/nXJPns4F5g and responsible for $50k rort http://t.co/r3dNLDdBSs #pilliga