By Nick McKenzie, Michael Bachelard and Amelia Ballinger

An anonymous source reveals what it was like being an undercover agent in the AFPCredit: 60 Minutes

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The Australian Federal Police’s top secret undercover program was for years compromised by systemic failures including outdated technology, inadequate security and a box-ticking approach to psychological support even though police whistleblowers say covert operations have become more important and dangerous than ever in the fight against global organised crime.

A scathing classified inquiry commissioned by AFP command, and obtained by this masthead and 60 Minutes, has also found that a revolving door of managers and wildly variable funding for the undercover program fuelled problems that were ignored for years, leading to serious and avoidable risks to officers.

The secret inquiry was conducted by retired veteran federal agent Frank Prendergast, who was previously the assistant commissioner responsible for counter-terrorism, and its findings were finalised in late 2020 and circulated among select officers in 2021.

The AFP insists that after a leadership change in 2019, new commissioner Reece Kershaw commissioned the Prendergast inquiry and responded to his call for reform by overhauling the undercover program and appointing a board of international and national law enforcement experts to oversee changes.

Describing undercover officers as some of Australia’s unsung heroes, Deputy Commissioner Ian McCartney said in a statement that the oversight board was still meeting and that other agencies on the board were now adopting some of those reforms for themselves.

The leaking of the Prendergast inquiry comes as three undercover program operatives have made confidential and contested claims to the AFP that their safety remains at grave risk after they left their covert posts. Last month, Kershaw privately flagged the appointment of a retired eminent judge to deal with the stand-off with the officers, two of whom left the AFP many months ago. The third is on sick leave.

Two AFP insiders with knowledge of the undercover program said the ex-operatives faced “a real risk of being killed” if identified, while others in the agency have stressed there is no evidence their identities have been compromised.

‘You can’t talk about the lie’

Former long-time AFP intelligence and security officer John Coyne said the revelation of the Prendergast inquiry’s scathing findings comes at a time when undercover operatives are more crucial in the task of investigating serious criminality, partly because encrypted communication methods have made it harder for police to tap phones and employ other traditional investigative tools.

Coyne said Australian police were increasingly forced to rely on covert infiltration of high-level international criminal groups, “those who are dealing across multiple nations in illicit drugs, who are laundering money, who are abusing children”. He said using undercover operatives was “often the only way to get inside [such groups] to get the evidence to disrupt, investigate, arrest and prosecute them”.

But going undercover is also becoming more dangerous. The wide availability of facial recognition software and open-source DNA tracing through ancestry websites means criminals can more easily uncover the true identities of undercover operatives attempting to infiltrate their networks.

Former long-time AFP intelligence and security officer John Coyne.Credit: Alex Ellinghausen

One AFP insider with knowledge of the undercover program said the Australian approach was “not like a lot of the other undercover programs around the world”. Undercover police “don’t carry guns or any weapons; the only thing they have is their ability to talk and read a situation”.

The insider said AFP operatives had been “able to infiltrate, trick and manipulate some of the world’s best crooks” and deeply penetrate “some of the most dangerous organised crime groups that previously could smell an undercover from a mile away.

“Needless to say, these sorts of criminals have made a very long living out of killing anyone for the smallest of reasons let alone an undercover.”

Such work has potential significant human costs, according to Coyne. “There’s some really deep psychological challenges to that, not the least of which is living two lives – one of which is a lie, and the other one where you can’t talk about the lie.”

An anonymous source talks about life undercover.Credit: 60 Minutes

The inquiry by Prendergast concluded that the federal police systems backing up covert agents were underfunded, badly managed and patched together.

Among many failures were problems in “legend building” – giving undercover officers credible fake identities to allow them to infiltrate organised crime groups – and “backstopping”, which involves providing documents and aliases that can withstand intense scrutiny.

In some cases, secret police agents deploying overseas on assumed identities had been forced to use their real passports for travel and accommodation.

“If you’re doing that, there’s really no point in being issued identities,” said one insider, “because they’re compromised straight away.”

According to Prendergast, “The [backstopping] team appears to have insufficient resources to carry out its core functions.” On the greater ease of facial recognition, he found, “there does not seem to be any co-ordinated and urgent effort to address its future implications”.

McCartney said in response that the AFP had created a dedicated intelligence team to support undercover operations with “timely and appropriate intelligence assessments”.

An inquiry into the undercover program was conducted by former assistant commissioner Frank Prendergast.

Technology snafus

Prendergast also found the program offered minimal psychological support for officers who are at particular risk of mental health harm. Psychologists, who had once been dedicated to the unit, had been put into the general pool of busy AFP Wellbeing Services with the result that undercover operatives’ contact with psychologists “only occurred during their annual psychological assessment, which members of the program perceive as a ‘box-ticking exercise’.”

“Rapport between the psychologists and members of the program has diminished, contact with families has ceased, and follow-up with members who have left the program appears to be limited,” Prendergast found.

McCartney insisted that, since the Prendergast report’s recommendations, the AFP had recognised the psychological toll on officers and their families, delivering them tailored support.

Prendergast also pointed out that the technology used by the undercover program was “out of date and not fit for purpose”. A special IT registry for assumed identities which was the subject of an October 2014 report that found it posed a significant risk to the organisation was still being used six years later.

An AFP source said that when one undercover operative deployed to Central America, the technology used to track the agent as he met criminals suddenly failed, meaning he disappeared and so was alone and without support. The Prendergast inquiry confirmed the failure of critical tracking technology and discovered that on some occasions, covert operatives were forced to borrow technology from partner agencies.

“It is untenable,” Prendergast wrote, “for officers’ safety to be put at risk or evidence to be compromised by substandard technology.”

Australian Federal Police Deputy Commissioner Ian McCartney addresses the media during a press conference at the AFP headquarters in Canberra in 2020. Credit: Alex Ellinghausen

McCartney said the AFP took safety extremely seriously, and that senior managers, “some of who have been undercover members themselves, are fully aware of the dangers these members face”.

“Protective measures are applied to current and former members tailored to their individual security requirements,” he said in a statement.

Prendergast said that, in his inquiry, inadequate and wildly variable funding, and the continual changing of managers, including many who lacked necessary expertise, were significant problems.

He found that between 2013 and 2020, the undercover program had been overseen by “five assistant commissioners, eight commanders and eight superintendents, many of whom were acting,” and had moved between functions within the AFP five times. Many leaders took up their jobs after “minimal exposure to the program and with little or no handover”, leading to inconsistency in decision making and direction.

Prendergast’s inquiry identified many attempts by managers to remedy issues but, when managers had changed, “these efforts have typically petered out”.

He said budgets for staff and for operations were unpredictable and in long-term decline. The total budget varied from $6.1 million in the 2002-03 budget to just $373,000 in 2017-18. “The current program is not well funded,” Prendergast wrote, with resources having declined substantially over the years amid pressure on the overall AFP budget.

McCartney said the AFP’s response to those observations had included significantly boosting resources and support to the program to “ensure members are not overworked and have time to rest before their next operation”.

Prendergast pointed out that gaps in the AFP’s personnel software meant the real identities of undercover operatives might not be secure. He also described how undercover officers were being sent into the field without appropriate checks, known as “deconfliction”, on whether multiple criminals being targeted in separate operations might in fact know each other.

“I think it got to the point where the same operative may have been deploying on two separate jobs under two different names with links between those jobs,” said an AFP insider with knowledge of the undercover program and who spoke on the condition of confidentiality to this masthead and 60 Minutes.

Prendergast concluded: “The lack of this [deconfliction] capability is a real risk to the program, and needs to be rectified urgently.” His inquiry also warned that some undercover personnel who worked in the role part-time were placed in “highly visible roles, such as in uniform at airports”.

Others’ false identities had lapsed and they had been contacted so infrequently by undercover program managers since being trained that they were not even aware they were still on the list.

“It is clear that management of the part-time pool is patchy at best,” Prendergast concluded.

Another potential security issue arose when consulting firm PwC had been given access to the database of undercover agents’ false identities as part of an external audit. The PWC staff involved held security clearances, but Prendergast said the event “raises the issue of the appropriateness of an outside entity (PWC) having access to all the AFP’s assumed identity information”. He urged consideration of the auditing function being moved in-house.

A senior PWC staff member was this year revealed to have taken confidential government tax information obtained as part of a separate government contract and then leaked it to the company’s clients for profit, despite having signed non-disclosure agreements.

Documents out of date

In another extraordinary finding, federal agents briefed Prendergast that covert operations were gathering information about organised crime activity which was then being ignored, because the undercover operatives’ handlers were focused on one particular investigation and not passing on collateral intelligence.

“The risk of this is that opportunities are missed, and threats and risks are overlooked,” Prendergast wrote.

Damien Marrett is a former Victorian undercover police officer.Credit: Eddie Jim

Long-time undercover program members also told Prendergast they “did not know where to locate the latest governance for the program”. His inquiry found that, given the operatives were “working remotely with minimal contact with the broader AFP”, this failure constituted a “substantial risk that needs to be addressed”.

“All the documents are out of date,” he wrote, and a glaring gap was the total absence of a risk management strategy. “Clients report that the undercover program is not responsive to their needs, can be slow and risk averse and does not have a diverse enough pool of operatives to meet their needs.”

McCartney responded on behalf of the AFP that governance documents were being reviewed and updated.

Prendergast also reported that, when they finished their deployments as undercover operators, some former officers had received “very little assistance” as they tried to find jobs back in the AFP, even though they could not talk about what they had been doing, and had missed training courses.

“Most full-time undercover officers reported they had to find positions for themselves,” Prendergast found, at what international experience suggests was the most dangerous time for them psychologically.

He found the agency had repeatedly ignored the findings of previous classified probes that also found the AFP’s undercover program was at risk of failure and needed urgent and significant reform.

“Many of the recommendations of this review mirror those of previous reviews of the [undercover program] which have been accepted by the AFP but not implemented due to a lack of resources and inadequate management attention,” Prendergast wrote.

‘Only a matter of time’

Former intelligence and national security officer Coyne said the community owed undercover officers thanks for the work they did.

“That debt of gratitude must be appropriate protection, appropriate risk management to ensure that when they go out to do a day’s work, they come home, they come home safely, and that they’re protected well into the future.”

The failure to provide that protection had real human costs.

A confidential source with knowledge of the undercover program, speaking anonymously to protect his identity, said: “I’ve known of multiple members who were off on stress leave for months on end. Some medically retired because of it … I think [force managers have] got a lot to answer for in why things like welfare, full-time psychs, were taken out of that program.”

People who did that job “are good at it and they enjoy it. But they expect it to be done properly and have all the security blankets and matters appropriately handled.”

Former state police undercover officer Damian Marrett said some people had described undercover work “like a drug addict gets hooked on heroin … he has that huge high, and he chases it for the rest of his life”. But there was a big comedown. His own work in the 1990s had left him with post-traumatic stress disorder.

“It’s a lot of little things. If you can’t go home and tell anybody about your day at work, and everything’s secretive, you can’t tell other policemen because loose lips, all the rest of it.

“You internalise everything that’s going on and then you’re back the next day doing it all again … And what I found was I wasn’t the same person. I didn’t have the spark or I’ll call it charisma, or whatever it is. It was gone. I could turn it on and pretend, but it wasn’t real any more.”

Marrett went through a period of alcohol and other substance abuse after he came out.

Said an ex-AFP member who dealt with the program: “These guys literally gave their lives to the job.” He said they “now don’t have the ability or freedom to make the decisions that every other Australian has”.

“If these practices are allowed to continue,” said another former undercover operative, “it’s only a matter of time before someone does get killed or injured.”

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