Blue Max Funny Car and Drug Smuggling
While he was secretly importing cocaine, Racing New South Wales blocked high-profile racehorse owner Damion Flower from working as one of the lowliest positions in racing — a stablehand — because of questions regarding his character.
Key points:
- Damion Flower faces a sentencing hearing this week for importing 228 kilograms of pure cocaine between 2016 and 2019, worth as much as $68 million
- He was promoted as a leader in horseracing by regulator Racing NSW, despite little evidence of income or a job to explain his high spending
- Racing NSW blocked Flower from securing a stablehand licence in 2013 but signed him up for a $1.8 million slot in The Everest race less than four years later
Then, less than four years later and as rumours swirled about the source of Flower's wealth, the NSW horseracing operator and regulator accepted his promise of $1.8 million to help create one of the world's richest horse races, The Everest, in 2017.
Racing NSW championed Flower as an industry leader but, in May 2019, the former baggage handler's double life came crashing down.
He was arrested and later pleaded guilty to importing 228 kilograms of pure cocaine, after a police investigation which, as the ABC revealed yesterday, also embroiled controversial Sydney gambler Eddie Hayson.
Flower, 49, had smuggled the cocaine on 12 Qantas flights since 2016, with the help of a horse co-owner, To'Oto'O 'John' Mafiti, who was a corrupt baggage handler at Sydney airport.
An ABC investigation can now reveal how weak regulation allowed Flower to help expand NSW horseracing and fund The Everest, even though his horse business was running at a loss.
Flower and Mafiti are due to face a sentencing hearing in the NSW District Court tomorrow, in a case that has sent shockwaves through the horseracing industry and some of Sydney's most prominent circles.
While he was secretly building his cocaine empire, Flower bought racehorses with famous Sydneysiders including radio shock jock Alan Jones, rugby league legend Phil 'Gus' Gould and adman John Singleton.
There is no suggestion any of his co-owners were aware of his criminal activities.
Criminals 'operate in plain sight'
As he rose through the industry, Flower went from persona non grata to racing royalty.
In August 2013, Racing NSW refused to licence Flower to work as a stablehand because he had a history of violence and was bankrupt at the time.
Flower had a criminal record for a serious assault on two police officers in Queensland in 2008, for which he received a suspended jail sentence and an 18-month good behaviour bond.
In 2003, he was fined $750 for recklessly causing injury in Victoria, though no conviction was recorded.
However, it was Flower's ability to turn his bankruptcy around from 2014 and flush tens of millions of dollars through the horseracing industry that has raised the most serious questions for Australia's regulators.
What are they doing to ensure the lucrative sport is not used as a money laundry by local and foreign organised criminals?
"The exploitation by criminals of horseracing is significant," says Nick McTaggart, a leader in Australia's fight against money laundering.
"Horses are an exceptional commodity for a criminal that has done money laundering. They semi-legitimise their wealth."
As the national coordinator of the Australian Federal Police (AFP) criminal asset taskforce, then-Detective Superintendent McTaggart was Australia's most senior operational officer investigating money laundering until he retired in 2016.
During his 38-year police career, he was Australia's representative on the international anti-money laundering financial action taskforce and ran Operation Caribou, a landmark investigation into drug importation and horserace fixing in the 1990s.
"Horseracing has been known to be infiltrated by organised crime figures since it commenced," Mr McTaggart says.
"The beauty about the horseracing game is that you can either buy such assets individually, or you can buy them with a group of other people, which doesn't diminish your wealth, but doesn't allow asset confiscation groups to make a complete claim on your assets.
"The criminals are able to operate in plain sight."
Mr McTaggart says the story of Flower's rise from working-class baggage handler to racing multi-millionaire exposes ongoing failures of financial probity at the heart of Australia's racing industry.
He says racing regulators such as Racing NSW are powerless to stop criminals like Flower.
"It's not within Racing NSW's bailiwick or charter to be doing background checks on the individuals involved in horseracing, unless they have a suspicion that these individuals are actually doing something by way of illegal activity with a horse or fixing races or issues like that," he said.
"So, their ability to be able to scrutinise activity is fairly limited in its terms."
The concerns are heightened, given the recent focus on another gambling industry in Australia: casinos. In 2019, it was revealed drug traffickers were using companies set up by casino giant Crown to store suspected drugs proceeds.
Much like Crown, the horseracing industry in Australia appears to take a disinterested approach to where the money comes from. It stands accused of being ill-equipped to combat the infiltration of organised crime.
But Racing NSW rejects such criticism, saying it has a "rigorous licensing process" and receives intelligence from law enforcement agencies.
"Racing NSW has previously refused to register owners who had alleged links to organised crime figures such as motorcycle gangs," said Racing NSW general counsel Pete Sweney in a statement to the ABC.
"In doing so, Racing NSW has provided procedural fairness to such persons, including the opportunity to respond, which means that it must act on evidence rather than simple speculation, rumour and innuendo."
He said Racing NSW ran "probity checks" on Flower because of "some rumour and innuendo" in 2017 but accepted his application for The Everest slot because he "had a clean criminal record with the NSW Police".
When then asked about Flower's interstate criminal record, including the assault in Queensland in 2008, Mr Sweney said, "it would be difficult, if not impossible, for a regulator to find that a person was not fit and proper due to conduct some nine years previously".
"Racing NSW, when assessing a person's fitness and propriety, does so in accordance with all principles of natural justice and procedural fairness," he said.
"It does not, and should not, sit in judgement from an ivory tower in respect of a person's conduct some nine years prior."
Repeated rumours about organised crime connections
In 2017, rumours were swirling in the racing industry around Flower's source of wealth when Racing NSW published a five-minute video profiling him and his luxurious $4.5 million stables.
"I look at racing and I love it," he said in the video. "I love all aspects of it, I love the racing side of it, I love the sales — I really love the sales — but the horses themselves, they're really lovely animals."
The video, set to gentle guitar and violin music, revelled in Flower's luxurious horse stables near the Hawkesbury River on Sydney's north-western edge.
As the camera rolled over the dozens of thoroughbred horses and the state-of-the-art facility, few would have known that Flower's racing empire was built on the global trade in cocaine.
Some in the racing industry had their suspicions, however.
Flower spent the better part of 20 years in the industry, where he described himself as a property developer or professional gambler and thoroughbred owner, if people were brave enough to ask.
"I'd heard rumours about him and I remember meeting him once at Randwick racecourse, so I asked him what he did. He just talked around the question," said a racing industry figure who spoke on condition of anonymity given fears for their safety.
"Then I asked again and he didn't respond. He just stared at me, gave me this really long, hard stare, which made it clear to me that I shouldn't ask a third time."
Another person, who was close to Flower in the 2010s, told the ABC they heard repeated rumours about his connection to organised crime and one day saw an open suitcase in a wardrobe at his house, stuffed with cash.
"I didn't ask him about it," they said. "I thought maybe it was just gambling winnings."
By May 2019, when Flower was arrested, he had amassed at least $7.5 million in unexplained wealth, according to a state government proceeds of crime claim filed in the NSW Supreme Court.
When police arrested him and his accomplices, they found millions of dollars stored in cars, houses and in a storage unit owned by Mafiti.
Police also seized millions of dollars' worth of property, horses and cash from Flower, and charged him with drug importation and dealing in the proceeds of crime.
In March this year, only days before he was due to face trial, Flower pleaded guilty to the cocaine importations between June 2016 and May 2019 on Qantas flights from South Africa.
Mafiti and Sydney panel beater Ashoor Youkhana have also pleaded guilty to involvement in the cocaine smuggling ring.
Investigations continue into the importations, as law enforcement believes Flower's group was only what police and underworld figures refer to as "the door": The group of criminals and corrupt officials who facilitate the movement of illicit drugs through a national border.
Police in Australia and overseas continue to investigate the other elements of what they believe was a complex and interlocking group of criminal organisations involved in drug trafficking into Australia.
A colourful history
When Flower was arrested, some of his high-profile friends expressed their disbelief.
"One minute I'm crying, worried about a great mate and thinking about how he must be feeling sitting there in jail," said NRL legend Phil 'Gus' Gould in a letter about his financial stakes in horses co-owned by Flower.
"The next minute I'm so angry and just want to throttle him. I guess we will never understand what has happened."
Despite the surprise, the ABC can reveal there were red flags and police intelligence about Flower dating back decades.
Flower told Racing NSW's own in-house magazine in 2018 that he was introduced to racing as a Sydney schoolboy, through the son of a notorious big-betting crook, "Hollywood" George Edser, who was banned from most racetracks because of his "undesirable character".
Two law enforcement officials with knowledge of the Flower case, and who were not cleared to speak about the case publicly, told the ABC police had intelligence on him going back to the early 2000s, when he worked as a Qantas baggage handler at Sydney airport.
In his four years as a baggage handler, he developed his underworld connections, including with one of Sydney's most well-known and prolific crime bosses, Michael "Mickel" Hurley.
In 2004, Flower's final year at Qantas, Hurley allegedly imported 10 kilograms of cocaine from South America using the airline's baggage handlers. Hurley was ensnared by a member of his syndicate who was wearing a wire. He died of cancer the month before his trial was due to start.
Flower's relationship with Hurley was close enough that, at one point, he even dated one of his daughters, one of the law enforcement officials said.
It was during his years as a baggage handler that Flower bought his first thoroughbreds, including Snitzel, who became one of the most successful racehorses of his era.
He gave the horse the nickname he earned when, as a 17-year-old he was hit by a car and shattered his legs and hip, leaving him looking like a schnitzel, according to one of his friends.
In 2005, the year after Flower quit his job at Qantas, he told the Sydney Morning Herald he was done with being a salary man: "Racing is what I do now. It's my job."
Over time, Flower sold down his interest in Snitzel.
Snitzel went on to earn more than $1 million in prize money, winning seven of its 15 races. The horse was then put out to stud and, in 2018 alone, generated more than $40 million in revenue.
"Snitzel has been a life-changer for me," Flower told the Daily Telegraph that year.
The truth was not as rosy. By the time Snitzel was put out to stud , Flower's stake in the stallion was only 2.5 per cent, meaning his profits were far smaller than people assumed.
A former racing associate with knowledge of Flower's business dealings, who asked for anonymity because of fears for his safety, told the ABC that the racehorse owner seemed to live a modest lifestyle and often ran his horse operations at a loss.
Flower's gambling on horses and rugby league often landed him on the wrong side of the ledger: In 2007, one of Melbourne's leading bookmakers sued him over a $125,000 debt and, in 2012, he was bankrupted over a $33,000 debt to his father.
He emerged from bankruptcy in 2014 and somehow appeared to be suddenly swimming in cash.
In 2014 and 2015, he spent more than $9 million on houses and apartments in Sydney and on the Gold Coast as well as a prestigious stables near the Hawkesbury racetrack on Sydney's northern edge, which he named Platinum Park.
Flower stocked the stables with scores of thoroughbred racehorses and it looked, from the outside, like a successful venture. The AFP soon discovered the opposite: The business was bleeding money with Flower losing roughly $50,000 a month on Platinum Park.
It appeared to have no impact on his burgeoning wealth. Between 2013 and 2019, Flower was involved in the purchase of more than $30 million worth of thoroughbred horses, according to sales records of the two main auction houses, Inglis and the Magic Millions.
After buying expensive horses, he often sold shares to other investors.
He was also a serious gambler, with federal police investigators discovering he was gambling $80,000 to $100,000 every Saturday on horses and the NRL.
The Everest
By 2017, Flower was racing royalty, regularly quoted in the media and appearing on the Sky Racing TV channel.
That year came his biggest breakthrough. Flower became a sponsor of a new Sydney horse race that Racing NSW announced would rival the Melbourne Cup.
Unlike most races, The Everest involved 12 prominent members of the horseracing industry, each buying a "slot" for $600,000. Each slot-owner would choose a horse to race, and the winner would receive $10 million in prize money.
To ensure the new race's viability, Racing NSW asked slot owners to commit to three years in a row, meaning each actually agreed to provide at least $1.8 million.
The Everest immediately became the richest horse race in Australia and the richest turf race in the world.
Flower was one of the first people to buy a slot.
To people with suspicions about the provenance of his wealth, the name of the horse he chose to run in the 2017 Everest seemed like an inside joke. It was named Clearly Innocent.
Criminal record
Flower declared his criminal record to racing authorities several times in the years leading up to The Everest, including in the unsuccessful 2013 application to Racing NSW for a stablehand licence.
He also declared it in an application to become a member of the Hawkesbury Race Club in 2018.
Racing NSW provided several lengthy written statements to the ABC, defending its decision to give a three-year Everest slot to Flower.
"Racing NSW stresses that Mr Flower had a clean criminal record with the NSW Police and Racing NSW did not receive any adverse reports as a result of its probity inquiries," Racing NSW general counsel Pete Sweney said in a statement.
He also said Flower had a "significant source of income" through his ownership share in Snitzel and other horses.
"In the circumstances, it could not be reasonably suggested that a person who made many millions of dollars from selling shares in a horse that cost him $260,000, while retaining an ongoing revenue stream in Australia's No.1 performing stallion, is not a person of considerable means," he said.
"To suggest that Racing NSW should have ascertained Mr Flower's exact wealth when granting him an Everest Slot is entirely unreasonable."
He said the body had "robust protocols considered by Racing NSW to be best practice", including a memorandum of understanding with the NSW Police and Australian Criminal Intelligence Commission and intelligence-sharing relationships with the Australian Federal Police and Australian Border Force.
The unravelling
Flower's double life came crashing down in February 2019 after police came across him in their surveillance of a cocaine supplier.
After examining criminal intelligence on Flower dating back at least 15 years, the AFP decided to shift their focus onto the racing identity, forming an investigation into him codenamed Operation Demonax.
The AFP watched as Flower organised four importations in just three months, each totalling nearly 20 kilograms.
They reviewed CCTV footage and phone records to connect him to another eight importations stretching back to June 2016.
According to court documents released in Flower's case yesterday, police discovered each importation followed a routine: Flower would use a phone registered in another name to message the baggage handler, Mafiti, about sports betting or plans for family gatherings.
Each text concealed directions for Mafiti to collect the drugs from a regular Qantas flight to Sydney, QF64, from Johannesburg, South Africa.
Flower's messages included the last three digits of the code of a baggage container which contained a duffel bag stuffed with cocaine.
For example, on June 29, 2018, Flower sent this text to Mafiti about rugby union betting, several hours before the arrival of QF64:
"Hey bro rugby union Auckland blues will win. Yeah in (sic) bettin them to win but also picking the score bet 37 to 9. Good players so they win. Blue with grey jersey bro and no rain. Yeah cuz lets win … Lol"
The three numerals, 3, 7 and 9, corresponded with the last three digits of baggage container AKE QF 93379. That afternoon, Mafiti collected a duffel bag from the container and slipped out of the airport through the staff exit.
Meetings with Eddie Hayson
The statement of facts for Flower's sentencing revealed that, in 2019, as police watched Flower and Mafiti in real time, they captured another prominent identity in their surveillance: professional gambler Eddie Hayson.
The latter was captured on CCTV cameras meeting with Flower in Sydney in the minutes before or after two drug importations.
Mr Hayson, who has never been charged with a crime, admits to friendships with sports stars and criminals, including former Comanchero outlaw bikie club leader Mark Buddle.
He has previously admitted to giving free sex to policemen, footballers and jockeys, as well as $60,000 to Buddle "because I like him", and also conceded he used insider information in 2006 to bet on an NRL match.
He won a defamation case against The Age newspaper in the Federal Court last year over an article accusing him of match-fixing.
According to the statement of facts, on the afternoon of March 15, 2019, at the same time as Mafiti was collecting the latest haul of drugs from QF64, Flower and Mr Hayson were seen meeting at Cahill Park, next to Sydney airport.
The pair were captured on CCTV walking to Flower's luxury SUV, nine minutes before it was seen stopping near Rydges Sydney Airport Hotel, where Mafiti was waiting with a duffel bag that he put in the car.
Thirty seconds after Flower's car drove off, Mafiti was seen walking away as he texted: "Check weight for jockey my brother … felt heavier [2 x laugh-crying emoji]".
Flower replied: "I'll look [two-eyes-looking emoji] on Racing NSW myself."
Nine minutes later, he texted Mafiti again: "The colts carry 2kg more than fillies in the group races …"
According to the statement of facts, two months later, on May 22, Flower was with Mr Hayson again as police closed in on Mafiti.
Mafiti was arrested that afternoon leaving Sydney airport with a duffel bag containing 24 one-kilogram blocks of cocaine and more than three grams of methamphetamine.
At 4:01pm, police intercepted Flower calling Mafiti and leaving a voicemail.
Between 4:25pm and 4:40pm, Flower and Hayson were captured on CCTV getting out of Flower's SUV near his home at Moorebank, in south-west Sydney.
Police pounced on Flower, arresting him at his home. They searched Flower's car and found a Visa card, prescription and receipt for a driver's licence, all in Mr Hayson's name, as well as keys to Mr Hayson's beachfront Manly apartment and an encrypted phone.
Police allege they found a black Optus-brand mobile phone in the car which had "almost exclusively connected to cell towers in the Manly area", where Mr Hayson lived, when it made calls and sent texts to a South African mobile handset which was being used in Port Melbourne that month.
According to the court documents, police suspected Mr Hayson had used a covert phone which was subscribed in the same fake name and bought from the same place as two burner phones used by Flower and Mafiti in the drug-trafficking conspiracy.
Police searched Mr Hayson's home in March 2020, but have not laid charges against him as a result of the investigation.
The ABC has attempted to reach Mr Hayson for comment.
Flower and Mafiti could face a maximum sentence of life imprisonment for drug importation.
Posted , updated
Source: https://www.abc.net.au/news/2021-12-16/how-cocaine-kingpin-damion-flower-infiltrated-horseracing/100703506
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