The key elements of the VITAB scam were published in The Canberra Times in March 1994 within the limits of our restrictive defamation laws.
The article led to squeals of innocence from the then ACT Government and then ACT TAB board.
With the privilege of the Burbidge inquiry, and $5.5 million of taxpayers’ later, the scam can be outlined more bluntly. Here it is.
All TAB betting money in Australia goes into one or two major pools. About 85 per cent of the pool is paid out in winnings and 15 per cent goes to taxes and money to support racing.
The ACT TAB was linked to a SuperPool of Victorian and other smaller states’ TAB takings. Winnings were paid out of the pool and the ACT took about 15 per cent of ACT TAB bets in taxes and racing-support money.
A fraudulent scheme under the name of VITAB was played upon the ACT TAB and the then ACT Labor Government, which both fell for it. The scheme’s promoters attracted former Prime Minister Bob Hawke, who unwitting of the fraud, lent his name to the scheme to give it respectability and for media relations.
The scheme was to pretend to the ACT TAB and the ACT Government that VITAB would attract big Asian punters to bet with the ACT TAB via Vanuatu.
Vanuatu did not take so much tax or racing-industry money out of the betting pool, so it could offer a higher return to the Asian punters than any Australian TAB. The return was about 95 per cent.
In fact, there were few, if any, Asian punters. It was really a scheme for some big Australian punters to get access to the big Victorian TAB pool via a gullible ACT TAB and VITAB with an average of about 10 per cent higher return than if they had bet directly with the ACT TAB or the Victorian TAB.
Big smart punters might average, say, 105 per cent return on direct bets with the Victorian TAB while mug punters would return, say, only 65 per cent to bring an average of 85 per cent. If those big punters bet through VITAB they would get a 115 per cent return.
At the time of falling for the scam the ACT TAB’s board had lost key racing people in favour of appointments with political connections.
But before the scam could get off the ground, the Victorian TAB got wind of it and gave notice to sever the ACT TAB’s link with the SuperPool unless the ACT severed its link with VITAB.
That was disastrous for the ACT. With only ACT bets its pool was too small to attract big punters.
But the ACT remained contracted to VITAB. When the ACT severed its link with VITAB, VITAB threatened to sue. The ACT Government paid out $3.3 million in damages.
The Burbidge inquiry found yesterday that the ACT should not have paid it. The legal advice to pay it was defective. About half of the people in VITAB, but not Mr Hawke who was unwitting, did not deserve their payout.
In short, the ACT TAB and the then ACT Government fell for a scam that cost the taxpayers (with damages and lawyers) at least $5.5 million.