Report by Wendy, Bacon And Tracy Pillemer originally published by Sydney Morning Herald, 21 October 2000.
The flames were cruel enough, but the methods of a policeman turned arson investigator proved worse.
George Nagy gets tearful when he remembers the night in February last year when his pub in Monto, Central Queensland, burnt down. Woken by thudding noises, George looked out the window. “I saw this amber-coloured flickering of light and ... I realised the pub was on fire”. In panic, Nagy, his wife, Margaret, and Nagy’s mother, who was spending the night with them, escaped. “I just broke down and cried like a kid. I lost my business, I lost my home, I lost all my personal belongings.”
Monto’s Sergeant Colin Giles was one of the first at the fire scene. “There was certainly no evidence at all that linked George to starting the fire,” he says.
A Queensland coroner, Colin McKenzie, says he did not hold an inquest into the fire because there were no suspicious circumstances.
The Nagys’ hotel was insured by a Lloyds of London partnership, R.J. Kiln, which uses the insurance broker Stirling Risk to run its Queensland operations. Stirling Risk began an investigation into the fire. The man it appointed was an experienced Brisbane investigator, Peter Thomas. He made a strong impression in Monto, shouting drinks that he said were “on Lloyds of London”.
“He came across as one of the boys,” says Nagy. “He was very smooth talking; he displayed a sense of humour. Little did I realise he was going to turn that around and cast accusations at me.”
Nagy was surprised when his interview with Thomas about the fire was interspersed with questions about his sex life. Thomas asked Nagy whether he was sexually interested in boys and had ever been in a threesome.
Margaret Nagy alleges Thomas spoke of his own sexual practices and questioned her about hers. “He was jumping back and forth between the questions of the pub and then the sex life so it was confusing,” says Margaret. “He did say that George burnt the pub down.”
A long-time friend of the Nagys, Gina Hart, was interviewed by Thomas, too.
“He wanted to know if I was having a sex affair with George. He said, ‘Well, that’s a shame because I come fully prepared to offer you $10,000,‘ if I could admit to him that George had told me in a moment of passion that he had lit the fire himself.”
Since Hart first made this allegation on A Current Affair this year, no-one from either Stirling Risk or the police has sought to interview her. “Basically he admitted to me from the outset that he believed George was guilty of arson,” she remembers. “I was horrified this man was investigating something and truly wasn’t objective.”
Late last year Nagy was told he would not be paid because the insurers suspected he lit the fire. He has never been told what evidence Thomas has against him. He has not been able to get copies of the statements prepared by Thomas based on interviews with him. The Nagys are suing R.J. Kiln for breach of contract. Stirling Risk was not prepared to make any comment about the case because of the Nagys’ legal action. A spokesperson for R.J. Kiln said the company had not been told by its lawyers about Hart’s allegations, but “would like to know more”.
This is the story of six fires and a private inquiry agent backed by big insurers who left all the victims feeling as much affected by the investigation as the blaze itself.
Thomas, who was president of the Queensland Association of Fire Investigators in 1993-95, has plenty of experience investigating fires.
Before he joined the private inquiry industry in 1991, he spent 21 years in the NSW police force, mostly in northern NSW where his father and grandfather were Anglican ministers. For six years Thomas was a member of the major crime squad in Newcastle and responsible for arson investigations.
The Nagys are not the first to question his investigation methods. During Thomas’s stint in the police force he was the subject of dozens of complaints and at least four adverse findings by NSW Police Internal Affairs and the NSW Ombudsman, including failing to return an acquitted man’s property and giving false evidence to an inquiry. At the time he left the police service Police Internal Affairs were investigating other allegations that he had wrongfully removed and disposed of property during a search. These complaints were upheld.
Through his solicitors, Thomas submitted that he was stressed at the time. He was not penalised because he had left the police service.
Thomas also led a controversial police investigation into the bombing of a Byron Bay restaurant in March 1989, during which he charged the couple who owned the restaurant with planting the bomb.
The owners, who do not wish to be identified, were acquitted after Thomas had left the police service.
In December 1992 in the District Court, Judge Harvey Cooper described Thomas’s conduct during a taped conversation about the bombing as “reprehensible”.
The transcript of the tape revealed to the court that Thomas had told one of the owners she could “walk out” if she was prepared to “tie up” her husband. He said: “In the long run, we will shake the life out of both of you ...”
Judge Cooper found Thomas had “patently insufficient” evidence to support the charge and failed to understand “the distinction between evidence justifying a suspicion and evidence justifying the laying of a criminal charge”.
He criticised the “fallacy and circuity in his reasoning” and found that Thomas and another detective had given false evidence in the committal proceedings.
In May last year, under cross-examination in a Queensland District Court arson case, Thomas was asked why he left the NSW Police Service. It was “time for a change”, he said and denied being under investigation when he left.
In his police days Thomas had developed strong contacts in the insurance industry. When he left the force he first took up a position with National Investigators Partnership, part of a Queensland loss-adjusting business, before later setting up his own agency.
Anyone without a criminal record can register as a private inquiry agent. Private inquiry insurance work is more lucrative than police work because insurance companies have an economic interest in not paying fraudulent claims. At National Investigators he worked with an accountant, Peter Wyatt, whom he had met while he was in the service and both were investigating a hotel fire near Grafton in 1987.
The owner of the hotel, Sid Bates, today drives trucks, having lost $1 million worth of assets as a result of the fire and his fights with the police and his insurer, Trans Tasman
Underwriters. “It’s hard when you’ve got to start again,” says Bates. He remembers walking along the streets of Grafton after a family birthday celebration at a local Chinese restaurant. “That’s when the fire engine came out,” says Bates, who pointed it out to his excited grandchild. “We didn’t know it was going to [our] pub.”
The investigation led to Bates being charged with arson. “He [Thomas] didn’t want to believe our stories at all,” says Bates.
The NSW Attorney-General accepted the submissions of Bates’s lawyers that the Crown’s weak circumstantial case was “completely consistent with the innocence of Mr Bates” and the case was dropped.
Bates was never paid by the insurer but, having spent all his funds on legal bills, did not have the money to sue.
This was not the case for a Brisbane couple whose home was gutted by fire in 1993. They have fought Thomas and won.
Bruce Gutteridge, a prominent pathologist, and his wife, Beth, lived in a grand colonial home called Mayfair.
A Vietnam veteran, Gutteridge had insured the house with Defence Service Homes, which is owned by the Federal Government.
When Mayfair burnt down, Thomas spearheaded the investigation for National Investigators Partnership, chosen by Defence Service Homes to investigate. The contents of the house were insured by New Zealand Insurance.
Beth suffers chronic severe facial pain from a skiing accident and had been injected by her doctor with the drug Largactil on the day of the fire.
Thomas was aware that Largactil is mostly used as a psychiatric treatment and suspected that Beth was psychiatrically disturbed and lit the fire herself. Past employees were interviewed about conversations with her.
Unhappy that local police were not pursuing the Gutteridges more vigorously, Thomas approached the Queensland Fraud Squad who took on the case. He handed them his file so that witness statements could be retyped on police letterhead. All the police had to do was get witnesses to sign them.
As a result of Thomas’s investigations, Beth’s entire medical history, including private conversations with doctors, was exposed during the inquiry by the coroner Gary Casey. Her barrister complained that the inquest developed into a trial of Beth rather than an inquiry into facts. Casey found the Gutteridges had no case to answer. NZ I’s loss assessor, Brian Dellitt, told the coroner that two months after the fire the two insurers had a meeting. He said his inquiries led him to be satisfied the Gutteridges should be paid. But Thomas argued that, on the balance of probabilities, Beth had lit the fire.
Dellitt said he told Thomas he did not have evidence to support his claims. He was critical that Thomas had not interviewed the crucial doctor who gave the Largactil injection.
NZI paid the Gutteridges for the contents of the home the day after this meeting. Defence Homes refused to pay and, in 1994, the Gutteridges sued the Commonwealth in the Queensland Supreme Court.
Some of the doctors who had treated Beth said there was no evidence that she would have lit the fire. However, Thomas introduced Defence Homes to a Sydney psychiatrist, Rodney Milton, an associate from his days in the NSW Police Service. On the basis of medical records, but without meeting her, Milton prepared a report that Beth “could have been motivated to light the fire”.
In June 1994, Milton was about to give evidence when Defence Homes agreed to a settlement of $1.9 million, at the time a record private fire-insurance payout.
After the case, Gutteridge said there should be more scrutiny of insurance investigations. Having the resources, he said, made all the difference. “It’s lucky I’m wealthy they just thought we’d crack,” he told The Australian.
“They’ll accuse you of lighting the fire, they’ll say your wife is mad, they’ll secretly record conversations with you and your friends and they’ll do everything to besmirch your good reputation.”
Despite the big payout and the bad publicity, when Defence Homes heard in December 1998 that another returned serviceman suffered a fire, they turned again to Thomas.
The house of an invalid pensioner, Jim Sprott, at Nobby in South-East Queensland, burnt to the ground. His is another case of an owner who was accused of lighting his own fire, was acquitted of the criminal charge, was refused his insurance payout and is fighting his insurer in the Queensland courts.
As court transcripts show, Thomas was commiserating with Sprott two days after the fire. “Bad luck, mate. We’re here to help you.”
Sprott told the Queensland District Court last year that he (correctly) understood that he would not be paid unless he co-operated with the insurer’s requests for information. He believed he had no choice but to assist Thomas.
Thomas reported that Sprott had lit the fire and the insurance company refused to pay Sprott.
Thomas handed his file over to the Queensland police, who charged Sprott. The Crown case was almost entirely dependent not on police evidence but on conversations with Thomas which had taken place without any of the warnings given to those suspected of crimes.
Sprott had made a comment that suggested he might have known how the fire began. But as the judge, Patricia Wolfe, found, “It is not so much the accused professing that, it is Thomas who regards himself as something of an expert considering those sort of things and then putting ideas into the accused’s mind.”
Sprott told Wolfe he had found Thomas “intimidating” at times. Sprott told the court: “I couldn’t say anything. It didn’t matter what, I felt as if I had to go along with what he wanted.”
Wolfe excluded a number of the conversations with Thomas on the grounds of unfairness, which left the Crown with no case. Sprott was acquitted and expected to be paid by Defence Homes Insurance. But still it will not pay and Sprott has sued.
Defence Homes Insurance referred the Herald to the Department of Veterans Affairs. A department spokesman said it was not possible to answer any questions about either the Sprott or Gutteridge cases or any other matters connected with Defence Homes Insurance while a matter was before the courts.
Another Queensland small businessman faced with the prospect of losing everything after a fire is a baker, Nigel Wilkinson, who says he is financially and emotionally devastated following his dealings with Thomas.
In the early hours of the morning of July 20, 1998, Wilkinson was baking for that day’s business. He went to the toilet outside his bakery in Mundubbera, Central Queensland.
“When I came out I was attacked,” he says. “I woke up chained and gagged in the toilet. When I heard voices out the back I started kicking on the door. I was lying on the floor still groggish.”
Firefighters used boltcutters to free Wilkinson. “The bakery was alight it was burning.”
Thomas, who was chosen by Zurich Insurance to investigate the case, alleges that Wilkinson’s story is a fabrication. The Herald has heard a tape of conversations between Thomas and Wilkinson, which casts light on how Thomas handles his suspects.
He is fast talking, seeming to be chatting on the run. He keeps reassuring Wilkinson that his building will soon be released by investigators. He inquires after his welfare (Wilkinson suffers from anxiety and depression as a result of the attack) and persistently tries to get him to say he would prefer a cash settlement to moving back into the bakery. (Desiring a cash payment could be construed as circumstantial evidence that a person suspected of lighting a fire needed money.) In the last conversation, his tone becomes harsher, although he never puts any allegations to Wilkinson.
Nearly two years after the fire, Zurich refuses to pay Wilkinson. The case is stalled because the police have not finished their report. The Queensland police say the reason why they have not completed the report “is a matter between the insurance company and police”. A spokesperson for Zurich says the company has not been “formally asked for information” by the police.
Wilkinson is living on the pension. “I’m very on edge and stressed out all the time,” he says.
Wilkinson and his wife, who insist they are innocent, have sued their insurer but despair for their future because their resources are almost exhausted.
The Zurich spokesperson declined to further comment because Wilkinson is suing the company. Zurich continues to use Thomas as an investigator.
Two months after Sprott was acquitted last year, Judge Wolfe had another case involving Thomas’s methods. Another fire victim insured with Zurich, Neville Wootton, was charged with arson. He was acquitted by Wolfe, but has not been paid by Zurich and is suing the insurer.
On the August 15, 1997, Wootton’s house caught fire and he was later charged. He remembers Thomas as “real pally with me to try and get me to say something just like police work with the goody and baddy and he was the goody”.
The case was committed to trial largely on the basis of Thomas’s evidence. Thomas presented himself during the committal as an investigator of such experience that he did not need to rely on forensic reports in this case. The prosecution case was conducted on the basis that there was no other report. Yet after Wootton was committed for trial, his lawyer Colin Hardie discovered the insurance company had commissioned another report that found the cause of the fire could not be determined. Hardie says the prosecutors had not been told about this report.
“I think there has been a deliberate cover-up by the investigator of the insurers not to disclose the report to the public authorities,” he says, “and the worst thing of it all is it resulted in the waste of public funds and subjected the witnesses to a criminal prosecution.”
The Crown agreed Thomas’s evidence be excluded. Wolfe said, “I really am concerned that there is no evidence” and “I don’t know how it got past committal, quite frankly,” she said, before dismissing the case.
Insurance companies have an obligation to protect themselves (and the premium rates their customers pay) from fraudulent claims. But victims of fire also have a right to fair investigations and to knowing what evidence there is against them.