LIZ HAYES: If we're ever going to stamp out people smuggling, we are going to need Indonesia's help. For most asylum seekers, it's the last port of call before Australia. More importantly, it's where the "Mr Bigs" are based. They operate in the shadows, but when you're desperate enough and you have the money, you can find them. This report from Richard Carleton.

RICHARD CARLETON: For some, this is their last stop before Australia. Palabuhanratu, on the south of Java, is where the Christmas Island people smuggling racket began. Palabuhanratu is just 400km from the nearest Australian territory. It was here, four years ago, that a man called Josias Bernardus set out on his first voyage with a cargo of refugees.

JOSIAS BERNARDUS: I got to Christmas Island...

RICHARD CARLETON: Had anyone gone to Christmas Island before with refugees?

JOSIAS BERNARDUS: No.

RICHARD CARLETON: You were the first?

JOSIAS BERNARDUS: I am the first.

RICHARD CARLETON: Josias Bernardus works in a small travel agency in the centre of Jakarta. He claims he no longer smuggles people, but in August 1997, Josias clearly thought he had found a nice little earner. As his scribbled receipts show, Josi made between US$800 and US$1600 from each of his mostly Iraqi passengers, all crammed on a vessel that was barely seaworthy. It was late in the afternoon when Josias and his crew of four and nine paying passengers set out in a boat just like this that they'd rented from that port, Palabuhanratu, here on the south coast of Java for the open-sea voyage to Christmas Island. Now, I felt uncomfortable just leaving the port in a boat like this, let alone challenging six-foot waves. Josias told me that he'd timed his departure so as to arrive at Christmas Island just on first light on Sunday morning because at that time, he'd been told, most Australians are hung-over and asleep. When they got to Christmas Island, Josias hid his knowledge of English and lied to Australian authorities that he was the ship's cook. The refugees were accepted but Josias and his crew were detained for three months, then sent back to Indonesia. Then Josias turned around and did it all again. How many trips all up have you organised to Australia?

JOSIAS BERNARDUS: Four.

RICHARD CARLETON: How much profit do you think you made?

JOSIAS BERNARDUS: Well, enough. More than enough. I'm not interested in the money, you know.

RICHARD CARLETON: Yeah, okay.

JOSIAS BERNARDUS: So sorry.

RICHARD CARLETON: I'm very interested in the money, though. Let's just get clear, though - on the four trips, you made something between US$10,000 and US$20,000. Do we agree?

JOSIAS BERNARDUS: Yeah.

RICHARD CARLETON: That's good money?

JOSIAS BERNARDUS: It's good money.

RICHARD CARLETON: For a week's work?

JOSIAS BERNARDUS: Yes.

RICHARD CARLETON: Since Josias' pioneering voyage, Jakarta, the Indonesian capital, has become a departure lounge for the desperate. There are at least five people-smuggling syndicates here predominantly run by Pakistanis with seemingly legitimate businesses. It's just that they trade in rugs out the front and refugees out the back. How many operators are there here in Indonesia, do you think?

BUSINESSMAN: There are probably around four or five.

RICHARD CARLETON: Big-time operators?

BUSINESSMAN: Big-time operators.

RICHARD CARLETON: Jakarta's Pakistani community is small and reputedly quite ruthless. This businessman asked that neither he nor his business be identified. And the other operators?

BUSINESSMAN: Small time, there are probably a dozen or 20 maybe - somewhere between 10 and 20 people.

RICHARD CARLETON: The four or five major operators - could you name them?

BUSINESSMAN: I'm sorry, I can't name.

RICHARD CARLETON: If the television camera wasn't running, could you name them then?

BUSINESSMAN: Everybody knows.

RICHARD CARLETON: Everybody knows who they are - is that right?

BUSINESSMAN: Probably everybody knows.

RICHARD CARLETON: Known, but rarely seen. Smugglers run their networks by mobile phone, and send lackeys to meet refugees at downtown locations. By day, it's the Slipi Plaza shopping mall, after dark, McDonald's in central Jakarta. The bosses themselves stay out of sight, but their customers are everywhere. After arrival in Jakarta, they're stored in cheap hotels until a boatload has been accumulated. At this place on Jakarta's outskirts, I found mainly Iraqi asylum seekers. One of them, Mohammad, had paid $1000, but is stuck here because his smuggler, a man named Abdul Razzak, has demanded more money to take him on the last leg to Australia. So pay $1000 more and then he'll send you to Australia?

MOHAMMAD: In Australia.

RICHARD CARLETON: Mohammad hasn't the money to pay, so he's both trapped and scared. You're stranded here?

MOHAMMAD: Yes, stranded here.

RICHARD CARLETON: Razzak has a thousand of your dollars? Let's go to his home, Razzak's home.

MOHAMMAD: No problem, to the home.

RICHARD CARLETON: And we'll try to get the money from him.

MOHAMMAD: Okay, no problem.

RICHARD CARLETON: Razzak lives on the right side of the sewer. His house is in a Jakarta suburb called City Garden where the wealthy reside behind high walls. He's part of a syndicate run by one of Indonesia's most wanted people smugglers, Saeed Omaed. This police profile lists Razzak as one of Omaed's associates. This is Mr Razzak's father-in-law. We found some of the family at home, but not Abdul Razzak himself. Your son-in-law has taken $1000 of this man's money, and he wants it back.

MOHAMMAD: I telephone [and say], "Mr Razzak, please can I have my money". He close telephone. "My name Sala", close.

MR RAZZAK'S FATHER-IN-LAW: I never get one single cent from him, honest. I never get a single cent from him. How do I know about $1000?

RICHARD CARLETON: Mohammad is by no means the only one who's been ripped off. In this rundown Jakarta hotel, I met Noraz Ali. Ali is an Afghani asylum seeker who's been left high and dry. How much money had you paid them?

NORAZ ALI: US$4000.

RICHARD CARLETON: $4000?

NORAZ ALI: Yes.

RICHARD CARLETON: Noraz's story is harrowing. His group actually set sail for Christmas Island two months ago - 138 people were crammed onto a dilapidated boat that began taking water an hour after leaving port. Six hours out, they turned back and were eventually washed up on a sandbar not far from where they'd left.

NORAZ ALI: Brought back in two pieces. The water level was more than my head. We go one by one with children and women. We bring out all of the people like this, old people also with us.

RICHARD CARLETON: How many children were on the boat?

NORAZ ALI: More than 30 children.

RICHARD CARLETON: One of the infants, two months old, slipped from his mother's arms.

NORAZ ALI: He was in the mother's lap when the boat became broke, so the baby fell down. We could not find him. When we got to the beach, the waves brought him, but he was already dead.

RICHARD CARLETON: Who are the people that smuggled you?

NORAZ ALI: Ahmed Bajwar.

RICHARD CARLETON: Ahmed Bajwar?

NORAZ ALI: Yeah, Ahmed Bajwar - he's from Lahore, Punjabi.

RICHARD CARLETON: But lives here in Indonesia?

NORAZ ALI: Yeah, lives here in Indonesia.

RICHARD CARLETON: Noraz now wants Ahmed Bajwar, his smuggler, arrested for the drowning of the baby and the death of another man lost overboard. With the cooperation of the Jakarta police, we set up a sting. Noraz was asked to set up a meeting with the smuggling syndicate, ostensibly to buy another passage. The smugglers gave him an address: the Al Malik carpet shop in south Jakarta and a nearby house. With a team of plain-clothes police, we paid them a visit. There were carpets and refugees, but no Bajwar - only his lackeys.

MAN: My business is of carpets.

RICHARD CARLETON: With carpets?

MAN: Only carpets.

RICHARD CARLETON: And people smuggling?

MAN: No, we don't do that.

RICHARD CARLETON: A little bit?

MAN: Not really.

RICHARD CARLETON: Not really?

MAN: No. Maybe the owner of the company, you know

RICHARD CARLETON: What is the owner's name?

MAN: Mr Alam. He's somewhere near. I don't know the house.

RICHARD CARLETON: Number two, maybe? Haji Alam, it seems, is higher up the chain. An associate of Ahmed Bajwar, he lives a few doors away and he was next.

RICHARD CARLETON: How's business?

HAJI ALAM: Carpet.

RICHARD CARLETON: What about the people smuggling?

HAJI ALAM: What?

RICHARD CARLETON: People smuggling?

HAJI ALAM: I don't know.

RICHARD CARLETON: Well, that wasn't a view that the police shared. Mr Alam, do you know what you're being arrested for?

HAJI ALAM: What did he say? I don't know.

MAN: Want to help police.

RICHARD CARLETON: He wants to help the police?

MAN: Yes.

RICHARD CARLETON: There was no sign this day of syndicate boss Ahmed Bajwar, but there were plenty of arrests. The police are also watching Josias Bernardus, though he insists he's now retired from the smuggling racket. Josias says he was doublecrossed by his own men. The fishermen he hired for his fourth trip jumped ship and ran away with his money, never to be seen again. So, they went out of the port, out of sight?

JOSIAS BERNARDUS: He just circled in the Indonesian sea, you know?

RICHARD CARLETON: And jumped overboard?

JOSIAS BERNARDUS: Yes.

RICHARD CARLTON: And left the passengers in a drifting ship? You trust this guy?

JOSIAS BERNARDUS: No, they do bad things to you.

LIZ HAYES: Minister, realistically, you can't stop it.

PHILIP RUDDOCK: Well, I'm not prepared to accept that. There are indications that the smugglers are operating in a very difficult environment now. I think we've gone a long way to sending a very clear signal through the legislation that passed the Parliament this week.