Five armed men, a sledgehammer and the spy raid that cost ASIS its guns

The hotel manager expected burglars. A guest had reported men battering a tenth-floor door with a sledgehammer. When the lift opened, the manager instead saw five armed men. They were Australian Secret Intelligence Service trainees, and their rehearsal had just turned a Melbourne hotel into the scene of the service’s most notorious public failure.

The operation was meant to remain an exercise. Instead, trainees forced a hotel door and confronted staff and guests while carrying submachine guns, according to the Australian Broadcasting Corporation’s later reconstruction. The manager’s contemporaneous account describes staff expecting burglars, not intelligence officers. A covert capability had collided with a civilian workplace in full public view.

The political damage travelled far beyond the hotel corridor. ABC reported that the raid cost ASIS its covert-operation powers and brought the service into a Justice Hope inquiry. The Hawke government also barred the agency from carrying weapons. For a service built to work overseas and outside public sight, the punishment reached directly into how it could train and operate.

It took two decades for ASIS to regain the right to carry arms, in 2003. The long prohibition shows why the Sheraton episode was more than an embarrassing training mistake: one badly controlled exercise reshaped the legal and operational boundaries of Australia’s foreign intelligence service long after the armed men left the hotel.

The affair also became part of the argument for outside control. When legislation to place ASIS under parliamentary scrutiny was debated in 2001, ABC returned to the Sheraton raid as the clearest example of the dangers surrounding a secret service without strong public oversight. The proposed committee’s reach was still limited to administration and budgets rather than operations or priorities, but the scandal had forced the service’s powers into Parliament’s view.