When the Federal Government released its white paper on counter-terrorism in 2010, there was a curious omission from its list of terrorist attacks and major foiled attempts in Australia over the past 40 years. What on the face of it should rank as the biggest counter-terrorism success was not even mentioned. The arrest of Max Bebic, one of the alleged members of the Croatian Six. This was the ''Croatian Six'' case in February 1979, when NSW police were said to have stopped the imminent bombing of Sydney's Elizabethan Theatre during an event attended by up to 1600 people, the bombing of several city businesses and the cutting of Sydney's water supply. The six accused were successfully prosecuted and each sentenced to 15 years' jail, convictions and sentences upheld on appeal. The omission may reflect embarrassment over the case, around which doubts and suspicions began to swirl even as the six underwent a trial that lasted eight months.

A Herald investigation strengthens suspicions that the Croatian Six - Max Bebic, Vic Brajkovic, Tony Zvirotic, Joe Kokotovic and his brother Ilija Kokotovic, and Mile Nekic, all young tradesmen and Australian citizens of Croatian birth - were framed, each spending up to a decade in prison. Not only that, the Croatian Six case resulted from an operation by the Yugoslav state security service, known as the UDBa, to blacken the Croatian-Australian community as extremists, using Australian intelligence and police services as its tools, according to a top American intelligence expert on the Balkans. The arrest of one of the members of the Croatian Six. This was not entirely unwitting. A former lawyer working for the government in Canberra claims intelligence information about the involvement of the UDBa was withheld by officials from the trial and from prime minister Malcolm Fraser. He says this information would have altered the verdict to not guilty. Croatians formed the majority of the 160,000 Yugoslavs who took up Australia's assisted migration scheme after World War II. The intensely nationalist and Catholic community soon used its new freedom to organise campaigns against the communist Yugoslav federation, dominated by Serbs.

Credit:Simon Bosch Consulates and travel offices linked to the state airline, JAT, were targets for demonstrations, ethnic scuffles broke out at football matches, smoke bombs went off at cultural events. It got more serious, with the Yugoslav Interior Ministry intercepting armed incursions by Australia-based members of the Croatian Revolutionary Brotherhood or HRB. It was a convenient cudgel for Australia's left to turn against the Coalition government and Canberra's security apparatus. Croatians were stigmatised as Nazis by the wartime collaboration of a nationalist organisation, the Ustache, with the German occupation. ''We were the Muslims of that time,'' says Branko Miletic, a Croatian-Australian journalist in Sydney. Left figures such as Jim Cairns and Joan Coxsedge excoriated the Liberals and ASIO for ignoring this importation of fascism, including East European war criminals on the run, in their one-eyed focus on communism and Soviet espionage. When Labor came to power in 1972, one of the first acts of its attorney-general, Lionel Murphy, was a ''raid'' on ASIO's headquarters in Melbourne in March 1973, to find files on Croatian extremists he believed ASIO was withholding.

In the 1970s the Croatians came under scrutiny by the federal police and special branches of state police. The founder of the Yugoslav communist state, Josef Broz Tito, was ageing; the temperature of Yugoslavia's sub-nationalism rising. So when, in February 1979, NSW Police announced that a group of Croatians had been arrested in Lithgow and Sydney just before planting gelignite time-bombs in targets identified with the Yugoslav regime - including the 1600-seat Elizabethan Theatre in Newtown, where entertainers from Yugoslavia were about to perform - there was a high degree of public credulity. The police swoop seemed the right mix of force and intelligence to grab terrorists and their explosives just in time. It had started when a young Yugoslav helping build the Wallerawang power station, Vico Virkez, went to Lithgow Police Station on February 8, 1979, and confessed he was involved in the plot. Raids on Virkez and his alleged accomplices in Lithgow and Sydney followed that night. Virkez turned crown witness, and got off with a two-year sentence. He renounced his Australian citizenship and was flown back to Yugoslavia while the trial continued. His six alleged accomplices each got the maximum 15 years. All served up to 10 years. The credibility of Virkez was disputed from the start. He had a history of psychiatric disturbance. He had been in touch with the Yugoslav consul-general in Sydney. He wanted to return to Bosnia-Herzogovina. Subpoenas by defence lawyers for what ASIO and other agencies knew about Virkez were blocked on national security grounds.

There were other questions. At least one of the accused had been roughed up during questioning at the Sydney CIB. All six recanted the confessions they had allegedly made to police, five in unsigned ''verbals''. But some 40 police insisted the confessions were uncoerced and that they had found gelignite, detonators and crude timers in the homes of the accused. The jury went for the prosecution case, as did the NSW Court of Appeal. In August 1991, the ABC's Four Corners dropped a bombshell. Reporter Chris Masters tracked down Virkez in the disintegrating Yugoslavia. He admitted he was a Serb named Vitomir Misimovic who had infiltrated the Croatian community here and informed on its activities to Yugoslav diplomats. In court he had kept to a script written by police. None of the six were guilty of the bombing conspiracy. By that time, many of the police involved were under a cloud. Roger Rogerson was about to go to jail. The Ananda Marga convictions had been overturned by Justice James Wood. The CIB and its squads had been disbanded as a ''hotbed of corruption''; the Special Branch was next. Wood's later royal commission ripped open patterns of police malpractice. Yet in 1994, chiefly on legal advice from crown lawyer Rod Howie, QC, (later a NSW Supreme Court judge), the then Liberal government's attorney-general John Hannaford dismissed applications for a judicial review of the convictions. The case remains a deep grievance for the Croatian community. ''We … still feel bitter about it today,'' says Mario Despoja, who ran an unofficial Croatian ''embassy'' in Canberra in the 1970s, and whose daughter, Natasha Stott Despoja, became leader of the Australian Democrats.

For the six men and their families, it remains a nightmare. Lydia Peraic, the former wife of Joe Kokotovic, shudders at the recollection of the night when Rogerson and his raiding party, pistols drawn, swept into their Burwood house, and what she says was a highly prejudiced trial. ''We were family people looking forward to the future. We had our beliefs,'' she said. ''They [the six] were active, within the law. They believed in the ideal of a free Croatia, which it is today.'' The effect was devastating. ''Our whole family was destroyed,'' Peraic said. But new information is reviving the case for a judicial review of the Croatian Six convictions. In the 1990s, John Schindler was the technical director of Balkan operations for the US National Security Agency, involved with interception and decryption of electronic data and messages. In the search for war criminals, he noticed a pattern in their background. ''Many of the them had the same curriculum vitae: that is, individuals who were involved in organised crime yet also had connections to the state security service,'' he said. ''These individuals had roots in the special program, as they called it, of UDBa back in the days of communism. That is, individuals who did dirty work for UDBa, for Belgrade, abroad, in western Europe, in the US, very much in Australia, who wound up doing terrible things in the 1990s.''

Now a professor in national security at the US Naval War College, in Rhode Island, Schindler will soon publish Agents Provocateurs, a book about the UDBa. It discusses the Croatian Six case. ''It was a classic UDBa op,'' Schindler says. ''There is no doubt they set up all six.'' Former UDBa officials involved with running the operation or who knew directly about it had told him it was ''one of their great successes'', Schindler said. ''They succeeded in discrediting the Croatian diaspora in Australia completely.'' Asked how aware of Yugoslav intelligence involvement were the Australian agencies, Schindler said that at the ''worker level'' they were probably unwitting. ''I have no doubt that individuals at a higher level were witting,'' he said. ''ASIO was certainly aware that the story was not right, as they intercepted Misimovic's phone call to the Yugo consulate telling them he was going to the cops - hours before he did,'' Schindler said. ''Exactly what ASIO knew, and when, I'm less certain of, but any ASIO officers who worked Croatian CT [counter-terrorism] in the 1970s had to be aware that Croatian emigre groups were deeply penetrated by UDBa and some such as the HRB [the group which ran the military training exercise near Eden, NSW, in 1978] were, in effect, under their control. Agents provocateurs were a standard UDBa technique.'' Schindler thinks about one-third of the 14 diplomatic staff then at the Yugoslavian embassy and consulates in Australia would have belonged to the UDBa. But he thinks Virkez would have been run by an ''illegal'' under some kind of cover.

''The UDBa pulled off the same op in the US shortly after the Croatian Six drama played out, the so-called Otpor [''Resistance''] trials here in New York circa 1981-82,'' Schindler said. ''The Australian Police screwed the case up royally, but I doubt they understood that the entire thing was an UDBa set-up.'' Some senior officials did have more than an inkling of this, says Ian Cunliffe, a senior legal adviser in the Department of the Prime Minister and Cabinet over 1979-81 and later the secretary of the Australian Law Reform Commission. In February 2007, while giving evidence at the NSW Coroners Court inquest into the deaths of the five Australian newsmen in East Timor in 1975, about intelligence material he had seen during duty with the 1975-77 Hope royal commission into Australia's intelligence services, he was asked if officials withheld intelligence material from the government. There was a case where ''the deputy secretary of the department said this wasn't to reach the prime minister,'' Cunliffe replied. ''That involved withholding information which would have been significant in a major criminal trial.'' Questioned by the coroner, Cunliffe said it occurred while he was in the Prime Minister's Department and involved ASIO and the Commonwealth Police. ''… I asked questions as to what had happened and, first of all, was given a whitewash answer by the Commonwealth Police,'' he said.

''I pressed further and it became clear there was much more to the story … There was one of those famous interdepartment committees called - which consisted of ASIO, Immigration, Foreign Affairs, Attorney-General's, the Commonwealth Police - chaired by the Prime Minister and Cabinet, … [its] decision closed matters that I thought were tantamount to perverting the course of justice in a criminal trial involving about six defendants here in Sydney.'' The subject was taken up at two committee meetings. ''The decision was taken that none of this material should be made available and that Commonwealth Police, indeed, at that meeting said that if - I asked the question, 'What happens if these things are subpoenaed?' - and they said, 'Well, they won't exist'. As an officer of the court, at that time, that troubled me.'' Cunliffe, now retired in Melbourne, confirms he was talking about the Croatian Six case. ''I feel there's been a grave injustice because of information that was withheld at the trial and at the appeal of the six people who were convicted …'' he says.

Framed, the Herald’s first ebook, investigates the fate of six men jailed for up to a decade over plans to blow up a Sydney theatre in 1979 as part of a Croat terrorist plot. Hamish McDonald spent months tracking down the surviving members of the Croatian six, the police and others involved in the case. His findings strengthen suspicions that these convictions are, as one former senior Australian official puts it, ‘‘a grave injustice’’. McDonald also investigates the role in the case of the Yugoslav state security service, which used Australian police and intelligence services as tools to blacken the reputation of Croatian-Australians as extremists. Loading The Herald publishes an extract of McDonald’s book in print, online and on the iPad app today. Video interviews with key subjects in the story are on the Herald’s iPad app and online.

The full story, Framed, is published as an Amazon ebook on the Kindle Store. The book can be purchased on the Kindle Store here. The ebook will cost $US1.99 and can be downloaded onto most digital platforms: Kindle reader, PC, Mac, iPad, tablet, iPhone and iPod touch.