When an Aboriginal man was killed by five white youths in Alice Springs last year, it was the latest race-hate crime in an area plagued by violence. But the lenient sentences handed down to the "Ute 5" have sparked alarm that there will be a racial backlash in the Australian outback

One after the other, the photographs of the dead man fall. There is Kwementyaye walking Waffles the dog on the beach; there he is on the platform of Alice Springs station; there he is blowing his birthday candles out, "surrounded by girls," says his fiancée, Jade. "And smiling. He was always smiling." And then I see it – the saddest picture of all. It's Jade with Kwementyaye just a few weeks before his death. It's shocking to see how different she looked before he died; before she knew the full story of the beating, the racist taunts and the firing of the gun; before all the rage and injustice that was to follow the phone call on that cold Saturday morning last July.

The problem with sadness is that it is invisible. I couldn't see it, two hours ago, when I walked into the house that Jade Keil and Kwementyaye Ryder thought they'd spend the rest of their lives in. I couldn't see it as she pottered about making coffee, fussed over her uneaten carrot cake and talked me through the events of his death and the subsequent trial. Of course, misery is detectable only in its works, and I manage to grasp something of the sorrow and bedlam that Jade has been through when I glimpse the old photograph of her. She's slim, 30kg lighter, and her face shows none of the strange damage that bereavement has inflicted – the lines beneath her eyes like bruises, the blemishes and whorls like cuts.

The phone call came on 26 July last year. It was Kwementyaye's elder brother Darryl. He was sobbing. "Where are you? You don't know, do you? Get round here now. It's my bros. They've found him at the bottom of Anzac Hill. He's dead."

The first feeling was no feeling at all. Jade simply put the phone down. She'd met Kwementyaye two and a half years earlier, in Bojangles bar in Alice Springs. She was a relative newcomer to Alice. She was 28 and had travelled all over Australia, but she liked it here and she definitely liked the look of the handsome Alice-born native in the flashy cowboy hat. Protected from shyness by an armour of beer, she walked up and pinched his bum. They got together immediately. They made plans. They would work, save and marry. They would travel to southeast Asia.

How can all of that disappear in the space of a phone call? For Jade, it was simply too much to grasp.

The last time Therese Ryder saw her son Kwementyaye, he was dancing to country music. He'd just returned from Trephina Gorge, where he worked as a trainee ranger and was singing and clapping to his favourite tunes before a beery night out. The next morning, an old school friend of Kwementyaye's knocked on the door. Therese laughed when she saw him – he was dressed as a policeman.

"Why are you dressed like that?" she said.

"I'm a police officer now, Mrs Ryder."

When he told her why he'd come, she screamed.

It was the sight of Therese and her family, sitting on the floor wailing and crying, that finally triggered Jade's tears. But there was mystery, too. How did Kwementyaye come to have abrasions and swelling on his face, arms, forehead and leg and a 3cm laceration on the back of his head? He wasn't the violent kind. He'd never been in trouble with the police. Perhaps, they thought, he'd been in a car crash. Soon, the police came with darker news: they believed Kwementyaye had been murdered.

In the streets and pubs and dusty camps of Alice Springs there were whispers and dread and fury; some heard rumours of white men fleeing the scene; others warned of riot and revenge. Bloody memories began to rouse themselves from the floor of the town's collective conscious. Worried, the police announced that race was not a motive in the crime. When reporters asked how they could know this when they didn't have any suspects, they replied: "That's just what we're saying."

On the morning of Kwementyaye's death, local artist Matty Day saw something horrific. He was walking his dogs by the Todd river – a wide, dry, sandy bed that runs through the centre of town on which, for generations, indigenous people have camped out on – when a white 4WD Toyota Hilux drove at high speed at a group of Aboriginal people.

"I couldn't believe what I was seeing," he tells me when we meet in a coffee shop. "There was one old guy who was struggling. If he hadn't got up he would've been run over. It was like they were driving at a flock of birds – like they were little animals that could be disposed of. The respect for life was just not there."

"Was there a lot of space around the group?" I ask. "They were definitely aiming for them?"

"Yeah, there was the whole river," he says.

Concerned, Matty approached the group and saw Kwementyaye, who told him the car had already tried to run over a couple of elderly people further down the river. As they spoke, the 4WD did a turn and stopped so that the driver's window was facing the Aboriginals. Before Matty could witness what would happen next, his dogs ran off and he gave chase.

The disabled old man who struggled to get up lives in one of the Aboriginal town camps that have existed on the physical and psychic fringes of Alice Springs for as long as the town has been here. Behind a coach base and a furniture depot in a bright, clean industrial estate is a scene from a hundred years ago. Few white people see Namatjira Camp, a grim nest of iron sheds and outdoor mattresses whose only obvious sign of modernity is a single electric light and a government sign listing everything the inhabitants can't do. I'm here to ask Tony Cotchilli how close he came to being run over.

He sits up from under his layers of blankets and eyes me nervously through his white hair and beard. Dogs bark. Other Aboriginal people watch silently as the freezing winter wind blows off the ranges and fusses among the crumpled beer cans and scorched cooking pots. "Went fast. Really fast," he says. "I was scared."

"How close did the car go to your blanket?"

He traces a rectangle, in the dirt, with his finger: "My blanket." Then he draws a line right across the centre of it.

Matty Day went to the police with what he saw and before long, local men Scott Doody, Timothy Hird, Anton Kloeden, Joshua Spears and Glen Swain, all in their late teens or early 20s, were charged with murder and eight counts of recklessly endangering life.

The news crackled through the streets of Alice. Black worried to black and white worried to white. Nobody knew what would happen next. There were short-lived rumours that a memorial to Kwementyaye had been deliberately burned. Kwementyaye's mother feared a riot and the family issued a public appeal for calm. Two hundred and fifty locals paid for a full-page advert in the Centralian Advocate calling for peace.

It was a call not heard by the resident who began selling "Alice Springs White Power" T-shirts for $25 each, or by the authorities who initially ignored complaints about him from the public. When his trade became national news, he was finally charged and later pleaded guilty to offensive behaviour. To protect his identity, the judge has suppressed publication of his name, but we can know something of his views thanks to an earlier interview he gave to the media. Admitting that he'd "done time for flogging the fuck out of some coons," he insisted that "a lot of my friends are Aboriginal," before adding, "go and see the fucking coon camps, the coon creeks… they couldn't invent the fucking wheel."

There are few better ways of tasting the minds of a community than reading their local papers. The stories and letters – their content, length and order – are like revelations from a therapist's notepad: you discover what trips the residents into anger and which of the hundreds of minor conflicts that buzz around a town on any given week they hold to be most important. Back in Jade's kitchen, I browse a couple that happen to be lying on her table as she makes another coffee. The Centralian Advocate leads with a story about an argument that resulted in a shooting. Buried on page two is the startling detail that, prior to the disagreement, the armed men approached the victim happily, saying: "You're [all] right, mate – we thought you were blackfellas and we were going to shoot you." Alice Springs News runs with the council's attempts, prompted by complaints from a white gallery owner, to stop Aboriginal artists selling their work on the grass outside a church. This "crackdown on hawkers" is front-page news. On pages two and 11 they have reprinted a lengthy reader's letter concerning the trial of the five killers of Ryder. Its author raged at the "excessively harsh sentences imposed on these boys".

Jade sees me reading it and allows herself a rueful smile. "Once all the evidence came out during the trial and we found out everything that happened that night, I thought, 'They're screwed.'"

During my time in Alice Springs I quickly realised that before I could truly understand the events surrounding the killing of Kwementyaye Ryder, I'd first have to learn something of the history of the town itself. Marooned in the centre of an impossible universe of sand and heat, it has the air of an abandoned space station – alien and stagnant; desperate and defiant. If it feels lost in space, it also feels lost in time. Here, as everywhere, the truth leaves a breadcrumb trail through tiny, incidental details: the police's premature insistence that race wasn't a motive; the weekly paper leading with the "crackdown" on black "hawkers"; the 250 people calling for calm; the man selling "White Power" T-shirts. To the outsider, these are shocking glimpses, reminiscent of 1960s Mississippi. They speak of a hostility between black and white that is fraught, active and building.

The story behind the friction begins in 1860, the year the first white man passed through the district. By 1881 the whole of Central Australia was held by pastoralists or under lease application. Of course, the Arrernte people already lived here, and had done so for more than 50,000 years. They mounted a brief insurgency and suffered disease, gunfire and rape. The last major atrocity was triggered by a fight about an indigenous woman that lead to a white dingo trapper being murdered. The Europeans' revenge was 1928's Coniston massacre, during which it is thought that around 100 men, women and children were slaughtered.

Having been forced off their land, and with nowhere to find food and water, the Arrernte gathered in camps around the nascent town. There were regular attempts to eradicate these settlements. They were frequently raided, their inhabitants denied basic services, such as water. Between 1928 and 1964 there were at least four round-ups and forced evacuations and indigenous people were banned from entering Alice Springs. Today, Aboriginals from remote communities are still drawn here, to visit family, collect welfare or seek medical attention. Many sleep, as they did then, on the Todd. The camps remain, as does much of the dangerous energy. Eighty-two per cent of the local prison population is black. Alice Springs is reportedly the most heavily policed town in Australia – while the national average is one police officer per 375 citizens, Alice Springs's ratio is 1:135.

The survival of these fringe settlements is thanks, partly, to black activists such as Geoff Shaw who, in 1997, fought resistance from white organisations such as Citizens for Civilised Living who wanted to see them demolished. Today, thanks in part to Shaw, indigenous people can formally lease land off the government. His daughter Barb still lives in the modern brick house Geoff built in Mount Nancy camp. When I meet Barb to discuss the tensions surrounding Kwementyaye's death, I'm amazed to learn that they still want for basic services. The approach road isn't illuminated and the streetlights in the camp itself were damaged by a plumber 11 years ago and never repaired. They don't even have a door-to-door mail service – even the elderly have to collect their post from a council office, 6km away.

For Barb, Alice is more racist today than when she was growing up: "It's gone backwards," she says. Partly, she thinks, the Howard government's controversial 2007 "intervention" – instituted after allegations of widespread child abuse in Aboriginal communities – has "given permission to people to treat us differently". But it was an event 12 weeks before the killing of Ryder that, Barb feels, had a more menacing effect: the violent death of a white local man. Two Aboriginal men have since been ordered to stand trial for the alleged murder that shook the town and threatened, in the minds of some, to wake the ghosts of the Coniston massacre.

"Rumours started going around that something bad was going to happen, that they were going to target Aboriginal people," says Barb. "There's been a lot of incidents. Frozen eggs started getting thrown at us, car chases. My sister-in-law got spot-lit by a car and chased home. People have had heavy tools thrown at them. I know that in some of the camps, whitefellas would drive through and throw stuff at the houses – rocks, bottles, rubbish. Cars started going up and down the Todd river, teasing, tormenting. It all essentially started because of that death."

That afternoon I hear a different view of the recent troubles from local Greek-Australian art dealer Marilena Hippis. "It's always been a very racist place, but tensions are rising," she tells me. "What's frustrating for white people is that we've got to fight for everything and they get $35 a week and here's a grant and here's a place in uni – just wake up in the morning and go to work. And they won't. You know what I mean? It shits me that they spit in the street. It shits me that they piss in the street. It shits me that they go to the pub in a filthy state." She adds that she's finding herself increasingly intimidated by drunk indigenous people. "I used to walk down the Mall and the Todd River at night, but there's no way I'd do it now. Things just seem a little more sinister, more dangerous."

Marilena's attitude is fascinating because she's not someone who can be easily accused of racism – her husband is Aboriginal. And through this local's view of feckless and hostile black inhabitants, perhaps we can sense something of how the world might have looked to those five young men as they climbed into their Hilux that freezing July night. On the Todd river, the battle against campers that had been squalling along for more than a century was gathering force once more, with rangers confiscating blankets or soaking them with water and making them unusable. Just two days prior to the tragedy, Alice Springs News reported a wider crackdown. The headline: "Littering, swearing, camping, begging: ALICE FIGHTS BACK".

The trial of the "Ute Five" began in the middle of December 2009. The Centralian Advocate was there and reported with titillating colour: "Defence lawyers had quiet words with the parents of the men, while a row of pretty young things, with painted nails and highlights in their hair, shared nervous giggles as they waited for the court to open… Mr Ryder's family slipped in the back. Scrutinising their every move was a line of journalists – some from out of town."

With each eyewitness that testified, another mystery retreated and the truth, in all its halting savagery, began to assemble itself in the minds of Kwementyaye's family.

When they motored to the Todd river, all of the defendants except driver Kloeden were drunk. Despite the recent troubles in town and the men's subsequent actions, the defence claimed their intention was not to harass Aboriginals, but to check if it was possible to drive to the old Telegraph Station, 6km upriver. Kwementyaye – who'd returned home from a night out only to discover that he had run out of cigarettes – visited the Todd to see if he could blag one from the campers. Falling into conversation with a group, he decided to stay.

The first time Kloeden drove at the campers he missed Tony Cotchilli's blanket by around a metre. Reaching the Telegraph Station, and finding himself unable to exit the river, he turned back. The second time he drove at the campers, he ran straight over Cotchilli's blanket, the old man scrabbling to hide behind a tree. Two campers testified that the men were swearing at them, shouting "niggers" and "black bastards" and that they "stink". In retaliation, one woman threw a burning log at the disappearing 4WD. Kloeden drove on for a few hundred metres and stopped. The men shouted more racist abuse. Then they drove home to fetch a gun – a replica of a Colt 45 – and some blank ammunition and returned. En route, Hird fired out of his window. The car stopped so he could unjam the gun. Job done, he pointed it at the campers and fired again.

Terrified, the Aboriginal people scattered. Driving on, the 4WD passed Kwementyaye. Enraged, he threw a bottle at the vehicle. It hit. Kloeden braked. He did a U-turn and drove directly at him, stopping just in time, with Kwementyaye grabbing the bull-bars. Realising he was in serious trouble, he ran.

All four passengers jumped out of the car and chased Kwementyaye, who fell at the spot where his memorial can now be found. Hird ran up and kicked him in the head. Swain joined in, kicking him twice more in the head. Spears hit him over the back of the head with a bottle. "Don't fuck with us," one of them shouted. Then, car headlights startled them. They noticed Kwementyaye wasn't moving. "Let's go! Let's go! Let's go!" shouted Swain. They fled and concocted an alibi in an attempt to fool the police.

The pathologist who examined Kwementyaye's body said he'd died from a haemorrhage at the base of the brain. While he had no evidence of a pre-existing aneurysm that was sensitive to rupture, he considered it likely that Kwementyaye had one because the physical damage to his body didn't appear acute enough to cause death.

The defence seized on this, positing that this theoretical aneurysm could have ruptured when Kwementyaye fell, rather than when he was beaten about the head. Despite this, the evidence seemed clear and devastating. Things, for the five young men, looked grim.

Throughout the trial, Kwementyaye's mother, Therese, couldn't draw enough strength to sit in court. "I couldn't face those fellas," she says. "But I went on the day of sentencing. They walked in all dressed up neatly, the star attraction of the court. I burst out crying. I had to get out. I sang out to them, 'You all look good on the outside, but inside there's bloody racism, straight out'."

It became obvious that something extra-ordinary was going to happen when Chief Justice Brian Martin began his pre-sentencing remarks. Strewn among the clauses are the stentorian admonishments you'd expect – words like "drunk", "stupid", "violent" and "aggressive" – but in almost every moment that matters, Martin excuses the "relatively minor violence" he found took place.

He accepted that their motive for driving up and down the Todd was not to harass black people. Of Kloeden's terrorising of campers, he said, "As your counsel put it, you were hooning. Another word is lairising" and that he "aimed to miss". He absolved everyone but the driver for this, saying, "Mr Kloeden, I pause in this sequence to observe there is nothing in the material before me to suggest that anyone in the car suggested that you drive at or close to the camp. This was your decision alone." He accepted the defence's claim that there was "no sinister purpose" in their driving home to fetch the pistol: "You only wanted to have fun by firing it and making a loud noise as you drove around." The racist abuse they shouted was downgraded to mere "abuse". He accepted the defence's bold claim that all of Ryder's physical injuries could have been caused when he fell. Although he initially acknowledges that "it's not known precisely what caused the bleeding" that killed Ryder, in the crucial "sentencing factors" section, he becomes absolute, saying: "The deceased was susceptible to dire consequences from minor trauma by reason of a pre-existing aneurysm. But for the bursting of the aneurysm, the deceased would have suffered relatively minor injuries and the offenders would have been guilty of an assault at the lower scale of seriousness for offences of assault." He said: "None of you intended to cause serious harm"; that "each of you has always got on well with Aboriginal people. However, on this occasion your normal attitudes and standards of behaviour were pushed to the background."

Before the trial, an editorial in the Centralian Advocate acknowledged the importance of what was about to happen: "Everyone knows this is a test case of Australian justice; a case where justice must be seen to be done. And in the Northern Territory a life sentence means life." And life was exactly what Therese Ryder wanted: "I know blackfellas who have got 10 years for domestic abuse. I wanted them in prison for a long time."

Because Justice Martin decided that none of Kloeden's passengers had encouraged him to drive at the Aboriginals, he alone was found guilty of recklessly endangering life. Having already had their charge reduced from murder to manslaughter by recklessness, Martin found the five guilty of the even lesser crime of manslaughter "by negligence". Announcing a further "reduction of your sentence by reason of your guilty plea and genuine remorse", he gave them between 12 months and six years. With parole, they'll be out in no more than four.

Alice Spring News revelled in the relief and glory that was reflected on their town: "Chief Justice Brian Martin's findings on the 'racial overtones' of the killing of Kwementyaye stop well short of the 'race crime' treatment of the story by many media." And they were right – his comment on the matter reads like a masterpiece of stuttering reticence: "It is difficult to avoid the conclusion that the actions of some offenders were influenced… at least to some degree, by the fact that the deceased was an Aboriginal person."

According to Therese, it's only lucky that the Ryders are peaceful, practising Catholics: "If this happened to [notoriously fierce] Warlpiri people, they'd have been coming in in busloads, with spears and boomerangs. They'd have rushed into the courtroom and started fighting people."

Today, Therese finds it very hard to sleep. She gets up in the early hours and cries. "I pray to Jesus to look after me, but I can see no future. There are no happy times any more."

And there's since been a further calamity. Devastated over the death of his "bros", Darryl Ryder has disappeared. "The last time we heard from him was October," says Therese. "I think, 'Don't say I've lost another son now.' We've got blackfella culture. When things like this happen, they go for revenge."

"Do you think, when they're released, the five will be at risk?" I ask.

She looks unblinkably at her hands and says very quietly: "That's not up to me. It's up to other families."

Back in July, when the crime scene police tape was finally removed, Jade walked along the road that leads up from the Todd river and curls around the base of Anzac Hill. She thought she was OK, but suddenly fell into sobs when she reached a certain area. Two weeks later, she would discover that this was the exact spot where the killing had taken place.

For months following the death, Jade just sat and stared at the walls of her house, obsessing about everything she'd lost. At Christmas, her grieving became so acute she was hospitalised for two weeks. She's working again now, and that's been helping. But on the really bad nights, she'll leave the house to go and hide up in the bushes on Anzac Hill. She'll think and cry and look down at the place where Kwementyaye died. She likes it up there in the dark, where no one else can see her.