Why Carl Williams was angry at ‘dog’ Peter Costello

An unconventional tactic from the former federal Treasurer sparked a furious response from Carl Williams, who warned “this is my state”.

Former Treasurer Peter Costello was described as a ‘dog’ by Carl Williams. Picture: AAP

A threat by then-federal Treasurer Peter Costello to strip Carl Williams of his assets sent the crime boss into a blind rage, secretly bugged conversations show.

On May 30, 2004, Mr Costello announced he would be using the Australian Taxation Office to “crush” Melbourne’s drug lords.

It came soon after former Victorian Premier Steve Bracks revealed plans to give police more powers to seize assets from those involved in Melbourne’s wave of gangland killings.

On the day of Mr Costello’s comments, Williams was involved in a taped conversation with associate Sean Sonnett.

Carl Williams.

Sean Sonnet.

They spoke as Williams surveyed the 30th-floor luxury CBD apartment that he had made the base for his criminal empire.

“This is what Bracks wants to kick us out of, this dog,” Williams said.

“This is what Bracks wants. Costello wants to kick us out.”

Sonnett, who was staying at the apartment and would soon be arrested over a plot to murder Carlton Crew figure Mario Condello, was also upset.

“This is my house, man,” Sonnett said.

Williams’ rage at Mr Costello was evident in a later conversation with an associate, also taped by organised crime police.

“This dog Costello wrote in the paper about me, this and that. The sooner they learn that this is my state, the better,” the livid drug boss said.

Mr Costello had given Williams and his ilk both barrels, raising the prospect of using the same kind of income tax evasion tactics once used on Chicago gangster Al Capone.

American gangster Al Capone. Picture: AP

Capone was never brought to justice for his murders but eventually wound up in jail because of his wealth.

“People well known to the police apparently live in luxury with no visible means of support or explanation as to how they maintain their lifestyles,’’ Mr Costello said.

“As we speak, drug barons compete for the distribution rights to sell drugs to our children in Melbourne. These are so lucrative that they are prepared to kill to protect profits … these barons sell young people into addiction.’’