* Security laws, bail system under scrutiny after cafe siege
* Hostage-taker Monis was not on watch lists - PM
* State’s criminal justice system underfunded - lawyer
* Iran says it warned Australian government about Monis (Adds Obama-Abbott call)
By Matt Siegel
SYDNEY, Dec 17 (Reuters) - Australian Prime Minister Tony Abbott on Wednesday ordered a sweeping investigation into a deadly hostage siege after tough new security laws and the courts failed to stop a convicted felon from walking into a Sydney cafe with a concealed shotgun.
Three people were killed, including hostage-taker Man Haron Monis, when police stormed the cafe early on Tuesday morning to free terrified hostages held at gunpoint for 16 hours. Police are investigating whether the two captives were killed by Monis or died in crossfire.
Monis, a self-styled sheikh who received political asylum from Iran in 2001, was well known to Australian authorities, having been charged as an accessory to murder and with dozens of counts of sexual and indecent assault. He had been free on bail.
Australia passed sweeping security laws in October aimed at stopping people from becoming radicalised and going to fight in conflicts such as those in Iraq and Syria, where scores of Australians have joined militant groups, as well as preventing attacks at home.
Despite the new powers, Abbott said Monis was not on any security watch list and managed to walk undetected into the Lindt Chocolate Cafe with a legally obtained shotgun on a busy workday morning. New South Wales (NSW) state police later contradicted Abbott’s assertion, telling Reuters in a statement there was no record of Monis having a gun licence.
Monis was convicted in 2012 of sending hate mail to the families of Australian soldiers killed in Afghanistan.
Abbott said the national and state governments would conduct an urgent review to identify where the system had failed in order to understand how attacks could be stopped in future.
“We do need to know why the perpetrator of this horrible outrage got permanent residency. We do need to know how he could’ve been on welfare for so many years. We do need to know what this individual was doing with a gun licence,” Abbott told reporters in Canberra.
“We particularly need to know how someone with such a long record of violence, such a long record of mental instability, was out on bail after his involvement in a particularly horrific crime. And we do need to know why he seems to have fallen off our security agencies’ watch list, back in about 2009.”
The justice system in New South Wales, Australia’s most populous state, was also under fire.
“We were concerned this man got bail from the very beginning,” said state Police Commissioner Andrew Scipione.
Police had requested that courts refuse Monis bail but were not paying special attention to him because his charges were not linked to political violence and he was not on any watch list, he said. Abbott also raised concern about the bail system.
Greg Barns, a lawyer and a spokesman for the Australian Lawyers Alliance, said that lengthy delays between arrests and cases being heard, along with the presumption of innocence, meant more people were on bail for longer.
“There aren’t enough courts, there aren’t enough judges, there is not enough legal aid. Every sector within the criminal justice system is underfunded by the government,” he said.
Funding for the state’s criminal justice system fell 11 percent in 2012/13, according to a government report, while delays in hearing criminal matters in the state Supreme Court grew to 6.5 months in 2013 from 1.5 months in 2010, according to its annual report.
New, tougher bail laws have already been passed in the state but they will not come into force until late January due to the need to train police, courts and lawyers.
Police said on Wednesday a man had been charged with making threatening phone calls to a mosque in western Sydney, one of the few confirmed reports of what was feared could be a wave of anti-Muslim sentiment in the wake of the violence.
In 2005, racially charged tension between residents from the largely white beachside neighbourhood of Cronulla and Muslim youths from western Sydney degenerated into days of riots involving thousands of people.
“There has been some issues of hate or bias crime but it’s certainly minimal compared to the outpouring of support,” Assistant Police Commissioner Michael Fuller told reporters.
U.S. President Barack Obama called Abbott on Tuesday night to express his condolences and offer assistance if needed, the White House said.
“The president also praised Australia’s rejection of any violence taken in the name of religion and the fear this violence seeks to stoke,” it added.
On Wednesday, people were still laying flowers and signing condolence books in Martin Place, a pedestrian mall near the scene of the cafe siege.
Police also said they would be boosting their presence in prominent locations such as Sydney Harbour, home to the Opera House, for the next three weeks as an added precaution.
Iran’s Foreign Ministry said it had warned Australia repeatedly about Monis, who fled Iran, claiming persecution.
Recently introduced Australian legislation has expanded the intelligence services’ ability to access private computer networks, crack down on the leaking of classified information and bolster the cooperation of the domestic and foreign intelligence services.
The government is also introducing controversial data retention laws, although Abbott said on Tuesday it was unclear whether the measures, aimed at intercepting communications between individuals plotting attacks, would have helped to stop Monis.
Critics of the security laws, which have been touted by Abbott’s conservative government as necessary to prevent attacks such as the hostage crisis, have seized on the recent failure to argue against granting more powers.
“There’s no control order regime to account for this. There’s no metadata inside an apparently deranged mind,” Fairfax News columnist Waleed Aly wrote. (Additional reporting by Swati Pandey, Lincoln Feast, Jane Wardell and Byron Kaye in SYDNEY, William Maclean in DUBAI and Doina Chiacu in Washington; Editing by Dean Yates, Paul Tait, Robert Birsel and Jeffrey Benkoe)