Cloud hangs over Australia's big day

Racing: Letter from Sydney – Melbourne Cup

Australia is gripped by its annual bout of racing fever ahead of tomorrow's Melbourne Cup, but this year the festive atmosphere has been tainted by a scandal that threatens to engulf the nation's leading jockeys.

Stewards in Victoria, where Australia's most celebrated horse race is staged, have questioned at least seven jockeys and trainers about their relationship with Antonios Mokbel, a suspected drugs trafficker reputed to be one of the country's biggest punters.

The jockeys are alleged to have given Mokbel inside information on races during telephone conversations taped by Victorian police. Detectives stumbled across the links after mounting a surveillance operation on Mokbel, a millionaire who is currently in jail charged with trafficking cocaine, ecstasy and LSD.

One jockey was reportedly seen by police in Mokbel's Ferrari shortly before the latter was arrested in August following the state's largest drugs seizure.

Mokbel, who owns a chain of Melbourne designer clothing stores, is said to have headed a syndicate of punters that used inside tips to place massive bets at racetracks across Australia's east coast. They are thought to have won £100,000 in one coordinated "raid", using old banknotes to place bets in what police called a classic money laundering operation.

Mokbel, whose telephone was tapped as part of a long-running investigation into his activities, is now banned from owning racehorses in Victoria.

The jockeys implicated in the scandal have not been named, and Racing Victoria – the industry's state governing body – has been accused of trying to sweep it under the carpet.

Des Gleeson, the chief steward, said that a number of people were questioned about their relationship with Mokbel, but no evidence of wrongdoing was uncovered. He complained that "unsubstantiated" claims were damaging the image of the sport.

His inquiry did not, however, have access to the police recordings because strict laws govern the use of material acquired through telephone taps.

For racing enthusiasts, there is a depressing sense of déjà vu about the case, which echoes a similar one in Sydney in 1995. Then, three well-known jockeys – Jim Cassidy, Gavin Eades and Kevin Moses – were suspended from racing for periods of up to three years for selling tips to a drugs dealer, Victor Spinks. The three, who have all since returned to the track, had their conversations recorded during a drugs investigation by Australian Federal Police.

While Racing Victoria's inquiry has been put on ice until Mokbel has been brought to trial, Gleeson has been criticised for failing to act more decisively. John Schreck, chief steward of the Australian Jockey Club at the time of the Sydney case, said: "Transparency is a very important thing in such a big industry like racing. There will be short-term pain for the image of racing, but, from my experience, the quicker the matter is resolved – and openly – the better."

He added, referring to the latest scandal: "It's very damaging. These sorts of things reinforce in the minds of a lot of people that racing is a dirty, corrupt business."

There appears to be no suggestion that the jockeys were rigging races for Mokbel, and it is not known whether they were paid for passing information. It is an offence for jockeys to place bets or have any interest in a bet.

As if morale within the sport were not low enough, a report commissioned by the Victoria state government has painted a bleak picture of life after retirement for jockeys, with their existences blighted by poverty, injury and depression.

The report also raised fears about their health, saying that some were so weak and dehydrated after losing weight before a race that they could barely stop their horses after passing the post and fainted after dismounting.

Those concerns were confirmed by Justin Sheehan, who rides one of the favourites, Universal Prince, tomorrow. He said that he never slept before a big race because of the pain of severe hunger and dehydration. "You're so nauseated; you lie there all night, rolling and tossing," he said. "You get so thirsty, you could drink battery acid. Your mouth feels like leather."

Sheehan said it would all be worthwhile if Universal Prince fulfilled his promise. On Saturday, though, the four-year-old ran lame and he may be withdrawn from the Melbourne Cup. Sheehan must wait until tonight for a decision. The tipping allegations have soured the atmosphere at the Flemington course in Melbourne, where rumours are swirling that a jockey accepted £25,000 to throw a race last week.

But not everybody is gloomy about the industry. Pat Lawler, a steward with the Victoria Racing Club for 34 years, said: "I wouldn't say racing is squeaky clean, because nothing is. But I certainly think that it's a much more honest game than the stock exchange."