They were the jailhouse equivalent of shock troops - elite prison guards who were to obey orders without question and be accountable only to others in their so-called Goon Squad.

Inside South Island prisons they allegedly spooked and harassed inmates, waking them in the night, rattling "cages", dragging out anyone who gave them lip and locking them in punishment cells.

The Corrections Department's now-disbanded emergency response unit (ERU) moved from jail to jail, including men's and women's institutions, using inmates as part of their training operations to "test compliance" and impose their will.

Outside jails, they searched visitors and their cars for drugs, weapons and alcohol - some of which disappeared.

Off duty, they bonded by drinking together - at one time spending department money they authorised themselves - and conducting covert operations in the civilian world that would normally be left to armed police or secret agents.

Clad in black overalls, black full-face helmets and armed with shields, members of the squad would stamp in unison through jail corridors to give the impression they were coming in vast numbers.

Selected from the ranks of prison guards, the 15 men and one woman were authorised to conduct strip searches of inmates and seize property and drugs from inmates and civilians without having to record their actions.

Drugs were seized and retained for "staff training" purposes and confiscated alcohol disposed of by "unknown means".

But it began to go wrong when a Paparua inmate, David Haimona, died of an apparent heart attack in November 1999 as a result of being overpowered by five guards and put in a restraint hold. One former squad member involved in restraining him, Nigel French, is now suing the department in the Employment Court for $100,000, saying he suffered depression and post-traumatic stress disorder after the death.

Mr French's case has brought to light many of the allegations about the ERU contained in a previously secret department inquiry report, released this week under the Official Information Act.

Senior department managers and eight other members of the squad were called to give evidence.

One, Peter Nielson, recalled the reaction of squad deputy leader Doug Smith to the fact Mr French was not coping after Haimona's death. Mr Smith said Mr French should "harden up" because "there's no place for soft cocks in this unit".

Another squad member, martial arts instructor Alistair Thompson, told the court how, in apparent eagerness to prove he was not soft, he put his penis on the bar of Canterbury's Kirwee Tavern and allowed Mr Smith to bash it with a beer bottle.

Mr Thompson denied this reflected a macho culture in the squad but offered no explanation for what happened, while Mr Smith said on oath that he was not a bully and squad members never acted aggressively.

But some of the evidence given in court and the contents of the internal report suggest a different story.

A month after Haimona's death the squad was joined by off-duty police officers and Army military police officers in a security operation at Paparua.

The police donned the same gear as the Goon Squad so they could not be identified.

This was part of Operation Buildup, in preparation for the possibility that computer systems and power supplies around the world could collapse at midnight when the year 2000 arrived.

It involved waking and "riling" inmates, one guard said. Any reaction would lead to cells being opened and squad members rushing in and seizing the inmate.

When a gang associate allegedly threatened to shoot a Dunedin prison manager, the Goon Squad was sent in to protect him, even though police did not take the threat seriously.

Armed with batons, they stood guard outside the prison and outside the manager's home.

In another Dunedin operation, codenamed Highlander, the squad travelled to the city and stayed two nights to conduct an unsuccessful six-hour search of the prison for a firearm.

Afterwards they drank $480 worth of alcohol courtesy of the taxpayer.

Police, the Defence Force and Customs all said they were not aware of the allegations until the court case and last week launched internal inquiries of their own.

The squad, apparently the only one of its kind, was disbanded in the middle of 2000 after operating for less than a year but, despite a recommendation that its head, Tony Bird, Mr Smith and another key figure in the squad, Mike Kelly, be dismissed, all remain with the department.

In an internal memorandum two months ago, public prisons manager Phil McCarthy defended his department and took issue with many of the inquiry findings, although some serious misconduct resulted in disciplinary action against some staff.

He said yesterday that three staff were disciplined but there was insufficient evidence to justify dismissal and "wild dispute" about what occurred during Operation Buildup.

"The really disturbing thing about the aspects of these claims that have been proven ... [is] it does tarnish the image of all Corrections staff, most of whom do a really good job."

It is not the first time concerns have been raised about brutality in prisons and revenge attacks by guards and inmates.

There were systematic beatings of inmates at Mangaroa Prison, near Hastings, in 1993, and Goon Squad-style methods employed at Auckland Prison at Paremoremo leading up to and after the riots there in 1998.

The president of the Howard League for Penal Reform, Peter Williams, QC, said it was well known that if jail inmates were brutalised, "when they get out they're going to commit more heinous offences", yet there was a deliberate policy in the 1990s to remove privileges and get tough.

Such regimes tended to make neurotic people psychotic, Mr Williams said.

"It adds to mental illness, these people in those small cells and they're apprehensive that suddenly the door might fly open and a group of these people will deal to them."

Mr French's lawyer, Rob Davidson, said yesterday that some staff had lied and some were still lying about what took place and a ministerial inquiry was needed.