Dozens of sailors are suspected of running a drug trafficking ring out of Sydney's Garden Island naval base.
A core group of sailors is believed to be operating the lucrative drug distribution network from the Sydney Harbour Base, Fairfax Newspapers reported on Tuesday.
NSW police and the Department of Defence are investigating the suspected drug ring, which is believed to have involved the sale of drugs to backpackers visiting Sydney.
If proved, it would be one of the most serious drug-related scandals to hit the Australian Defence Force (ADF), which has struggled to contain the use of illicit drugs in its ranks.
A Defence spokesman confirmed the ADF investigative service was examining the allegations.
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