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By Phil Mercer
BBC correspondent in Sydney
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A Sydney newspaper has published a photograph of Australian soldiers posing as members of the Ku Klux Klan.
The Daily Telegraph said the soldiers were dressed like that to intimidate young Aboriginal recruits.
The picture shows more than 20 troops dressed in white hoods standing behind Aboriginal recruits.
Australia's army chief Gen Peter Cosgrove said even if the stunt was supposed to be light-hearted it was "inappropriate and offensive."
The photograph was taken four years ago at the Lavarack barracks in northern Australia.
The Telegraph accused the military of ignoring these humiliating rituals, and said that those responsible had escaped punishment and in some cases had been promoted.
Gen Cosgrove said the photograph was investigated last year and action was taken.
He said further complaints had warranted another inquiry by Australia's Human Rights and Equal Opportunity Commission as well as by the army.
'Skylarking'
The Prime Minister John Howard said the photograph was in very bad taste.
However, one Member of Parliament said it was outrageous to describe the soldiers' behaviour as racist.
Peter Lindsay, whose constituency includes the Lavarack barracks, said they were simply "skylarking" and hadn't intended to offend anyone.
Indigenous leaders see things very differently.
They have said the photograph illustrated a wider problem within Australian society, where many aborigines were confronted by abuse and taunts every day.