The warning came after allegations of a sex scandal at the academy in Canberra. The academy has called in the Federal Police to investigate claims six male cadets secretly used a Web cam to broadcast live footage of another cadet having consensual sex with an 18-year-old female colleague.
The woman, known only as "Kate," told the Ten Television Network she did not know she was being filmed and said she was "physically ill" when investigators told her what had happened.
If the allegation is proven, the cadets will be dismissed from the academy and the military, Smith said Wednesday.
"I can't think of a greater betrayal of trust of a colleague in the workplace than the suggestions that have been made," Smith told the Australian Broadcasting Corp.