Friday, 25 March 2016

Liberal Party of Australia: when faced with corruption allegations first ignore, then deny, defy and threaten - ending all with weasel words

The Liberal Party of Australia was warned, the Liberal Party ignored, the Liberal Party denied, defied and then told political lies to the electorate…..

The general warning that went out

The NSW Electoral Commission will take enforcement action against 14 entities and individuals that have missed the deadline or entirely failed to disclose political donations they received between 1 July 2014 and 1 March 2015.

The NSW Electoral Commission received 411 declarations on behalf of parties, elected members, candidates, groups and third-party campaigners for the Additional Disclosure Period in the lead-up to the 28 March State Election.

Out of the entities and individuals required to lodge a declaration, five have failed to lodge and 11 lodged a declaration after the due date, making a total of 16 contraventions.
"The Commission takes seriously the rules on disclosing political donations and will be taking enforcement action against 14 entities and individuals that, on the information known to the Commission, have broken the law," said NSW Electoral Commission Chairperson, Hon Keith Mason AC QC.

"We have issued Penalty Notices and Cautions according to the seriousness of the contravention and will also be considering a prosecution in one case."

The declarations that have been lodged are a matter of public record and are published on the NSW Electoral Commission website at:

The declarations must disclose political donations of $1,000 or more received between 1 July 2014 and 1 March 2015. If no donations were received, declarations should have been lodged to that effect.

This additional requirement on parties and candidates applied only to the 2015 State Election and was introduced in accordance with the interim recommendations of the Panel of Experts on Political Donations.

The Panel has since delivered its final report which has proposed long term reform options on political donations.

For more information about disclosure of political donations generally or the State Elections to be held on 28 March 2015, visit the NSWEC website at

Forming a new Commission

The year saw significant structural change, following implementation of a 2013 recommendation of the Parliamentary Joint Standing Committee on Electoral Matters. The Committee found that our electoral legislation required a comprehensive review with a focus on consistency, functionality and modernisation. The Committee recommended a new electoral Act for NSW that would cover both the conduct of State elections and the regulation of campaign fi nance and disclosures, and that the new Act be administered by a single statutory corporation.

Consequently, legislative change during the year reconstituted the Commission so that it consists of the Electoral Commissioner, a former Judge as Chairperson of the Commission and a member with financial or audit skills, instead of it being constituted only by the Electoral Commissioner. The Election Funding Authority was abolished and its functions conferred on the reconstituted Commission. The new Commission is therefore responsible for administering the election funding, expenditure and disclosure scheme in NSW. The Commission’s role is also to provide “assistance” to the Electoral Commissioner in his statutory function of conducting elections.

Legislative change in 2014 also empowered the Commission to investigate and undertake enforcement actions for breaches against the Parliamentary Electorates and Elections Act 1912 and the Lobbying of Government Officials Act 2011. This has moved our function from largely administrative to a greater focus on client services and regulation, with increased investigative and enforcement activities. We now have additional objectives of promoting campaign finance transparency and enforcing compliance with the legislation.

Ignoring evidence of the Commission’s resolve in the first instance

Mr Robert Smith, Registered Officer of the Fishing Party, was convicted on 13 July 2015, at the Downing Centre Local Court, of failure to lodge a declaration of disclosure of donations received and made and expenditure incurred pursuant to s.96H(1) of the Election Funding, Expenditure and Disclosures Act 1981 ("the Act").

Mr Smith was required to lodge a declaration with the NSW Electoral Commission, in the prescribed form, by 23 September 2013 and failed to do so. His Honour Local Court Magistrate Grogin emphasised, when sentencing Mr Smith, the importance of the transparency of political parties in relation to the declaration of political donations, regardless of the size or financial means of the political party. Grogin LCM also considered that general and specific deterrence are important considerations when sentencing for such an offence. Further, his Honour emphasised that ignorance of the law is no excuse in failing to comply with the requirements in the Act.

His Honour Grogin LCM convicted Mr Smith and ordered him to pay a fine of $2750, being the amount of the initial penalty notice issued by the NSW Electoral Commission, as well as awarding costs to the prosecutor of $5000.

The matter was investigated by the NSW Electoral Commission and prosecuted on its behalf by the Crown Solicitor's Office.

On 27 July 2015 the Commission was notified that Mr Smith has lodged an appeal of his conviction with the District Court. The matter is listed for mention on 23 September at the Sydney District Court.

"The Commission takes seriously the rules on disclosing political donations and expenditure and will take enforcement action against entities and individuals that, on the information known to the Commission, have broken the law," said NSW Electoral Commission Chairperson, Hon Keith Mason AC QC.

Ignoring its own predicament in the second instance, denying and defying

Excerpts from NSWEC, 23 March 2016 document: Final Summary of Facts – Decision re Liberal Party

20. On 1.1 February 203.6 the Acting Electoral Commissioner wrote on behalf of the Commission to the Party Agent of the Party, Mr MCInnes . The letter outlined the Commission's tentative concerns and invited submissions directed to the two legal issues mentioned above as well as the issue as to whether a final payment should be made under the Election Campaigns Fund in light of these matters.

21. The letter in reply from Mr MCInnes dated 18 February 2016 did not advance any response to the suggestion about the invalidity of The Free Enterprise Foundation "trust". The letter further asserted that the Party had and has no responsibility to disclose information relating to individual donors to the Foundation, a position that the Commission completely disputes. The invitation to remedy the deficient 201.1 declaration was firmly declined.

22. On 24 February 2016 the Commission considered whether the Party was eligible for public funding taking into account sections 70(I) and 97L(I) of the Act. The Commission was not at that stage satisfied that the Party was eligible, because the Party had failed to disclose reportable political donations for the period ending 30 June 2011.

23. Since public monies totalling $4,389,822.80 is at issue the Commission decided to give the Party a further opportunity to change its stance or satisfy the Commission that the Commission's tentative views were erroneous. A letter was sent to Mr MCInnes on 26 February 2016 enclosing a draft Summary of Facts document and inviting the Party's response.

24. On 18 March 2016, Swaab Attorneys forwarded the Party's response. None of the Summary of Facts were disputed,

25. The Party's response contended that a declaration in requisite form had been lodged and that its adequacy in terms of detail was irrelevant to the decision confronting the Commission under sections 7011) and 97L(I),

26. The Commission rejects this submission for the reasons already set out. Neither does the Commission accept the submission that the amount that must be withheld cannot exceed the total of unlawful donations involved. For one thing, this ignores the matters set out in paragraphs 2 and 3 above. On 23 March 2016 SWAAB Attorneys sent a further letter on behalf of the Party urging the Commission to release all but $693,000 of the funding claimed. After careful consideration the Commission believes it does not have discretion in this matter having regard to the terms of sections 70(I) and 97(I) of the Act.

Full 5-page document here.

A response to that defiant stand

The NSW Electoral Commission has decided that the Liberal Party of Australia (NSW Division) is not eligible for payment of its current claims for about $4.4 million in public funding because it failed to disclose the identities of all major political donors in its 2011 declaration.

Effective 23 March 2016, the Liberal Party will not receive further funding from the Election Campaigns Fund or the Administration Fund, administered by the Commission. The Party will remain ineligible until it discloses all reportable political donations in relation 10 its 201I declaration. These donations include some made by donors identified during the ICAC's public hearings in Operation Spicer.

The Liberal Party did not submit a "requisite declaration", which is a breach of the Election Funding,  Expenditure and  Disclosures Act 1981.

The Commission considered the public evidence generated by ICAC's Operation Spicer and other information held by the Commission and information and submissions put forward on behalf of the Liberal Party and The Free Enterprise Foundation. Since I I February 2016, the Liberal Party was given opportunities to rectify its declaration but  it declined to do so.

Copy of full document and related correspondence here.

Threats of legal action

Excerpt from SWAAB Attorneys letter to NSWEC, 23 March 2016:

As is clear from the Response attached to our letter of t 8 March 2016, our client denies that it has in any way given an incorrect disclosure for the year ended 30 June 2011. Nevertheless, at paragraph 12 of our response, we suggested that at the very least the NSWEC should release the Funding, but withhold $693,000 pending resolution of the matters in issue concerning the donations from the FEF (Balance Funding).

Provision of the Funding, or the Balance Funding, is of critical importance to our client. We are instructed that our client requires the Funding or the Balance Funding in order to continue its operations. If the Balance Funding is not received by 30 April20,6 our client will be forced to take emergency measures, the most likely of which will be forced retrenchment of staff. Even then, retrenchment of staff will only allow it to carry on its operations for a relatively short period of time thereafter.

You are also aware that there will be a federal election this year, perhaps as early as 2 July 2006, placing further pressure on our client's financial position, and our client requires provision of the Funding or the Balance Funding as a matter of urgency.

We require that the NSWEC pay to our client the Balance Funding by 30 March 2016.

If this request is not met, our client has no choice but to apply to the Supreme Court of New South Wales for urgent relief that, inter alia, the monies be paid to our client without further delay.

This is an open letter and will be tendered on any application made to the Supreme Court, including on the question of costs.

Liberal Senator for NSW and Cabinet Secretary (Turnbull Government) Arthur Sinodinos1, 24 March 2016: Statement - NSW Electoral Commission

It is a matter for the NSW State Division to respond to the matters raised by the NSW Electoral Commission in its statement.

I had no role in the NSW Division’s decision to decline to update information disclosed in that declaration, as was requested by the Commission.

For my part, my lawyers have written to the Commission to draw its attention to errors of fact in its statement in relation to me. I was not given the opportunity by the Commission to comment on its statement before its publication and I was not aware of the publication until shortly prior to its release.

The Statement already has been extensively cited by the media. In a number of instances, there has been erroneous commentary to the effect that I “concealed” illegal donations, and that my actions were somehow corrupt or illegal. That media commentary is a direct consequence of the NSW Electoral Commission’s flawed publication.

In light of these matters, my lawyers on my behalf have invited the Commission to immediately retract all references to me in the publication. The Commission has been invited to publish a correction to that effect on its website.

Those weasel words in the media

The Australian, 24 March 2016:

The party's NSW division says it had been waiting for the state's corruption watchdog to hand down its findings from hearings in 2014, but will comply with the commission's ruling.

"I have written to the commission this afternoon seeking their assistance in resolving any areas of uncertainty about the legal status of donors in the 2010/2011 period," a spokeswoman said in a statement on Thursday evening.

"The NSW division has already publicly acknowledged and apologised to the people of NSW for these matters."

1. Senator Sinodinos was the Liberal Party (NSW Division) finance director and treasurer during the period in question. His name was mentioned twice in the Summary Of Facts Relevant To The Decision Of The New South Wales Electoral Commission: Liberal Party Of Australia (NSW Division) Claim For Public Funding. In both instances the mention was confined to words to the effect that evidence was given at ICAC hearings of the involvement of other senior Liberal Party officials constituting the Party's Finance Committee in arrangements touching the Free Enterprise Foundation, including Arthur Sinodinos as then Finance Director/Treasurer.


North Coast Voices,19 September 2014:

So what is this Free Enterprise Foundation of which they speak?

According to evidence before the NSW Independent Commission Against Corruption (ICAC) and other sources, the Free Enterprise Foundation:

* Is listed by the Australian Electoral Commission as an associated entity of the federal divisions of the Liberal Party of Australia and the National Party of Australia.

* Was created by deed on 20 August 1981 as a $10 trust at the direction of Sir Robert Crichton-Brown, federal treasurer of the Liberal Party of Australia from 1973 to 1985.

* Has set out its objectives in the trust deed are as follows:
 * Original trustees were Anthony Joseph Bandle and Charles James Fox who comprised the trust’s original Council. The current trustees are Anthony Bandle and Stephen Francis McAneney.  Both of whom were also trustees of the Greenfields Foundation, an associated entity which was allegedly set up to hide from public view a 1992 $4.7 million political donation to the Liberal Party.
* Accountants are Bandle McAneney & Company.

*  Name was registered with the Australian Security & Investments Commission as a business name in 2012.

* Receives political donations which the trust directs onto the Liberal Party of Australia, the Liberal National Party of Queensland, other associated entities of the Liberal Party and, infrequently to registered charities.

In practice the Free Enterprise Foundation does not appear to fulfil all the prescribed purposes set out in the trust document, does not seem to operate independently of the Liberal Party of Australia and, has accepted political donations from prohibited donors in New South Wales which it redirected to the Liberal Party of Australia (NSW Division).

Rather disingenuously former NSW Deputy State Director of the Liberal Party and former Metgasco Limited executive, Richard Shields, stated during a 12 September 2014 ICAC Operation Spicer hearing in relation to the Free Enterprise Foundation, which had donated approximately $700,000 to the Liberal Party to fund its 2011 NSW election campaign:

I knew that it existed, I, I didn’t have a lot, a great understanding of it. I had heard, you know, I, I was of the opinion that it was an organisation that had political or philosophical 
allegiances with the conservative side of politics. 

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