JACK WATERFORD. Labor’s turn with the brown paper bag.  Integrity bodies should have power to check corruption inside political parties.

Sep 3, 2019

NSW Labor’s little embarrassment in front of its Independent Commission Against Corruption has a bad look, temporarily takes attention away from problems festering the Berejiklian government and had led to the fall of yet another NSW Labor General Secretary in murky circumstances. AS is usual in NSW, whichever party is involved, brown paper bags come into it. Still, all in all, it is almost the scandal one has to have if one is going to have a scandal, because it is very unlikely that the NSW Liberal Party will be very interested in making political capital of it.

Why?  It’s because the recent history of the Liberal Party, including in cases coming before ICAC, has involved very much the same pattern of rorting state electoral donation laws so as to frustrate their intent. In NSW in particular, political party organisations are as likely to defy electoral donation legislation they themselves have put in place as they are to ignore legislation put in place by their opponents. Both the Labor and Liberal parties have actively sought to evade laws banning donations from developers and foreigners, as well as limits on individual donations.

Labor has been caught out badly in the current case before ICAC – and, as the hearings seem to suggest, is compounding its problems first by lying about it, in some cases on oath, as well as using the occasion to vent spleen, and, they hope, blame on party colleagues in rival factions.  It was much the same with the Liberal Party when under the party treasurership of Arthur Sinodinos, at least until the High Court set limits on how far an ICAC inquiry could, or should, go.

There are several different rorts involved in the latest matter. Labor held a fundraiser among its Chinese community supporters, and, on paper raised about $120,000. Of this, about $100,000 arrived at NSW Labor HQ in Sussex Street in unsorted used notes in an Aldi shopping bad. This money purported to be the individual donations, generally of $10,000 each, from 20 people who had attended the fundraising dinner.

The Aldi bag also contained filled-in donation forms from the 20 donors, a good number of whom were waiters employed at the function, few of whom could afford to donate such sums. In NSW, the limit on donations is $5,700 but the party was able to get around this by making one donation of $5000 for the general party, and another $5000 for the Country Labor Party, a supposedly separate entity.

The $100,000 in loose cash was, at it happened delivered to Sussex Street by Chinese billionaire and banned donor, Huang Xiangmo, a former patron of Sam Dastyari, who, naturally, figures in the current hearings. ICAC has not yet got to the point of asking each of the nominated donors whether they in fact made the donations for which they signed donation statements (in the process getting themselves a handsome tax deduction), but we can confidently expect that few, if any of them did, and that the money in question was a donation by Huang. His donations were banned in NSW on at least two grounds: he was a NSW property developer, and he is not an Australian resident. The evidence so far is that the ALDI bag was handed by Huang  to former general secretary, John Clements, who shortly afterwards passed it on to Kenrick Cheah, a minor party functionary. Lines of cross-examination suggest that this version is in contest.

The woman who replaced Clements, Kaila Murnain, says she only became aware of the dodgy nature of the donations after the NSW Electoral Commission began asking questions. She says she consulted the party’s lawyer Ian Robert, from Holding Redlich who had told her: “Don’t record this meeting. Don’t put it in your diary. Forget the conversation happened with Ernest [Wong] and don’t tell anyone.”

This was not entirely dissimilar from advice from Sam Dastyari, an old personal and political friend, even if they are no longer close. Dastyari told her to “cover your arse” and to get and follow legal advice.

Murnaine has since been sacked as party secretary. She had obviously been chosen as main fall guy, if for sitting on the misconduct and failing to come clean until it was obvious that it could not be concealed from first, electoral office and second, ICAC investigators. It is also said, so far somewhat less convincingly, that she was less than frank with the party’s governance officer, Julie Sibraa. (For completeness it should be noted that Julie Sibraa, a player in this  nest of faction, hereditary privilege and nepotism, is married to Kerry Sibraa, himself a former assistant general secretary of NSW Labor, and thereafter, as is the pattern, a federal Senator, later diplomatist. Ms Sibraa has recently been anointed for a winnable NSW Upper House seat).

Dastyari’s presence at the inquiry is designed (by himself) only to be helpful, though he claims now to be completely retired from public life and interference in politics. I doubt his contribution is welcome, if only for the way that his presence reminds everyone of how thoroughly Dastyari was compromised and disgraced, while a senator, by his relationship with Huang. That relationship, which saw Dastyari stray from party policy to promote China’s view of the world, to the point where he was described as an agent of influence for China, led to changes to federal electoral laws banning foreign donations, and requiring some people (on both sides of politics) to register as agents of foreign powers.

It is, of course, no proper response to evidence of witting and systemic efforts to get around the law to say that the other side also does it. This is the more so now when recent amendments to electoral law have seem to be invested with moral virtue, or conscious efforts to reduce the influence that lobbyists and insiders can have over parties. A good many parliamentarians, on both sides, are quite sincere about wanting to reduce the influence of money and privileged access in political parties, the more so in the face of warnings from security agencies about the efforts of foreign governments, often acting through rich businessmen, to influence local politics.

For many party officials on both sides of politics, the creation of new rules seems a challenge of finding fresh loopholes. It seems sometimes as if party machines even swap tricks to avoid or evade the plain intention of legislation. In recent years, this has included moving money around from state party branch, particularly in and out of jurisdictions lacking rules against developer donations, and contrived bills for “services,” attendance at party functions, systems of providing access to ministers or senior party folk. For some the skulduggery is made to seem harmless, much like low level tax evasion. These are victimless crimes, it is said. And, in any event, the ordinary member of the public is said to be not very interested or upset by machinations within parties, or occasional evidence of hanky panky, such as with branch stacking.

If that is true, it is about time that it changed. A good many of the minor and petty corruptions of political party life set the stage for much more serious corruption down the track. Both major political parties, for example, have winnable seats generally regarded as being within the gift of some particular faction in a party, or, as is often the case with Labor, in the gift of some particular union, or faction warlord. One often hears of factional chieftains agreeing among each other about the disposition of seats for more than a decade in advance.  Those who are the beneficiaries of such patronage are usually left in no doubt about how they are expected to vote in the party caucuses, or as to the role they are expected to play in the development of party policy. Those who defy instructions, whether from unelected outsiders, or the invigilators of the factions are punished by losing pre-selections and  failing to get or hold ministries or other patronage appointments. In Australia, it has always seemed impossible for politicians under such pressure to seek protection from a parliamentary privilege committee, even when the same pressure, applied from outside, would be a clear breach of privilege.

Branch stacking has a long and discreditable history in Australian party politics, and is a significant weapon in the hands of powerful factions, and incumbents with some access to party councils. It may well be true that one person’s branch stacking is another person’s seeking to bring fresh blood into moribund and complacent  branches. But the obviousness and ruthlessness of ethnic and religious stacking, and its frequent association with activities of state branch officials to help or hinder particular candidates tends to discredit party organisations as places through which ordinary citizens can influence government. Party organisation and party democracy has often taken a second place to control by tight highly disciplined groups unwilling to share power with anyone.

I remember once talking to the federal secretary of a major party who asked how one could be in the least confident in the honesty and probity of most MPs, given the lack of integrity in party pre-selection systems, the scope for reward and punishment of those who defied factions and the clear ruthlessness of many of those who exercised power over elected representatives. The villainy was enough to discourage many good people from wanting to get involved in what was now a very dirty game. But many politicians come in with ideals and hopes, wanting only to do the right thing. All too often, however, idealism or determination to act only in the public interest was progressively ground down by the tribute required to be paid as the price of getting on to the greasy pole.

He was not talking only of the pressure to support a faction and its collective view. Pressure on politicians over gambling and alcohol, and over casino licences and, in the past at least, television licences came not only from well resourced lobbies but from placemen inside the party itself. And that was in days before party organisation figures, on both sides of parliament, but particularly Labor seemed to see working for the Packer family as the logical next job after a period in politics.

From one point of view, unrepresentative, venal and potentially corrupt party government is a problem of the particular parties, not something calling for the intervention of the state, or external regulation. It may not be for the law to save a bad party from itself.

But this old view ignores the fact that political parties are now the recipients of considerable public money – generally much more than is received in donations. The major parties get grants for general operations as well as for elections, and they often combine this money with allowances given to electoral representatives to develop formidable intelligence operations on electorates, and sophisticated propaganda at public expense.  So far, however, the law has been reluctant to put minimum standards of transparency, accountability or democratic structure on the party organisations. It is time that it did.

It is to be noted that NSW ICAC is investigating what NSW Labor did in reporting donations. It has been focused on compliance with that law, and efforts to defeat it. But it has not, as such, been concerned with the good government or good management of the Labor Party, any more than ICAC was directly involving itself in the affairs of the Liberal Party as various members were setting up schemes to defeat the no-developer rule, or seeking to use their access, influence and donations to the party to transfer public goods, at a loss, into the private sector.   An ICAC need never be interested in particular policies adopted by a party, or how it campaigns in elections. But its brief to defeat corruption in public life should, at the least,  embrace the abuse of party power to achieve corrupt ends, whether through breach of parliamentary privilege, or efforts to influence pre-selections and other party processes in efforts to achieve corrupt outcomes. A registered party should meet minimum standards of control by members, accountability for money and exercise of power. Perhaps the model should be the rules the government is seeking to impose on trade unions and employer organisations.

Jack Waterford is a former Editor of The Canberra Times



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