*Pic: Political donations are door openers for corporate lobbyists.
The Tasmanian Liberal Party is refusing to disclose the origin and nature of over $56,000 worth of ‘gifts-in-kind’ it has received over the last six years.
$35,000 in ‘gifts-in-kind’ – which could have included anything from cut-price goods through to the secondment of corporate lobbyists – has been given to the Tasmanian Liberal Party in the last two financial years.
The Liberal Party’s return to the Australian Electoral Commission (AEC) for the 2013-14 financial year – the year in which the 2014 state election was held and the Hodgman Government elected – reveals it received $25,000 in ‘gifts-in-kind’.
The following year, the first full year of the Hodgman Government, the total value of the disclosed ‘gifts-in-kind’ was $10,000.
During the years in opposition, gifts-in-kind to the Liberals were far less generous. They received nothing in gifts-in-kind in 2012-13, $10,000 a year in the two preceding years, $1300 in 2009-10 and nothing in the year before that. (Before the 2008-09 financial year political parties were not required to separately disclose the value of gifts-in-kind.)
Australian electoral law requires both donors and political parties to reveal all contributions made in the year over an indexed threshold, which in the 2013-14 financial year was $12,400; and $12,800 the following year.
The State Secretary of the Tasmanian Liberal Party, Sam McQuestin, did not respond to several requests from Tasmanian Times seeking details of the number, source or the nature of the ‘gifts-in-kind’ in question.
The Commonwealth Electoral Act 1918 defines a “gift” in part as including “any disposition of property made by a person to another person.” According to the AEC, disclosure is required not only for cash donations but also “a service for which no payment or an inadequate payment is received.”
The AEC’s annual return form requires political parties to disclose the total “value of gifts-in-kind.” However, parties and donors are under no additional requirement to disclose the specific origin of the individual gift or gifts, even if they are over the disclosure threshold.
Nor does the AEC require the specific nature of each gift to be identified. (The Senate Finance and Public Administration Legislation Committee is currently conducting an inquiry into the national donations disclosure regime, with submissions closing on April 29.)
Despite the legal loophole, some donors voluntarily disclose the nature of their gifts in kind.
However, in the case of the Tasmanian Liberals no donors have disclosed gifts-in-kind even if they contributed over the disclosure threshold.
Who were the mystery gift-givers?
McQuestin did not respond to a question seeking to clarify whether the $25,000 in ‘gifts-in-kind’ the Tasmanian Liberal Party received in the 2013-14 election year was from one or more donors.
However, if the $25,000 that year came from only one contributor, the donor would have to be disclosed by the party as one of its major funders. The donor would also be obliged to submit a return disclosing the contribution, though without necessarily identifying it was a ‘gift-in-kind’.
In 2013-14 there were only two contributors who donated $25,000 to the Tasmanian Liberals: Pathology Australia, a lobby group for private pathology companies, and the Manildra Group, a privately-owned agribusiness company with interests spanning from flour to ethanol.
In the 2013-14 financial year, Pathology Australia – which among other things lobbies state governments for the privatisation of public hospital pathology services – made two contributions : one for $25,000 on July 20, 2013 and, three days later, a further $2,500.
The Manildra Group also made two donations : $12,000 on February 20, 2014 – just three weeks before the 2014 state election and a further $25,000 contribution on March 10, 2014 – five days before the election of the Hodgman Government.
Originally both of Manildra’s donations had been disclosed as having been made to the national office of the Liberal Party of Australia. However, in March 2014 the company submitted an amendment to its return changing the recipient from being the national office of the Liberal Party to the Tasmanian branch. (Manildra’s amendment was lodged on March 11, less than a week after the NSW Independent Commission Against Corruption commenced public hearings into allegations over NSW Liberal Party fundraising.)
As the only two disclosed donations for exactly $25,000 were from Pathology Australia and Manildra these two donors are the only candidates to have made the ‘gift-in-kind’ contributions to the Tasmanian Liberal Party in 2013-14 if the amount originated from a single donor.
The CEO of Pathology Australia, Liesel Wett, did not respond to a request for clarification on whether the lobby group’s $25,000 contribution was a cash donation or a ‘gift-in-kind’ and, if the latter, what the nature of the gift was.
While the Manildra Group currently has no direct business interests in Tasmania, it has long been a generous donor to the Liberal and National parties across Australia. In the most recent financial year Manildra disclosed it had donated $452,797, with the overwhelming bulk directed to the Liberal Party and the National Party. (The Labor Party’s national office received $32,272 from Manildra.)
Tasmanian Times also sought clarification from the Manildra Group whether its $25,000 contribution was a cash donation or a ‘gift-in-kind’ and, if the latter, what the nature of the gift was. No response was received.
Legal loopholes, secondments and smokescreens
Gifts-in-kind can cover a broad array of contributions to a political party from the provision of a rent-free venue, posters or catering at cut-price rates to the provision of free services.
However, one form of ‘gift-in-kind’ provides particularly intimate access of donors to a political party: where a staff member is seconded across to work in the engine room of the party.
Under current electoral law there is no requirement by either the donor or the recipient to disclose the existence or nature of such secondments.
As a result the public has no way of knowing whether a ‘gift-in-kind’ was the secondment of a staffer or a more benign cut-price product or service akin to a cash donation.
While the phenomenon of corporate secondments to political parties has been little documented, several instances have come to light.
Back in February 2005, during the West Australian state election, British American Tobacco (BAT), one of the world’s biggest tobacco companies, contributed $13,517 to the Liberal Party of Western Australia.
While the Liberal Party routinely received tobacco industry donations, what was different was that the donation was in the form of the secondment of Caroline Denyer , who was the Corporate and Regulatory Affairs Manager for British American Tobacco (BAT) at the time.
The West Australian reported that Denyer “performed low-level work for the party and was not involved in policy or health issues.” However, precisely what Denyer did while on secondment remains shrouded in mystery; let alone how it was in the interests of a for-profit company’s shareholders to forgo the services of senior lobbyist.
After working for BAT for over 13 years Denyar now lives in London and runs Growlmama, a company which she describes as a fashion brand for “high-end dog accessories.” Tasmanian Times emailed Denyer’s company but no response was received. (There is no record of Denyer or her work for the Liberal Party in the online archive of millions of internal tobacco industry documents.)
Western Australian voters had no knowledge of the secondment ahead of the February 26, 2005 election. The existence of the secondment only came to light early the following year when BAT’s return to the AEC voluntarily disclosing it was made public.
The Liberal Party of Western Australia didn’t initially disclose the secondment, only revealing it in June 2006 – almost 14 months after the election – after being criticised over the deal in the Western Australian parliament by the then Minister for Health, Jim McGinty.
The Labor Party too has been in on the secondment game.
In its return to the AEC for the 2013-14 financial year the Financial Services Council (FSC), a lobby group for wealth management companies and trustees, disclosed that it had provided two secondments in August/September 2013: one to the federal Liberal Party worth $27,349 and another to the federal Labor Party worth $12,836.
Tasmanian Times sought details from the FSC on whether the secondments were of the lobby group’s own staff or the staff of member companies. However, the FSC wouldn’t say. Nor would it provide details as to what the purpose of the secondments was or whether they worked on policy development related to financial services.
Nor would the FSC comment on whether the difference in the value of the secondments reflected the person provided to the Liberal Party was more senior than the person seconded to the Labor Party or not.
All the FSC – which boasts the Tasmanian Government’s Public Trustee as a financial member – would say was that “at the request of these parties, we have extended simultaneous secondments from time to time.”
ASIC invites the foxes into the henhouse
Some insight into the potential conflicts which can arise with the secondment of corporate staff can be gleaned from when a staff lawyer with MLC was seconded to work with Australia’s corporate regulator, the Australian Securities and Investment Commission (ASIC).
In April 2014 a former ASIC lawyer, James Wheeldon, gave evidence to a Senate Inquiry into the Performance of ASIC in which he detailed how a decade earlier he had been directed to take instructions from a lawyer on secondment from MLC, the wealth management division of the National Australia Bank.
MLC is a member of the Financial Services Council, which was known as the Investment and Financial Services Association (IFSA) prior to a name change in July 2010.
In his evidence to the Senate committee Wheeldon said that in his presence the MLC lawyer, Grant Jones, had informed senior ASIC staff that he had a conflict of interest over his involvement in a project aimed at granting an exemption to IFSA members from the provisions of the Corporations Act over their use of online financial calculators.
Without the exemption, IFSA members were required to ensure they had a “reasonable basis” for the estimates they generated from their online financial calculators.
According to Wheeldon, Jones had explicitly informed senior ASIC staff that as an MLC employee he had been involved in drafting letters from IFSA to ASIC lobbying for the exemption of the calculators from the Corporations Act. Despite this, ASIC senior staff authorised Jones’s continued role in the ‘calculator relief’ project.
“He amended ASIC’s internal issues papers on calculator relief to advance his employer’s interests. He drafted emails to IFSA on behalf of ASIC. He actively lobbied ASIC lawyers, including me, to support changing the law to benefit his employer,” Wheeldon told the Senate committee.
Wheeldon warned that the secrecy surrounding the secondment program was a major cause for concern. “We know that ASIC has a policy of allowing bank employees and bank lobbyists to sit at a desk in ASIC, to work on ASIC projects, to read ASIC emails and sensitive internal correspondence, to supervise the work of ASIC lawyers, and to report back to their employers – the banks – about what they observe,” Wheeldon told the Sydney Morning Herald.
While acknowledging ASIC’s approach may have changed since he resigned in 2005 Wheeldon cautioned against secondments into the policy branch of the agency: “You just cannot do it that way. ASIC need to have their own people who are doing that.”
“If they want somebody who has got experience working for an investment bank or a top law firm, they should hire somebody and they should become members of the Australian Public Service and be bound by the Public Service code of conduct; and owing a fiduciary duty only to the Public Service and to the Australian people,” he said.
It was, he told the Senate committee, an example of the “big end of town, the banks and financial services companies, dictating the law to ASIC.”
While ASIC sought to downplay Wheeldon’s damning evidence, they made no attempt to address his central concern about a corporate representative being seconded to the agency’s policy arm.
Despite the controversy over the effect of ASIC’s secondment program, a few months after Wheeldon’s explosive evidence the President of the Business Council of Australia, Catherine Livingstone, announced the lobby group would be “asking 20 of Australia’s leading companies to offer highly-structured secondments for senior public servants with the aim of improving our mutual understanding of the forces impacting on business.”
The Business Council of Australia represents the largest corporations operating in Australia, including companies spanning from the financial services to healthcare to resources companies and even Australia Post.
“We have to close the gap between what government thinks and what business knows,” Livingstone explained, before flagging that she would be making calls the following week to the federal government and state premiers to support the BCA’s secondment initiative.
Livingstone’s plan was unveiled in late July 2014 – just four months after Will Hodgman was elected Premier. The BCA has not yet approached the Tasmanian Government to develop a secondment programme but, according to its Director of Media and Public Affairs, Scott Thompson, it plans to do so “in due course.”
Whether the gifts-in-kind the Liberal Party received over the last six years included any secondments of corporate staff is unknown.
While Premier Will Hodgman is fond of proclaiming the government he heads has a commitment “to increased accountability and transparency” his own political party has no intention of disclosing just who the Tasmanian Liberal Party’s secret gift-givers are.
Bob Burton is a Hobart-based Contributing Editor of Tasmanian Times. His earlier articles on Tasmanian Times are here.
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EARLIER on TASMANIAN TIMES ...
• March 31, 2016: Australia’s private pathology lobby shifts political donations strategy
• February 1, 2016: Tasmanian Liberals disclose origins of less than one-fourteenth of income
• December 14, 2015: Who are the invisible major donors behind the Tasmanian Liberal Party?
• October 29, 2015: What happens if a major political donor doesn’t disclose?
• October 28, 2015: Who’s a Liberal donor gonna call? Rentbusters!
• October 27, 2015: The private pathology industry emerges as major Tasmanian Liberals donor
• Funding and Disclosure Inc. ( HERE ) in Comments: Thanks, Bob, for your valuable contribution … he who pays the Piper calls the tune …
• ABC: Arthur Sinodinos to be called before inquiry into political donations Cabinet Secretary Arthur Sinodinos will be required to appear before a new federal parliamentary inquiry into political donations. The inquiry into donations and associated entities will be established following a successful Labor motion in the Senate, passed by the Upper House this evening. … It follows a report issued by the NSW Electoral Commission last month, in which it announced it was withholding more than $4 million in public funding from the NSW division of the Liberal Party, unless it disclosed the identity of donors pushing funds through the party’s fundraising body.
• Tim Thorne in Comments: If the unions mentioned in comment #7 are “lawless” why have they not been prosecuted under present legislation? Why the need to bring in the ABCC bill in order to prosecute them, unless as an admission that activities the government doesn’t approve of are actually perfectly legal? As a result of the Hayden Royal Commission, at great expense, the grand sum of three individuals have so far faced the courts. All have been acquitted. A vote against Damien Mantach’s and Erich Abetz’s party on July 2 will be a vote in the direction of reason, transparency and equity. Of course, electing a Shorten ALP government in itself is no automatic solution to any problem. Extra-parliamentary pressure will still be needed.
• Jake in Comments: In my own view, small donations should be exempt. A small businessperson, or a public servant, or anyone, who donates $100 to a campaign, has no reasonable expectation of undue access to government, and should not be inhibited from contributing to public discourse with some anonymity and freedom from rancour. Also, I don’t think we should demonise political finance. Competing for public office is bloody expensive, and good candidates need support, which is probably often beyond their own means or their preference to feed their families. It is the transparency thing.