Speeches

Senator Andrew Murray speaks on adjournment - Political Parties: Donations [30th Mar, 2004]
by Senator Andrew Murray

Senator MURRAY (Western Australia) (10.10 p.m.) In the Joint Standing Committee on Electoral Matters report, The 2001 federal election, the committee responded to Labor evidence on donations to political parties from overseas. Unlike a number of other countries, foreign donations are not banned in any Australian jurisdiction. In their submission Labor had said it may be a mechanism to hide the source of donations and that the law was difficult to enforce because of foreign domicile. The Committee essentially fudged the issue, only asking the AEC to keep a watching brief. They did acknowledge, however:

... that it is important to distinguish between donations made from trusts and funds overseas, where the true source of the donation may not be readily apparent, and those made from overseas branches of Australian companies.

While the issue of foreign donations has been less contentious in Australia than in some other countries, there is real concern over the issue. In its 1996 election report, the AEC said that federal disclosure laws were:

... not adequate to ensure full disclosure of the true source of donations received from overseas.

In its submission to the abandoned Joint Standing Committee on Electoral Matters inquiry into electoral funding and disclosure some years ago, the AEC said:

Australian law generally has limited jurisdiction outside our shores and hence the trail of disclosure can be broken once it heads overseas. This provides an obvious and easily exploitable vehicle for hiding the identity of donors through arrangements that narrowly observe the letter of the Australian law with a view to avoiding the intention of full public disclosure.

If the overseas based person or organisation who makes a donation to the political party were not the original source of those funds, there would be no legally enforceable trail of disclosure back to the true donor, nor would any penalty provisions be able to be enforced against persons or organisations domiciled overseas.

The AEC recommended that:

... donations received from outside Australia either be prohibited, or forfeited to the Commonwealth where the true original source of that donation is not disclosed through the lodgement of disclosure returns by those foreign persons and/or organisations.

The AEC recognised their second option does nothing to resolve the problem of trying to track and prosecute donors who are overseas. The AEC also recommended that whatever action is taken it must be extended to donations received from overseas by third parties or associated entities that are then passed on to a political party or candidate or used to their benefit and that it should also apply to loans and debts owed by parties to overseas entities.

In the Democrats' supplementary remarks to the Joint Standing Committee on Electoral Matters report into the 2001 election we said:

It is neither necessary nor desirable to prevent individual Australians living overseas from donating to Australian political parties or candidates.

There is no case, and it is fraught with danger, for offshore based foundations, trusts or clubs to be able to donate funds, because those who are behind those entities are hidden. Bodies with shareholders or members are more transparent.

However, none of these entities are capable of being audited by the AEC.

Donations from overseas entities must be banned outright. Donations from Australian individuals living offshore should be permitted.

One of the main reasons for banning foreign donations is the fact that donations to political parties and candidates by foreign individuals and organisations can be used as a means of avoiding disclosure requirements. While the recipients of such donations must still disclose details of the donor if the donation exceeds the disclosure threshold, the donor is not under such an obligation and there is no way to ensure that the donor was the real source of the money.

The Global Corruption Report 2004 provides an overview of political corruption around the world, with 34 country reports. It lists seven key recommendations. The very first one says that governments `must enhance legislation on political and funding disclosure'. In late 2003 the International Institute for Democracy and Electoral Assistance published the handbook, Funding of Political Parties and Election Campaigns. In chapter 1 at page 15 they have this to say:

The most obvious danger comes from foreign funding. If a governing party depends heavily on financial resources provided by foreign governments or especially multinational corporations, their influence may undermine national sovereignty and the democratic principle of self determination.

Just look at a few countries. In the United States it is unlawful for foreign nationals to make donations. United States citizens living abroad can still make donations. In Canada, Section 404(1) of the Elections Act says:

No person or entity other than an individual who is a citizen or permanent resident ... shall make a contribution to a registered party, a registered association, a candidate, a leadership contestant or a nomination contestant.

In the United Kingdom only permissible donors can donate. These are those on the electoral roll or registered corporations. The latter category is complicated by European Union membership. Germany stipulates that parties have to `publicly account for the sources and use of their funds and for their net assets'. Sweden does not accept any corporate donations and Canada requires the disclosure of donations in excess of $100 to all parties and candidates.

In Australia the problem is not yet large. We need to act before it grows larger and to set an example in order to help improve lax state donations laws. The AEC online disclosure returns show that in the four years to June 2003 Australian political parties received $607,178 from overseas sources: the Liberals, $255,275; Labor, $172,029; the Greens, $170,564; the Citizens Electoral Council, $7,110; and the Australian Democrats, $2,200. Of the $607,178, $86,413 appeared to come from individuals. Whether these persons living overseas were on the Australian electoral roll is not known. The donors to the Greens, the Heinrich Boll Foundation$99,622and the Swedish Green Forum Foundation$58,304are and were absolutely hidden, as were Shimao Holdings Ltd, who donated $100,000 to Labor.

Foreign donations seem to figure prominently at the state level. I do not have those figures. One of the most notorious foreign donations was in 1999, where Labor's New South Wales branch took a $25,000 donation from Benito Salazar, a Manila lawyer charged with murder. Salazar reputedly was someone of note during Estrada's corrupt regime. Salazar said that the money came from business clients whose names he refused to identify. The New South Wales ALP took another $25,000 donation just over seven years ago from bus importer Antonio Rodriguez, who left the country soon after, while under investigation for serious corporate offences. It is cases like these that provoke strong public interest in knowing who the real donors are and what their motives are.

I delivered an adjournment speech earlier this month on political donations. I spoke at length about the need for political donations that come with strings attached to be banned. There is a view that some donors specifically tie large donations to the pursuit of specific outcomes they want achieved in their self-interest. This is corruption. It is essential that we have a comprehensive regulatory system that legally requires the publication of explicit details of the true sources of donations to political parties. It is only then that we will be able to properly prevent, or at least discourage, corrupt, illegal or improper conduct in the formulation or execution of public policy. Such mechanisms of accountability would see a revival of faith in the integrity of the political system amongst the wider public and the protection of politicians from the undue influence of donors.

One of the key screening devices for hiding the true source of donations is the use of trusts, clubs and foundations. The Democrats continue to recommend strong disclosure provisions for these. The Democrats have made a number of recommendations over many years, which we believe will clean up this political donations area, which is of high controversy and public interest. I refer all interested parties to our full intentions spelt out in our supplementary remarks to the Report of the Inquiry into the conduct of the 2001 Federal Election.