Transparency experts have warned of a “huge loophole” in the nation’s donation disclosure laws following allegations that undeclared payments from Hancock Prospecting flowed to the Liberal party.
The ABC reported on Friday that mining magnate Gina Rinehart’s company, Hancock Prospecting Pty Ltd, was behind $150,000 in funds paid to the Liberal party via a third-party entity known as the Sydney Mining Club (SMC).
The SMC paid the money to the party via a subscription to its business observer program, Australian Business Network, according to the ABC.
Such business observer schemes, operated by both major parties, have been routinely criticised as a form of cash for access, which give subscribers exclusive opportunities to access political events and briefings.
The former Liberal minister Michael Yabsley, once a key party fundraiser, has previously described the business observer programs as nothing more than “government for rent” and “an unedifying exchange” where businesses were encouraged to pay for access to politicians and the politicians advertise themselves.
For the public, the only transparency around the payments are found in the Liberal party’s annual disclosures, which declare $144,000 in “other receipts” from SMC, made up of six individual payments of $24,000.
Hancock’s donation disclosures make no mention of payments to the SMC, while the SMC itself made no declaration of payments to the Liberal party.
Internal emails, published by the ABC, showed Hancock gave $190,000 to the SMC, of which $150,000 was to be paid “straight out to the Liberal party”.
Australia’s electoral laws do not always require such payments to be declared. SMC did not need to declare its membership of the Liberal party’s business program if it received value for money from its subscription.
Many corporate subscribers to the major parties’ business forums are not required to declare such payments, though some choose to.
Hancock, according to the current electoral laws, was only required to declare a payment to a second entity such as SMC if that payment was intended to “benefit” a political party.
The ABC reported on Friday that its questions had prompted Hancock to concede a “deficiency” in its disclosures to the Australian Electoral Commission, which was being corrected. No amendments had been published on the AEC’s website on Friday morning.
Transparency experts say the framing of current electoral laws creates a loophole that, potentially, allows donors to mask payments to parties.
The Centre for Public Integrity executive director, Han Aulby, said the failure to classify membership of business forums as a “donation” was contributing to that loophole.
“This is a huge loophole allowing potentially millions of dollars to pass through our system undisclosed,” Aulby said.
“If businesses claim they are getting value for money in these forums, the public should be concerned about what this value is. Is it access to government?
“The public has a right to know who is funding our political parties and what access or influence they are receiving in return.”
The Transparency International Australia chief executive, Clancy Moore, said the fact that companies may not have to declare their contributions reveals a “Sydney harbour-size loophole in our current donations laws”. Moore called for reform, saying real-time disclosures, lower thresholds and greater transparency were needed.
“Political donations create an uneven playing field,” Moore said. “Australians have a right to know who exactly is donating to the major political parties, how much and when.”
Hancock Prospecting, SMC and the Liberal party have been approached for comment.
An AEC spokesperson said it could not comment on “individual matters in detail until they have been examined”. It also stressed that it could only apply the electoral laws enacted by parliament and “cannot take into account feelings held surrounding certain transactions”.
The spokesperson did stress that SMC’s membership of the Australian Business Network would not require disclosure under current laws.
“The AEC is not in possession of the information held by the ABC prior to them running their article so it is difficult to provide a definitive view on certain obligations,” the spokesperson said.
“The Electoral Act enables amendments to disclosure returns to be received in order to achieve full and accurate disclosure. It has been the AEC’s longstanding practice for this to be the primary aim of our administration of the scheme – in line with the legislation.”
Labor has already signalled it will pursue reform to donations disclosures, including lowering the disclosure threshold to $1,000 and introducing real-time, rather than annual, reporting.
