One thousand $100 notes delivered to NSW Labor offices in a plastic grocery bag in 2015 came from a Chinese property developer hiding behind a group of hospitality staff and other donors, the state's corruption watchdog has found.
Former NSW Labor MP Ernest Wong engaged in corrupt conduct by concealing the illegal political donations and then trying to get one of the fake donors to lie about it, the Independent Commission Against Corruption found in a report delivered on Monday.
The $100,000 cash donation delivered to Labor came from Chinese businessman Huang Xiangmo, a property developer who was therefore prohibited from donating to political parties in NSW, ICAC said.
Mr Huang was legally represented at - but did not participate in - the inquiry.
Nor did his executive assistant Wun Chi Wang, who the commission says withdrew $100,000 cash from The Star casino on behalf of Mr Huang, ahead of a meeting with then NSW Labor secretary James Clements.
Despite "no direct evidence" linking the withdrawal to the donation, ICAC says other contextual evidence and "the fact that both of those transactions involved Mr Huang, the same amount of cash, and identical denominations" meant it could not accept it as a coincidence.
The NSW Electoral Commission referred the matter to ICAC in January 2018 after suspicions were raised about how five donors who said they were restaurant waiting staff could afford to make substantial political donations.
Operation Aero was created to investigate and zeroed in on a Chinese Friends of Labor dinner held at a restaurant in the inner-Sydney suburb of Haymarket.
ICAC reported many of the donors lacked the financial means to make such large donations, were not Labor members, did not attend the dinner, explained the source of their cash donations in similar ways and gave them to the same man, who did not keep a record of receiving it from them.
About eight months after Operation Aero commenced, Mr Wong also tried to encourage a listed donor, Steven Tong, to give false testimony if asked about whether he had made donations.
Mr Tong said he knew nothing of the $5000 donation made in his name until he received a letter from Labor informing him he was eligible to deduct the donation from his taxes.
Mr Wong's evidence about a meeting in his parliamentary office between the pair and another man was regarded as "internally inconsistent, at odds with the other evidence and unreliable".
ICAC is seeking advice from the Director of Public Prosecutions on whether to pursue prosecution.
Opposition Leader Chris Minns says the ICAC report is "tough and troubling" for his party.
"It does show a conspiracy to circumvent transparency laws ... we obviously face a big task to rebuild the trust in the run-up to the 2023 NSW election," Mr Minns says.
He says Labor supports ICAC and accepts its recommendations in the report, and will soon announce plans to ensure the commission is independently funded.
Mr Minns acknowledged he and Mr Clements have a family friendship and "do go back a long way", but Mr Clements is now a private citizen working as a lawyer, not a member of parliament or a party official.
"I don't take any professional advice from him ... clearly he's not going to be involved in my administration and in fairness to him I don't expect he wants to be."
