A former Victorian government minister secretly lobbied for a developer in exchange for donations to the 2018 election campaign of his daughter, Labor MP Kat Theophanous, the state’s corruption watchdog has found. There is no suggestion of wrongdoing by Kat Theophanous.
An Independent Broad-based Anti-corruption Commission (Ibac) special report, tabled in parliament on Wednesday, found Theo Theophanous improperly lobbied in favour of a $31bn proposal by the Australian Education City (AEC) consortium to develop a large education, residential and employment district in the western suburbs of Melbourne.
Ibac’s three-year investigation – dubbed Operation Clara – did not identify any direct financial payments from AEC to Theo Theophanous for his work but there were “other arrangements that provided financial and in-kind benefit to people associated with [him]”.
“In particular the 2018 campaign for the seat of Northcote, which was contested by Mr Theophanous’ daughter,” the report said.
Ibac did not find any evidence to suggest Kat Theophanous was aware of her father’s relationship with AEC.
At the time, Theo Theophanous was serving on the board of the Metropolitan Planning Authority, which later became the Victorian Planning Authority (VPA).
The VPA was responsible for seeking expressions of interest for the project in 2014 and continued to receive information and provide assistance to government about it when Theo Theophanous was approached by the AEC for help in early 2018.
A government spokesperson said the contents of the Operation Clara report “are damning and go to the judgement of Mr Theophanous”.
“Mr Theophanous has resigned from the VPA board. In light of Ibac report, the government has also asked him to resign immediately from his position as a board member of State Trustees,” the spokesperson said.
Theo Theophanous issued a seperate statement confirming his resignation.
Ibac’s report said Theo Theophanous was not formally appointed as an AEC lobbyist but engaged in activities including phone calls, text messages and in-person meetings with Victorian ministers and government representatives involved in the project, such as the treasurer and member for Werribee, Tim Pallas, the report found.
In 2019, when the project was rejected by the state, Theo Theophanous texted three ministers, including Pallas, urging further negotiation.
“I really think that the decision to terminate AEC will have serious consequences for the Govt and despite what U have been told for our relationship with China. A massive law suit may also follow and pretty bad publicity,” he wrote, according to the Ibac report.
Ibac said that about the time Kat Theophanous was preselected as the candidate for the seat of Northcote, Theo Theophanous was involved in a text message exchange with an unnamed AEC representative – identified as “AEC representative A”, who had reservations about making a donation.
“Theo I thought about our conversations yesterday I have been asked before by the government whether I have donated any money to any political parties in the past the answer was NO,” the text message said. “If I do this now and particularly in the effort to influence the opinion of key decision makers such as the ministers it will be seen very dodgy at this time of the project and this can lead to disqualification of our bid which is not worth the risk.
“I have asked [AEC representative B] to see you today to see how else we can help without getting everyone in trouble … the last thing I want is to be seen doing something wrong. Hope you understand. Thanks.”
Four months later, a $10,000 donation was made to the Northcote state election campaign account by a company linked to AEC representative A.
The AEC also bought tickets to fundraising events held in support of the campaign for the seat of Northcote on 31 July 2018 and 9 October 2018. Tickets to these events were sold for between $2,000 and $2,500 a head.
Ibac’s investigation found further in-kind contributions to the Northcote campaign were made by AEC representative B. This included 250 phone calls to Chinese speaking constituents, translation of a letter with a Chinese salutation and people to hand out how to vote cards at prepoll booths in November 2018.
“Ibac’s investigation did not identify any connections between AEC representative A or B and Mr Theophanous’ daughter or the campaign for Northcote, other than Mr Theophanous,” the report said.
It found Theo Theophanous misused his position on the VPA board, failed to declare a conflict of interest and failed to register AEC as a client on the lobbyists register. He also sought to advance his private lobbying business by indicating to clients he had access to staff and information within the VPA that would assist with their matters.
In a lenghty response attached to Ibac’s special report, Theo Theophanous said he “absolutely and categorically reject[ed]” the allegations.
He said since leaving parliament, he continues to speak to ministers and bureaucrats “on a wide range of topics as a trusted confidant and party elder”.
“I tried to explain this background to Ibac and presented evidence to them that I was not lobbying for the project but expressing support for it,” Theo Theophanous said. “It is a fine but important distinction.
“My support was as an interested public figure, and citizen. I strongly believed that the project, appropriately delivered, would contribute to much-needed investment, employment, and educational stimulus in an economically depressed area.”
Responding to the findings that he received payment “in-kind”, through political donations, he said it was “farfetched, unsubstantiated and speculative”.
Theo Theophanous said “no evidence” was presented by Ibac to show that an arrangement “was ever discussed or proposed” in relation to the donations.
“They could just as easily be characterised as support for or building good will or a myriad of other explanations,” he said. “This kind of serious allegation cannot be just based on conjecture or assumptions.”
The Greens have called on Kat Theophanous to detail all sources of funding for her 2018 and 2022 election campaigns in Northcote, and to pay back the donations that were subject of the Ibac report.
The shadow attorney-general, Michael O’Brien, said Pallas must also “come clean on all attempts by Theo Theophanous to lobby him over the AEC project”.
The Ibac acting commissioner, Stephen Farrow, said the report highlighted the difficulty in lobbyists undertaking roles as directors on public entity boards.
“Lobbyists’ main role is to influence government decisions in favour of private interests,” Farrow said in a statement. “A director on a public entity board should be impartial and should make recommendations that advance the public interest.”
Ibac’s report made four recommendations aimed at increasing transparency and protecting against improper influence in political decision‐making, which the government has supported in principle.
They include amending guidelines to ensure lobbyists are ineligible for appointment to public entity boards that relate to their line of work. Similar rules are already in place in New South Wales and Queensland.
The Victorian government discontinued negotiations with AEC for the project in 2019, prompting the consortium to commence litigation, which was unsuccessful.
Theo Theophanous served from 1988 to 2002 as the member for Jika Jika before he moved to the upper house, where he represented the northern metropolitan region until he retired in 2006. He had served as a minister in the Brumby and Bracks Labor governments.
