A former Victorian Labor minister "improperly" lobbied for a major development consortium and obtained donations for his daughter's election campaign, the state's anti-corruption watchdog has found.
For two years, the Independent Broad-based Anti-Corruption Commission (IBAC) investigated Theo Theophanous, who was a minister in the Brumby and Bracks Labor governments before becoming a lobbyist.
His daughter Kat Theophanous is the Labor MP for Northcote and IBAC found that her campaign benefited from donations from her father's unregistered client.
Operation Clara probed Mr Theophanous's dealings with the Chinese-backed Australian Education City (AEC), a $31 billion proposal to build an education and employment hub in East Werribee.
The project failed to win government support in 2019 after four years of negotiation.
Despite Mr Theophanous being a registered lobbyist, AEC was not listed as one of clients and IBAC found that he had engaged in lobbying on behalf of the group from 2018.
The report, tabled in parliament on Wednesday morning, detailed Mr Theophanous speaking to Andrews government ministers including Treasurer Tim Pallas and then finance minister Robin Scott about the project.
"IBAC's investigation found that Mr Theophanous attempted to influence ministers and their advisors in favour of the East Werribee project," the report said.
In 2019, when the project was rejected by the state, Mr Theophanous texted three different ministers including Mr 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 texted.
While Mr Theophanous never entered into a commercial arrangement with the company, IBAC found "he obtained benefits from AEC and its associates in the form of donations to his daughter's campaign for election to the Victorian Parliament".
These donations included a $10,000 donation from a company linked to an AEC representative, tickets to fundraising events as well as in-kind assistance including making 250 phone calls to voters in Chinese language and providing people to hand out voting cards at polling booths.
Theophanous says IBAC findings 'farfetched, unsubstantiated'
Kat Theophanous won Northcote for Labor off the Greens at the 2018 state election and was re-elected last year.
IBAC said there was no evidence Ms Theophanous was aware of her father's relationship with AEC.
Ms Theophanous said she had always acted appropriately and IBAC's report makes it clear that she had no knowledge of the circumstances outlined.
"All donations made to my campaigns were appropriately disclosed,'' she said.
During Operation Clara, an AEC representative agreed with IBAC that the sole purpose of the relationship the company formed with Mr Theophanous was to progress the project.
"I treat him like another lobbyist [who] just couldn't be paid," the representative told IBAC.
IBAC also found that Mr Theophanous misused his position on the board of the Metropolitan Planning Authority — which later became the Victorian Planning Authority (VPA) — and failed to declare a conflict of interest with AEC.
The VPA was involved with assessing the AEC proposal.
IBAC found that Mr Theophanous "sought to use his public position on the board of the VPA to favour AEC and further his other business interests as a registered lobbyist".
It found he did this by telling clients he had access to staff and information within the authority.
Mr Theophanous resigned from the VPA board last week. In his official response to IBAC, Mr Theophanous said he "absolutely and categorically" rejected the findings.
He argued that the investigation was based on testimony from two unidentified witnesses "whose personal or political agendas are unknown".
Mr Theophanous said he did not engage in unpaid lobbying, rather his actions "centre around my enthusiastic support for the AEC project as one that, properly delivered, would have provided jobs, investment, and educational opportunities in the western suburbs," he said.
"I did not see this expressed support as 'unpaid lobbying' but as advice to senior ministers and bureaucrats in the public interest."
Responding to IBAC's findings that he received payment 'in-kind' through political donations, Mr Theophanous said it was "farfetched, unsubstantiated and speculative".
A government spokesman said the allegations were damning and go to the judgement of Mr Theophanous.
"Mr Theophanous has resigned from the VPA Board. In light of IBAC's report, the government has also asked him to resign immediately from his position as a board member of State Trustees,'' the spokesman said.
The government said it would support in principle each of the recommendations and stands ready to make any further necessary changes.
IBAC made four recommendations for reform as part of Operation Clara, including banning public entity board members from lobbying in their field.
Last year, outgoing IBAC commissioner Robert Redlich revealed there were "about 35" corruption investigations underway in Victoria, some involving politicians.
This includes Premier Daniel Andrews, who is being investigated as part of Operation Daintree, which is probing a deal with the Health Services Union.
Another investigation into the United Firefighters Union's dealings with the state government has been held up by litigation.
The re-elected Andrews government has begun a process to find Mr Redlich's replacement.
Greens leader Samantha Ratnam called on Ms Theophanous to address the issues raised in the IBAC report.
"There's something rotten in the seat of Northcote," she said.
"It's important that Ms Theophanous urgently comes clean on the sources of funding for her last two election campaigns — to confirm that no dodgy behaviour has gone on behind closed doors."
