Jenny McAllister (NSW, Australian Labor Party) Share this | Hansard source

Yesterday morning as senators were taking their oaths of office in this chamber, the ICAC report into corruption and political donations was being tabled in the New South Wales parliament. It is unfortunate that Senator Sinodinos's name was relevant to both proceedings. The Independent Commission Against Corruption's report is the product of years of investigation into the breach of electoral donation laws by the New South Wales Liberal Party using an associated entity called the Free Enterprise Foundation. It is a report that details a deliberate, well organised and systematic undermining of electoral laws by senior officials of a major party, and it is a report that merits our attention.

I would like to take the opportunity this morning to set out in this place some of ICAC's findings about the operation of the Free Enterprise Foundation. The following quotes are extracted directly from the ICAC report, and they explain the scheme that was put in place by the New South Wales Liberal Party.

From 14 December 2009 … the Election Funding Act prohibited political donations by property developers.

…   …   …

Key personnel in the NSW Liberal Party recognised that the prohibition on seeking and receiving donations from property developers … could have a serious negative impact on its budget …

…   …   …

Mr Nicolaou—

the chairman of the Liberal Party's fundraising arm—

suggested that donations could be made by prohibited donors through a body known as the Free Enterprise Foundation and come back from the Free Enterprise Foundation to the NSW Liberal Party. The Commission finds that Mr Nicolaou's suggestion was, in terms, implemented.

…   …   …

The Commission is satisfied that, during November and December 2010, the Free Enterprise Foundation was used to channel donations to the NSW Liberal Party for its 2011 NSW state election campaign so that the identity of the true donors was disguised. A substantial portion of the $693,000 provided by the Free Enterprise Foundation and used by the NSW Liberal Party in its 2011 state election campaign originated from donors who were property developers and, therefore, prohibited under the Election Funding Act from making political donations.

The report also states:

By these means, it was only the large donors whose identity would ever become publicly known, and those donors would appear on the public record as having made their donations to the Free Enterprise Foundation, not to the NSW Liberal Party.

So how is it that Senator Sinodinos was involved with this scheme? He had oversight of it. Again, I turn to the words of the ICAC report:

Specific tasks and functions of the NSW Liberal Party are delegated to committees … Under the party constitution, the Finance Committee has responsibility for the management of income and expenditure of the State Party.

…   …   …

Mr Sinodinos was the chair of the Finance Committee. He was actively involved in fundraising and, in this regard, had a fundraising role second only to Mr Nicolaou.

The report states:

The Commission also accepts the evidence of Mr Nicolaou that he raised the matter specifically with … Mr Sinodinos …

The report continues:

Mr Neeham said that either Mr Webster or Mr Sinodinos raised the question of whether the proposal was legal. According to both Mr Nicolaou and Mr Photios, the need for legal advice was raised. There is no evidence that relevant legal advice was obtained.

That is where the quotes end but it is not where the issue ends, because this report raises serious concerns for Senator Sinodinos to explain to this chamber.

We have been asking questions of Senator Sinodinos and the government about the Free Enterprise Foundation for quite some time. Those questions have been batted away for as long as we have been asking them. Earlier this year, for example, Senator Brandis declined to give a substantive answer to a question relating to the foundation on the basis that it related to mere allegations. In his usual way, he very helpfully explained that:

All sorts of allegations are made against people all the time, and the fact that the statements are made does not make them true. If they are not supported by a finding by the relevant court, tribunal, commission or board, they amount to nothing.

Well, the quotes I read out earlier were not allegations; they were the findings of ICAC. Thus, by Senator Brandis's metric, they amount to something.

After the report was handed down, Senator Sinodinos rushed out a statement to the effect of 'there is nothing to see here'. I intend to step this chamber through why this is not the case. This report raises serious questions of integrity. Senator Sinodinos has said that no findings were made against him, and it is true that no findings of corruption were made against him. But ICAC found that Senator Sinodinos's evidence was, in parts, not believable. As the report states:

Mr Sinodinos was the chair of the Finance Committee. He was actively involved in fundraising and, in this regard, had a fundraising role second only to Mr Nicolaou. Yet … Mr Sinodinos denied knowing that the Free Enterprise Foundation was a major donor.

The report also states:

The party received $629,000 in three days from one donor, but no one on the Finance Committee admitted to knowing anything about it in their evidence.

ICAC found this evidence:

… difficult to accept.

We now have the situation where ICAC has questioned the credibility of a senator of the Commonwealth and a minister of the Crown.

Senator Sinodinos said:

I gave my evidence and respected the process throughout.

In fact, the transcripts of ICAC proceedings reveal 101 separate instances where he claimed he could not answer a question because he could not recall. Just for reference, that is 23 more memory lapses than President Ronald Reagan had during an eight-hour deposition about the Iran-Contra affair.

The report also raises very serious questions about Senator Sinodinos's judgement. The report's findings depict someone who was uninterested in knowing the detail of a program he was responsible for. This carelessness seems at odds with the person described by others who know him—a man who Prime Minister Turnbull described as:

… a pillar of the Howard government, as he is of mine.

In 2009, a year before the proposal to use the Free Enterprise Foundation was raised with Senator Sinodinos, Fairfax published a retrospective about Senator Sinodinos's time as chief of staff to former Prime Minister Howard. Former Prime Minister Abbott was quoted as saying of him that:

He was calm, articulate, measured, thoughtful, intelligent, one of those people it's hard to fault.

Those qualities are not evident in ICAC's findings.

In fact, ICAC expressed surprise that the pattern of donations from the foundation to the Liberal Party did not raise Senator Sinodinos's suspicions. ICAC did not have enough evidence to find that he was knowingly involved in channelling prohibited donations. However, the report expresses suspicions:

The question arises as to whether anyone else in the NSW Liberal Party was aware that donations were being channelled through the Free Enterprise Foundation.

The course of events demonstrated that the expected shortfall in funding from $1.5 million to $1 million, as a result of the introduction of the prohibited donor provisions, was a matter of serious concern to the NSW Liberal Party Finance Committee and state executive. It was accepted by Mr Sinodinos that he and the Finance Committee wanted to know from Mr Nicolaou how the party was "tracking" against budget. The NSW Liberal Party was actually receiving donations at a rate exceeding the old budget. This should have raised questions as to the source of the unexpected funds, but the evidence before the Commission is that no member of the Finance Committee asked that question.

The report describes someone who was either very careless about whether the operations of the Free Enterprise Foundation were legal or was very careful to avoid finding out whether they were legal or not. ICAC found that the finance committee was cognisant of the potential illegal nature of the Free Enterprise Foundation scheme right from the beginning. The need for legal advice was raised at a meeting with Senator Sinodinos—possibly even by him. Despite this, no legal advice was ever obtained.

This carelessness stands at odds with the very strong commitment to strict legalism that has characterised Senator Sinodinos's approach to any scrutiny of his conduct. It is also curious that Senator Sinodinos did not satisfy himself of the legality of the arrangements given that he was actively involved in fundraising. ICAC found:

… some members of the Finance Committee were actively involved in soliciting donations for the party. It is not clear whether this was carried out as an official function of the Finance Committee, itself, but it is clear that committee members, including Mr Sinodinos … were given the task of approaching potential donors.

The ICAC transcripts are silent on what, if anything, Senator Sinodinos told these donors about the legality of the Free Enterprise Foundation and the process of donating to that body. They are also silent about the basis on which he might have provided that advice. How could he have known or understood or been in a position to give advice, given that no legal advice was ever obtained?

Taken together, these findings raise questions about Senator Sinodinos's integrity and judgement. These questions would be serious enough on their own; however, to make matters worse, they suggest that there may be a risk that Senator Sinodinos possibly misled parliament about this matter. On 2 May this year, Senator Wong asked the Cabinet Secretary:

… did he ever participate in, or witness, discussions about the use of the Free Enterprise Foundation to channel and disguise donations by prohibited donors?

Senator Sinodinos replied:

The answer is no.

Well, ICAC has made a finding seemingly contradicting this. The report states:

Mr Neeham said that Mr Nicolaou raised the use of the Free Enterprise Foundation at a Finance Committee meeting in the context of a discussion of how the NSW Liberal Party would deal with the ban on property developers. … The Commission also accepts the evidence of Mr Nicolaou that he raised the matter specifically with each of Mr Sinodinos, Mr Webster, Mr Photios and others.

Senator Sinodinos's statement in recent days suggests that ICAC's findings exonerate him. They do not. ICAC's report has not put the issue to bed. If anything, it has raised further questions for Senator Sinodinos to answer—the types of questions that Senator Sinodinos has repeatedly failed to answer, whether before ICAC, in this chamber or when ignoring an order to attend a Senate committee hearing to explain himself.

This chamber has options available to it to satisfy itself as to whether the conduct of its members is appropriate. We should keep these options in mind whilst we wait for the next report to be handed down by ICAC about Senator Sinodinos's conduct, and that is due in just a few months. In the meantime, I would invite Senator Sinodinos to consider offering to explain himself properly to the Senate. Last year Senator Sinodinos said:

… I'm prepared to stand in the public square and defend myself in that regard.

It is a suggestion he also made to ICAC during his testimony and a suggestion he has never followed through on, despite being ordered by the Senate to appear before an inquiry. He should explain himself. And, before he does so, he should read the Ministerial Code of Conduct and reflect on its contents.