The cold Canberra air had yet to be tempered by the dawn when plain-clothes agents from ASIO and a locksmith assembled outside an apartment in the upmarket suburb of Kingston.

The locksmith's work done, the agents filed past two wooden Chinese artefacts standing like sentries at the entrance, and up a single flight of stairs into the apartment. The living room was decorated with exquisite porcelain vases and a dozen half-melted candles on a table.

The apartment belonged to Roger Uren, a tall, bookish man with thinning silver hair. Before resigning in August 2001, Mr Uren was the assistant secretary of the Office of National Assessments, the agency that briefs the prime minister on highly classified intelligence matters.

Mr Uren's speciality was China. Foreign affairs sources in Canberra say he was regarded as one of Australia's leading sinologists. In 2011, prime minister Kevin Rudd was reportedly considering appointing him as Australia's ambassador in Beijing.

A close friend of Mr Uren describes him as brilliant but eccentric. Under the pseudonym "John Byron", he had penned a book on Chairman Mao's feared intelligence chief, Kang Sheng, who amassed a collection of erotic art that was seized by his Red Guards during the Cultural Revolution. Mr Uren shared Sheng's taste in art.

"When we visited the markets in Beijing, the erotic art sellers would call out his name because he was a regular customer," the friend recalls. Some of these artworks were on display as the agents from Australia's counter-intelligence agency searched the apartment in the early hours of October 7, 2015.

This raid was a small piece of a much larger picture. It reflects deep concern inside ASIO about the attempts of foreign nations to influence Australia's politics.

The issue of foreign interference has exploded into prominence globally since the revelations of Russia's influence over the American election in favour of Donald Trump.

In Australia, it is the Chinese Communist Party causing the greatest concern, and Beijing's attempts at influence potentially extend to political players as senior as Labor's Sam Dastyari and the Liberal Party's Andrew Robb.

But neither of those men, nor even Mr Uren himself, were the target of ASIO's 2015 raid which, until now, has remained one of Canberra's most closely guarded secrets. The agents were searching for evidence about somebody else entirely - Roger Uren's wife.

Sheri Yan 'a dynamic, active person'

Sheri Yan arrived in the United States in 1987 with $400 sewn into her clothes and a fierce desire to make something of herself. She met Mr Uren, who was working as a diplomat at Australia's Washington embassy, and helped him research his Kang Sheng book.

By the time Mr Uren returned to Australia to join the ONA in 1992, he and Ms Yan were a couple. They moved together to Canberra. As Mr Uren climbed the ranks of the intelligence assessment agency, Ms Yan was forging a reputation as a fixer and lobbyist, able to open doors in Beijing for Australian and US businesses seeking access to Communist Party cadres.

She also sold her services to Chinese entrepreneurs wanting to build their fortunes overseas. By the time Mr Uren resigned from the ONA in 2001 and moved with Ms Yan to Beijing, her network was flourishing.

John Fitzgerald, a former Ford Foundation director in Beijing said he received a warning from an "old friend in Australia's security establishment" to "stay away from Yan".

Former Australian ambassador to China, Geoff Raby, who lived in the same exclusive St Regis apartment block as Ms Yan in Beijing, described her as a "dynamic, active person, [who] speaks both languages perfectly, is charming, and comes from a well-connected background".

Ms Yan's business network includes the US software tycoon Peter Norton, high-flying Australian corporate figure and Australia's former New York consul general, Phil Scanlan, and former ABC chairman Maurice Newman. She also knew several senior Australian politicians.

But not everyone trusted Sheri Yan. John Fitzgerald, a former Ford Foundation director in Beijing turned Swinburne University China expert, told Four Corners and Fairfax Media of a warning he received from an "old friend in Australia's security establishment" to "stay away from Yan".

"I understand that Sheri Yan is very closely connected with some of the most powerful and influential families and networks in China," Mr Fitzgerald said.

"Once you know that, you don't need to know much more."

Among Ms Yan's Chinese clients was billionaire property developer, Dr Chau Chak Wing. Dr Chau is known in Australia for his large political donations, philanthropy and for buying the nation's most expensive house, James Packer's Sydney mansion, for $70 million, sight unseen.

He gave $20 million for the construction of the business school University of Technology, Sydney, which was designed by Frank Gehry, and is called the "Dr Chau Chak Wing building".

And over the years, Dr Chau donated more than $4 million to Labor and the Coalition. Among his contacts were senior politicians on both sides of the aisle, including John Howard and Kevin Rudd.

As ex-prime ministers, both have visited Dr Chau's palatial conference centre and resort, Imperial Springs, in the thriving Guangdong province in China's south.

According to a close friend of Ms Yan, Dr Chau engaged her as a business consultant for 18 months around 2007 and again in 2013, when she helped entice global A-listers to his conference centre.

Then it all came tumbling down.

Bribery scandal unfolds across Pacific

The covert ASIO raid of Ms Yan and Mr Uren's Canberra property in October 2015 was timed to coincide with events across the Pacific. In New York, Ms Yan and several other Chinese business people were being arrested by the FBI for allegedly running a bribery racket in the United Nations.

According to US District Attorney Preet Bharara, Ms Yan and her co-accused had paid kickbacks to the president of the United Nations general assembly, John Ashe, and in return, Mr Ashe performed certain services for wealthy Chinese businessmen.

"For Rolex watches, bespoke suits and a private basketball court, John Ashe, the 68th President of the UN General assembly, sold himself and the global institution he led," Mr Bharara told journalists at a briefing announcing the arrests.

ASIO suspected, though, that Ms Yan's activities extended well beyond bribery. Classified material shared between FBI counter-espionage officials and ASIO prior to the Canberra raid suggested Ms Yan may have been working with Chinese intelligence.

And a Four Corners-Fairfax Media investigation has established that, in the apartment she shared with Mr Uren, ASIO agents located highly classified Australian documents. Mr Uren had apparently removed them from the ONA prior to his departure in August 2001.

The documents contained details of what Western intelligence agencies knew about their Chinese counterparts.

ASIO called in the federal police to launch an inquiry. Well-placed sources have confirmed Mr Uren may face criminal charges.

But it is understood the documents are not the main game for ASIO. While the agency never comments publicly on its operations, it is understood the investigation into Ms Yan involves suspicions she may have infiltrated or sought clandestine influence in Australia and the US on behalf of the Chinese Communist Party.

In his brief interview, Mr Uren labelled the notion "pure fantasy" concocted by an incompetent, politicised FBI.

"They think anyone who is Chinese is a spy," he said.

But professor Rory Medcalf, who directs the Australian National University's National Security College, says the ASIO raid would not have occurred without "the authorisation of the Attorney General" and input from "many parts of the Australian national security community."

'Potential to cause harm to nation's sovereignty'

Professor Rory Medcalf says ASIO has a "real concern" about the Chinese Communist Party's influence in Australia.

Mr Medcalf believes the targeting of Ms Yan reflects a small part of a "deep and real concern" inside ASIO about the Chinese Communist Party's secret interference to influence operations in Australia.

Eight serving government officials, who spoke on the condition of anonymity, broadly confirmed Mr Medcalf's assessment.

Several of these officials also confirmed that in the months leading up to the ASIO raid, the agency had been collating intelligence suggesting Australia was the target of an opaque foreign interference campaign by China on a larger scale than that being carried out by any other nation.

They believed the Chinese Communist Party was working to infiltrate Australian political and foreign affairs circles, as well to gain more influence over the nation's growing Chinese population.

The sources said ASIO feared the campaign was succeeding. In comments to a Senate committee at the end of May (which were overshadowed by a controversy about refugees and terrorism), director general Duncan Lewis appeared to confirm this.

"Espionage and foreign interference continue to occur on an unprecedented scale and this has the potential to cause serious harm to the nation's sovereignty, the integrity of our political system, our national security capabilities, our economy and other interests."

Mr Lewis didn't name Beijing. But ASIO's serious concern about the Chinese Communist Party were on clear display when analysts working for Mr Lewis prepared an extraordinary document in the weeks before the Sheri Yan raid in October 2015.

It was created so that Mr Lewis could show it to the senior officials of Australia's Liberal, Labor and National parties to warn them about accepting political donations from some foreign sources.

A number of people who have seen the document described it - at the top was a diagram representing the Chinese Communist Party with lines connected this diagram to photos of two Chinese-born billionaires.

These two men were known to dislike each other. Both had amassed significant wealth in China. Both are significant donors to Australia's political parties. One of them was a businessman called Huang Xiangmo. The other was Sheri Yan's sometime employer, Dr Chau Chak Wing.

Dr Chau Chak Wing takes legal action against media

Dr Chau was was given the codename 'CC3' in a sealed indictment in a New York court. ( Fairfax )

Dr Chau is not directly named in court documents unsealed by US officials in the Sheri Yan UN bribery case, but he is referred to by a pseudonym, "CC3".

The FBI alleged CC3 was an "old friend" of Ms Yan whose firm had wired $200,000 to UN chief John Ashe to make the payment organised by Ms Yan. There is no suggestion or evidence that Dr Chau knew it was illegal to pay a speaking fee to a UN official.

The money was paid to secure Mr Ashe's appearance in his official capacity at Dr Chau's palatial Imperial Springs conference centre. Several former politicians would be there, including Bill Clinton.

Under US bribery laws, Mr Ashe's status as a serving UN official meant it was illegal for him to receive payments. He was charged alongside Ms Yan, but died last year, shortly before a guilty plea from Ms Yan led to her jailing for 20 months.

While she is still in prison, Dr Chau has faced no criminal charges. He has taken legal action against Australian media outlets for any suggestion he is involved in impropriety and his representatives have assured his Australian political contacts that Dr Chau has no connection to the wrongdoing of others targeted by the FBI.

Dr Chau declined to answer questions put by Four Corners and Fairfax Media, and he appears to have shrugged off the matter. Two weeks after "CC3" was identified in FBI documents, former prime minister Kevin Rudd attended Dr Chau's Guangdong conference centre to speak at a global leadership event.

Mr Uren is also confident Dr Chau does not have any connections of concern to the Chinese Communist Party.

ASIO, though, appears not to share his conviction.

Donors could be channels to advance Beijing's interests: ASIO

ASIO chief Duncan Lewis's document picturing Chau Chak Wing and Huang Xiangmo was essentially a prop. Three times he removed it from a black briefcase to display to three different men - Brian Loughnane, the Liberal Party's federal director; George Wright, Labor's national secretary; and Scott Mitchell, the National Party's federal director.

ASIO's Duncan Lewis warned politicians of the risks associated with foreign-linked donations. ( AAP: Lukas Coch )

They were at the time the most senior administrative officials of Australia's major political parties, and Mr Lewis's document conveyed a strong message: be wary of these donors.

''[Lewis] said 'be careful','' says a source who is aware of what the trio were told.

"He was saying that the connections between these guys and the Communist Party is strong," says another political figure briefed about the content of the ASIO warning.

ASIO also warned this connection meant the donors could be channels to advance Beijing's interests.

In his briefings, Mr Lewis was careful to stress that neither Dr Chau nor Huang Xiangmo was accused of any crime and that Mr Lewis wasn't instructing the parties to stop taking their donations. But he also sought to describe how the Chinese Communist Party co-opts influential businessmen by rewarding those who assist it.

This meant there was a risk Dr Chau's donations, which are made via the Australian citizen's companies, might come with strings attached.

Dr Chau's ownership of a newspaper in China places him in effective partnership with Communist Party propaganda authorities, while his membership of a provincial-level People's Political Consultative Conference (CPPCC) is also telling.

CPPCCs ostensibly oversee China's political and policy making system, but in reality they are used to entrench the Communist Party's monopoly power and advance its interests in China and abroad.

People such as Dr Chau who make the cut as members of a CPPCC are screened by the Communist Party's United Front Work Department, a unique agency that aims to win over friends and isolate enemies in order to further the party's agenda.

In May 2015, President Xi Jinping publicly championed the United Front and the CPPCC, describing their mission as "persuading people… to expand the strength of the common struggle".

"We have to assume that individuals like that [Chau] have really deep, serious connections to the Chinese Communist Party," Mr Medcalf said.

Sorry, this video has expired Professor Rory Medcalf speaks with Four Corners.

"Even if they're not receiving any kind of direction, they would feel some sense of obligation, or indeed to make the right impression on the powers that be in China, to demonstrate that they're being good members of the party, that they're pursuing the party's interests."

Former China ambassador Geoff Raby disagrees. He told Four Corners and Fairfax Media he had met Dr Chau and visited his conference centre, and dismisses the notion that a property developer well down the Beijing pecking order would be used by the Communist Party to somehow further its agenda in Australia.

He said Dr Chau's Australian political donations and networking are aimed at the Chinese practice of "getting status, and face, and prestige".

But Mr Medcalf said ASIO's decision to come out of the shadows and identify Dr Chau in its briefings to the Coalition and Labor is "certainly unusual" ... "it would reflect very real concern," he said.

Political donations are made 'with a purpose': Varghese

The most recent head of Australia's Department of Foreign Affairs and Trade Peter Varghese is also troubled by the willingness of political parties to take foreign money. He warns political donations are made "with a purpose" and large Chinese companies may act in accordance with the interests of the Communist Party.

Peter Varghese says Australia is on the cusp of significant changes. ( AAP: Mick Tsikas )

"The Chinese system is such that the dividing line between a state decision, and a decision by a company that may be anticipating what is in the interests of the state, is rather blurred," he said.

The former DFAT chief is encouraging debate about foreign interference because the stakes are so high. Any influence sought by Beijing may ultimately be aimed at advancing the strategic interests, activities and values of an authoritarian, one party state.

Australia is one of the few western countries that accepts political donations from foreigners, although the fact that Dr Chau is an Australian citizen shows that a ban on donations from non-citizens may not mitigate the risk identified by Mr Varghese.

"It goes back to how we want to frame our laws on political donations and making sure people reveal their connections back to China if they are taking a position on a particular policy issue," he said.

If Dr Chau has taken a position on any policy issue in Australia, he's not done so publicly. All he appears to have sought via his donations is access to some of Australia's most powerful men and women. But for parts of the Chinese Communist Party, access to the right networks may be worthwhile in and of itself.

This may be why Sheri Yan sought to compromise UN chief John Ashe, according to former CIA officer turned China-watcher Peter Mattis.

Mr Mattis said figures such as Ms Yan who know how to cultivate networks of influence are "useful not only for getting things done, not only for injecting Chinese perspectives into [the networks], but also for being able to say, 'here are the players, here are the people who are important, here are their personal foibles'."

Dr Chau Chak Wing may only ever have sought access, but the same can't be said of the second billionaire pictured alongside him in the ASIO briefing document.

Huang known by two formal identities

As with many men able to drop $100,000 at a casino or on a political donation, Huang Xiangmo is used to getting his way.

So it was with some consternation that, in early 2016, the lively businessman who sports a comb-over became worried his application for Australian citizenship was progressing more slowly than anticipated.

One thing bothering immigration authorities was the curious fact Huang Xiangmo had two separate formal identities - he's also known as Huang Changran. But there was another reason for the delay. Mr Huang's application was being assessed by ASIO.

Mr Huang had likely become of interest to ASIO for a range of reasons. One was his leadership of the Australian arm of the Chinese Council for the Promotion of the Peaceful Reunification of China.

Former US Defence department China specialist Mark Stokes, an expert on Chinese Communist Party influence operations, said the Beijing headquarters of that organisation manages a "global outreach" project overseen by the Communist Party's United Front Work Department.

The "peaceful reunification" work of the council involves undermining the Taiwan and Hong Kong independence movements and asserting China's fiercely disputed claims over the South China Sea. Mr Stokes has also documented the Beijing-based council's links to Chinese intelligence agencies.

Mr Huang's role as president of the Australian Council for the Promotion of the Peaceful Reunification of China places him at the vanguard of the United Front's lobbying in Australia.

"He's a key member supported by the Chinese authorities, including the embassy or the consulate here," said Sydney University of Technology's China academic and communist party critic Dr Feng Chongyi.

Mr Huang told Four Corners and Fairfax Media in a statement that, while it supported the one China policy, the ACPPRC was "an autonomous, non-government organisation", and it was "incorrect to describe… [it] as an affiliate" of the United Front Work Department or the Chinese Communist Party. The organisation "supports economic and cultural exchange programs and charitable causes," he said.

But according to Dr Feng, Mr Huang's council role affords him immense influence and status, as well as a launching pad into Australian politics.

Sydney University of Technology's China academic Dr Feng Chongyi said Mr Huang's council role affords him immense influence and status.

'Life was a struggle': Huang

The way Mr Huang built his Australian network is all the more remarkable given his humble beginnings in the back blocks of southern China's Guangdong province.

As a 15-year-old, Mr Huang left school for a year to look after his impoverished family after the sudden death of his father.

"Life was a struggle, especially with five children to feed," he recently told a Chinese magazine. "Despite the hardships we were a close family."

In 2001, he scraped together enough funds to form the Yuhu Investment Development Company in Shenzen, a buzzing metropolis in Guangdong. He built upmarket villas and apartment blocks before diversifying into energy and agriculture. He also formed the close Communist Party connections expected of any billionaire property developer in China.

In 2011, Mr Huang moved to Australia. He claims to have been seeking new business opportunities and a place to raise his children where the "people are warm and friendly and the air is clean, very clean".

Australia was also free of the endemic corruption and corresponding anti-graft purges of the Chinese Communist Party that created an uncertain and sometimes hostile business environment for entrepreneurs.

Huang Xiangmo donated $1.8 million to help build the Australia China Relations Institute at the University of Technology Sydney headed by Bob Carr.

In 2012, one of Mr Huang's key Communist Party contacts in his home-town of Jieyang was targeted for corruption, a fact Mr Huang has privately brushed off as irrelevant.

After arriving in Sydney, Mr Huang developed a shopping centre and launched a philanthropy blitz, donating millions of dollars to medical research and universities, including $1.8 million to help found the Australia China Relations Institute at the University of Technology Sydney.

The institute is headed by Bob Carr, whom Mr Huang claims he hand-picked. Mr Carr (who declined an interview request) disputes this, although it's unquestionable that Mr Huang's large donation provided an open channel to the former foreign minister and premier.

Mr Huang quickly became known as a "whale" in political fundraising circles. The nickname was earned with his very first donation: $150,000 to the NSW branch of the ALP on November 19, 2012. That same day, two of Mr Huang's close associates, Chinese businessmen and peaceful reunification members Luo Chuangxiong and Peter Chen, gave an additional $350,000.

Mr Huang and his allies' large donations were initially handled by the then ALP NSW secretary Sam Dastyari, along with Chinese community leader and ALP identity Ernest Wong, who quickly became one of Mr Huang's point men in Labor.

As well as encouraging Mr Huang's campaign fundraising, Mr Dastyari requested the developer donate $5,000 to settle an outstanding legal bill he had accumulated as party secretary.

In the Liberal camp, Mr Huang was also dealing with high-flyers. They included trade minister Andrew Robb, whose Victorian fundraising vehicle was given $100,000 by Mr Huang, and Tony Abbott, who encountered Mr Huang at Liberal fundraisers where, in the lead up to the 2013 selection, the Chinese businessman donated $770,000.

Mr Huang moved with ease across the political aisle. Mr Dastyari and Mr Robb both effusively praised Mr Huang's philanthropy at charity or community events organised by the developer.

"He is a man of many dimensions from what I've already been able to determine," said Mr Robb at a December 2013 charity event. "He's a very thoughtful, cerebral fellow. I've had many interesting conversations already with Mr Huang on an endless range of topics."

Sorry, this video has expired Trade minister Andrew Robb also had dealings with Mr Huang.

Mr Robb said Mr Huang's donation to Bob Carr's Australia-China Relations Institute showed he was a "visionary".

"China is going to be an integral part of all of our futures, and it is absolutely imperative that we build the closest possible relationship," Mr Robb said.

At least $2.6m donated to the major parties

Mr Huang first turned his political connections into a request for a favour in early 2013. Court records show it involved a minor immigration matter. His ally, Ernest Wong, was at the time an ALP deputy mayor, who Mr Huang would recruit as an advisor to his Australian Council for the Promotion of the Peaceful Reunification of China (Mr Wong had, years earlier, been part of the council under its previous leadership).

Mr Wong wrote a letter of support to help Mr Huang secure a work visa for a Chinese employee. The Migration Review Tribunal later rejected the application because the proposed job referred to was not genuine.

Mr Huang (circled) at the launch of the Association's Chinese New Year Lantern Festival with Chinese and Australian Government officials. ( Supplied )

Shortly after Mr Wong penned the letter in question, in May 2013, he was parachuted into a NSW state parliament upper house seat left vacant by the resignation of former Labor member Eric Roozendaal. It was a curious affair, if only for the timing.

Mr Roozendaal was suspended from Labor on November 7, 2012 over a corruption scandal (he was later not found to have engaged in any improper behaviour). This meant his place on the ALP's upper house ticket would need to be eventually filled.

Twelve days later, Mr Huang and two fellow Peaceful Reunification council members donated $500,000 to the NSW ALP. After Mr Wong took Mr Roozendaal's place in the upper house, Mr Huang employed Mr Roozendaal to work in his development firm.

Mr Huang's donations to both major parties continued. Records reveal that over four years, Mr Huang and his close associates or employees gave at least $2.6 million to the major parties.

It was these donations, along with Mr Huang's Communist Party ties, that led to him being featured in the briefing spy chief Duncan Lewis gave the three political party chiefs in 2015.

The same qualification that applies to Dr Chau Chak Wing also covers Mr Huang - Mr Huang's donations were legal, and ASIO said the parties were under no obligation to refuse them.

Mr Huang declined to answer detailed questions, but has denied any wrongdoing. In a statement to Four Corners and Fairfax Media he said: "It is regrettable that without knowing me, Four Corners would seek to question my motives and undermine my reputation based on recycled news reports, dubious assertions and innuendo.

"While your program may seek to reinforce negative stereotypes about Chinese involvement in Australia, I am committed to more positive endeavours, such as investment, philanthropy and building stronger community relations."

In the right company, though, Mr Huang himself has made no secret of his more political views. Around the time of the ASIO briefing, he spoke at an event at the Chinese consulate to celebrate 66 years of Communist Party rule.

"We overseas Chinese unswervingly support the Chinese government's position to defend national sovereignty and territorial integrity [and] support the development of the motherland as always," he said.

Mr Huang's desire to champion Beijing's territorial claims eventually led to a clash with ALP policy. But in the months leading up to the election, Mr Huang's most pressing concern was his application to become an Australian citizen. It had been temporarily blocked as ASIO attempted to understand his relationship with the Chinese Communist Party and other discrepancies in his application.

Mr Huang did not know that Australian authorities had concerns, at least not initially. All he knew was that his application was taking far longer than he believed it should. The answer, he believed, lay not with a migration agent or lawyer, but with the intervention of his political friends.

"In China, the system works like that," explains a well-placed source.

Mr Huang attempted to recruit a number of politicians to his citizenship cause, including former prime minister Tony Abbott. Several politicians agreed to help, but it appears only one followed through - Sam Dastyari.

On four separate occasions over the first six months of 2016, Mr Dastyari or his office called the Immigration Department to quiz officials about the status of Mr Huang's application. The senator made at least two of these calls personally.

In response to questions for Four Corners and Fairfax Media, Mr Dastyari said, "it's my job to assist constituents with migration matters including liaising with the Department of Immigration".

He said he had never "spoken to any representative from Australia's security agencies," and he was "never given any reason to have concerns about Mr Huang up to and including my final contact".

An Immigration Department spokesperson said citizenship was only granted for people of good character who could meet identity requirements, and who were not subject to adverse ASIO assessments.

"The Department is not influenced by representations, no matter who they are from, if the applicant does not meet the requirements of the Citizenship Act."

As for Mr Dastyari's calls on Mr Huang's behalf, one official said: "It shows a pattern of conduct, beyond a single call the department might get from a politician about a constituent".

$400,000 donation in question

Sorry, this video has expired Sam Dastyari denies making comments to please donors

Around the time of Mr Dastyari's last call, and as the 2016 election neared, Mr Huang promised the ALP another $400,000 in donations - money the party desperately needed to fund its campaign. But then Mr Huang received some bad news. The ALP was publicly and unexpectedly challenging one of the core doctrines of Beijing's foreign policy.

At a lunchtime address on June 16, Labor shadow defence spokesman Stephen Conroy told the National Press Club that China's actions in the South China Sea were destabilising and "absurd".

Labor, he said, was open to the Australian Navy conducting freedom-of-navigation exercises in the area.

In Beijing, the Chinese Communist Party viewed this as an unwelcome challenge. In Sydney, Mr Huang decided to act.

He called ALP fundraising officials in Victoria. Mr Conroy's comments meant he could no longer deliver the promised $400,000 in donations. The ALP pushed for Mr Huang to honour his commitment, but he stood firm. Mr Conroy had crossed the line and his comments would cost the ALP dearly.

Still Mr Huang wasn't prepared to give up on Labor entirely. Just a day after Mr Conroy launched his South China Sea salvo, Mr Dastyari and Mr Huang spoke at adjacent lecterns at a press conference attended by the Chinese language media.

"The South China Sea is China's own affair," Mr Dastyari stated. "On this issue, Australia should remain neutral and respect China's decision".

There is no suggestion Mr Dastyari knew directly of the threat to the $400,000 donation.

Those comments cost Mr Dastyari his frontbench job amid a storm of publicity after the election over why he had allowed Mr Huang to pay for the $5,000 legal bill in 2014, and a second Chinese donor to contribute to pay a $1,670 office travel expense.

In response Mr Dastyari said he had broken contact with Mr Huang after "the events of last year".

Mr Huang's use of a $400,000 donation as leverage over the ALP's foreign policy has remained hidden until now. It came about a year after ASIO had first put the political parties on notice about Mr Huang's likely connections back in China.

"It's precisely the kind of example of economic inducement being turned into economic leverage or coercion," said Rory Medcalf from the ANU National Security College.

"It's a classic example of a benefit being provided, but then withheld as a way of punishment, and as a way of influencing Australia policy independence."

A few days after Mr Huang said he would withdraw his offer of the $400,000 donation, he appeared at a Labor press conference to announce two Chinese candidates for the last two spots on the ALP's senate ticket.

One of the candidates was active ALP member Simon Zhou, a close associate and member of Mr Huang's peaceful reunification council.

Mr Zhou also helped raise funds for the NSW ALP, with two of his business associates donating $60,000 in May 2016. Mr Huang also asked the NSW ALP to appoint Mr Zhou as a multicultural adviser (the ALP insists he was appointed on merit).

At the event announcing Mr Zhou and Mr Han's candidacy, Mr Huang told Chinese-language media "the Chinese realise that they need to make their voices heard in the political circle, so as to seek more interests for the Chinese, and let Australia's mainstream society pay more attention to the Chinese".

Mr Huang's withdrawal of the 2016 donation is understood to have not only concerned some within Labor, but to have caused grave concern inside Australia's security community and the US embassy in Canberra.

Several sources have also confirmed that in September 2016, ASIO briefed Bill Shorten about Mr Huang. Mr Shorten responded by directing his colleagues to cut ties to the donor. The opposition leader also issued a public call for a ban on foreign donations.

Call for reform on foreign donations

Sorry, this video has expired Malcolm Turnbull says Bill Shorten has to address Senator Dastyari's comments

In Washington DC, Australia's role as one of the only western nations not to have banned foreign donations, continues to cause alarm.

But despite promises for donations reform from senior figures in both parties, nothing firm has happened. Many politicians still appear more interested in attracting foreign cash than ensuring the integrity of our political system.

It is clear the problem is not confined to donations and Australia's national security agencies continue to sound the alarm behind closed doors.

"There's an awareness of a problem, but the agencies themselves don't have the mandate or the wherewithal to manage the problem," Mr Medcalf warned.

"All they can do is sound the alarm and alert the political class. The political class needs to take a set of decisions in the interest of Australian sovereignty, in the interest of Australia's independent policy making, to restrict and limit foreign influence in Australian decision making."

After being briefed on the findings of the investigation by Fairfax Media and Four Corners and sent a list of questions, the Turnbull Government has stressed it is not only listening to the warnings but prepared to act.

In a statement, Attorney General George Brandis revealed Prime Minister Malcolm Turnbull had launched a major inquiry into Australia's espionage and foreign interference laws.

"The threat of political interference by foreign intelligence services is a problem of the highest order and it is getting worse," Mr Brandis said.

"Espionage and covert foreign interference by nation states is a global reality which can cause immense harm to our national sovereignty, to the safety of our people, our economic prosperity, and to the very integrity of our democracy."

Mr Brandis also flagged the introduction of new laws to "strengthen our agencies' ability to investigate and prosecute acts of espionage and foreign interference."

His statement is certain to rile Beijing. It will also concern certain political players in Australia, who will be hoping any inquiry is confined to finding gaps in the law and leaves alone the previous conduct of individuals.

Watch the Four Corners report "Power and Influence" on ABC iview.