Senator Sam Dastyari announces his resignation from the opposition frontbench. Credit:Wolter Peeters Associated entities are defined in the Commonwealth Electoral Act as operating "wholly or to a significant extent for the benefit of one or more registered political party". The foundation did not respond to emailed questions this week, but in June, a spokesperson denied the organisation made political donations, or was even a political organisation. "[The CLF] is an educational and leadership development organisation for young conservatives," the spokesperson told Fairfax Media. "It has never contributed financially to any political party or any political candidate [and] our charter expressly prohibits such involvement." But as well as a platform for the views of its chairman, Senator Bernardi, on political issues such as the repeal of Section 18C of the Racial Discrimination Act, the foundation's website and Facebook page boast of the success of CLF alumnus James Paterson in his surprise Liberal preselection for the Senate in March.

In May, Senator Paterson posted a picture of dozens of Young Liberals, whom he praised for "working incredibly hard campaigning in marginal seats", at the CLF headquarters, which is owned by a company jointly held by Bernardi and his wife Sinead. Experts say the organisation inhabits a grey area. The foundation, which solicits donations of up to $2500, hosts networking, fundraising and education events and can accommodate up to 300 dinner guests, according to its website. Prime Minister Malcolm Turnbull attended a federal election campaign fundraiser at the CLF on June 2, which reportedly raised hundreds of thousands of dollars and exceeded expectations. A post on the CLF Facebook page boasted of the success of the fundraiser, though a spokesperson denied the foundation had organised it.

The South Australian Liberal Party confirmed it had organised the event and a spokeswoman for the party said, "it is not uncommon to use this space" for party fundraisers. On July 18, the CLF launched the Australian Conservatives movement, which has so far gathered 50,000 supporters, according to its website. Australian Conservatives is not registered as a political party, but it also spruiks for donations, and promotes causes such as the return of Adam Giles' Country Liberals government in the run up to the Northern Territory election. The website permits donors to be based anywhere in the world, including China. On Tuesday, Senator Bernardi called for all foreign donations to be banned over what he called a "new level of sleaze." "It's wrong for substantial amounts of money from foreign entities in non-democratic governments to flow into [the] Australian body-politic," Senator Bernardi said.

"CLF's reported structure, relationships and activities either flout the law or are sneakily designed to exploit loopholes in fundraising and disclosure laws," says Monash University governance expert Ken Coghill. Queensland University political finance law expert Graeme Orr compares the CLF to the Free Enterprise Foundation, a well-known Liberal Party political fundraising entity. "Just as the NSW Electoral Commission found the FEF to be a Liberal entity, if a core CLF role is to promote sympatico, neo-conservative candidates for pre-selection or election, it should be disclosing its inward and outward contributions," Professor Orr said. Fundraising entities He argued that the proliferation of opaque and publicly unaccountable fundraising entities was evidence not only of Australia's flawed political donations regime, but also the increasing influence of charismatic candidates who can raise significant funds from donors.

"We risk sleepwalking into an American political culture," Professor Orr said. "If you give Mr Bernardi's foundation a big donation, you may achieve more sway with him than if you give to the party's election funds. Strong parties, centralising donations, can protect politics as parties have an ongoing reputation to protect. Individuals within parties are concerned with their short-term survival. Bernardi's ambitions are ideological, not just personal. Long term, he wants his views and prodigies to dominate in the party." On Wednesday, Senator Bernardi called on Senator Dastyari to "come clean", in his weekly newsletter. " This is a very grubby affair and I suspect it is only the tip of the iceberg," the South Australian senator said. Australian Conservatives did not respond to an emailed request for comment before deadline. A staff member at Senator Bernadi's electoral office said she had no knowledge of the organisation or phone numbers for its employees.