The role of controversial “associated entities” in Australia’s political donations system is set to come under scrutiny after the NSW Independent Commission against Corruption (Icac) heard that the Liberal party’s long-established Free Enterprise Foundation was used to “disguise” at least $165,000 worth of “prohibited” donations.



Geoffrey Watson, SC, counsel assisting Icac, said Paul Nicolaou, the head of the Liberal party fund-raising organisation the Millennium Forum, had told Icac investigators that if property developers wanted to donate he would direct the cash through the Free Enterprise Foundation.

The foundation – classified as an “associated entity”, or organisation that primarily benefits a party, for the purposes of electoral law – received $715,724 in donations in 2012-13, $510,000 in 2011-12 (almost all of it from one of private hospital entrepreneur Paul Ramsay’s companies) and $1,157,726 in 2010-11.

Watson did not say how the donations were “disguised” since associated entities have the same threshold to disclose donations as political parties, currently $12,100.

Another Liberal fundraising company, the Cormack Foundation, set up decades ago from the proceeds of the sale of Melbourne radio station 3XY, donates more than $1m to the Liberal party most years and in 2012-13 was the party’s largest donor, giving $1.5m.

And one of the most mysterious of the Liberals’ foundations is the Greenfields foundation, which continues to insist it is not an associated entity at all.

It was set up in the 1990s to “lend” the Liberal party $4.75m to cover its outstanding debts after the 1993 federal election. When the Australian Electoral Commission began investigating where the “loan” had come from the then party treasurer, Ron Walker, insisted he had personally lent the money. This would make Walker a very generous lender. The Liberal party has paid back very little on the loan and almost 20 years after the original “loan” $3,550,000 remains outstanding. After insisting for years that it was not an associated entity, it began submitting returns to the AEC, but still insists it is not obliged to.

The Labor party has always alleged the actual donation was very probably not from Walker and that the purpose of the foundation was to hide the source of the money.

The AEC has said that whatever happened in the case of Greenfield, it has highlighted a big potential loophole in the political disclosure laws.

“It is apparent that a person, or in certain circumstances a corporation, who wished to avoid full and open disclosure could do so by a series of transactions based on the Greenfields model. The AEC believes that such potential circumventions of the intention of the public disclosure provisions in the act should be addressed legislatively as a matter of priority,” the AEC has said in a report.

The Labor party and other parties also have associated entities, investment fund-raising vehicles like John Curtin House Ltd and fundraising “clubs”. In the case of the ALP, unions are also considered by the AEC to be associated entities.