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The entry on the hand-scrawled donor return to the Australian Electoral Commission, from Harry Triguboff’s company Meriton, was cryptic: “Liberal Party – Simcha Federal, PO Box 545, Edgecliffe [sic], NSW, 2027.”

Other than that, it recorded simply a date – July 29, 2010 – and an amount – $10,000. No politician was named. The commission had no way of knowing to whom the money went.

What was Simcha? Was it some associated entity of the Liberal Party? Another of those many slush funds? And why was the property developer kicking money into it? It was all the more puzzling because while the electoral commission had a record of the donation having been made, there was no record of it having been received. A search revealed no corporate entity by that name either.

The key was the post-office box. It belonged to Malcolm Turnbull, member for Wentworth and senior Abbott government minister.

We contacted Turnbull’s office to ask the obvious questions about the nature of Simcha and the donations it collected. It took a while, but a spokesman came back with an answer.

“There is no entity called Simcha,” he said. “My understanding is simcha is a word that can be translated as ‘party’, as in ‘thanks for inviting me to your simcha’. What has happened is that Triguboff has been invited to a fundraising function and he’s given a donation and that’s how he’s disclosed it, with this word.”

Would other money have been solicited at that simcha?

“Probably,” he said. “Obviously, it was up to them to follow the rules about disclosure.”

Triguboff’s donation to Turnbull was absolutely legal. In fact, he need not have declared it at all, for the amount was below the level at which political donations must be disclosed under federal electoral law.

Had he made the donation to a New South Wales state politician, however, it would have been a different story. Under NSW electoral law, Triguboff, being a property developer, is forbidden from making any political donation at all.

The Simcha donation, while small in itself, serves to highlight a ludicrous situation. If someone like Triguboff hands a cheque to a NSW state politician, they are a lawbreaker; if he hands it to a federal politician representing a NSW electorate, he’s clean. They are treated as quite separate things, the respective state and federal party branches, as though an amount of money given to one does not influence the other.

Their response was to use the FEF “as means of washing and re-channelling donations made by prohibited donors.”

This is a ridiculous notion, as is made clear by another Meriton/Triguboff donation, made just a day prior to the one to Turnbull. It was much larger – $50,000 – and made out to the Free Enterprise Foundation, which unquestionably is a Liberal Party slush fund.

In that year, 2010-11, the FEF took in a bit over $1.158 million in donations and paid out $1.146 million. All but $20,000 of the receipts came from corporate donors, including some property developers other than Meriton. And the bulk of the money paid out – some $700,000 – went to the NSW division of the Liberal Party.

Funny, that. In the 10 years before the NSW electoral funding laws were changed to cap donations and prohibit completely donations from some sources, including property developers, the FEF had directed a grand total of $30,000 to the Liberal’s NSW division.

Then, after the laws came in, a sudden, enormous jump. Why?

Geoffrey Watson, SC, counsel assisting the NSW Independent Commission Against Corruption says: “It is very clear that there were those in the Liberal Party who resented the prohibition which had been placed on donations from property developers.”

Their response was to use the FEF “as means of washing and re-channelling donations made by prohibited donors. This was clearly done for the purpose of avoiding the Election Funding Act.”

Watson referred to evidence given by a Liberal Party fundraiser, Paul Nicolaou, about instances in which a prohibited donor had given to the Free Enterprise Foundation with the expectation that the money would flow to the NSW branch of the party. When asked for examples, Watson told ICAC that Nicolaou replied: “Harry Triguboff, Meriton’s.”

Meriton subsequently denied the claim. But whether or not Meriton sought to influence the state Liberal Party, the state Liberal Party was potentially influenced. So long as a donor is giving money to the party in some jurisdiction, there must be pressure felt in every jurisdiction not to displease that donor.

1 . Packer influence

It can be very unpleasant to displease a donor, even a potential one. To illustrate this point, and also to indicate how corporate donations to parties really work, hark back 20 years to the time when Kerry Packer missed out on the licence for what is now Sydney’s The Star casino.

Soon after the licence had been awarded, a senior Liberal fundraiser went to Packer, seeking money.

“I asked about a donation and he said – I still remember his exact words, because I was so shocked – he said, ‘Now is not a good time to be asking the Packers for a donation.’ ”

“And I said, ‘Why is that, Mr Packer?’ He said, ‘Because we didn’t win the tender for the casino.’ I then said, ‘But you were tens of millions short in the process.’ And he said, ‘Son, that shouldn’t matter.’ ”

When the fundraiser protested that this was not the way he and the Liberal Party did business, Packer responded: “Well, it doesn’t matter to the other mob. We’ll put your government out of business.”

So Packer didn’t get his casino, and the Liberals didn’t get his financial support.

Fast-forward a generation and you’ll note the current state Liberal government is treating Kerry’s son, James, with rather more deference. His casino development at Barangaroo has been given a rails run, bypassing the usual tendering and planning processes.

Further evidence of the more convivial relationship between the Libs and the Packers is the fact Kerry’s widow and James’s mother, Ros, tipped more than $580,000 into the Liberal can in 2012. It included the largest single donation to the party that year, $570,000. She gave it to the federal party, of course. James’s casino operation, Crown, gave nothing to the NSW Libs.

Most of the focus in the current ICAC investigation has been on the operations of Eight By Five, the company set up allegedly to disguise campaign contributions from prohibited donors as something else, as payment for “services” rendered, rather than donations. It was a pretty crude scheme by people working with the NSW Liberal Party, within NSW, to subvert the NSW funding laws.

Watson himself said he found the use of the Free Enterprise Foundation more interesting. It certainly raises more interesting problems.

The FEF gambit relied on a sort of regulatory arbitrage – trying to take advantage of differences between the rules in different political jurisdictions.

The electoral funding regulations are different in every state and territory and the commonwealth. Some have low thresholds on the declaration of donations; some have high thresholds. Some have caps on the amount donors can give and some do not. Some limit the amounts candidates can spend on campaigns, some do not. Some restrict donations from particularly corruption-prone industries, such as property development or gambling, and some do not.

2 . NSW laws best

The allegations coming out of ICAC give the impression NSW is the worst jurisdiction for political corruption. The reality, though, is quite different. The allegations are there because NSW has the best system.

The laws in NSW are the most stringent of all: a low declaration threshold ($1000), tight caps on donations, and prohibition on some donors, including property developers. Equally importantly, it has an effective investigating body in ICAC.

In contrast, says Anne Twomey, professor of constitutional law at Sydney University, “at the federal level you can get away with almost anything”.

The federal system is the biggest and weakest of all the nation’s electoral funding regimes. There are no prohibitions on any class of donors and no caps on the size of donations or expenditure. Thus it becomes attractive to launder donations through the federal system.

There was once a requirement that donations of more than $1500 be declared, but in May 1996 the Howard government lifted the threshold to $10,000, and indexed it, thereby ensuring the bulk of donations stayed secret. The threshold now stands at $12,400.

Further obscuring the donations picture are the hundreds of “associated entities” – businesses, companies, unions and foundations, such as the Free Enterprise Foundation, set up to collect money and pass it on to the parties with which they are aligned.

And, as we have recently learned, there are also the secretive “clubs”, such as Treasurer Joe Hockey’s North Sydney Forum, which charge membership fees – up to $22,000 in Hockey’s case – to business figures and lobbyists in return for access. The fees are then “consolidated” (read: laundered to remove identities of members) and passed to the party.

The effect of this is to make it all but impossible for an outsider to determine exactly who has given exactly how much to which politician, and to what end. The Australian Electoral Commission (AEC) requires three groups to submit returns: parties, donors and associated entities. But often these returns don’t match up.

The reasons are not always insidious. Donors often declare when they don’t strictly have to, because the amount they gave was under the threshold. Like Harry Triguboff’s $10,000 to Malcolm Turnbull.

The Labor Party also declares donations it doesn’t have to. As a point of principle, it reveals any donation over $1000.

But the conservative parties really don’t like scrutiny. Back when the Howard government was amending the electoral act to increase the threshold for declarations, the responsible minister, senator Eric Abetz, was famously quoted saying he looked forward to “a return to the good old days when people used to donate to the Liberal Party via lawyers’ trust accounts”.

But some discrepancies in the AEC declarations look more than a little questionable. To cite just one example, in 2012 – when the federal Labor government was looking to cut the private health insurance rebate – the late billionaire Paul Ramsay, who made his money in private healthcare, gave $500,000 to the federal Liberal Party.

His company’s AEC return omitted the donation. So did the Liberal Party’s. Instead it recorded having received $490,000 from the Free Enterprise Foundation. Presumably someone at the AEC noticed this, for three months later, more than a year after giving the money, Ramsay’s company put in an amended return, acknowledging the donation.

That’s another shortcoming of the system: donations made in one financial year are not made public until the following February, a delay of up to 20 months. Even more if, as often happens, an amended return is submitted.

3 . Call for federal ICAC

The laws are a shambles. There is plenty of blame to go around for this situation, but it has to be said the conservative parties, by virtue of the fact that their constituency has the deepest pockets and most vested interests, are more resistant to transparency and regulation.

If you need further confirmation of this, just look to Queensland, where the Newman government is even now moving to weaken what were the nation’s second-best laws, to bring them into alignment with the federal model.

It is deliciously ironic, then, that it is conservatives – having seen their sundry rorts exposed in NSW, and concerned the scandal is bleeding into the federal sphere – who have lately been doing the most talking about reform, albeit often at cross purposes.

Premier Mike Baird, echoing Geoffrey Watson, says he is inclined to replace private donations with public funding. The Abbott government’s leader of the house, Christopher Pyne, advocates allowing only individuals to donate. Immigration Minister Scott Morrison, a former NSW state director, advocates the capping of campaign spending. The weakest suggestion is from Abbott himself, who declared Canberra had a “pretty clean polity” and reckons stopping lobbyists from also serving as party officials is sufficient reform.

Former Liberal leaders Malcolm Fraser and John Hewson have sensibly suggested other changes, such as continuous disclosure of donations, making them public within days of receipt. Hewson also argued for a $1000 cap. Fraser thought a federal version of ICAC was likely necessary.

A number of academics suggest a system similar to that of NSW, with caps and some prohibitions, and with the addition of continuous disclosure, would be a good model. But it is the Fraser suggestion – that reform must be backed by an ICAC, or at least an electoral regulator with real investigative power, real teeth, enforcing significant penalties – that is seen as probably the single most effective measure.

In the past, any suggestion of an ICAC-style body at the federal level has been anathema to the major political parties, excepting the Greens. It appears it still is to the conservatives, and to at least some on the Labor side. Gary Gray, who as shadow special minister of state is responsible for electoral matters, told The Saturday Paper this week: “No, I do not believe a federal ICAC is required.”

But his leader, Bill Shorten, along with other key players in federal Labor, such as Anthony Albanese, have signalled they are now open to the idea.

Shadow Attorney-General Mark Dreyfus is another who has changed his mind, which is significant, because his portfolio is the relevant one when it comes to such law enforcement agencies.

“I think the performance of ICAC over the past three years can be seen to have had beneficial outcomes for governance in NSW,” Dreyfus said. “And they’ve now touched federal political figures, and there is no federal body by whom the alleged wrongdoing might be further investigated.”

The introduction of a national anti-corruption body, also responsible for administering the electoral funding system, Dreyfus said, was an idea “that should be given serious consideration”.

The parliamentary numbers are such that if Labor joined the Greens and went for it, they would prevail, in the senate at least.

Dare we hope that finally, for the donor-corrupters of federal politics, the party might soon be over?