Sidelined senator tells corruption inquiry he was not aware FEF money was from prohibited donors and accepts no responsibility

This article is more than 6 years old

This article is more than 6 years old

The former finance minister, Arthur Sinodinos, has told a Sydney corruption inquiry that a scheme to launder banned donations to the New South Wales Liberal party through a third-party fundraiser did not pass “the pub test” and “didn’t look right”.

But the sidelined senator, who chaired the party’s finance committee at the time, said he was not aware that money from the Free Enterprise Foundation (FEF) was being sourced from prohibited donors, and that he accepted no responsibility for the donations winding up in Liberal party coffers.

Pressed by counsel assisting the Independent Commission Against Corruption (Icac), Geoffrey Watson, SC, on what he had done to “determine whether the funds that had been raised had been raised lawfully”, Sinodinos admitted he had done “nothing”.

Icac has heard that a “substantial” amount of $700,000 donated by the FEF to the NSW Liberals before the 2011 election came from property developers, who have been banned from giving money to parties and candidates in the state since 2009.

The money was bundled and washed in the accounts of the FEF, which then passed it onto the NSW branch of the Liberal party,

the commission has heard.

“As chair of the finance committee ... what responsibility do you accept for the fact that these funds from illicit donors came to the Liberal party?” Watson asked.

Sinodinos initially demurred. “Are you asking me about compliance responsibility? Are you asking me about finance responsibility? The problem I have with that question is that it’s a very general question.”

Finally, he said: “I don’t accept responsibility because I made my best endeavours for that not to happen.”

Sinodinos said he had taken a “capital-C conservative approach” to banishing property developer donations, updating the party’s finance guidelines and training staff to comply with the new laws. He also wrote a letter to party staffers pointing out the changes, he said.

Had someone raised with him the way the FEF was being used, Sinodinos said he would have sought legal advice. “I don’t think it would have passed the pub test. It doesn’t look right,” he said.

Icac has previously heard that the party’s top fundraiser, Paul Nicolaou, had suggested funnelling donations to the federal party through the FEF at meetings when Sinodinos was present.

“If there was a suggestion, it went over my head,” Sinodinos said.

Sinodinos said the only way he could have stopped the practice would have been to “micro-manage other people’s roles”, which was not possible “in a real sense”.

He called for wholesale reform of the electoral funding system to “lower the amount of donations that individuals can provide, get rid of corporates and make sure trade unions can’t donate”. “I’ll take it up in the Senate,” he said.

When the commissioner, Megan Latham, suggested the practice of paying the party’s fundraisers a 6% commission on the money they generated might be encouraging corruption, Sinodinos disagreed. “Well, that’s the end of capitalism isn’t it,” he said.

Outside the commission, Sinodinos told reporters he was “glad to have had the opportunity to speak to Icac today and complete my evidence. My family have been in suspended animation for the last 18 months through this whole process”.

“At no stage has any allegation of corruption been made against me,” he said.

“I want to thank my family, particularly my wife who has been the subject of personal attacks and jibes in some of the newspapers, for standing by me.”

“I look forward to now getting on with going back to work as a member of the Abbott team in Canberra and helping to make this an even better country than it is now,” he said.

Earlier on Friday, Port Stephens MP Craig Baumann became the 10th NSW Liberal to move to the crossbenches after admitting to Icac he used sham invoices to disguise donations from property developers during his 2007 election campaign.

Only hours after Baumann’s appearance before the commission, Premier Mike Baird said he had accepted the MP’s decision to stand aside from the parliamentary Liberal party and relinquish his parliamentary positions.

“I am not prepared to allow this to become a distraction for the party or the government,” Baird said in a statement.

The corruption inquiry has now adjourned, and will release a report in December with its findings.