The Turnbull government’s cabinet secretary, Arthur Sinodinos, has threatened to take legal action against the NSW Electoral Commission over what he calls a “flawed” report that has led to media outlets labelling him corrupt.

Sinodinos was the NSW Liberal party’s finance director and treasurer in 2011 when donations were made through the Free Enterprise Foundation, which has since come under scrutiny from the electoral commission and the Independent Commission Against Corruption.

The commission announced it would be withholding $4.4m of public funding on Wednesday after the party refused to reveal details of the donors through the foundation from 2011.

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Sinodinos said the commission’s report had led to media reports labelling him corrupt and is demanding it retract all references to him in the publication. “I had no role in the NSW division’s decision to decline to update information disclosed in that declaration, as was requested by the commission,” he said.

“For my part, my lawyers have written to the commission to draw its attention to errors of fact in its statement in relation to me. I was not given the opportunity by the commission to comment on its statement before its publication and I was not aware of the publication until shortly prior to its release.”

Sinodinos said the statement had already been extensively cited by media. “In a number of instances, there has been erroneous commentary to the effect that I ‘concealed’ illegal donations, and that my actions were somehow corrupt or illegal. That media commentary is a direct consequence of the NSW Electoral Commission’s flawed publication.

“In light of these matters, my lawyers on my behalf have invited the commission to immediately retract all references to me in the publication. The commission has been invited to publish a correction to that effect on its website.”

Asked whether he was sure Sinodinos had not known about the donations, prime minister Malcolm Turnbull told ABC’s Lateline program: “My understanding is that Arthur Sinodinos has said he was not aware [of the banned donations] and he has done so at the Icac hearings, which were some time ago.”

He repeated that “the Liberal party should only take donations in accordance with the law and the should disclose them in accordance with the law”.

The NSW premier, Mike Baird, has criticised the Liberal party, saying it did “the wrong thing”. On Thursday it released a statement saying it would comply with the electoral laws.

“Given the continuing delay in the ICAC being able to finalise these matters because of litigation by others, the remission of certain matters relating to the Liberal party or the electoral commission and the decision yesterday by the full three-member panel of the electoral commission, I have written to the commission this afternoon seeking their assistance in resolving any areas of uncertainty abut the legal status of donors in the 2010-11 period so as to comply with our obligations,” said the party’s state director, Chris Stone.



“These matters occurred six years ago. The NSW division has already publicly acknowledged and apologised to the people of NSW for these matters and taken detailed steps to prevent such issues reoccurring.”

The commission’s inquiry drew on Icac investigations that it said found there had been “significant breaches” of donation laws, and had found that it should have declared a series of donations from the source of those who provided them to the Free Enterprise Foundation. It gave the party an opportunity to amend its declaration in February 2016 but it did not do so.