THE Turnbull Government today was forced to pause its attack on trade union lawlessness by the linking of a second minister to alleged law breaking by the NSW Liberal Party.

Assistant Minister for Cities Angus Taylor today denied claims he was part of a plan to disguise donations to the party, saying “unambiguous evidence” showed he expected all cash would be declared.

Mr Taylor rejected the thrust of a Fairfax Media report which in Sydney had the headline, ‘Payment sought from banned donor’.

The report means he joins Cabinet Secretary Arthur Sinodinos in being linked to alleged attempts to bypass donation rules by laundering cash through an intermediary organisation.

The allegations are more than a huge embarrassment for the Liberals in Prime Minister Malcolm Turnbull’s home branch.

It makes it harder for the Government to argue a specific watchdog, the Australian Building and Construction Commission, is needed to control trades unions.

Because it is accusing building unions of breaking the law when there are serious accusations the Liberal Party itself is a law breaker.

Today news reports suggested Mr Taylor had been part of a scheme to solicit donations to a body called the Free Enterprise Foundation which would feed it to the NSW Liberals’ state campaign.

At issue were discussions Mr Taylor had with party fundraiser Paul Nicolaou, who referred to the talks in evidence to the Independent Commission Against Corruption in 2014.

Mr Taylor, a former member of the state Liberals’ finance committee, today said in a statement the Fairfax report had omitted “critical facts”.

“Fairfax has unambiguous evidence that I assumed and expected donations to the NSW Liberal Party would be disclosed and compliant under NSW legislation,” said Mr Taylor.

“Fairfax has this evidence and has refused to include it.”

He said: “Full compliance and disclosure is the standard I adhere to and will always adhere to.”

Late last week lawyers for Senator Sinodinos challenged a statement by the State Electoral Commission which might “convey to some readers that there was evidence that Senator Sinodinos was knowingly involved in the so-called scheme to disguise donations by prohibited donors”.

“Any suggestion that Senator Sinodinos knew of (or was indifferent to) and was involved in a so-called scheme to disguise donations by prohibited donors is contrary to all of the evidence adduced by the ICAC during the Operation Spicer hearings,” said the lawyers’ letter.

“Critically, no such suggestion was ever put to Senator Sinodinos either privately, publicly or otherwise.”