Abbott’s Honest Politics Trust a Liberal Party front: Donor disclosure required

G’Day. Webdiary legal contributor and electoral law expert Joo-Cheong Tham argues in this piece that the Australian Electoral Commission should require Tony Abbott to disclose the donors to his Honest Politics Trust as a matter of law. The AEC still refuses to release its legal advice to date or the HPT trust deed, but is seeking new legal advice after revelations that it conducted no investigation into the trust, asked no questions of Tony Abbott, and did not take legal advice before it reversed its demand that Abbott disclose its donors. The backdown followed a letter from Abbott in 1998 claiming he could keep his donors secret. Mr Abbott did not enclose the legal advice he claimed backed his wish to keep his donors secret, and later admitted the advice was given orally and never reduced to writing. Mr Abbott will not disclose the name of his lawyer, or say whether the lawyer saw the HPT trust deed before giving his or her opinion.

Abbott’s Honest Politics Trust a Liberal Party front: Donor disclosure required

by Joo-Cheong Tham

Joo-Cheong Tham is associate lecturer in law at La Trobe University. He has written a chapter on campaign finance reform in Graeme Orr, Bryan Mercurio and George Williams (eds), Realising Democracy: Electoral Law in Australia (2003), Federation Press, forthcoming.

The continuing controversy surrounding the Abbott-controlled ‘Australian for Honest Politics’ Trust (AHP Trust) has pushed to forefront the legal question whether AHP Trust is an ‘associated entity’ under the federal disclosure laws and, therefore, obliged to disclose the identities of its financiers.

The ‘associated entities’ provisions are a relatively recent addition to the disclosure laws. Prior to these provisions being enacted, only registered political parties were subject to annual disclosure obligations. The ‘associated entities’ provisions, in essence, extended these obligations to entities which were seen to have a sufficient connection with one or more registered political party.

When passed in 1995, the ‘associated entities’ provisions defined an associated entity to mean an entity:

– controlled by one or more registered political parties; or

– which operated wholly or mainly for the benefit of one or more registered political party.

In 1999, prompted by ALP concerns over the Liberal Party’s Greenfields Foundation, this definition was enlarged to include entities which operated to a significant extent for the benefit of one or more registered political parties.

How then do these provisions apply to the AHP Trust’ The key question is whether the AHP Trust is an entity that ‘operates to a significant extent for the benefit’ of the Liberal Party.

The conjugate phrase, ‘operates to a significant extent for the benefit’, directs attention to certain features of the AHP Trust:

– ‘operates’: who controls or directs its activities’

– ‘for the benefit’:

– what is the motivation driving such activities’

– what is the objective effect of such activities and, in particular, does any advantage accrue to the Liberal Party’

On all three counts, the evidence disclosed by newspaper accounts strongly suggests that AHP Trust is an ‘associated entity’. These accounts suggest that a senior Liberal Party figure, Tony Abbott, was a trustee. More importantly, while Abbott was only one of the three trustees, he controlled the activities of the fund. Further, while the stated purpose of the trust was to ‘support legal actions to test the extent to which political entities comply with Australian law’, (see letter by Tony Abbott to the Australian Electoral Commission in Margo Kingston, ‘AEC pulls up its socks, starts serving the people’, Web Diary, Sydney Morning Herald, 4 September 2003), its activities were more narrowly focussed at funding anti-One Nation litigation. Such litigation, in turn, was directed at advancing the Liberal Party’s interests. Finally, the adverse impact of the litigation on a political competitor of the Liberal Party clearly conferred an electoral advantage on this party.

Various arguments, however, have been made against the view that AHP Trust is an ‘associated entity’.

Firstly, there are arguments that go beyond the letter of the law. For instance, it has been contended that ascribing a broad meaning to the definition of ‘associated entity’ would be undesirable as it would mean that numerous other bodies especially those which have a looser connection to the political parties would be caught by the disclosure laws.

This concern is misplaced as the relevant provisions still require that an ‘associated entity’ have a sufficient connection with one or more registered political parties. More fundamentally, it is, in fact, desirable that bodies that engage in significant political activity whether or not they have a sufficient connection with a political party be required to disclose the identities of their financiers. Such activity, whether it be by ad-hoc political campaigns, businesses or unions, clearly affect the political debate and voters’ choices. There is then a need for voters to know who is financing such activity.

Indeed, these principles are clearly recognised by the present disclosure laws. As it stands, entities that have engaged in certain forms of political activity, regardless of their connection to a political party, are subject to disclosure obligations.

There is also a cluster of textually based arguments against the view that AHP Trust is an ‘associated entity’.

It is said that the purpose of the trust was to fund litigation against other parties, in particular, One Nation and not to benefit Liberal Party. This argument is simply fallacious as both purposes can simultaneously apply. If this argument is accepted, anti-Liberal Party litigation could not be characterised as operating for the benefit of the ALP.

It has also been argued that the purpose of the AHP Trust should be fixed objectively and, in this case, by reference to the purpose set out in the trust deed, and not by the motivations brought to bear by the main protagonists.

There is, however, no good reason for narrowing the pool of evidence in this manner. When determining the purpose/s of the trust and its activities, the objective set out in the trust deed and the motivations of its controllers are both relevant. Moreover, it is dangerous to confine the evidence to the former as it will allow parties to camouflage the true nature of their activities through the veil of the trust deed.

Finally, it has been argued that the advantage flowing from the AHP Trust’s activities is too diffuse and intangible to be ‘for the benefit’ of the Liberal Party. In one form, the argument is that ‘benefit’ should be read to mean monetary benefit.

This argument is far from convincing. While it is true that the ‘associated entity’ amendments were originally aimed at fund-raising vehicles like the Liberal Party’s Free Enterprise Foundation, the terms of the definition are not so confined. The plain meaning of ‘benefit’ extends to monetary as well as non-monetary advantages. Moreover, the term should be read in the context of an Act dealing with elections. In elections, benefit to political parties can obviously take non-monetary form. For instance, a campaign attacking the Liberal Party clearly benefits the ALP regardless of the fact whether the body coordinating the campaign channels funds to the ALP.

These objections against the view that the AHP Trust is an ‘associated entity’, in fact, reveal what is at stake in this flurry of legal arguments. On one hand, there is a position that ascribes a narrow meaning to the definition of ‘associated entity’ often through strained interpretation and flawed logic. If accepted, this narrow meaning will provide ample scope to evade disclosure obligations through non-monetary political activity and legal devices like trusts. On the other hand, there is a test based on control, motivation and effect that is more firmly based on the text of the definition and truer to the reality of electoral politics. If transparency, the overriding objective of the disclosure laws, is to be advanced, the choice is clear.

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