Donation legality

Stuff reports:

Former National MP says the Serious Fraud Office (SFO) is tracking an alleged $100,000 donation to the National Party back through multiple bank accounts. …

Ross told media he didn’t “know” more than they did but based on a number of conversations with police he understood the SFO were attempting to track the alleged donation back through its smaller parts to an original donor.
“I understand there is some work that is being done or has been done in relation to tracking the money backwards through different bank accounts,” Ross said.

I’d be wary of assuming this is correct, but if so this may shed some light on what the issues are.

The key issue may be whether the were a contribution or just bundled.

Bundling is entirely legal. It is where one person arranges a number of people to make a donation. The lower the donation limit the more often this happens – it is very common in the US where the limit is $2,300 so the emphasis goes on people who can persuade others to donate.

So if an individual donates $15,000 and persuade six of their friends to also donate $15,000 that is entirely legal, and none of the donations exceed the disclosure limit.

But if the individual gives $15,000 each to six of their friends, and they donate that money claiming it to be their own – that is not kosher, as they are required by law to disclose any contributors to their donation. The defines a contribution as:

means any thing (being money or the equivalent of money or goods or services or a combination of those things) that makes up a donation or is included in a donation or has been used to wholly or partly fund a donation, and that—
(a) was given—
(i) to the donor; or
(ii) to a person who was required or expected to pass on all or any of its amount or value to the donor, whether directly or indirectly (for example, through one or more intermediaries, trustees, or nominees); and
(b) would have been a donation if it had been given directly to the candidate or party; and
(c) was given in the knowledge or expectation (whether by reference to a trust, agreement, or understanding) that it would be wholly or partly applied to make up, or to be included in, or to fund, a donation

So if these donations to National were funded by someone other than the listed donor, potentially offences have been committed. Also if the money isn’t their own they could also be deemed a transmitter.

But what is interesting is who may have liability.

S207C(2) requires a donor to to disclose to the party if the donation was funded by a contribution. So the obligation is on the donor to disclose.

There is also an obligation on a candidate and/or a party secretary to refund a donation if they have grounds to believe a donor has not complied with S207C(2).

Now even if these donations were funded by a contribution, I’ve seen nothing to suggest the party secretary had any reason to think so. In fact the material released by JLR shows the party secretary went out of his way to gather authenticated details of the donors, namely their name, address and that they were on the electoral roll.

The obligation on a candidate could be interesting as they were donated into the Botany electorate bank account. And who was the candidate for Botany? JLR. He is probably okay as it seems they were a party donation, not a candidate donation. But could still be interesting.

The other issue for JLR might be whether he is a transmitter. A transmitter is someone who transmits a donation to the party secretary on behalf of the donor. If JLR passed on the donations from the Botany electorate to HQ, then he may be deemed a transmitter. And a transmitter is required under 207E to disclose if they knew of any contributors. This section could well apply to JLR.

Now what are the fines for an offence. A donor who doesn’t disclose can be fined up to $40,000.

A transmitter who doesn’t disclose can also be fined up to $40,000.

A party secretary must disclose any contributors to donations under S210(1)(b) and if the return is false is guilty of a corrupt practice if knowingly false or an illegal practice unless they can prove they had no intention to misstate took all reasonable steps to ensure the information was correct.

So in summary:

  • Whether or not there has been a breach depends on if the individual donors were donating their own money, or donating on behalf of someone else
  • If there were contributions to the donations, the major liability rests with the donors who clearly knew this. They face the most trouble.
  • If JLR is deemed either a candidate or a transmitter under the Act, he may face liability also as he says he knew they they may have been contributions
  • The party secretary does face a strict liability offence if any donation return was incorrect, but he has a defence of having taken all reasonable steps. Also worth noting the annual return has not yet been filed, but if these donations did originate from one person, they the over $30,000 donation return should have been trigerred
  • As far as I can see does not face any real legal liability unless there was some sort of evidence that he actually orchestrated the whole thing, in which case general provisions in the Crimes Act about being a party to an offence could take place.

So in terms of legal liability, JLR would appear to be in significantly greater danger than Simon Bridges, if he is deemed a transmitter.

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