Political donations – allegations concerning ALP NSW branch officials, Chinese Friends of Labor and others (Operation Aero)
The ICAC investigated whether, from January 2015, Australian Labor Party (ALP) NSW Branch officials, members of Chinese Friends of Labor, political donors and others had entered into, or carried out, a scheme to circumvent prohibitions or requirements under Part 6 of the Election Funding, Expenditure and Disclosures Act 1981 relating to political donations.
In its report on the investigation, made public on 28 February 2022, the Commission makes findings of serious corrupt conduct against Ernest Wong, a former member of the NSW Legislative Council.
The ICAC is of the opinion that the advice of the Director of Public Prosecutions should be obtained with respect to the prosecution of Ernest Wong, Xiangmo Huang, Jonathan Yee, Kenrick Cheah, Valentine Yee, May Ho Yee, Emperor’s Garden Pty Ltd, Lei Mo, Patricia Siu, Teresa Tam, Ming Tam, Wei Shi, Johnnie Lin, To Yip, Harbour City Group Pty Ltd, Steve Tong, Alex Wood and Maggie Wang for various offences.
The Commission has made seven recommendations to assist the NSW Government to strengthen the laws, policies and procedures concerning political donations in NSW.
Ruling in relation to the production of a mobile phone by a witness - 14 October 2019 (PDF)
Findings of corrupt conduct
The Commission found that Ernest Wong engaged in serious corrupt conduct by using the privileges to which he was entitled as a member of the Legislative Council:
- between about February 2015 and at least September 2018, in the course of carrying out a scheme for the purpose of circumventing the requirement of the Election Funding, Expenditure and Disclosures Act 1981 to the effect that the true source of a “reportable political donation” received or made must be disclosed to the NSW Electoral Commission; and
- •on 17 September 2018, at a meeting with Steve Tong in Mr Wong’s Parliament House office, during the course of which Mr Wong attempted to procure Mr Tong to give false testimony to such investigative authorities as may make enquiries of him in relation to the question of whether he had made a donation in connection with the Chinese Friends of Labor dinner held on 12 March 2015.
Recommendations for prosecutions
Download the Operation Aero recommendations for prosecutions (pdf)
Recommendations for disciplinary action
The Commission does not make any recommendations for disciplinary action in this matter.
The Commission conducted a review of policy issues identified in the course of this investigation. The Commission makes the following seven recommendations to assist the NSW Government to strengthen the laws, policies and procedures concerning political donations in NSW.
That the NSW Government amends the Electoral Funding Regulation 2018 to provide for the NSWEC to issue penalty notices for less severe breaches of the prohibition on cash donations under s 50A of the Electoral Funding Act 2018.
That the NSW Government, in consultation with affected parties, initiates an amendment to the Electoral Funding Act 2018 so that payments from the Administration Fund are contingent on the achievement of acceptable standards of party governance and internal control. A working group should be established to determine the relevant governance and control standards, which could relate to:
- accounting for, receipting and banking donations
- the organisation of fundraising events
- identifying prohibited donors and donations that
- exceed statutory caps
- the roles and responsibilities of staff, including volunteers
- risk management and internal audit
- whistleblowing and complaint-handling
- management of gifts and conflicts of interest
- compliance and ethical obligations of senior party officials.
That the newly established working group should seek input from the NSWEC to ensure the efficient administration and implementation of standards. That is, consideration should be given to:
- applicable minimum standards
- whether the standards should take the form of model rules, which an individual party would be free to modify only if the NSWEC agreed that the modified rule did not adversely affect the party’s governance. This would prevent small, or new, parties from incurring the expense of drafting rules from scratch
- the limits on the type of standards that could be required. That is, in order to avoid topics and areas that the state has no legitimate interest in regulating (for example, the way a political party formulates its policies)
- the desirability, or extent to which, the standards take the form of specific rules, so as to meet the reasonable satisfaction of the NSWEC
- the need for a proportionate approach that does not unreasonably penalise small, new political parties or independents
- providing political parties with reasonable opportunities to address shortcomings in their governance and internal control frameworks before administration funding is withheld.
That the NSW Government amends the Electoral Funding Act 2018 to provide the NSWEC with the necessary powers to assess, audit and enforce non-compliance with standards of party governance and internal control.
That the NSW Government amends the Electoral Funding Act 2018 to require the NSWEC to publish findings regarding political parties’ adherence to established governance and controls standards.
That the NSW Government, in consultation with the NSWEC, gives consideration to:
a) amending section 100(1) of the Electoral Funding Act 2018 to require senior office holders of political parties to report reasonably suspected contraventions of the Act
b) increasing penalties associated with the offence under section 100(1) of the Electoral Funding Act 2018 to bring it into line with the penalties set out in sections 141 to 146 of the Act.
That the NSW Government amends the Electoral Funding Act 2018 to give the NSWEC power to publish the results of its compliance audits, investigations and regulatory actions.
View all transcripts associated with this investigation. The Commission makes every effort to post the daily transcripts of its public inquiries on its website by 8:00 pm each day when possible. If the Commission sits later than 4:00 pm, the daily transcripts, particularly the afternoon session, may not be available until the next working day.
The document uploaded on 9 September 2019 to the public website and described as Exhibit 218 has since been removed and the contents are subject to a non-publication order under section 112 of the Independent Commission Against Corruption Act 1988.