Political donations – allegations concerning ALP NSW branch officials, Chinese Friends of Labor and others (Operation Aero)

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)

Updates

Briefs of evidence in relation to the substantive offences were provided to the Director of Public Prosecutions (DPP) on 20 June 2024. 

Briefs of evidence in relation to the ICAC Act offences were provided to the DPP on 4 September 2024.

The Commission is awaiting the DPP’s decision on whether proceedings will be taken.

The ICAC understands that Huang Xiangmo is outside Australia. No brief of evidence in relation to Mr Huang has yet been furnished to the DPP.

Recommendations for disciplinary action

The Commission does not make any recommendations for disciplinary action in this matter.

Policy recommendations

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.

Recommendation 1

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.

Recommendation 2

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.

Recommendation 3

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.

Recommendation 4

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.

Recommendation 5

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.

Recommendation 6

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.

Recommendation 7

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.

Responses to CP policy recommendations
The letter below provides details of the NSW Government action plans in response to the CP policy recommendations made in the Operation Aero report. It does not constitute approval or endorsement by the Commission.

Action plan – update – NSW Government (pdf)