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Cost Of Democracy
<p class="p1">Peter Macdiarmid/Getty Images</p>

Peter Macdiarmid/Getty Images

Julian Assange speaks from the Ecuadorian embassy in London on December 20, 2012.

Grass Roots Politics, Global Money Trees

It’s election time in Australia. Do you know where your campaign funds are coming from?


On the face of it, WikiLeaks founder Julian Assange and former United States ambassador to Australia Mel Sembler would each seem to represent everything the other despises.

Sembler is the very epitome of the American establishment. A rich shopping-centre developer, former finance chairman of the Republican National Committee, controversial anti-drug campaigner, ambassador under George Bush the elder, pillar of the American Enterprise Institute and of other right-wing causes.

Assange is the computer hacker, international subversive and opponent of government secrecy, who delighted in leaking diplomatic cables produced by the likes of Sembler, to the great embarrassment of governments around the world, particularly that of the US. Sembler himself turns up hundreds of times in the WikiLeaks cables.

What could they possibly have in common?

Well, a couple of things, as it happens. Controversial sex lives for a start. You probably know about the allegations relating to Assange, with Swedish authorities wanting to question him over complaints made by women there. But you may not be familiar with the highly entertaining Sembler “pumpgate” affair: it’s worth reading this for a giggle.

But the more important thing they have in common is a desire to use foreign money to influence Australian domestic politics.

<p class="p1">ANDREAS SOLARO/AFP/Getty Images</p>

ANDREAS SOLARO/AFP/Getty Images

Mel Sembler in 2005.

We’ll get to the details in a minute, but first to the underlying question of principle.

Only Australian citizens are allowed to vote in Australian elections, yet anyone in the world can contribute to Australia’s political campaigns. Is this foreign intervention in Australian domestic politics good for our democracy?

It’s a question worth pondering, because as things stand, millions of dollars of foreign-sourced money are being employed to fund Australian political campaigns. Look into the donations data and you’ll find money coming from sources as disparate as Swedish environmentalists and Chinese property developers.

In many of the world’s other democracies, foreign donations to political parties are either illegal or severely restricted in their amounts. To cite a few examples:

• The United States of America allows no donations at all from non-citizens. Americans don’t like the thought that foreign nations might exercise influence on their political process by such means.

• Likewise in Canada: you have to be a citizen to donate.

• In the UK, foreigners may not give more than a £500 donation to any one party. (They are, however, allowed to support candidates’ international travel, “as long as the amount is ‘reasonable’ ”.)

• Under New Zealand law, foreigners may donate, but no more than NZ$1,500 to any one party.

In Australia it’s open slather. Professor Graeme Orr, specialist in electoral law at the University of Queensland, describes Australia’s regime for regulating donations as “weak” and “lackadaisical”.

“If you look at all our cousins, English-speaking democracies: Britain and New Zealand both limit expenditure; the US and Canada both limit donations; and Canada does both.

We have neither of those limits, on donations or on expenditure.”

Thus Australia has arguably the weakest electoral funding laws among the English-speaking democracies, he says.

So, to a few examples of the consequences of our lack of limits on foreign donations, beginning with Julian Assange.

Only Australian citizens are allowed to vote in Australian elections; so is it acceptable that non-citizens can contribute to political campaigns?

His WikiLeaks Party, which is fielding candidates for seven Senate seats (in the states of New South Wales, Victoria and Western Australia), has recently been appealing for donations from supporters all around the world. They will accept donations in bitcoin, naturally. You would expect a hi-tech, whistleblower organisation intent on subverting corporate and government secrecy to encourage donations via a “cryptocurrency ... based on an open-source protocol that is independent of any central authority ... transferred through a computer or smartphone without an intermediate financial institution.”

Now, in fairness, it must be said that the prospect of the Australian political system being corrupted by donations to the WikiLeaks Party is pretty remote. As one of its campaign spokespeople told The Global Mail on August 14, the party’s entire electoral war chest, when last she checked, held somewhere between $40,000 and $50,000.

Furthermore, we can assume that the motivations of those giving the money are ideological, rather than mercenary.

In this last aspect, the same probably goes for Mel Sembler’s $10,000 donation to the Liberal Party, on August 15, 2007. No doubt he was motivated by affection for his ideological soulmate John Howard, rather than by any intent to gain some commercial advantage. Mark him down, though, for hypocrisy, given that he must have been aware that accepting such a donation would have been illegal in his own country.

But does it make a foreign donation OK, just because a donor is motivated by ideological affinity, rather than by the baser motives of personal or corporate advantage?

Apparently the Australian Greens think it does, for they have accepted large amounts of money over the years from their counterparts in other countries. The Global Mail’s examination of Australian Electoral Commission returns shows that since 1998, the Greens have been fed $70,942 from sibling parties in Sweden, the USA and Liechtenstein. (It’s not directly relevant to this story about foreign donations, but in the spirit of over-disclosure, or good old transparency: during the 2010 election, The Global Mail’s philanthropic backer Graeme Wood, an Australian, made donations of $1.68 million to the Australian Greens.)

The Swedish donations come from the Green Forum Foundation whose website states it works “for long-term sustainable democratic societies that live and work within the framework set by nature”.

The irony of the Swedes splashing cash around is that in Sweden receiving political donations from a foreign entity is a criminal offence. The USA, as noted, also bans foreign donations. Liechtenstein, however, imposes no such ban.

Now the Greens may accept the money on the basis that it is ideologically pure, but any test of motivational purity is very hard to apply.

Take the case of the billionaire British Tory peer, serial entrepreneur and controversial money mover Lord Michael Ashcroft. In 2004 he gave $1 million to the Australian Liberal Party, and in 2010 he gave another $250,000.

<p class="p1">Oli Scarff/Getty Images</p>

Oli Scarff/Getty Images

Lord Michael Ashcroft.

That’s the sort of money that could buy serious influence. Not that we’re suggesting Ashcroft sought any personal or business advantage. This was a rich Brit with tight links to conservative parties, giving to the conservative cause that is the Australian Liberal Party.

But one can see the possibility of government policy-making being affected even so, on the basis of where the money came from.

In 2010, for example, £5.1 million donated by one of Ashcroft’s companies to the Conservative Party in Britain was sourced to a secretive corporate entity in the tax haven of Belize.

You have to wonder if a political party which benefits by the use of tax havens might not as a result be less determined to close down such loopholes.

And anyway, at a time when governments everywhere, including in Australia and Britain, are wrestling with the threat to the integrity of their tax systems presented by international corporate profit shifting, do we want to see international corporate donation shifting?

In 2008, to cite another example, US billionaire Peter Briger kicked in US$50,000 to the Australian political process. His donation to the Liberal Party was specifically made out to the party through Malcolm Turnbull’s electorate of Wentworth.

The donor and recipient were previously linked through having worked for Goldman Sachs, and Turnbull had previously held shares in Briger’s Fortress Investment Group. For Briger, whose salary plus bonus from the company was reported to be US$26.2 million for last year, the donation was small change. Hey, he was just helping out a mate.

Other foreign donations raise even more difficult questions.

Among the many foreign donors who collectively direct millions of dollars to Australian political parties, one of the biggest is an outfit called Hong Kong Kingson Investments, which has declared donations of $1,503,500. Of this, Labor received $771,500, the Liberal Party $450,000 and the Nationals $282,000.

The company is Chinese, but it is run by Dr Chau Chak Wing, a Chinese-born Australian citizen. He has contributed other money, too, via other companies, as a Fairfax Media investigation showed.

The details are not so important, except inasmuch as they show the difficulty, in an increasingly globalised environment, of deciding what is foreign interference in our political system and what isn’t. The company is Chinese, the bloke directing its donations is Australian. Should we be suspicious?

“Various major companies give money to the major parties … to access ministers and to get ministerial briefings. In my view that is a form of corruption.”

Associate professor Joo Cheong Tham, an expert in political finance law from the University of Melbourne and author of Money and Politics: the democracy we can’t afford, urges caution in passing judgment on foreign donations.

“We shouldn’t presume, just because it’s a foreign donation sourced from Hong Kong or mainland China... We shouldn’t presume that – without further investigation – that this is a suspect transaction,” he says.

At least no more suspect than any other corporate donation. “Various major companies give money to the major parties,” says Tham. “They give money to access ministers and to get ministerial briefings. In my view that is a form of corruption.”

And that is perhaps the most relevant point. The problem is not the geographical source of campaign donations, so much as their propensity to corrupt the political process.

So, what system of regulation would solve that problem?

Joo Cheong Tham says no system is perfect, but he believes the reforms that came into force in New South Wales at the start of 2011 provide a good template for the rest of the country.

Under the NSW laws, only individuals can donate; donations cannot be accepted from corporations and other entities. Furthermore, those individuals have to be registered Australian voters. And even then, some categories of potential benefactors – property developers, tobacco companies, gambling and liquor-industry representatives and their “associates” – are banned from giving money to political parties.

In addition, any single donation of more than $1,000, or series of donations totalling more than $1,000, must be disclosed, and caps apply on donations to parties contesting state elections: $5,300 for registered parties or groups of candidates, and $2,200 for unregistered parties, groups, individual members or candidates or third-party campaigners. You can find further detail here.

If this system were adopted at a federal level, Julian Assange’s international hacktivist mates would be out of the funding picture. Mel Sembler would be out. Lord Ashcroft and his millions from possible-dodgy sources would be out. Briger, Hong Kong Kingson, et al, all out.

If such regulations were adopted, our federal political parties would be the poorer for it. But not our democracy.

5 comments on this story
by Marilyn

Why continue the smear against Assange, it is well known that the women did not make any complaint about anything but a condom that did not have Assanges DNA on it.

They were only worried about STD"s

August 15, 2013 @ 7:04pm
by Simon Sharwood

I'm a tech journo for The Register (theregister.co.uk) and feel the point that anyone can donate to Australian political parties is well made.
But when I asked WikiLeaks party about The Guardian's article and its allegation it is thinking about a membership category for overseas supporters, they said it is an idea they have considered, but don't intend to implement and don't have time to work on before the election.
My reason for asking the question was to inquire if funding that reached the WikiLeaks party might be forwarded to WikiLeaks, which would be interesting inasmuch as credit card companies and others have refused to process payments for the organisation. That starves WikiLeaks of cash.
The WikiLeaks Party pointed out they are discrete entities and that Party is using every dollar it can get its hands on for the local campaign.
Of course Australian electoral law means it is possible that if the WikiLeaks Party has some cash left in the kitty at the end of the campaign, it could send it to WikiLeaks. But my inquiries suggest that is not the Party's intention.

August 16, 2013 @ 10:54am
Show previous 2 comments
by Liz Johnston

Nice one Secco

August 17, 2013 @ 8:11am
by Reinhold

Assange has become almost irrelevant as the days progress. I'm Swedish and I think he should go to Sweden and resolve these issues. They are not that important in the scheme of things. Reading through some documents it was alleged that Assange had sex with a consenting partner while she was asleep.? Etc. You men out there examine that one.! It is almost absurd that he tried to set up a senate ticket here and of course it was doomed to fail. Yes I think millions have been spent in a lost or at best a past cause. If only politicians could get over it. Or he has the courage to walk out the door!

August 22, 2013 @ 11:15pm
by Reinhold

Sure beats the general flow !

August 22, 2013 @ 11:19pm
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