Six weeks have been set aside for the hearing. They will be long, agonising weeks for a party already bruised by the loss of two leaders since November, poor results in this year’s federal and state elections, and a drawn-out leadership contest that descended into sporadic backroom warfare between supporters of the ultimately successful candidate, Jodi McKay, and those of her rival, Chris Minns.
It is well-known that Minns is a long-time friend of Clements and that deep animosity remains between Clements and his successor, NSW party general secretary Kaila Murnain. Many in Labor are worried about the potential of the ICAC hearing to inflame what has become a grumbling civil war inside the party’s right, between the Minns/Clements camps and supporters of Murnain.
There is, ICAC has made clear, a second dimension to the “significant public interest” in its inquiry which lies in “its context in connection with possible foreign influence in NSW electoral processes”.
The fuse for the corruption probe was lit four years ago, at a Chinese Friends of Labor (CFOL) fundraising dinner held at the Eight Modern Restaurant in Sydney’s Chinatown, not far from the party’s headquarters.
Hosted by then MP Ernest Wong, the dinner for 600 guests was held on March 12, 2015, a fortnight before that year’s state election.
As well as a slew of then political luminaries such as Bill Shorten, Luke Foley (at that time the state party leader), Chris Minns and senior federal frontbencher Chris Bowen, one of the most important guests at the dinner was Wong’s close friend, Chinese billionaire Huang Xiangmo.
Huang, who was revealed this week to have been an $800 million-a-year gambler at Crown casino, had for years been courted by both sides of politics, keen for scraps of his extraordinary largesse.
Only a year after his arrival in Australia, the property developer donated $150,000 to the NSW branch of the ALP. That same day, on November 19, 2012, a family member gifted an additional $150,000 to the party’s state branch.
Over time, Huang went on to donate a total of $2.7 million to both major political parties.
But the welcome mat was abruptly withdrawn in February this year when Huang, who’d taken up residency and was hoping for citizenship, was refused re-entry into the country by Australia’s intelligence agencies. They had become concerned he was buying political influence as an agent for the Chinese government through his links to the United Front Work Department (UFWD), a Communist Party-aligned lobby group.
Signs of trouble had come two years earlier when then senator Sam Dastyari – another former general secretary of the NSW party – had been forced to leave Parliament over his connections to Huang.
It emerged that Huang had not only paid some of the legal bills Dastyari had incurred while serving as party boss, but Dastyari appeared alongside Huang at a press conference for Chinese media, during which Dastyari supported Beijing’s stance on territorial disputes in the South China Sea. This put Dastyari in direct conflict with his party’s policy.
It was the revelation that the diminutive senator had gone to Huang’s $13 million mansion in the harbour-side suburb of Mosman in 2016 and tipped off Huang that he was likely to be under surveillance by Australian authorities that finally killed Dastyari’s political career.
Clements, for his part, had followed Dastyari into the role of NSW party boss when Dastyari first ascended to the Senate in August 2013. Clements lasted three years before running into his own woes. He was forced to resign as party general secretary in 2016 over sexual harassment allegations, which a parliamentary investigation subsequently cleared him of. In 2017, he was convicted of unlawfully accessing the electoral roll after seeking confidential details about a voter for a union boss.
Clements, who declined to comment about the ICAC inquiry, now runs his consultancy firm, James Clements and Associates, from the seventh floor of a Pitt Street office block. The floor is owned by Huang’s property company Yuhu, and right next door to Clements’ office is the Australian Council for the Promotion of the Peaceful Reunification of China (ACPPRC), which is considered the main front organisation for furthering Beijing’s influence in Australia.
Huang was president of the ACPPRC from 2014 until November 2017. He stepped down only days before the explosive revelations aired in the Herald that Dastyari had alerted him to security agencies’ interest in him.
Another person of interest to the ICAC is the former upper house Labor MP Ernest Wong, who’s regularly featured as guest of honour at ACPPRC functions along with former Liberal MP Daryl Maguire.
(Maguire, who represented the seat of Wagga, was forced to resign from Parliament in 2018 after an ICAC inquiry aired recordings in which Maguire could be heard trying to get a cut of a multimillion-dollar property sale to a Chinese developer.)
According to Labor sources, Wong’s connections with Chinese donors, including Huang, were a major factor in his being able to secure a political position. Wong had taken the parliamentary spot of another former general secretary of the ALP, Eric Roozendaal, who’d left the upper house in 2013 and taken up a role as deputy chairman of the Yuhu Group.
Wong’s parliamentary career was curtailed when he landed in an unwinnable position on Labor’s ticket for the upper house in the 2019 election. Wong told the Herald earlier this week that “he expected to be called” to the inquiry, given he was the patron of the Chinese Friends of Labor organisation.
It is an offence under the electoral act to make false declarations about donations. The probity of declarations for more than $80,000 in cash raked in on the night of the famous March 2015 Chinese Friends of Labor dinner will now be examined by the corruption watchdog.
Much of the cash donated on the night was collected by Jonathan Yee, whose friends and family declared the cash donations the following month. Yee, whose family owns the Emperor’s Garden restaurant in Chinatown, unsuccessfully ran as a Labor candidate for the City of Sydney council in 2016. Yee told the Herald he could not discuss the looming inquiry.
Another of Wong’s close associates, Kenrick Cheah, is also understood to be of interest to the inquiry. Cheah posted a photo on Facebook of his friends Yee and Wong at the end of the infamous fundraising dinner in March 2015. It was towards the end of the night and Yee, who had taken off his tie, was snapped with the beaming host, Ernest Wong.
Cheah captioned the Facebook post: “The Don and his Consigliere.” Wong (“the Don”) replied: “Hay [sic], we got nothing to do with Mafia.”
For many years the CFOL fundraising dinners have been organised by Cheah, who is employed at Labor headquarters as a community adviser but whose key role, sources have told the Herald, is marshalling donations from the Chinese community. Cheah did not return the Herald’s phone calls.
Cheah is also connected to the Australian Chinese Buddhist Society, which is another Labor donor, while the society’s head, James Chan, has a close involvement with the ACPPRC.
Frank Chou, who has also held senior roles within the ACPPRC, including as its honorary chairman, was at the centre of another recent donation controversy which dogged Chris Minns’ bid to become NSW party leader.
According to documents obtained by the ABC in the midst of this year’s protracted leadership contest, a Chinese organisation associated with Chou donated $100,000 to prominent federal Labor MP Chris Bowen in 2013. Of that amount, $5000 was forwarded by ALP head office to Chris Minns.
Labor has said the 2013 donations were legal. But the leak was intended to damage Minns.
The monetary gift was not the only act of munificence towards Bowen from Huang. Two months before receiving that donation, Bowen declared a donation of a 2002 bottle of Penfolds Grange Hermitage which had come from the billionaire.
Barred from Australian shores, Huang is now residing in a luxury house in Hong Kong’s Repulse Bay which his wife Huang Jiefang purchased in January for $HK520 million ($95.7 million.)
‘Pack of vipers’
While ICAC pores over links between Chinese donations, influence-peddling and possible alleged circumvention of the state’s election laws, party insiders are starting to worry about what collateral damage the inquiry might inflict along the way.
Already attempts have been made by Murnain’s critics to make her the scapegoat for a spectacular tactical bungle by party officials in the wake of ICAC’s December raids.
Acting on legal advice, the party decided to complain to the Inspector of ICAC, Bruce McClintock, SC, about the timing and manner of ICAC’s conduct of the raids.
In May of this year, the law firm Holding Redlich wrote on the party’s behalf to McClintock saying Labor was of the view that the search warrants obtained by ICAC might have amounted to “maladministration”. They pointed out the warrants had been issued 11 months after the matter had been referred to ICAC but just three months before the looming state election. And the party also raised the question of who had leaked news of the raids to the media. The raids were conducted when the most senior officials were out of the state at the party’s national conference in Adelaide.
In response, ICAC told McClintock that any suggestion the search of the party’s premises might have been based on improper motives was “entirely scurrilous”. The letter then went into some detail about what ICAC was about to investigate – a matter that until then had been shrouded in some mystery.
Last month, to the shock of Labor officials, McClintock’s report together with all the correspondence was tabled in State Parliament, laying bare the details of the ICAC allegations while comprehensively shredding the party’s complaints.
“I don’t think anyone thought our response would end up in the public domain,” one senior party source confessed. “I don’t think people thought it through.”
Who could have been responsible for such a blunder, party insiders started to ask. Murnain was seen as an easy target by some who wish to see her gone. Her position is now widely regarded as vulnerable, after the twin election defeats of March and May this year in the federal and state polls. Once hailed as the party’s bright young hope, she has attracted increasing criticism internally for a personal style that is described by her detractors as “immature” and too combative.
As one senior source put it: “She has made a lot of enemies on the way up; she stayed the warrior whereas, when she got to top, she needed to become the peacemaker.”
Murnain was seen as taking an “anyone but Minns” approach to the leadership contest, which was particularly drawn out because it involved a vote of party members for the first time this year, and had to wait until after the May federal election. The ill-advised legal letter about the raid was portrayed as yet another strike against her.
Murnain’s supporters, however, say she is not responsible for the letter. While she hadn’t entered the top party job until early 2016, they say she took the precaution of recusing herself from dealing with the ICAC issue because she’d held a series of more junior positions inside the party head office since 2008.
Whoever made that decision [to lodge the complaint], it was a hopeless decision devoid of political judgment.
Senior Labor source
The McClintock letter was a “massive own goal”, all the factions now agree. But “Kaila was not responsible for that decision”, one senior source claimed. “That’s a drive-by shooting that is coming from her enemies in the party office and the caucus. The decision was made by party officers on the advice of lawyers, and was not embraced with great enthusiasm.”
Another senior party source told the Herald: “Whoever made that decision [to lodge the complaint], it was a hopeless decision devoid of political judgment. For experienced political operators – and this was Sussex Street, for god’s sake- to take the advice of lawyers saying ‘here are your rights’ and not applying a political lens, someone needs to lose their job over that.”
Another source described a “bunker mentality” prevailing inside the party office at the time, given police raids on the AWU a year earlier. “There was this mentality that there are all these bodies coming after us.”
Murnain is said to be exhausted by dealing with rolling crises within the party since November. There was the shock resignation of Luke Foley as leader after allegations were aired that he had inappropriately touched an ABC journalist. Then came the bitter disappointment of the March defeat, with major gaffes by Foley’s successor, Michael Daley (whom Murnain had strongly backed into the role) during the last week of the campaign. May delivered the federal loss, followed by the month-long leadership run-off between Minns and McKay, dogged by some dirty tactics on both sides. The legacy is a toxicity in the party that has not disappeared with McKay’s victory. Now comes the ICAC inquiry.
The drums are beating that the right-wing union leaders, who usually make or break a NSW party boss, are going cool on Murnain. Three of the big right-wing unions – in a move that shocked the faction – broke from party head office during the leadership contest and backed Minns instead of the candidate favoured by Sussex Street, McKay.
There remains the remote prospect that the ICAC findings – if they are sufficiently serious – might provide the left of the party with a trigger to seek federal intervention in the NSW branch. In the words of one state MP, “There needs to be a strong party machine to be getting us campaign ready for three years’ time. If the hearing goes badly enough, then this thing does need to be cleaned out.”
But others dismiss this as highly unlikely. The left and right are evenly balanced on the party’s national executive, giving new federal leader Anthony Albanese a casting vote. The last thing he wants, a senior federal source says, is to “get involved in the civil war within the NSW right of the party. To do that, you would have to be brave, or stupid, or both.”
Murnain’s supporters want to see her continue in the role. They praise her energy, her organisational drive, her endeavours to get party finances back on track and her promotion of women within the party. They fend off criticism of her by ascribing it to the lingering bitterness of those loyal to Minns, and to those who still carry a torch for Clements. One senior backer in Parliament says of her “she had little to no visibility of party finances” before becoming general secretary.
Yet it does seem even some of her supporters are starting to waver. A federal insider talks of the state of the NSW party as akin to a “pit of vipers”.
One MP who identifies as a historical supporter of Murnain’s said this week, “I’m losing faith”. Another source says, “There is a large pocket of MPs who are unhappy with her performance.”
However, others say Murnain is safe if nothing emerges from the ICAC inquiry to show she ignored red flags about the party’s donation practices. Not everyone is sure she wants to carry on . If she does, her future will rest in the hands of those who still decide who rules the roost in Sussex Street – the party’s union heavyweights.
Kate McClymont is an investigative journalist at The Sydney Morning Herald.
Deborah Snow is a senior writer for The Sydney Morning Herald.
Tom Rabe is a journalist with The Sydney Morning Herald