Saturday, February 07, 2009

Ho, ho, ho: a closer look at political largesse, by Rowan Callick - The Australian - 7th February 2009

How Australia's political parties should be funded - and how that information should be divulged - have been hotly debated for years. But we are at last approaching the end-game, as the amounts of cash pumping through the political arteries rise rapidly.

The Australian Electoral Commission revealed this week that the parties raised and spent a record $215million in the past financial year. Submissions to a green paper for discussion on the issue close on February 23, and a bill is before federal parliament.

Asia's controversial casino king Stanley Ho, aged 87, has emerged as the unlikely catalyst in ensuring the key issues are resolved, as he pressed more than $1.6million on federal and NSW Labor branches, although much of it was returned.

Ho, rated by Forbes magazine as the 113th richest man in the world, with about $12billion, lives in Hong Kong. But he has made almost all of his money to the west across the Pearl River delta, in Macau, where he owns 17 casinos, besides the jetfoil company that transports most people to the gambling haven, operated by Shun Tak, Ho's holding company.

He has been married four times and has 17 children. He was a cousin of kung fu star Bruce Lee. He has a high social profile, having been a ballroom dancer and a tennis player well into his 80s, and remains prominent at the biggest Hong Kong charity balls.

He has four honorary doctorates, and endowed through a $5.6million donation to Pembroke College, Oxford, England, a chair for the Stanley Ho University Lecturer in Chinese History.

His son Lawrence is the chief executive of Melco Crown Entertainment, another Macau casino operator, of which James Packer is co-chairman. His daughter Pansy is a director of STDM, his core casino operating business, and is half-owner of MGM Grand Macau.

His businesses account for about one-third of Macau's gross domestic product.

Ho owns property in Australia and, like many other Asian billionaires, enjoys visiting here, where he can relax with less likelihood of being recognised or bothered.

But his preoccupation in Australia has for decades been to gain a slice of the rewarding gambling action; now soaring with the succession of government-funded stimulus packages.

In this, he has been constantly thwarted -- but he has persisted, nevertheless, in seeking to charm Australian politicians through extravagant political donations, which he appears to view as investments.

Ho has been welcomed as an investor in gaming in North Korea's capital, Pyongyang, which is visited by streams of Chinese tourists who gaze nostalgically at old-style communist sites by day and carouse in the casino -- banned in mainland China -- by night.

But he has otherwise largely been frustrated in his attempts to grow his business internationally, although he has been a part-owner of casinos in Hobart, Launceston and Darwin.

Singapore and Canada, as well as Australia, have blocked casino investment proposals, chiefly because of allegations that he has links with Asian organised crime, even being associated with triads in a Royal Canadian Mounted Police report. Veteran regional analyst Bertil Lintner wrote in the Far Eastern Economic Review: "It would be almost impossible to run a gambling enterprise in a place like Macau without some kind of understanding with the triads".

Apparently because of such concerns, he was left out of consideration for a role in the first casino in Sydney, Tabcorp's Star City, which opened in temporary facilities in 1995 and in its permanent home two years later.

As discussion began about issuing a second casino licence -- in the end, the NSW government cemented Tabcorp's monopoly -- Ho sent fresh bursts of good wishes to the Labor party.

During the 2007-2008 financial year a Gold Coast-based company Ho controls, Hungtat Worldwide, donated $600,000 via the NSW branch, with which he appears to have been most familiar. His fourth wife, Angela Leong, sent $499,980 to the federal party.

He personally declared a $200,000 donation to the NSW party, although the branch reported it received $400,000. Anthony Chan, a director of Ho's Shun Tak, gave $100,000 to the NSW branch in two instalments.

What might have been Ho's motivation?

Almost certainly, it was not ideological, since Ho has not often indicated any political commitment, beyond a general leaning towards the Chinese Communist Party, and support for its insistence on a slow pace for any democratisation in Hong Kong or Macau.

He appeared to have lost his former local political clout when in 2001 the Macau gaming industry, which he had monopolised for 40 years, was thrown open to the big names from Las Vegas. But the market soared, and he retained more than half. Last year the government suddenly shut the door on newcomers, and Ho's stakes soared further.

And he can provide material assistance for the communist party and its senior officials without any requirement for disclosure; more likely the opposite, an expectation that he will be discreet.

Unusually, the NSW party returned the Hungtat donation within days because, said general secretary Matt Thistlethwaite, it was not needed. But the branch retained the rest of the money that came from Ho sources.

The federal party, however, sent back the money given by Ho's wife. Assistant secretary Nick Martin said such decisions were made "on a case by case basis. We look at them, and if there's a donation we don't believe we should accept, then we return it".

National secretary Nick Bitar said the rejection followed "a due diligence assessment". The state and federal branches operate under separate constitutions. They operate their own budgets, although Victoria operates under the federal scheme.

But especially as national elections approach, funding tends to flow upwards from the states to the centre. So at least some Ho-derived money may have found its way to Canberra despite its due diligence.

Martin said the federal branch backed the reform proposals led by Special Minister of State Senator John Faulkner, both those before parliament -- currently blocked in the Senate by the opposition -- and in the new green paper, including restricting donations to Australian citizens only.

Such a limit would occasionally hit the Liberals. In September 2004, shortly before that year's federal election, Briton Lord Michael Ashcroft gave the Liberal Party $1million. Although donors are not required to provide explanations, his donation was more likely than Ho's to have been ideologically based. He is deputy chairman of Britain's Conservative Party.

But the US already bans all donations from foreigners, and such a ban in Australia would bar the money from Hos and Ashcrofts alike.

The options being canvassed in the green paper include: enhancing disclosure, including tighter time-frames and broadening the definition of the types of donations that should be disclosed; banning or capping political donations; placing limits on campaign expenditure by political parties and other participants in the political process; examining public funding rates for participants in the political process; and further regulating the involvement of third parties -- such as the ACTU, which spent $15.8million on advertisements and the Business Council of Australia, $2.3million -- in the political process.

Faulkner wants to require disclosure of donations above $1000, not $10,900 as at present, and to remove tax deductibility. The Senate -- led by the minority parties -- has voted within the present bill to keep tax deductibility. How such elements finally emerge, are likely to be hammered out as the green paper is concluded.

The controversy over the Ho donations makes it more likely a ban on foreign donations will remain in legislation.

It would be understandable if Labor was fed up with the fallout from its relations with Ho. In 2006 he paid $48,000 to party funds in return for a lunch with then NSW premier Morris Iemma. He also launched a plan to re-develop for about 4billion yuan ($905million), with Ian Tang, a mysterious Australian-Chinese business figure, Beijing's famous Friendship Store.

Tang was a generous donor to Australian politicians, paying for visits to China including by Kevin Rudd, who spoke at the launch of the Friendship Store development. But almost three years later, no work has begun on site and it appears the deal has collapsed.

A leading expert on party funding, Brian Costar from Melbourne's Swinburne University, said: "We haven't had a big enough scandal to force through wholesale change yet" -- although the Ho affair helps.

The most practical and acceptable answer, he says, is to follow the example of the New York City Campaign Finance Board. It has a website on which it is required to post all donations over a basic threshold, at set times in the electoral cycle.

"Everyone agrees transparency is essential, and that's the easiest thing, technically, to achieve. Today, we have the least regulated system of any of the advanced democracies. It's virtually open slather." (Credit: The Australian)

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