‘Bundles of cash’: AFP considers referring former Labor staffer to prosecutors over money laundering

The Australian Federal Police has told the High Court it is actively considering referring a former NSW Labor staffer to prosecutors over suspected money laundering offences after bundles of $60,000 in cash were seized from his premises last year.

Police have underlined the “serious” and “ongoing” nature of their investigations before the High Court this week, as they fight to uphold search warrants executed against ALP staffer John Zhang last year.

Labor MLC Shaoquett Moselmane with former staffer John Zhang, right.Credit: Facebook

Mr Zhang is under investigation over an alleged foreign interference plot to advance the interests of the Chinese government while he was working as a staffer to NSW Labor backbencher Shaoquett Moselmane.

Some of the conduct allegedly took place in a private social media chat group.

Last June the AFP swarmed on Mr Zhang’s home and sunglasses business in an unprecedented raid, seizing two Huawei mobile phones, three computers and $60,000 in cash.

Mr Zhang provided pass codes for the Huawai phones but advised the AFP that he was unable recall his WeChat password and unable to find his WhatsApp password.

A “vast number” of WeChat messages have been identified as being held on the phones by authorities.

Mr Zhang has launched a legal bid to have the search warrants quashed by the High Court and the material seized destroyed or returned to him.

The matter went to a two-day hearing before the full bench of the High Court this week.

Mr Zhang has argued the warrants were invalid because they “lacked clarity” and did not precisely identify the target of the alleged plot or the foreign actor involved.

His lawyer, Bret Walker, SC, told the court the “uncertainty and ambiguity bespeak defectiveness in the warrant”.

“For the warrant the present concern is the availability of discernible boundaries so as to make this piece of paper an appropriate open sesame of that which would otherwise not be within State power to compel,” Mr Walker said.

Mr Zhang is also arguing Australia’s new foreign interference laws are constitutionally invalid because they infringe on freedom of political communication.

“Keeping your private political discussions secret is entirely proper for a free population, not all of whom wish to be involved in the public hurly‑burly of political debate,” Mr Walker said.

The AFP has rejected suggestions the warrants were imprecise, arguing the target of the plot was “plainly” Mr Moselmane and if it was necessary to state the foreign actor this was “amply satisfied” as being the government of the People’s Republic of China.

“These warrants comfortably satisfied the requirement to indicate the area of the search,” Commonwealth Solicitor‑General Dr Stephen Donaghue QC told the court.

Perry Herzfeld, SC, appearing for the AFP, noted that $60,000 in cash had been seized during raids on Mr Zhang’s home and business.

“So the offences at issue are serious ones,” he said.

“The investigation is ongoing and the AFP is continuing to give consideration to whether a brief of evidence should be referred to the Commonwealth Director of Public Prosecutions”.

He noted there was a five-week delay in Mr Zhang launching legal action following raids.

Such a delay had not occurred in a similar case where journalist Annika Smethurst took action in the High Court after a raid on her home by the AFP, which ultimately resulted in the search warrants being declared invalid.

“[Use] has been made of the material by the AFP since the execution of the warrants, both before and after the commencement of the proceeding,” Mr Herzfeld said.

“Unlike Smethurst, the copied data has not been quarantined pending the outcome of the proceeding.”

The plaintiff’s conduct had given rise to an “impossible” situation where AFP officers may have to “put out of their minds information which then came to their notice” or “ignore leads or inquiry and investigation” if the search warrants were found to be invalid, Mr Herzfeld said.

The AFP also argued that foreign interference poses a serious threat to Australia’s political and governmental processes and the effect of the new laws on freedom on political communication was “slight” at most.

Mr Moselmane was temporarily stood aside from parliament in the wake of the AFP raids but has maintained his innocence and the suspension was lifted in October.

Mr Moselmane said his legal counsel had been advised he was “not a suspect” in the investigation.

The High Court has reserved its decision.