Federal election 2016: Xenophon, his donor and the Timor tie-up

The relationship between Nick Xenophon and his biggest financial backer has been called into question.

Ian Melrose is a director of a company with Bernard Collaery, a lawyer and East Timor advocate. Picture: Kelly Barnes

The relationship between Nick Xenophon and his biggest financial backer has been called into question, with a request to the Australian Electoral Commission to investigate donations to the South Australian independent senator as details emerge of a business link between the donor and a lawyer who was raided by ASIO.

All three have a link in a history of support for East Timor.

Wealthy spectacles retailer Ian Melrose, who has a business partnership with human rights lawyer Bernard Collaery QC, has donated $175,000 to the Nick Xenophon Team, including paying fees for a consultant to help in the party’s launch in December 2014.

ALP national secretary George Wright this week formally asked the Australian Electoral Commissioner to examine whether donations from Mr Melrose to Senator Xenophon were in fact loans, and therefore in breach of the electoral act. This followed a March report in The Australian that Senator Xenophon had described several contributions from Mr Melrose as being in the nature of a loan and that “my ambition is to hand a cheque back to (Melrose) once we get up and running”.

Amid intensifying scrutiny on the payments, Senator Xenophon and Mr Melrose said yesterday they viewed the businessman’s contributions as donations without any expectation of reimbursement being made. “It would be great not to have to rely on these donations but I’d be making a rod for my own back not to accept them,’’ Senator Xenophon said.

A fierce advocate of transparency with political donations, Senator Xenophon said in 2010: “If you give someone $1000, you support them; if you give them $100,000, you own them.”

Asked yesterday whether he “owned” Senator Xenophon through donations, Mr Melrose said: “I cannot own somebody with morals like Nick. It’s not possible.’’

Some of the contributions were being spent at about the same time Senator Xenophon appeared with Mr Collaery and former NSW ­director of public prosecutions Nicholas Cowdery QC last ­November to call for a royal commission into the 2004 bugging of East Timor’s cabinet offices.

The accusation — by a former Australian Secret Intelligence Service employee who has legal representation by Mr Collaery — is that the Australian government, under John Howard, sought to ­obtain information through the intelligence agency to benefit a privately owned oil company. Mr Collaery, a former ACT attorney-general, is representing East Timor against Australia at the Permanent Court of Arbitration in The Hague, in an action in which he says Australia is “seeking to avoid judgment”.

In December 2013, ASIO raided Mr Collaery’s Canberra office and seized documents relating to the oil and gas treaty between Australia and East Timor. East Timor sought to have the material returned and took its case to the International Court of Justice. In May last year, the Australian government agreed to return the documents to Mr Collaery.

DOWNLOAD GRAPHIC: The Xenophon donations

Mr Melrose, chief executive of Optical Superstore and 14-year campaigner for human rights in East Timor, believes the Howard government stole from the impoverished nation in its negotiations over the carve-up of rich oil and gas reserves in the Timor Sea. In 2004, ASIS officers allegedly snuck into East Timor’s cabinet office and installed listening devices. The operation reportedly gave Australia the upper hand in negotiations over the treaty to divide the Greater Sunrise oil and gas field in the Timor Sea, worth an estimated $40 billion. Senator Xenophon said his interest in East Timor dated to before he met Mr Melrose and believed his motivations were altruistic.

Mr Melrose and Mr Collaery QC are co-directors of property development company Actara Pty Ltd. Mr Colleary said the company had been operating for up to 15 years and had up to five blocks of land left for development. He said he recently sought Mr Melrose’s expertise as a director because he had land development experience. There was no flow of money out of the company going to political interests or to Senator Xenophon, Mr Colleary said yesterday.

Mr Melrose, who yesterday was working on TV commercials criticising the Turnbull government to be aired next week, said he had spent $3.5m since 2002 campaigning for the East Timorese as well as supporting a malnutrition clinic in the country. He was using the advertisements to criticise a Defence decision to award his competitor, multinational Specsavers, a $33.5m contract over Australian businesses.

Donations to Nick Xenophon Team from two Melrose vehicles include one of $15,000 by Optical Superstore Pty Ltd, of which his wife Margaret Douglas is sole director. This is listed in the party’s 2014-15 Australian Electoral Commission return as an “other receipt”, but amended in March to be a “donation”. Xenophon campaign director Stirling Griff said last night this was a technical change. This is one of the issues Mr Wright has asked the AEC to investigate.

Golden Lineage Pty Ltd, which has Mr Melrose as its sole director and shareholder, donated $100,000 in 2014-15 and $60,000 this financial year, as disclosed by the Xenophon party on its website. Mr Griff said yesterday the party had $600,000 in its campaign coffers, most of it the result of candidate loans and other donations below the disclosure threshold.

Additional reporting: Stephen Fitzpatrick