The innocuous vote that exposed the murky world of council donations

One by one, the City of Melbourne councillors stood up, declared a conflict of interest over a South Yarra apartment building, and filed out of the meeting.

Four of the city’s 10 councillors had to step out of that June meeting, including then-mayor Sally Capp. Councillors Nick Reece, Roshena Campbell and Kevin Louey followed her out of the chamber.

“Deputy lord mayor, I am declaring a material conflict on the basis of a campaign donation in 2020, thank you,” Capp said.

The others offered similar sentiments before shuffling out of the public meeting in June.

Former Qantas chairman Leigh Clifford, who made donations to four City of Melbourne councillors during the 2020 election campaign.Credit: Eddie Jim

Their reasons for bowing out on the seemingly innocuous matter of heritage protection for the “ugly duckling” apartment block weren’t revealed in the meeting.

But The Age has now confirmed via the council that it was because all four had in 2020 received a council election campaign donation from former Qantas chairman Leigh Clifford, who lives near the building.

The episode has offered a peek into the largely hidden world of campaign donations, highlighting a stark lack of transparency, the secretive power of donors – and the baggage for councillors that can come with their money.

Across Australia and internationally, there is a push towards “real-time” disclosure of donations – a change backed by Victoria’s anti-corruption watchdog.

It’s also put a sharp focus on the October Victorian council elections. Voters won’t find out who is funding their preferred candidates until after they cast their ballots.

Under Victorian law, candidates have until 40 days after the poll to submit details of their donations.

It’s of particular importance in the City of Melbourne, where – unlike other councils – business owners can be enrolled for an extra vote, while regular residents get just one.

The debate reached a crescendo at a fiery City of Melbourne meeting this week. While the council’s meetings are usually harmonious affairs, characterised by polite agreement, this time there was open dissent in the ranks as Reece was grilled over his donations.

Councillor Jamal Hakim, who is running for lord mayor, moved a motion for candidates to voluntarily commit to real-time disclosure of their donations in the upcoming election campaign, and to agree not to accept donations from developers, gambling companies or weapons firms.

“Voters should know who is running Town Hall and to whose benefit,” he told the meeting.

“To find out after the election is an absolute travesty and just the kind of thing that has continued to dilute trust in government and politicians.

City of Melbourne Councillor and lord mayoral candidate Jamal Hakim.Credit: Luis Ascui

“Time and time again we see corruption raise its ugly head or find out once someone is elected that their donors are this lobby group or that mega-millionaire or organisation who wants to pave their front door in bluestone.”

Hakim’s motion passed with the support of councillors Olivia Ball, Philip Le Lieu, Rohan Leppert and Davydd Griffiths.

Campbell and Louey abstained, as did Reece – who is currently the lord mayor and a strong candidate to take the top job in his own right at the looming council election.

Reece said that while he welcomed the sentiment behind the motion, he did not support it because candidates had started fundraising and already accepted some donations.

“To have the rules changing when those campaigns are already under way shifts the terms of the election and would not be fair,” he said.

Lord mayor Nick Reece is not disclosing his campaign donations before the council election.Credit: Penny Stephens

But Ball fired back at Reece, questioning what he had to hide.

“I’m trying to fathom how it would be unfair to all councillors if it is applied simultaneously,” she said.

“I can only conclude it would be unfair for people who have already accepted donations that they don’t want disclosed before the election because they did not plan or they might not have accepted those if they had known it would be disclosed.”

Reece did not directly address Ball’s inference, instead looking to move the debate on.

Earlier in the meeting, Reece declared he would not accept donations from the tobacco or gambling industries. He also said he would not take money from property developers in the City of Melbourne – without ruling out accepting it from those in other jurisdictions.

In 2020, it was only after Capp and Reece won on a “Team Capp” joint ticket that it was revealed their election campaign had amassed more than $316,000 in donations from a who’s who of Melbourne’s elite.

It was topped by $25,000 from Pratt Holdings, associated with one of Australia’s richest men, Anthony Pratt.

Former Melbourne lord mayor Sally Capp will not contest the next local government election.Credit: Eddie Jim

Other donors included former Myer family scion Baillieu Myer, America’s Cup yachting star John Bertrand, private equity firm boss Mark Summerhayes, former Westpac chief executive Brian Hartzer, Just Jeans founder Craig Kimberley, gallery owner Anna Schwartz and Capp’s aunt and former Labor federal minister Ros Kelly.

Businesses including health food business New Core Group, plaintiff law firm Maurice Blackburn and boutique investment bank Australian Heritage Group also donated to the campaign, as did Mitchelton Wines and Jayco Corporation – both associated with rich lister Gerry Ryan.

Their 2020 opponent, Arron Wood – who is running for lord mayor again this year – also attracted high-profile donors including Ben Gray, co-founder of private equity firm BGH Capital, Flight Centre co-founder Geoff Harris, and former young rich lister Nick Bell.

What is clear is that donations are essential for most candidates: the cost of running a mayoral campaign has been estimated at between $250,000 and $500,000.

Arron Wood has also declined to identify any of his donors.Credit: Jason South

Former radio shock jock and federal senator Derryn Hinch dropped out of this year’s lord mayor race shortly after putting his hand up because he did not think he would be able to raise the necessary warchest.

Alongside fundraising, candidates often stump up their own money. In 2020, Capp and Reece each donated $20,000, while Wood put the same amount into his own campaign.

Reece said he would again dip into his and wife Felicity Pantelidis’ savings to help fund this year’s campaign.

“The biggest donor to my campaign will be Felicity and I,” he said. “It’s fair to say we are not going on a family holiday this year.”

So where is the rest of the money coming from for this year’s election? That remains largely a mystery.

The declared candidates for lord mayor are Reece, Wood, Hakim, businessman Gary Morgan, Roxane Ingleton for the Greens and Phil Reed for Labor. Former Carlton great Anthony Koutoufides is also a likely contender.

Most previous donors contacted by The Age remain undecided about whether or not they will donate again.

Several people – including Hartzer and Katie Hudson of Yarra Capital Management – said they were personal friends of Capp and had donated to her campaign for the last election, but were unlikely to donate to Reece this year.

Jacob Varghese, chief executive of plaintiff law firm Maurice Blackburn, said as both a resident and chief executive of a company headquartered in Melbourne he was a strong supporter of Reece’s track record and his vision for the city.

“I’ll be enthusiastically volunteering and campaigning to re-elect Reece,” he said. “Our firm has supported the ALP and labour movement for 105 years, so we also plan to donate to the Melbourne Labor campaign.”

Reece’s wife is the deputy chief executive of Maurice Blackburn.

Flight Centre co-founder Harris, who donated $5000 to Wood’s campaign last election said he had not made a donation yet and was waiting to hear what the candidates’ platforms were.

“It will be about who is cleaning up the city for me and a safe space for people sleeping rough which gives them somewhere to go and getting them off the streets. I’d like to see a 24-hour turnaround on graffiti,” he said.

When asked what he expected to get by making a donation to a candidate Harris said “that’s the $64,000 question”, a reference to the catchphrase of a famous quiz show.

“It is more about backing people that fit my values and will implement things that will suit the city,” he said.

The “ugly duckling” building, a South Yarra apartment block, that triggered almost half the council to leave the chamber due to election campaign donations.Credit: PENNY STEPHENS

When asked by The Age, candidates Reece, Wood and Reed all declined to identify any of their donors.

Hakim on Friday said he had so far received three donations: $10,000 from John Karkar, KC; $1500 from Hakim Consulting; and $570 from Ramneek Wayne.

Morgan said he was funding his own campaign and not taking donations.

Koutoufides did not respond to questions about how many donations he had received and from whom.

But he is being backed by flamboyant former Wyndham councillor Intaj Khan, who in 2018 was convicted and fined over a string of charges relating to his failure to disclose his company interests in the city’s west.

“We are running for the City of Melbourne election and I will be part of the team Kouta,” Khan said.

“If I am part of the team Kouta because I work so hard and save so much money, it shows our team cannot be bought by any donor. We are a team of professionals that can fund ourselves.”

Flamboyant former Wyndham councillor Intaj Khan is backing Anthony Koutoufides’ run for mayor. Credit: Jason South

In 2022, Victoria’s anti-corruption watchdog, the Independent Broad-based Anti-corruption Commission (IBAC), called for real-time disclosure of donations to local government candidates – but the recommendation has so far been ignored by the government.

Clancy Moore, chief executive of Transparency International Australia, said that real-time – or close to – disclosure of political donations was important for the City of Melbourne “given the council yields significant influence and has an annual budget of more than $700 million”.

“Victoria is behind other states as South Australia is proposing to ban political donations altogether, Queensland has had ‘real-time’ disclosures since the state 2017 election and NSW has banned donations from property developers as well,” he said.

“Last week I was at the Australian Public Sector Anti-Corruption Conference, where almost all states and territories highlighted the corruption risks present at a local government level.”

Queensland has the strongest regulations for local council elections in Australia where candidates must disclose donations over $500 – cumulative – within seven business days. If a disclosable gift or loan is received during the seven business days before the election, a return must be lodged within 24 hours.

Globally, the trend is towards more frequent reporting during election periods at all levels of government. In Latvia, it’s 15 days for any online campaign activities; in the US, it’s 48 hours for donations over $1000 during the campaign period; and in New Zealand it’s 10 working days for donations over $20,000 in an election year.

Moore said “best practice” standards involved requirements for comprehensive disclosure of donor identities – for example no or very few anonymous donations - details of amounts donated and any affiliations or interests that donors might have. NSW has banned anonymous donations.