Industry and Science Minister Christian Porter revealed that part of his defamation legal fees were paid by a blind trust with funds from an undisclosed source.
So what is a blind trust, does the statement comply with the disclosure rules and could the Attorney General find out more about the source?
Who Paid Christian Porter’s Legal Fees?
Porter said that “in addition to” his personal funds, he has received or may soon receive contributions, including:
A sum paid by the ABC to its lawyers, the company Giles, for the costs of mediation.
A “partial contribution to the payment of my fees by a blind trust known as the Legal Services Trust”.
Lawyer Sue Chrysanthou “did not charge me for all the time she spent on the case” and some services were provided “at a reduced rate”.
What is the Legal Services Trust?
Very little is known about the Legal Services Trust as Porter did not disclose the settlor, who created the trust with the original funding or assets, or the trustees, who administer it.
What is blind trust?
University of Sydney Associate Professor Jamie Glister said the term blind trust describes a situation in which “the trustees have complete control over the assets of the trust, so that neither the beneficiaries nor the settlor of the trust have no influence on the decisions of the trustees [about] investment [or] Distribution”.
Could Porter find the source?
In his statement, Porter said, “As a potential beneficiary, I do not have access to information about the conduct and financing of the trust.”
Glister said it was “a bit of a weird way to put it.” “This gives the impression that he necessarily does not have access to such information, or that he does not even have the right to ask for it.
“In fact, he has every right to ask the trustees where the trust money comes from. Directors can choose to disclose this information or not… but there is no prohibition on Mr. Porter requesting the information.
Labor leader Anthony Albanese said that the idea that “random people discover this trust, find out for themselves where to put the money and unknowingly deposit the money, is, frankly, just amazing and absurd”.
Porter’s office and attorney did not respond to whether he knew the original source of the funding or the trust’s trustees, or if he had requested it.
A spokesperson reiterated that Porter had declared what he needed according to the rules and that no taxpayer money had been used for his case.
Is Porter required to disclose?
Registry of Interest rules state that MPs must disclose gifts valued over $ 300 from unofficial sources and “any other interests in which a conflict of interest with a member’s public office may arise. or be perceived in a foreseeable manner ”or“ holds the risk of a real or apparent conflict of interest arising with the public functions of a member ”.
Porter declared the contributions to legal fees as “other interest” (not a gift) out of “being cautious.”
“The Minister undertook the disclosure in accordance with the registry requirements and in accordance with the disclosure by the previous members of the circumstances in which the costs of personal legal affairs were mitigated by contributions or fee reductions,” a spokesperson said. .
Are there any other details to be disclosed?
Regardless of whether or not the statement complied with the rules, former Prime Minister Malcolm Turnbull described Porter’s statement as a “shocking affront to transparency”, comparing it to saying “my legal fees were paid by a guy masked man who left a straw bag full of money ”.
Transparency International Australia Managing Director Serena Lillywhite said “basic due diligence would require knowing and disclosing who ultimately disbursed the money, who runs the Legal Services Trust and when the Trust was established.”
While stressing that he was not aware of the specific structure of the Legal Services Trust, Glister said it would “rather frustrate the interest of the interest register” if Porter were to rely on an apparent lack of knowledge of the legal services trust. original source of funds to avoid disclosing the trustees.
“Although I am not an expert on the interest register, it seems to me that there is a valid argument that the identity of the trustees – if known – should be disclosed.”
What about ministerial standards?
Ministerial standards require that ministers “shall not be affected by considerations of personal advantage or disadvantage”, including that they “shall not seek or encourage any form of personal gift.”
“Ministers must also comply with the requirements of parliament and the prime minister for the declaration of gifts.
“Ministers should not seek or accept any advantage or other consideration of value, whether for themselves or for others, in the performance or absence of any element of their official duties in as a minister. “
Ministers are also not “to be subject to any financial or other obligation to individuals or organizations to the extent that they may appear to be inappropriately influenced in the performance of their official duties as Minister”.
The Prime Minister referred the matter back to his ministry for an opinion on the conformity of the Porter’s declaration with the standards and “any measures that the minister must take to ensure that it meets the standards”.
Porter insists that the contributions to his legal fees were “paid to me, or were for my benefit, on a purely personal basis.”
Is this against the electoral law?
When asked about Porter’s legal fees, the Australian Election Commission said the electoral law “does not prohibit MPs from receiving anonymous or foreign donations as individuals outside of a (election) candidacy period.”
“The framework also does not require Members who personally receive gifts to declare such gifts (outside an election period) to the [AEC]. “
Does he have to pay taxes?
Porter may have to pay taxes on the amount paid by the trust, but the answer is unclear. It depends first on whether Porter is a beneficiary and second on whether tax has already been paid on the trust funds.
Porter has described himself as a “potential beneficiary” – but there is a difference between a beneficiary, a person to whom a portion of the trust is owed when it is distributed, and a member of a class of persons who are eligible for it. receive funds from it. as a gift.
University of Melbourne Law School Professor Miranda Stewart told Guardian Australia that “a trust distribution to a beneficiary will generally constitute taxable income.”
“A donation that is not a trust distribution may be tax-free. “
What can we do about it?
Citing the gift of confidence, Greens leader Adam Bandt said he would seek to present a no-confidence motion to Porter when Parliament resumed in October:
If Labor, Greens or opponents believe Porter’s disclosure violates the rules, they can ask the Speaker of the House of Representatives to refer the matter to the Privileges Committee.
There have been previous unsuccessful attempts to set up a Senate inquiry into Porter’s suitability for minister. This would require the support of One Nation and would be hampered by Porter’s ability to decline to appear because he is a Member of Parliament and not a Senator, and the important facts are not known to officials.
Shadow Attorney General Mark Dreyfus said on Wednesday that if the Labor Party “needed it” it would “permanently” ban the practice of the statement citing a blind trust if he was in government.
Greens Senator Larissa Waters said Morrison must force Porter to disclose the source of the funding.
“We need to clean up our donation laws so that they actually work and are meaningful,” she told reporters in Brisbane.