Defense seeks to dismantle SFO’s political donation charges

Lawyers for the seven defendants in the Serious Fraud Office prosecution over political donations are challenging the very basis of the charges faced by their clients – saying the Crown has failed as required to specify a value for any alleged benefit gained

What is the ‘value’ of avoiding public scrutiny of your personal donation to a political party?

Does that value have to be quantifiable?

And can it be compared with the benefit gained by an arsonist, kidnapper or, as in the case of royal son-in-law and English rugby player Mike Tindall in Queenstown, the benefit gained by a person trying to sell CCTV footage from a bar ?

Defense lawyers are using their closing statements in the seven-week High Court trial of seven defendants on obtaining by deception charges to attempt to dismantle to Crown case at its foundations.

John Katz QC, for defendant Yikun Zhang, told Justice Ian Gault the Crown had laid the charges from the Crimes Act but was attempting to use elements from the Electoral Act to justify its allegations.

It argued the defendants had secured for themselves a benefit of ‘freedom from public scrutiny’ but Katz said that alleged benefit was amorphous.

Obtaining by deception was a property charge, with a maximum penalty of seven years’ jail, but the penalties were on a scale depending on the value supposedly defrauded by a defendant.

Katz asked the judge: “How do you assess the value of freedom from public scrutiny?”

The law did not have “a catchall that deals with something with an unascertainable value”.

The only benefit possible was that someone might not find the identity of a political donor if they searched names on the annual returns from political parties within the Electoral Commission website.

That unlikely benefit was the only one possible. It also needed to be able to be quantified.

“How is Your Honor going to assess penalty when you do not know what the value of the benefit is? It’s all very well for the Crown to say there is a value for the benefit of anonymity. It must be proven. You have to be able to quantify it.”

Katz said the Crown had suggested examples in previous cases of someone committing arson for benefit, or mortgage fraud, or blackmail. The Mike Tindall case, where defendants had been charged with trying to sell footage from a bar after the rugby star was filmed during an incident had also been raised. But for most of these instances the Crimes Act had provided a discreet definition of the benefit or value.

“None of them, absolutely none of them, deal with the type of benefit here alleged, that is the freedom from public scrutiny.”

He said it was “the only, the first, case where anything of a like nature has been brought before the court”.

“My submission is that unless the Crown can actually establish on solid evidence what the value of freedom from pubic scrutiny is, it cannot make the charges.”

Another benefit put forward by the Crown was that the political party had retained the benefit of the money, despite being deceived.

“None of the defendants obtained or retained benefits for themselves, so it has to be, through the extended definitions, for somebody else, the political parties.”

Katz said the Crown had tried to separate the two ‘benefits’ – retention of a donation and freedom from scrutiny, but an earlier High Court hearing had determined they were two sides of the same coin and could not be alleged as standalone elements.

He argued there had to be a “reasonable foreseeability of a benefit” for the defendants.

His client, Zhang, said he “obtained no benefit of which anyone could be aware”.

Crown lawyers had seemed to resile from an earlier position that it could show reasonable foreseeability in this case. “The Crown now disavows any obligation to establish reasonable foreseeability in making the charges.”

Katz said the Crown had failed during the trial its duty to establish all elements of the obtaining by deception charges beyond reasonable doubt.

“The Crown is well short in concluding Mr Zhang was involved in a fraudulent stratagem or intended to deceive any person.”

Another lawyer for Zhang, Blair Keown, said the supposed benefit of freedom from scrutiny or benefit or the party retaining the donation, as part of a complex statutory regime were not “something Yikun Zhang or any other defendant could have contemplated”.

Interactions between the judge and lawyers during the trial on this matter had illustrated its complexity.

Lawyer Sam Lowery, for a defendant with name suppression, told Justice Gault the Crown had failed in another important part of its case over the Labor 2017 artworks donation, by not having undertaken an independent valuation of two particular paintings.

For that donation, the Crown produced evidence that another of the defendants with name suppression had bought five paintings for Labor to auction as fundraising, but substituted two of his own collection before they were purchased as part of a $60,000 donation by Zhang (netting Labor $35,000 ).

Lowery said the Serious Fraud Office had acknowledged in an affidavit before securing a search warrant in 2020 that further work was needed to assess the value of those two paintings, but deliberately decided not to do so.

Instead it followed the Labor Party in relying on a quick text message estimate from the defendant who had supplied the two works from his collection that they were worth a combined $17,000. Even then that defendant’s text message had said that was “roughly” their value and he would need to check with his wife.

First Labor and then the SFO simply ran with that value.

The value mattered, Lowery said, because if, as both the defendant and his wife later told the SFO in interviews, the paintings might have been more valuable again, that would mean the ultimate sum paid as a donation to the party would be lower – possibly lower than the Electoral Act threshold for donations to be declared.

Lowery said there was evidence that a Labor finance official was not happy with relying solely for the two paintings’ values ​​offered roughly in a text message, but the party was on a deadline to submit its donations return and did use those figures.

While the defendant who supplied the two works “had many qualities, there is no evidence he has the qualities to evaluate art.

“The figures are effectively plucked from the air, expressed in the text message as ‘rough’ and he caveats that himself.”

While the Crown now wants to rely on the defendant’s painting valuations, “out of the other side of its mouth the Crown says [name] has engaged in some barefaced lies”.

Lowery said the touchstone for the court was how a donation was defined in the Electoral Act, not what a party did at the time. “Sometimes it’s going to get it right, sometimes it’s going to get it wrong.”

It was not good enough for the Crown to say about that rough valuation that ‘if it was good enough for the Labor Party, it’s good enough for Your Honour’.

“We are left with a guess. If the court adopted that guess, as Labor did, that’s not an appropriate course for the Crown to invite Your Honor to take.”

The SFO had asked about the values, had acknowledged it needed to do more work on valuation but then consciously decided not to do so.

He said the Crown tried now to say it was highly implausible that even if those two paintings’ values ​​were substantially higher that they could be high enough to drive the donation figure down (thus taking the original need to declare value and even identities out of the equation altogether).

But the burden of proof of the valuation was not on the defence. It was for the Crown to prove the paintings had that value and thus set the alleged level of donation.

“The Crown ignores [the defendant and his wife’s estimates the value could have been much higher] and invites Your Honor just to have a guess. adopt [name]’s guess or just have a go yourself.

“If this was a game of Monopoly, the Crown just wouldn’t get past go. The Labor charges would fail.”

Lowery said the Crown had not proven either of the alleged benefits “because we don’t know what the donation value is”.

“We’ve wasted our time because we don’t know if any donation has occurred.”

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