News

A Darwin private school's indirect donation to the CLP, raises questions about disclosure laws, and the involvement of consultants Crosby Textor. By Mike Seccombe.

Donation disclosure reveals murky deal for Country Liberals

Helen Spiers has a good story to tell. Particularly this week, as Australia contemplates the woeful Closing the Gap report on Indigenous disadvantage.

The school of which Dr Spiers is principal, Darwin’s Kormilda College, is a low-fee private school run by the Anglican and Uniting churches. In addition to its day students, it educates about 200 boarders drawn from remote Indigenous communities.

They come in year 8, usually with very limited literacy and numeracy. Over the past two years, 49 have graduated.

“They get the Northern Territory certificate of education and they get entrance into university,” says Spiers. “This is a great school. It does a lot of good things.”

Sadly, that is not the story anyone has lately been interested in hearing.

Instead, the focus of parents, the media and electoral authorities has been on another matter entirely: how a respectable school came to pay tens of thousands of dollars to a shadowy associated entity of the Northern Territory’s scandal-plagued and dysfunctional Country Liberal Party government, called Foundation 51.

And the truth is Helen Spiers doesn’t really know the answer. Nor does the school’s board. Those who do know aren’t telling.

Crosby Textor and Foundation 51

This intrigue goes back to August 2012, when Kormilda College determined the need for action to boost flagging enrolments. At that time it took students from years 6 to 12. The college board came to the view that it might help if they set up a feeder primary school. It was decided they should commission some market research and then-principal David Shinkfield was left to organise it.

Eleven months later, in July 2013, the consultancy report duly arrived, recommending the school should go ahead with its planned expansion.

Stamped all over the report was the name of the firm that carried out the work. It was Crosby Textor, probably Australia’s best-known research outfit, by virtue of its long association with conservative political campaigns in Australia, Britain, New Zealand and elsewhere, as well as its work for controversial clients such as tobacco companies.

Spiers says “it was a very comprehensive report”, and the board decided to go ahead with its expansion plan. Most of this work was overseen by Spiers, who became principal after Shinkfield left in March 2013. “We opened the week before last,” she says.

The accomplishment of getting the primary school operational, however, was overshadowed by an unexpected development.

The Australian Electoral Commission released electoral donation returns for the 2013-14 financial year, and among them was a document called an “associated entity disclosure return”, dated October 13 last year and signed by Graeme Lewis as director of Foundation 51.

The AEC defines an associated entity as an organisation that operates wholly or significantly for the benefit of a political party, in this case the CLP.

The disclosure Lewis signed attested that during that year Kormilda College had paid $33,000 to his foundation.

Apart from that, Lewis’s AEC disclosure revealed little. The commission provides those making declarations two choices: they can declare the income as “donation” or “other”. Lewis marked it “other”.

At the school there was initial confusion. As far as the principal and the school board knew, they had never given a cent to Foundation 51.

It didn’t take long for them to work out what had happened. Foundation 51, rather than Crosby Textor, had invoiced the school for the consultancy report.

On Tuesday last week, a day after the calls started, the chair of the college board, Peter Jones, put up a statement on the school’s website. It says, in part: “The payment refers to a consultancy into the establishment of a primary school at Kormilda. The consultancy was undertaken by Crosby Textor, a research, strategies and results company based in Sydney. The board was never aware that Foundation 51 had any involvement in this process.”

The money trail

But that did not resolve the central mystery. Why had one company been paid for what the school understood to be the work of another?

A week later principal Spiers is still none the wiser.

“I have been back into the archives, checked all the emails, board minutes, finance committee minutes, and I can find nothing at all that mentions Foundation 51,” she says. “The only link with Foundation 51 is that invoice.”

When we contacted the foundation’s Graeme Lewis, he was not very enlightening.

He maintains that the former principal, Shinkfield, had come to him via a mutual contact to offer the consultancy. Asked to be more specific about how the arrangement was formalised, he says that “this is a small town”.

Lewis says he subcontracted some of the work to Crosby Textor and that Foundation 51 paid Crosby Textor for its work. How much was paid, he does not recall. Quizzed on what Foundation 51 actually did for the school, other than forward an invoice, Lewis was similarly vague.

“There would have been a report of some sort. I can’t recall. I’m 73 years old and pretty stupid,” he says. “The connotation that it was a political donation is absolute garbage. It was never a political donation. It was a consultancy receipt.”

Foundation 51 has similarly subcontracted other commissions to Crosby Textor, he says. His personal relationship with the firm’s co-founder, Mark Textor, goes back a long way.

“Mark Textor was born in Darwin. I knew him when he was growing up. I knew his father when he was here as a senior policeman. I’ve known Mark for 50 years.”

Their political relationship goes back a long way, too. Lewis has been described as the eminence grise of the territory’s Country Liberal Party. An accountant by profession, he has been its president and its treasurer and worked on many of its campaigns.

Textor likewise is a long-time CLP operative as well as being perhaps Australia’s most cunning political strategist. He is widely credited with bringing to this country various polling techniques pioneered by the Republican Party in the United States, notably the use of focus groups to refine negative messages that might resonate with swing voters.

In the 1994 Territory election campaign, for example, when Textor was a member of the CLP campaign committee, voters were contacted by phone and asked whether they could support a Labor candidate if they knew Labor planned to close the seas to non-Aboriginals and have two laws, one for blacks and one for whites.

This is widely considered to have been the first use by any political party in this country of so-called push-polling, a technique by which damaging, false allegations about an opponent are spread under the guise of seeking to measure public opinion.

Accusations of a 'slush fund'

Over the years, the Northern Territory has been used as a kind of testing ground for various strategies. Which brings us back to Foundation 51.

The company was set up in early 2009 by Lewis and James Lantry, the chief of staff to the then CLP leader Terry Mills. Lewis says its purpose was strictly commercial.

“We did market research for clients, we did a range of consultancy commissions, on social issues, on lots of different issues,” he says.

Brochures distributed when the company was launched provide a somewhat different picture. Foundation 51 offered memberships: at $5500 for a standard membership, or “platinum” membership for $22,000. Members would benefit from access to “commercial research, reports and information gathering … with both economic and taxation advantages”.

The research would be delivered by Mark Textor.

Foundation 51 also offered political access. Guest speakers at events included John Howard, Peter Costello and Joe Hockey, as well as lesser conservative politicians and senior business figures.

For most of its existence, the foundation had largely operated under the radar of electoral regulators, and not made any disclosures. Then it made two, in very short order. The 2013-14 return, as we noted, was signed last October. Total receipts for that year were declared as $101,200.

Six weeks later, another return was belatedly lodged for the previous year, listing total receipts of almost $202,000.  Most came from property developers. 

Why the sudden rush to lodgement? Lewis says he did it on legal advice, out of “an abundance of caution”.

And no wonder his caution is abundant. The Territory and federal electoral authorities are now investigating the foundation, following the leaking of emails detailing the closeness of the relationship between it and the government, as well as various allegations of impropriety by disaffected former CLP members and a complaint by Territory Labor that it served as a “slush fund” for the CLP.

Space prohibits detailing them all. Suffice to say, as Lewis did when we spoke to him: “The brand of Foundation 51 has now been totally trashed.”

The company has been wound up.

Ongoing investigations

Lewis maintains the foundation was never an associated entity in the strict sense, because money paid into it was not passed on to the CLP.

“The only time that money ever went from Foundation 51 to the CLP was in 2014 when – by the time this had all blown up – I thought, what the hell, and I gave something like $7000 to the CLP.”

But cash is not the only currency in politics. So is information and research.

“My problem was that, as director of Foundation 51, I was coming into information … that then in my spare time I went and helped Terry Mills set up his electoral campaign.

“And then the electoral commissioner said, ‘You must have been helping the CLP – that makes you an associated entity.’ ”

Lewis’s admissions suggest the following picture. Conservative donors pay into Foundation 51. The foundation commissions research. The research, conducted by Liberal Party pollster Crosby Textor, as well as other research companies, then gets passed to the CLP.

As for how Kormilda College and the $33,000 fit into the picture, we can’t be sure. Maybe the electoral commission investigations will find out, but don’t bet on it. The response of the Northern Territory electoral authorities to questions from The Saturday Paper suggests they are not following that money trail. The response from the federal electoral authorities suggests only that the investigation is ongoing.

Crosby Textor did not respond to a request for clarification.

The best we can say is that the school appears to have become collateral damage in the long war between Australia’s conservative parties and funding disclosure laws.

Not that Graeme Lewis cares too much about that. If the school doesn’t know whom it engaged as a consultant, he says, “Well, I’m not responsible for that.”

This article was first published in the print edition of The Saturday Paper on Feb 14, 2015 as "Crosby, bills and stats". Subscribe here.

Mike Seccombe
is The Saturday Paper's national correspondent.