The PM has sought urgent advice on whether Christian Porter’s use of a blind trust is in breach of the ministerial code of conduct.
Prime Minister Scott Morrison has sought urgent advice on whether the “blind trust” arrangement being used by Liberal frontbencher Christian Porter to fund his legal bills is in breach of the ministerial code of conduct.
Mr Porter has said he does not know who is paying a chunk of he legal fees, rumoured to be around $1 million, in the now discontinued libel case against the ABC.
Labor has said if Mr Porter “genuinely does not know” who funded his court case then he should reject that cash as it could be from “criminals” or a “foreign power”.
In a statement to news.com.au, the Prime Minister said he had spoken to Mr Porter about the matter. The guidelines require ministers to declare gifts and adhere to the highest of standards.
“The Prime Minister is taking this matter seriously and has discussed the matter with the Minister today,’’ a spokesman told news.com.au.
“The Prime Minister is seeking advice from his department on any implications for the Ministerial Standards and any actions the Minister must take to ensure that he meets the Standards.”
Mr Porter first revealed he would not be declaring the donors because he doesn’t know who his secret benefactors were on Tuesday morning in a declaration to parliament.
“In March 2021, I commenced defamation proceedings in a purely personal capacity against the ABC and Ms Louise Milligan,’’ the declaration stated.
“On 31 August 2021 this matter was finalised by the Court. Although these matters have been conducted in a personal capacity and all legal services were engaged in a purely personal capacity, out of an abundance of caution and consistent with approaches adopted by other parliamentarians in relation to the provision of reduced fee or pro bono legal services, I advise that, in addition to my own personal funds, the following contributions have recently or may shortly be made.
Mr Porter continued that part of the settlement amount was paid by the ABC to Company Giles and part by persons or a company unknown.
“Part contribution to the payment of my fees by a blind trust known as the Legal Services Trust. As a potential beneficiary I have no access to information about the conduct and funding of the trust.”
The former Attorney-General defended the arrangement, saying no taxpayer funds were being used.
On this front, the plan secured the backing of the Treasurer Josh Frydenberg who defended dit during an interview on Sky News.
However, it would also be highly unusual for taxpayers to foot the bill for a private defamation case launched by an MP.
What MPs must declare
Mystery has surrounded the question of how the Liberal frontbencher plans to fund the cost of his legal battle with the ABC for months with multiple high profile business leaders including Andrew “Twiggy” Forrest, Nev Power and Gina Rinehart denying to news.com.au that they had opened their wallets to fund the case.
Under parliamentary rules any benefit – or agreement to provide a benefit – must be declared on the pecuniary interest register within 28 days.
The only basis for a politician to decline to disclose a gift of legal assistance would be if they claimed to have formed the view that there is no appearance of a conflict of interest.
Under a resolution of the House of Representatives, members need not disclose a gift valued at more than $300 where received from other than official sources in a purely personal capacity unless the Member judges that an appearance of conflict of interest may be seen to exist.
There are precedents of MPs declaring gifts such as receiving legal assistance free of charge.
For example, former Labor leader Bill Shorten always declared pro bono legal fees for the Royal Commission into trade unions and other matters.
Separately, there is also the issue of the obligation to disclose gifts/potential conflicts as a cabinet minister.
The rules state that ministers and officials attending cabinet or cabinet committee meetings must declare any private interests of which they are aware.
Money could be from ‘criminals’
Labor’s Attorney-General spokesman Mark Dreyfus said, “If Mr Porter genuinely doesn’t know who his donors are, he shouldn’t accept their money. Did the money come from criminals? A foreign power? Apparently Mr Porter doesn’t care.
Opposition Leader Anthony Albanese said Mr Porter’s decision to use a blind trust to source his legal fees was “simply untenable”.
“It is just not believable that people have somehow found out about this fund and made contributions to this fund without Christian Porter’s knowledge,” Mr Albanese said.
“I know pubs are closed at the moment, but this does not pass the pub test.”
Mr Porter strenuously denies the allegation that he raped an Adelaide teenager at a debating conference in the 1980s.
The woman died by suicide last year shortly after telling police she did not want to proceed with the complaint. He maintains he never had any sexual contact with the woman.
Blind trust compared to “guy in a mask who dropped off a chaff bag of cash”.
Former Prime Minister Malcolm Turnbull, a longtime political foe of Mr Porter’s, led the attack describing the decision to use a blind trust to pay for his defamation case as “so wrong.”
“It’s like saying “My legal fees were paid by a guy in a mask who dropped off a chaff bag full of cash,’’ Mr Turnbull said.
“In Porter’s case the trustee doesn’t tell him (supposedly) who contributed the money to pay his legal fees. So zero transparency, zero accountability.
“I don’t think that is acceptable in public life. But Porter’s case is much worse than a conventional blind trust because we don’t even know where the money came from.”
Tax questions raised over blind trust arrangement
Questions have also emerged over whether Mr Porter would need to declare any “gift” from a mystery benefactor to pay his legal bills as taxable income.
News.com.au contacted Mr Porter’s office and the Prime Minister’s office on Wednesday to ask what the arrangements would be and whether the gift would be declared to the Australian Taxation Office.
In a statement, the ATO said it “cannot comment on the tax affairs of any individual or entity due to our obligations of confidentiality and privacy under the law.”
“Generally, an individual taxpayer, who is a beneficiary of a trust, must declare their entitlement to the trust’s income in their own tax return each year. The individual must pay tax on their entitlement, even if they didn’t actually receive the income,’’ a spokeswoman said.
“Where a trust distributes corpus to a beneficiary these amounts are generally not taxable in the hands of the beneficiary.”
Legal bills estimated to run as high as $1 million
Mr Porter legal bills have been estimated to be as high as $1 million. However, sources close to Mr Porter suggested that the bill was substantially lower than that amount.
The cost of the defamation case against the ABC would need to be covered entirely by Mr Porter. That defamation case was discontinued by Mr Porter leaving him with huge legal bills.
The ABC had agreed to pay $100,000 in “mediation costs” relating to the discussions to discontinue the case and this would be taken off his legal bill. They also agreed to put an editorial note on the story.
The remaining legal bill, which is estimated to be substantial, would be left to Mr Porter to fund or find funding for.
Mr Porter stated in the declaration that some of his legal fees had been reduced by barrister Sue Chrysanthou, who was forced to withdraw from the defamation act as a result of separate legal action launched by friends of his accuser.