Menu
Ireland's political and cultural magazine
2 2 April 2016
Money for Nothing?
Lobbyist Frank Dunlop told the Planning Tribunal in Ire-
land that his phone would “walk off the desk” with calls
from candidates seeking money as soon as a general
election was called.
There are analogies with Australia.
For years the heavy reliance of both major Australian
political parties on developer donations has been
known. One developer (Jeff McCloy) memorably told the
New South Wales (NSW) Independent Commission
against Corruption he felt like a “walking ATM”.
Both givers and recipients have insisted that nothing
is expected and nothing is given in return for these
donations, and it has been impossible to disprove this
“money for nothing” proposition. Instead it has been
suggested that donations are simply a way of “partici-
pating in the political process”.
The Courts: donations as
communication
The notion that donations are simply a way of “partici-
pating in the political process”
reflects US Supreme Court jurispru-
dence, which has elevated donations
to the status of “speech” and forbid-
den US legislatures to act to prevent
anything short of “quid pro quo”
corruption.
The Australian High Court fol-
lowed the US Supreme Court part of
the way along this path, characteris-
ing donations as a form of “political
communication”. An attempt to
confine donations to voters (as is the case in Canada)
was successfully challenged in the Australian High
Court by Unions NSW, on the basis that this was an
unreasonable imposition on an “implied freedom of
political communication” .
A recent challenge by McCloy to the constitutional
validity of the pre-existing NSW ban on donations from
property developers (in place since 2009), and caps on
the amount of donations (in place since 2010), was how-
ever unsuccessful in both respects. The High Court
rejected the US Supreme Court’s reasoning that govern-
ments may only limit political communication to prevent
quid quo pro corruption. It confirmed that the preven-
tion of both corruption and undue influence are valid
reasons for legislatures to restrict political donations,
and that in the final analysis, the Australian constitu-
tion must be interpreted to serve the interests of
democracy.
This should come as a great relief to Australian
citizens.
Proving quid pro quo
Anti-corruption agencies with strong investigative
powers (including the power to undertake covert opera-
tions) have uncovered what many suspected was the
truth, both in Ireland and Australia.
There is now firm empirical evidence in both coun-
tries of cases in which donations from the property
development sector have in fact had “strings attached”.
Something was expected of public officials in return,
whether explicitly stated or not, and that something
was some form of rezoning or development approval,
or an action that cleared the way for these approvals.
The reality of donor influence has been admitted in
The problem
is influence
Donations and planning corruption
in Ireland and Australia
by Julie Walton
The US Supreme Court
has elevated donations
to the status of “speech”
and forbidden US States to
prevent anything short of
“quid pro quo” corruption
POLITICS
Undue influence in concrete
April 2016 2 3
the public statements of some donors and some
recipients in Australia, most recently in the sub-
missions for the plaintiffs in the McCloy case in
the High Court. This evidence is backed up by
research in the field of psychology. A donation,
like any gift, tends to activate the very human
urge to reciprocate. The resulting cognitive bias
may be genuinely unconscious, but it is real,
and potent.
The Planning Tribunal
In Ireland the Tribunal of Inquiry into Certain
Planning Matters and Payments (the “Planning
Tribunal”) ran from 1997 to 2008 in Ireland, and
made its final report in March 2012. It found 14
separate rezonings that had been influenced by
corrupt, improper or inappropriate payments in
the form (or guise) of political donations. The
Tribunal made adverse findings against public
officials from George Redmond, Dublin’s Assis-
tant City and County Manager, right up to a
Taoiseach, Bertie Ahern.
The approach taken by the Tribunal is encap-
sulated in a passage from its final report. The
Tribunal found that the developer Owen
O’Callaghan had provided his lobbyist Frank
Dunlop with large amounts of cash (IR£80,000
in 1991 and IR£73,500 in 1992) and that most of
this money was paid to councillors to ensure
their support for the rezoning of land at
'Quarryvale':
"The Tribunal considered that such pay-
ments were always corrupt from the perspective
of Mr Dunlop and Mr O’Callaghan, and were
often (although not always), corrupt from the
perspective of the recipients".
Having considered an enormous amount of evi-
dence, the Planning Tribunal developed a set of
principles relating to payments to local council-
lors, covering both givers and recipients. These
principles are summarised below.
Donors
In the eyes of the Planning Tribunal it was
“probably corrupt” for a developer/landowner
to pay money to an elected councillor, where:
(a) the developer/landowner was, or was
likely to be, or to become, the subject of
a decision by the County Council in which
the councillor was an elected public
representative;
(b) the councillor would be entitled to exer-
cise the right to vote, or to otherwise act,
in relation to such a decision.
Depending on the circumstances, however,
the payment might alternatively be classed as
“improper” or “inappropriate”. The Tribunal’s
concept of improper or inappropriate payments
corresponds with the concept of “undue
influence”.
Donors often argued that payments could not
be corrupt because they did not change the
recipient’s actions, but this claim was either
rejected or made no difference to the Tribunal’s
overall view of them:
"The Tribunal did not consider it necessary
that the recipient was actually influenced by
the payment or even aware of the payer’s inten-
tion to influence him or her for the payment to
be corrupt on the part of the payer".
Recipients
The principles applied by the Planning Tribunal
in the case of the recipients of donations were:
a) It is corrupt to solicit or accept money
from a developer/landowner, specifically
in return for exercising his/her vote (or for
undertaking any other act open to him/
her to take in his/her role as a
councillor);
b) It is corrupt for a councillor to exercise
his/her vote in the expectation of a pay-
ment of money;
c) It is inappropriate, improper or corrupt to
solicit or accept money from a developer/
landowner, where it is known, believed,
expected or suspected that land in which
they have an interest is (or is likely) to be
the subject of a rezoning/planning deci-
sion, in respect of which the councillor
has any role.
In addition to being inappropriate, improper or
corrupt (depending on the circumstances), the
Tribunal regarded soliciting or accepting a
donation in the above circumstances:
a) compromises the councillor’s disinter-
ested performance of his/her duties as a
councillor; and
b) constitutes an abuse of a councillor’s
public office.
As in the case of donors, the Tribunal did not
regard it as necessary that recipients could be
shown to have actually changed their vote, to
justify a corruption finding. The Tribunal did not
however make findings of corruption against
recipients unless they were aware that a dona-
tion was intended to influence them, and it
accepted that "this level of conscious
awareness by councillors in receipt of payments
was not always present".
National politicians
The Tribunal did not set out a separate set of
principles in relation to payments made to poli-
ticians at the national level, such as the
IR£25,000 given by developer Owen
O’Callaghan to Liam Lawlor TD during the
November 1992 election campaign. Rather it
made a number of findings broadly consistent
with the application of the same principles it
applied to the local level.
In this context it was unable to ascertain
whether or not some of the hundreds of thou-
sands of pounds acquired by Bertie Ahern, for
which he had no sensible explanation, came
from Owen O’Callaghan. Dunlop admitted he
had paid IR£25,000 to someone at Powers
Hotel in September 1993, but his memory
uncharacteristically failed him, and he could
not tell the Tribunal the name of the recipient.
Corruption and undue influence
Too often the critical question of donor influ-
ence is muddied by arguments about whether
or not particular behaviour constitutes corrup-
tion. These arguments in turn spark debate
about the presence or absence of a proximate
and explicit connection between a donation and
a particular outcome: a “quid pro quo”.
The inadequacy of the quid pro quo approach
is starkly evident in evidence before the Plan-
ning Tribunal.
Whether or not behaviour constitutes corrup-
tion is a question of significance in terms of the
possibility of sanctions against individuals. The
issue for the integrity of planning systems is not
however confined to corruption. It is the broader
question of donor influence that has been
brought into sharp focus by the work of anti-cor-
ruption agencies in Australia and in Ireland.
Points on a continuum
Corruption and undue influence are best
thought of as sitting at different points on a
Corruption and undue influence are best thought
of as sitting at different points on a continuum;
with legitimate influence at one end, corruption
at the other, and undue influence somewhere
between the two
2 4 April 2016
continuum; with legitimate influence at one
end, corruption at the other, and undue influ-
ence somewhere between the two. Maintaining
the integrity of planning systems requires
attention to undue influence, not just to behav-
iour that is clearly corrupt, and sometimes
criminal (such as bribery).
The point at which influence on a public offi-
cial becomes “undue influence” is hard to
pinpoint, but that point has certainly been
passed if money, including a political donation,
has been paid to a person with influence over a
decision affecting the donor. It has also been
passed if a donor pays an intermediary to gain
preferential access to decision makers.
In the McCloy case High Court Justice Gageler
summarised the plaintiffs’ principal argument
as an argument that caps on donations and pro-
hibition of developer donations restricted
political communication by ‘removing the pref-
erential access to candidates and political
parties which would otherwise come to those
who have the capacity and incentive to make
large political donations’. He continued:
"… The argument is as perceptive as it is
brazen. It goes to the heart of the mischief to
which the provisions are directed".
Justice Gageler concluded:
"…the elimination of preferential access to
government which results from the making of
political donations is a legitimate legislative
objective. More than that, the elimination of
that form of influence on government is prop-
erly characterised as a compelling legislative
objective".
The damage done
The cases revealed by the Planning Tribunal
show that corruption and undue influence made
a real difference to the location, density, and
type of urban development in and around
Dublin in the period in question. Ireland has
been forced to demolish isolated and
uncompleted “ghost estates” built in the rush
of speculative development from 1995 to 2005.
Some will be returned to farmland.
This bears out what geographer Peter John
Perry predicted more than twenty years ago:
"For such are the geographies of almost eve-
rywhere: the rationale of corruption is after all
to make a difference; the bribe is paid to ensure
that things are made or located differently from
what the law or even a narrow view of the
market intended. Corruption acts alongside or
within a matrix of other legitimate forces to
shape our geographies and we ignore it our
intellectual peril".
If the planning system loses the ability to
direct development to appropriate locations, at
the right time, with the necessary services in
place, this has physical and financial conse-
quences for cities and regions; and for the
people who live in them.
In the long run it also has consequences for
democracy. The proper functioning of the dem-
ocratic system is threatened by failure to deal
adequately with the elevated risk attached to
donations from the development industry.
The conflict of interest
perspective
When considering how best to address the
potential for donations to lead to undue influ-
ence as well as corruption, the conflict of
interest perspective is useful. The Planning Tri-
bunal’s concern for the disinterested
performance of official duties reflects this
perspective.
From a conflict of interest perspective it is the
objective circumstances surrounding the
making of a donation that count. There is no
need for the fraught task of unlocking the inner
workings of people’s minds to discern their
motives. Elected representatives are placed in
a position of serious conflict of interest if they
or their parties become reliant on donations
from industries highly dependent on govern-
ment decisions. The development industry is
such an industry.
The decisions made under planning systems
and related systems are of high value. There is
discretion in the making of planning rules, and
often a degree of “flexibility” in applying them.
In the McCloy decision, High Court Justice
Gordon noted:
"The value of land is peculiarly tied to govern-
mental decisions relating to such matters as
zoning and whether or not particular develop-
ment applications are approved. These
governmental decisions often involve State and
local government officers in an individualised,
discretionary decision-making process".
Justice Gageler observed:
"The problem is not merely theoretical. The
unfortunate experience in New South Wales has
been one of exploitation of influence leading
too readily to the corruption of official
conduct".
The conflict of interest perspective is capable
of dealing with undue influence as well as cor-
ruption. It does not suggest personal culpability
where that is not warranted (although some-
times, of course, it is). There is no basis for
wounded feelings such as those expressed in
the plaintiffs’ submissions to the High Court in
the McCloy case, which portrayed the NSW ban
on donations from property developers as:
"…an attempt to prevent socially undesirable
persons from being seen to contaminate politi-
cal parties and candidates with their
influence".
Transparency is not enough
Political donations regimes need to decisively
address the conflict of interest created by dona-
tions from the development industry, to lessen
the risk of corruption and undue influence.
Declaring them is a grossly inadequate
response.
The philosophy behind the disclosure
approach is that “sunlight is the best disinfect-
ant”, a quote taken from the work of American
jurist Louis D Brandeis (1913,1914.). Australian
legal academic Joo-Cheong Tham (2010) rightly
calls this mantra “a snappy, but overstated
case”.
The Planning Tribunal did not
regard it as necessary that
recipients could be shown to
have actually changed their
vote, to justify a corruption
finding
POLITICS
Councillor John O'Donnell's conflict caught on camera
April 2016 2 5
Having examined the position in both Aus-
tralia and Ireland, I have concluded that
planning systems cannot co-exist with a weak
political donations regime and retain their
integrity.
It is not usually seen as sufficient for signifi-
cant conflicts of interest to be dealt with simply
by declaring them. A donations regime that
goes no further than requiring the disclosure of
donations is a weak political donations system.
In a rare instance of upholding a complaint, Ire-
land's Standards in Public Office Commission
found it was remiss of Councillor Oisín Quinn to
declare an interest in a building whose viability
for high-rise development was to be changed
by resolutions he was promoting in Dublin City
Council but not to absent himself from the vote.
The illogicality of such a position had entirely
escaped the Council's ethics officer who had
advised such a course.
Greater public disclosure since the 1980s
served a very useful purpose in Australia; it
exposed the fact that Australia’s major political
parties had become reliant on donations from
the property industry, with the liquor and gam-
bling industry not far behind. Transparency had
revealed a potentially large problem, but of
itself could do nothing to correct it.
A period of more muscular action began in
New South Wales, in 2009 under Labor Premier
Nathan Rees. Since 2009 property developers
have been “prohibited donors” under the Elec-
tion Funding, Expenditure and Disclosures NSW
1981. Donations from other groups highly
dependent on government decisions - tobacco,
liquor and gambling industry entities - were
prohibited in 2010.
Still more muscular was Premier O’Farrell’s
subsequent attempt to follow Canada’s lead,
and confine donations to individuals on the
electoral roll. Since there are many industries
apart from the development industry depend-
ent on government decisions, and government
contracts, this comprehensive approach has
much to recommend it. That approach fell foul
of the High Court in Unions NSW.
Intermediaries
The central role played by intermediaries is
unmistakable. Lobbyists involved in securing
and disbursing political donations, in tandem
with lobbying decision-makers, feature in
investigations in Ireland and in Australia.
Indeed it seems that one of the ways to become
a highly successful lobbyist has been to dem-
onstrate your prowess at bringing in donations
for the people you intend to lobby.
In the WA case of Whitby, Brian Burke, a
former Premier of Western Australia, and his
business partner Julian Grill wanted a particular
public servant, Gary Stokes, promoted. Stokes
was amenable to a rezoning request opposed
by his Department. Grill was close to the Minis-
ter in charge of the Department, Bowler, and
had run his campaigns in 2001 and 2005. In an
intercepted conversation with Grill, Burke said
of Stokes:
"One of the big things is to convince Bowler
that he’ll be our bloke there and get Bowler to
promote him".
The CCC was satisfied that Burke and Grill
duly attempted to influence Minister Bowler to
remove the head of the Department and appoint
Stokes.
In the worst of all possible worlds, political
lobbyists occupy official positions in political
parties. The prospects of both elected officials
and candidates depend to a greater or lesser
degree on the goodwill of a party head office
dominated by the task of fundraising.
Tom Gilmartin knew this. His instincts took
him first to two Ministers (Bertie Ahern and Pád-
raig Flynn) and then to the Head Office of Fianna
Fáil to seek redress when he faced demands for
money from Liam Lawlor TD, and from Council-
lor Hanrahan. According to a Bank of Ireland
Manager, Sheeran, in whom Gilmartin confided
shortly after making the payment:
"His primary object in making a donation to
Fianna Fáil was to try and ensure that the people
that were putting obstacles in his way for what-
ever reason, because they weren’t being paid
money or were looking for money, would be
admonished or disciplined or eliminated by the
Fianna Fáil party".
In NSW third-party lobbyists (and the indi-
viduals they engage to undertake the lobbying
for them) are expected to “keep separate from
their lobbying activities any personal activity or
involvement on behalf of a political party” (NSW
Lobbyists Code of Conduct 2014 clause 13).
Prosecutions: Analogies
between Australia and Ireland
In Ireland, the Planning Tribunal’s findings of
corruption were numerous, but successful pros-
ecutions have been thin on the ground. This has
been widely seen as a failure of the Tribunal to
achieve much, despite its length and consider-
able expense.
Only Dunlop served time for corruption. Ray
Burke and Liam Lawlor did spend time in jail,
Commissioner
The Hon Megan Latham
Deputy Commissioner
Theresa Hamilton
Communications
and Media Section
Manager: Nicole Thomas
Assessments Section
Manager: Andrew Garcia
Investigation Division
Executive Director:
Sharon Loder
Corruption
Prevention Division
Executive Director:
Dr Robert Waldersee
Corporate Services
Division
Executive Director:
Andrew Koureas
Legal Division
Executive Director/
Solicitor to the Commission:
Roy Waldon
Investigation &
Sector Wide Projects
Finance
Human Resources
& Administration
Information
Management
& Technology
Education
Surveillance &
Technical Unit
Investigations
Property Services
...but permanent
ICAC and its structure: lessons for Ireland
New South Wales' version of Dublin Castle...
2 6 April 2016
but for tax offences and contempt of the Tribu-
nal respectively. Lawlor died in a car crash in
Russia before any further charges could be laid
against him.
Criticisms based on a perceived lack of pros-
ecutions have also been levelled at the NSW
ICAC. To some extent this reflects a lack of
understanding that the responsibility for pros-
ecutions sits with the DPP, not the ICAC. More
fundamentally, though, it is not appropriate to
judge the success of anti-corruption agencies
solely, or even primarily, in terms of criminal
prosecutions. They are there to expose the
truth. It falls to others to serve up the just
deserts.
In recent days, the NSW Electoral Commis-
sion has decided that the Liberal Party of
Australia (NSW Division) is not eligible for pay-
ment of its current claims for about AUD$4.4
million in public funding, because it failed to
disclose the identity of all major political donors
in its 2011 declaration. Oral and documentary
evidence from Liberal Party officials and agents
from the Free Enterprise Foundation provided
to ICAC in the course of its Operation Spicer
Inquiry led the Electoral Commission to con
-
clude that there were significant breaches of
election funding laws.
Whether or not there are findings of corrup-
tion followed by prosecutions of individuals, it
cannot sensibly be said that the efforts of the
ICAC have come to naught. Nor is that a justifi-
able conclusion in Ireland. Ireland’s Criminal
Assets Bureau has clawed back millions of
euros from corrupt individuals and tenaciously
continues to do so. In NSW the Criminal Assets
Recovery Act 1990 allows for the same form of
redress.
Law reform is another key outcome. The Plan-
ning Tribunal drew attention to the inadequacies
of Irish law in relation to official corruption. The
Criminal Justice (Corruption) Bill now in its final
stages in Ireland gives effect to some of the Tri-
bunal’s recommendations, and to several
international agreements relating to
corruption.
If all else fails, the levying of hefty tax bills
and prosecution for tax evasion is an outcome
that should not be sniffed at. It was, after all,
tax offences that finally brought down the
seemingly untouchable American gangster Al
Capone.
K
losterman (1985) suggests that the “great
debate” of the 1930s and 1940s between pro-
ponents of government planning and
defenders of free markets and laissez-faire has
never really ended:
Contemporary arguments for abandoning plan-
ning, reducing regulation, and restricting the size
of government are generally accompanied by calls
for increased reliance on private entrepreneurship
and the competitive forces of the market. That is, it
is often argued, government regulation and plan-
ning are unnecessary and often harmful because
they stifle entrepreneurial initiative, impede inno-
vation, and impose unnecessary financial and
administrative burdens on the economy.
Challenges to the legitimacy of the planning
system have intensified in the neoliberal era in
which we still live. A recent example is the nomina-
tion of planning and zoning rules as one of three
priority areas for review, in a review of competition
policy in Australia. The Harper Report argues that:
Planning systems by their nature create barriers
to entry, diversification or expansion, including
through limiting the number, size, operating model
and mix of businesses. This can reduce the respon-
siveness of suppliers to the needs of consumers.
A 2015 article in the Economist complains that:
London has strict rules preventing new struc-
tures blocking certain views of St Paul’s Cathedral.
Google’s plans to build housing on its Mountain
View campus in Silicon Valley are being resisted on
the ground that residents might keep pets, which
could harm the local owl population. Nimbyish resi-
dents of low-density districts can exploit planning
rules on everything from light levels to parking
spaces to block plans for construction.
The Economist sees an association between
planning controls and higher house prices, arguing
‘many households are priced out of more vibrant
places. It is no coincidence that the home-owner-
ship rate in the metropolitan area of downtrodden
Detroit, at 71%, is well above the 55% in booming
San Francisco.’ The article contains the claim that:
… lifting all the barriers to urban growth in Amer-
ica could raise the country’s GDP by between 6.5%
and 13.5%.
In Ireland, influential economist Colm McCarthy
often argues that corruption of the planning pro-
cess is rooted in Ireland's anti-market fundaments:
“Restrictive planning rules, which make planning
permission scarce, are an ingredient in the corrupt-
ing of politics all over the world” (Sunday
Independent, 2012).
Such views have been institutionalised too. For
example, in his evidence in June to the Banking
Inquiry the former chief economist of the Central
Bank, Tom O’Connell, submitted that: “the demand
mania for property took off against the background
of restrictive zoning which limited the supply of
housing: the inevitable result was huge property
price inflation”.
On the other hand, the diagnoses and the pre-
scriptions of neoliberal ideology are not universally
accepted. There is strong public support for the reg-
ulation of development, for a variety of social,
environmental, amenity and financial reasons. An
attempt to add to the changes made to the NSW
biodiversity offset scheme late in 2014 ‘the oppor-
tunity to reduce the value of the required offset if a
project’s social or economic benefit is deemed sig-
nificant enough’ was also fiercely opposed and
eventually abandoned by the NSW State
government.
Opinions will differ on whether or not it is appro-
priate to insist that planning regulations should
work in the interests of “consumers”. Some might
see themselves as citizens living in a society, not
consumers living in a marketplace. Different per-
spectives and ideologies will produce different
views of what constitutes “the public interest”.
So, while the Economist might have a problem
with planning controls protecting views of St Paul’s
Cathedral, Londoners and visitors might well
regard views of Wren’s masterpiece as, literally,
priceless. The Economist (2015) itself anticipates
(and rejects) the retort: ‘give economists their way,
and they would quickly pave over Central Park’.
Julie Walton BA LLB, MTCP, is qualified both as a lawyer and as an urban planner (MTCP). She served as a City of Sydney
Councillor from 1991 to 1999 and was a Principal Officer at the Independent Commission Against Corruption, working in the
Corruption Prevention Division. She is the University of Sydney's Henry Halloran Trust's practitioner in residence.
Conclusion
RECOMMENDATION Prohibit political donations from the property development indus-
try, at all levels of government.
RECOMMENDATION Prohibit political donations from political lobbyists, and bar lobby-
ists from official positions in political parties.
RECOMMENDATION Introduce a presumption of corruption along the lines of that contained
in the Irish Criminal Justice (Corruption) Bill: covering undeclared donations, exceeding allow-
able limits, by a donor who had or has an interest in the recipient “doing any act or making
any omission in relation to his or her office, employment, position or business”.
RECOMMENDATION Confine override provisions in planning systems to the variation of
means, rather than ends. In NSW, this entails removing clause 4.6 (3) (b) from the Standard
Instrument and requiring applicants to demonstrate consistency with objectives, in line with
the assessment required by clause 4.6 (4) (ii).
RECOMMENDATION Developing and drafting clear and robust objectives that function
well when tested by override provisions should form part of the training of every planner.
POLITICS
