A company part-owned by Liberal MP David Coleman was given a government grant that put him in breach of section 44 of the Constitution. Jommy Tee investigates the trail of the Defence Department grant, which also involved Coleman making false declarations to the Australian Electoral Commission and breaching ministerial standards.
A company co-founded and co-owned by a federal Coalition MP David Coleman was awarded a $100,000 grant by the Department of Defence just before the 2019 federal election.
Before that election, Coleman also signed a declaration to the Australian Electoral Commission (AEC), stating there was nothing that could disqualify from eligibility as an election candidate even though the constitution and the AEC form state clearly that anyone in receipt of federal government money may be disqualified from sitting in Parliament.
Apart from Coleman’s possible false declaration to the AEC and his eligibility to sit in parliament, the one-year grant raises serious questions around breaches of ministerial and parliamentary standards.
No comment… again
An FoI request was lodged with the Office of the Prime Minister to clear up some of these questions but the PM’s Office refused the request. An appeal has been lodged.
The Department of Defence also refused to answer a series of questions about the grant, saying it “would not be providing a comment on the matter”.
David Coleman, a minister in the Morrison government, and John Lee, a senior adviser to former foreign minister Julie Bishop, co-founded L21 Pty Ltd in 2001, according to ASIC records.
Mr Lee, Bishop’s senior adviser from 2016 to 2018, also has links to a number of think tanks including the Centre for Independent Studies, the United States Studies Centre and the Australian Strategic Policy Institute.
Records show that the grant to L21 was approved on December 2018 (grants.gov.au). Two months later, in February 2019, then defence minister Christopher Pyne announced the grant. It was formally published in August 2019, several months after the May 2019 federal election.
Coleman stopped being a director of L21 in 2004 but retained a 35% beneficial shareholding at the time of the $100,000 grant. Mr Lee owned the remaining shares.
Dodging a constitutional bullet
Under section 44(v) of the Constitution, an elected represented who has a direct or indirect financial interest in any contract or agreement with the government may be incapable of being chosen or of sitting as a senator or a member of the House of Representatives.
Coleman was a part-owner of L21, which had been awarded a $100,000 grant contract with the Department of Defence.
It appears on the evidence that Coleman should have been ruled ineligible to sit in parliament from the time the grant was awarded in February 2019.
The situation was compounded by Coleman’s actions after the election campaign began.
The AEC is very clear in its advice to candidates and its section 44 qualification checklist (questions 15 & 15a):
“Section 44(v) may disqualify you even if you are not a party to the relevant contract or agreement. A disqualifying financial interest may arise, for example, from an agreement between the Commonwealth public service and a trustee of a family trust of which you are a beneficiary.” (AEC EF060)
In response to the Question 15 on the qualification checklist that all candidates have to answer, Coleman answered “No”, declaring he had no direct or indirect financial interest in any Commonwealth contract or agreement.
The offence of making a false and misleading statement in the qualification checklist falls under the Criminal Code, not the Electoral Act. The maximum penalty is 12 months imprisonment, or a fine of $12,600, or both.
According to the AEC if a candidate has answered the mandatory questions in the qualification checklist and has paid the relevant deposit, the AEC is legally required to accept the nomination.
The AEC has previously referred matters to the Australian Federal Police for false declarations, including Rod Culleton – a senate candidate from WA.
When contacted by Michael West Media, the AEC said:
“The AEC is not required to investigate the accuracy of information on a candidate checklist and notes that any person who identifies a potential Commonwealth criminal offence is able to report the conduct to the AFP.”
Any disqualification of a candidate due to section 44 of the Constitution can only be determined by the High Court sitting as the Court of Disputed Returns after an election.
Failure to correct the record
Was Coleman not aware of his duties under the Constitution? Did it slip his mind that his company had received the grant or that it posed a major constitutional risk to his re-election?
It would appear he was aware of his responsibilities because just two days after signing his form with the AEC, records from the corporate cop ASIC show that Coleman offloaded his shareholding in L21 to the company’s co-founder, John Lee, on 17 April 2019.
Coleman had another opportunity after the election to correct the record. Elected representatives are now required to attest and sign a statement that the material they provide to the AEC is complete and accurate and or they must supply supplementary material, which is an opportunity to correct the record.
Coleman lodged his attestation on 29 July 2019, but again made no mention of his shareholding in L21.
Yet on that same day he amended his parliamentary register of interests to advise that he had offloaded his shares in L21.
Failure to comply with Ministerial standards
Is it ethical for a government to award a grant to a company part-owned by a minister?
As a Cabinet minister Coleman was also bound by the ministerial standards, in particular the section dealing with integrity.
“Ministers must also comply with any additional requirements for declarations of interests to the Prime Minister as may be determined by the Prime Minister, and notify the Prime Minister of any significant change in their private interests within 28 days of its occurrence.”
This put the onus on Coleman to advise the Prime Minister that a company he part-owned had received a government grant, thus triggering possible constitutional ramifications. Likewise, Coleman should have also advised the Prime Minister that he divested his shareholding within 28 days from 17 April 2019. The only public record we have is Coleman’s register entry on 29 July 2019 – some three months after the fact.
The Prime Minister’s Office has denied a Freedom of Information (FOI) request that seeks to check whether Coleman (and other ministers) complied with the integrity part of the ministerial standards. The refusal is being appealed.
Can Coleman’s position be challenged?
The deadline for a challenge by an individual or the Australian Electoral Commission to the election of David Coleman, via a petition to the High Court (sitting as the Court of Disputed Returns), has long since passed. The deadline for lodging a challenge is 40 days after the return of the writs and expired on 31 July 2019.
However, the Commonwealth Electoral Act allows for a referral to be made to the High Court by the legislative chamber in which the relevant MP sits (in this case the House of Representatives). Moreover, there is no time limit on pursuing such a referral.
To make such a referral requires political will and strength of character by the parliament – a test for whether our politicians hold themselves accountable to the law.
Coleman who has been on indefinite personal leave from the ministry since December 2019, and demoted in the recent ministerial reshuffle late last year to an assistant minister was approached for comment.
Jommy Tee is a long-time career public servant, having worked in the policy development field for 25+ years as well as an independent researcher interested in politics, current affairs, and Nordic noir.