Calls for reform following rule-breaking donation by cinema chain

The movie mogul owners of Palace Cinemas breached the state’s campaign finance rules when they donated almost $20,000 to the Victorian Liberal Party – only for the High Court to effectively legalise the contributions by ripping up the laws.

Four companies owned by Palace Cinemas founder Antonio Zeccola and wife Karen in March each handed over $4970, the maximum allowed by a single donor or organisation. Corporate records show two of the firms share a parent company, meaning one of those contributions exceeded the cap on donations.

But the Victorian Electoral Commission (VEC) is unable to take action because the High Court invalidated almost 80 pages of the state’s Electoral Act, and the replacement laws rushed through the parliament in June were only backdated to the date of that shock decision in April, which left no rules in place for earlier donations.

The revelation marks the latest loophole in Victoria’s donation laws exposed by The Age in the lead-up to November’s state election.

This masthead reported last week that three wealthy property developers donated $44,100 to the Liberal Party in a single week through a network of jointly owned companies, a move which did not breach electoral laws because each payment came from a separate legal entity.

The Age can now reveal a family of Melbourne lawyers have similarly used that loophole to legitimately donate nearly $30,000 to the Labor Party through a collection of businesses and trusts.

Integrity experts say the technicality means wealthy individuals can use multiple businesses to donate up to the cap repeatedly and funnel large sums to political parties and independent candidates, and effectively undermine the legislation’s aim of limiting the influence of big money in politics.

On March 20, the Liberal Party received a total of $19,880 from four companies owned by Zeccola and his wife. Zeccola founded the Palace Cinemas chain in Melbourne in the 1960s, and it operates 25 locations nationally including Northcote, South Yarra, Brighton, Balwyn.

The four donations of $4970 were made by Palace Cinema Nominees, Palace Cinema Pty Ltd, Palace Investments and Palace Enterprises, electoral commission disclosure logs show. At the time, donations were capped at $4970 by a single donor or organisation over the four-year parliamentary term. The cap applies to businesses that are “related”, meaning those which share a parent company, or are subsidiaries or holdings companies of another.

Corporate records show two of the companies – Palace Cinema Nominees and Palace Cinema Pty Ltd – are owned by the same parent company, Palace Company 7 - AKZ Pty Ltd, which makes the two former companies related corporate entities and which means one of the donations exceeded the cap.

Neither the Liberal Party nor the VEC flagged the donation as breaching the cap at the time, or after the 21-day disclosure period allowed for donations. Political parties and independent candidates are required to disclose and forfeit donations over the cap to the VEC.

Palace Cinemas did not respond to repeated requests for comment. A spokesperson for the Liberal Party said the party “operates within the requirements of the Electoral Act”.

On April 15, the High Court upheld a challenge to the state’s campaign finance laws brought by Paul Hopper and Melissa Lowe, independent candidates at the 2022 state election, who argued the rules unfairly advantaged major parties. The court’s decision temporarily left Victoria without any laws governing political donations.

In June, the state government rushed to pass new laws, which reintroduced donation caps, but its legislation was only made retrospective to the date of the High Court ruling. This means the March 20 Palace Cinemas donation, requires no repayment and is not in breach of the law.

Kiera Peacock, the principal lawyer at Ripple Legal and the solicitor who represented Hopper and Lowe at the High Court, said the Palace Cinemas donations warranted scrutiny when they were made.

“The Liberal Party should have reasonably looked into the donations at the time to see if they were related and then returned the amount which exceeded the cap,” Peacock said. “The VEC has a standing obligation to investigate breaches, but they had little opportunity to do so before the laws were invalidated.”

During this parliamentary term, the Zaparas family, which runs a law firm in Oakleigh, has donated almost $30,000 to the Labor Party through six jointly owned businesses and property trusts. Although ownership varies among four members of the family across the six entities, they are not considered to be related under the Corporations Act, and each business is legally permitted to donate to the cap.

The Zaparas family has long supported Labor, and has donated almost $300,000 to the federal party since 2014, including $109,000 in 2018-19. Commonwealth political donations have been uncapped, and the Zaparas family made all its donations at the federal level through one company.

But at a state level, where caps are in place, the family has used a network of companies to donate.

“We’ve been very careful to ensure that we’ve donated in accordance with Victorian electoral law and that’s a paramount consideration for us,” said Paul Zaparas, a lawyer and shareholder on six of the family’s companies that donated.

Zaparas said the family felt it owed Labor a great debt of gratitude because his father Peter, a Greek migrant who arrived in Australia aged 15, was able to access free university under Gough Whitlam’s prime ministership and built a successful business in Melbourne.

“We are great believers in the Australian Labor Party and its values and what it stands for today,” Paul Zaparas said.

Asked if he felt the current electoral laws regarding donations from businesses were suitable, he said: “That’s a matter for the Victorian parliament to turn its mind to and make any changes to the law that it deems appropriate. We will always operate absolutely within the confines of the law.”

Lowe and Hopper, the candidates who successfully challenged the state’s laws in the High Court, said the legislation passed by Labor following the court’s ruling was not strong enough. Both said they would have launched another legal challenge if there was more time before the November election.

“A cap you can multiply by donating through more companies isn’t a cap,” said Lowe, who is running as an independent in the Southern Metropolitan Region in the upper house.

“The real fix is for the next parliament to close these gaps properly, with an open, independent review, so every donor and every candidate is treated the same.”

Hopper, who is running as a candidate for The West Party in the lower house seat of Werribee, said: “All we want [is] no workarounds, no loopholes, a level playing field.”

Clancy Moore, the chief executive at integrity advocacy group Transparency International Australia, said stronger laws and regulation to prevent donations unfairly influencing the electoral process would be welcome.

“There is definitely scope to include stronger safeguards in the Victoria’s Electoral Act to stop people setting up unrelated corporate structures but with same owners in a cynical ploy to avoid donation caps and try and influence policies ahead of the November election,” Moore said.

The VEC declined to comment on the Palace Cinemas and Zaparas donations. It would also not comment on whether using multiple businesses to donate might be considered an anti-avoidance scheme designed to circumvent the cap.

“We closely monitor donation disclosures,” a spokesperson said. “The ability of laws to achieve their intended objectives is a matter for parliament.”

The Victorian Greens are pushing for political donations to be linked only to individuals, not companies, to put an end to these donations.

“Labor’s allowed these dodgy donations to continue, and the Greens want to close these dodgy loopholes and get big money out of politics,” Greens leader Ellen Sandell said.

The government did not directly respond to a question on whether tighter controls on business donations were needed.

“Labor introduced the strongest donation laws in the country,” Premier Ben Carroll said. “Victoria’s elections should be decided by Victorians – not by who has the deepest pockets.”

Get the day’s breaking news, entertainment ideas and a long read to enjoy. Sign up to receive our Evening Edition newsletter.

You have reached your maximum number of saved items.

Remove items from your saved list to add more.