Property developers at the centre of a corruption inquiry into Liberal Party fund-raising could be let off the hook if the High Court overturns the NSW ban on political donations from developers, legal experts say.
Newcastle lord mayor and property developer Jeff McCloy, who is being investigated by the Independent Commission Against Corruption over allegations he "improperly sought to influence certain members of Parliament" by making illegal donations during the last election campaign, has launched a constitutional challenge to the laws that ban developer donations.
Cr McCloy is seeking to have the laws overturned on the basis that they infringe on the implied freedom of political communication in the constitution.
The High Court ruled in December that a similar ban on donations by trade unions and corporations – introduced in 2012 – was invalid on this basis.
University of NSW professor George Williams said the ban on developer donations had been "vulnerable to High Court challenge ever since the [court's] decision late last year".
"There is certainly a credible case to be put to the High Court that they are unconstitutional," Dr Williams said.
On Monday, the ICAC announced that Cr McCloy was being investigated as part of Operation Spicer, its inquiry into Liberal Party fund-raising, which resumes public hearings on Wednesday.
The High Court challenge, if successful, could benefit other developers being investigated over potentially illegal donations, including embattled coal mogul Nathan Tinkler and his property development group Buildev.
The ICAC needs to be satisfied that conduct could constitute a criminal offence – such as a breach of the donations laws – before it can make a finding of corruption against people who are not public officials or MPs. But it is possible it could identify another offence apart from the donations laws.
Dr Williams said that, if the laws were struck down, it would be "as if the law never existed".
"Having the law struck down could be the best defence they have," he said.
Unions NSW was behind the successful challenge to the ban on donations from associations and corporations. Dr Williams said the court could not identify a "reason or rationale" for the ban in that case.
But it hinted in its reasons that it might draw a distinction in the case of other categories of banned donations.
Sydney Law School professor Anne Twomey said the question for the court would be whether there was "enough evidence to show that the position of property developers is substantially different and raises a much higher risk of corruption than the position of corporations, or unions, or other organisations generally".
Dr Twomey said there was a chance Cr McCloy could "try and get an injunction to try and stop the ICAC from acting until such time as the High Court determines the constitutional challenge".
Property developers have been banned from donating to NSW election campaigns since 2009.
