Former NSW Liberal MPs have been issued letters of demand to repay potentially hundreds of thousands of dollars in illegal donations solicited before the 2011 state election.
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As the corruption watchdog prepares to table its report into Liberal Party rorting of political donations laws on Tuesday, Fairfax Media can reveal the NSW electoral commission has issued the demand to some of those caught up in the Operation Spicer inquiry.
The electoral commission has the power to demand repayment of illegal donations. If it is determined that an MP or candidate knew the donation was illegal, they can be forced to repay twice the amount.
An electoral commission spokesman would not release names of those sent the demand, but confirmed it had completed an investigation.
It had "formed the view that sufficient evidence is available to justify recovery action against some of the persons who have received or benefited from unlawful donations, loans or indirect campaign contributions," he said.
"Those persons have been issued with demands for payment. The commission reserves its right to pursue recovery action in the event of non-payment."
It is understood there is some uncertainty over whether the former MPs can be prosecuted under the Election, Funding, Expenditure and Disclosures Act.
The time within which prosecutions can be launched was extended from three to 10 years by Premier Mike Baird in October 2014, but the change only applied to offences committed after that date. The offences in question were committed in 2010.
But there is a question over whether the law could be applied from when they were uncovered by the Independent Commission Against Corruption in 2014 and therefore fall within the original three-year limit.
During the 2014 corruption inquiry, former Liberal energy minister Chris Hartcher was alleged to have been the "mastermind" of corrupt scheme in which illegal donations from developers found their way into the campaign coffers of several Central Coast MPs.
The banned donors were allegedly encouraged to pay for marketing or consulting services by a "sham company" called Eightbyfive, established by Mr Hartcher's former staffer Tim Koelma.
No such marketing or consulting services were provided.
Newcastle Liberal MPs Tim Owen and Andrew Cornwell quit parliament after admitting to taking envelopes stuffed with $10,000 in cash each from property developer Jeff McCloy before the 2011 state election.
Mr Cornwell also admitted to taking $10,200 from developer Hilton Grugeon as part of an artwork sale the ICAC has heard was a "sham" to disguise an illegal donation.
Then Port Stephens MP Craig Baumann was alleged to have received almost $80,000 in secret donations from developers McCloy and Grugeon before the 2007 election. He hid the payments by issuing "sham" invoices.
Although this occurred before the 2010 ban on developer donations, Mr Baumann, the former mayor of Port Stephens, agreed the reason for hiding their identity was that both developers could have profited from a proposed development at Wallalong, near Maitland.
Former police minister Mike Gallacher denied accusations aired at ICAC that he was involved in a scheme for Buildev, the company of one-time mining mogul and property developer Nathan Tinkler, to channel illegal donations to Liberal candidates before the 2011 state election.
Of the 10 Liberal MPs embroiled in the inquiry, only Mr Gallacher remains in parliament.
