A minor political party that bowed out of the state election before polling day received $250,000 in membership fees from a company linked to the scandal that forced Matthew Guy’s chief of staff to quit.

The payment to the short-lived Victorians Party was exempt from new donation limit caps of $4320 because the lump-sum payment from GSA Capital was made as an annual subscription fee.

Jonathan Munz pictured in 2008.Credit:Martin King

GSA Capital is an investment company owned and managed by billionaire Jonathan Munz, who The Age last year revealed was approached by Mitch Catlin seeking payments to his private marketing business in addition to his taxpayer-funded salary.

Munz declined to make the payments. Catlin quit his position as chief of staff to Guy, then the state opposition leader, following reports of the scandal.

The $250,000 membership subscription to the Victorians Party was publicly declared in the party’s annual return and published by the Victorian Electoral Commission (VEC).

Subscription fees need to be deposited into a separate account and cannot be used for political campaigning. A Victorians Party spokesman said the payment was used for administrative purposes to establish the party and was within the rules.

But experts say the payment is yet another example of how political parties can use gaps in the system to accept large payments.

Geoffrey Watson, SC, a former counsel assisting the NSW Independent Commission Against Corruption, said subscription fees were an “obvious loophole” and that the VEC should investigate the payment.

“This is just a plain loophole,” said Watson, now the director of the Accountability Round Table. “Even if there’s no breach here, it’s an obvious loophole that needs to be closed.”

It is not suggested Munz received or expected to receive anything from the payment.

New parties and independents struggled to fund their campaigns in Victoria as a result of the donation cap, whereas established parties benefited from public funding and registered “nominated entities”, which each provide unlimited cash to Labor, the Liberals and the Nationals.

Uncapped affiliation fees from associated entities, such as those from unions to Labor, are also allowed.

The Victorians Party eventually withdrew from last year’s election, stating it was hamstrung by the donation rules introduced in 2018. The party was voluntarily deregistered in September.

A spokesman for the party said the payment made by GSA Capital was completely within the rules.

“As permitted under the Victorian Electoral Act, the payment received was for an annual subscription for membership of the Victorians Party, with all funds received used for the set-up and administration of a new party, not campaigning,” the spokesman said.

“The payment was disclosed by the Victorians Party as required under the Electoral Act. The Victorian Labor Party received similar membership payments from its affiliated unions, but for many millions of dollars, raising close to $1.8 million in 2021-22. This is standard and accepted practice.”

Watson said it was inconceivable a party subscription was valued as high as $250,000.

Membership fees for Victorian Labor range from $30 for concessions to $400 for high-income earners. Liberal Party membership costs between $42 and $118.

The Victorians Party rules, seen by The Age, did not specify a dollar value for membership fees.

A spokeswoman for the VEC said: “Membership fees, annual affiliation fees and/or annual levies are not considered to be political donations, as long as they are not paid into the recipient’s state campaign account. The Electoral Act does not specify a limit in relation to these fees.

“Knowingly making or accepting an unlawful political donation, or providing false or misleading information, are offences that can carry a fine of over $50,000 and/or a two-year prison sentence. Attempting to circumvent the Electoral Act via a ‘scheme’ may also result in a 10-year prison sentence.”

Munz, who is listed as the director and secretary of GSA Capital in company documents, did not respond to a call and text message from The Age. GSA Capital was also contacted.

The Victorians Party was founded by Small Business Australia executive director Bill Lang, publican and former Western Bulldogs footballer Paul Dimattina, City of Merri-bek councillor Oscar Yildiz and businesswoman Ingrid Maynard; and chaired by Randal Killip.

Yildiz said he didn’t want to close the party. The Age has seen a statutory declaration signed by Yildiz, listed as the party’s registered officer, that he was not a signatory to party bank accounts.

Dr Catherine Williams, research director at the Centre for Public Integrity, said subscription and affiliation fees should be capped at $2000 in line with NSW.

“[The] 2018 law reforms had structural deficiencies, including the wholesale exemption of subscription and affiliation fees from the meaning of ‘donation’,” Williams said.

“Such payments should only be excluded up to a cap of $2000. Beyond this, they must fall within the meaning of ‘donation’ and the regulator empowered and resourced to treat them as such.”

A Victorian government spokesman said its reforms were “the toughest political donation laws in Australia”.

“Our reforms drastically reduced the size of donations and ensure Victorians know who makes and receives them in real time,” he said.

The Victorians Party withdrew from the election campaign in August, because of “the limitations on new political parties raising campaign funding under Victoria’s electoral laws”.

“This has meant that the party could not adequately fund its campaign to achieve its objectives in the limited time available to November,” the party said in a statement at the time.

The fallout led to infighting and the party was voluntarily deregistered in September.

Separate from the annual membership subscription, the party received $4000 in declared donations and a further $5500 in donations below the $1080 threshold for non-declared donations, which came from 21 donors, according to the party’s published annual return.

The Age last year revealed Catlin asked Munz in leaked emails to top up his taxpayer-funded job, in what could have amounted to an attempted breach of new donation caps.

The proposal never eventuated. Munz said in a statement at the time: “I do not know how many people received this unsolicited and unwanted email, but when I got it, I rejected it out of hand.”

The VEC investigated but was unable to make any findings, and referred the matter to the Independent Broad-based Anti-corruption Commission, which last week confirmed it was still considering the matter.

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