Lifting the veil on business of love

On a summer day in Sydney many years ago, two young Chinese nationals and two younger Australians stood before a greying celebrant at a Kings Cross marriage registry.

On a summer day in Sydney many years ago, two young Chinese nationals and two younger Australians stood before a greying celebrant at a Kings Cross marriage registry. It was an unusual affair, attended by no friends or family and, outside of the legal necessities, devoid of pomp or ceremony.

As the brides and grooms recited their vows, each committed to a secret that, if revealed, could lead to serious criminal charges. The two marriages were, in fact, shams, conducted to give Helen Liu, from Shandong in China's north, and her countryman Harry Xu the right to stay in Australia permanently.

As Liu pledged her fidelity to David Shultz and Xu spoke of his devotion to Grace Clague, the two couples committed themselves to a lie that would stay hidden for years.

At the time of the weddings, believed to have been in 1989, all parties were relative nobodies. But as the decades passed, the stakes for one participant, Liu, got far higher. As a multimillionaire with impressive links to the Labor Party, especially to federal MP Joel Fitzgibbon, and ties to top Chinese officials in Beijing, Liu had become a somebody.

In March 2009, Liu's long-standing friendship with Fitzgibbon and financial support for him became public. He was defence minister at the time and had been living in a Canberra property owned by Liu's family.

After initially denying having received any substantial gifts from Liu, Fitzgibbon was forced to admit he had received two all-expenses-paid trips to China while an opposition MP and had failed to declare them to Parliament. He quit cabinet months later after it was revealed his brother had used his ministerial office to lobby for defence health contracts.

Amid the publicity in 2009, Liu highlighted her status as an Australian citizen, saying, "I am an Australian citizen and I participate in all activities, not just political ... I am a very good Australian businesswoman."

Fitzgibbon and former NSW premier and now Foreign Minister Bob Carr also came to her defence, with Carr describing his friend as a nice, pleasant and slightly shy woman, according to one media report.

Carr took umbrage at media reports raising national security concerns regarding Liu's connections in Beijing, suggesting they were based on Sinophobia. "I think Helen Liu is entitled to object to being branded a 'mystery woman' - she's no more a mystery than any other woman but for her anonymity," Carr said.

Maybe Carr was not aware of the biggest mystery of all surrounding his friend: how Liu attained permanent residency and citizenship.

Today, that mystery comes to an end, with one of the participants in the sham weddings, Clague, revealing that she and Shultz - her boyfriend at the time and later her husband - entered into the marriages because of a mistaken belief that Liu and Xu's lives would be in danger if they returned home.

Clague was aged 18 at the time of her marriage; Shultz was 20. Clague says they were "young, naive and stupid" when they agreed to take part in a sham with potentially serious criminal consequences.

Clague says she and Shultz became friends with Xu and Liu after being introduced to the couple by an Australian friend, Philip Everson, who worked with a Sydney migration agent at the time. Xu and Liu were in Australia on student visas.

"To understand why I did, you'd have to understand me, but to put it basically, it was love - corny, I know, but that was me. I saw their love, I wanted to be part of it and share it ... the final decision was made when I was told their lives were at stake," says Clague, the daughter of prominent Aboriginal activist Joyce Clague and NSW state Labor election candidate Colin Clague. The marriages were never consummated and the wedded couples never lived together. Clague says that after the wedding ceremonies, she and Shultz only occasionally saw Xu and, even less frequently, Liu.

"I did [catch up] with Harry a bit. I don't remember Helen being around so much. I thought that was because she wasn't at home or whatever," she says.

While technically married to the Chinese, Clague and Shultz had two of their three children. After their marriages to the Chinese couple ended, they wed. They separated in recent years.

For their part, Liu and Xu got busy amassing a Sydney property empire worth $40 million, using money and loans sourced from China and the Bank of China.

They were so busy, in fact, that they forgot to divorce the young Australians until about 1995, about three years after being granted permanent residency. The realisation that the Australians were legally entitled to half their fortunes may have prompted the Chinese pair to finally end the marriages.

As Clague and Shultz brought up their family, Liu and Xu built a network of useful contacts in the NSW Labor Party, chiefly federal government MP Eric Fitzgibbon and his son and successor as the member for Hunter, Joel Fitzgibbon.

As early as June 1993, one of Liu's companies paid for Eric and Joel Fitzgibbon to fly first class to mark the start of work on a tourism development in Liu's home province of Shandong. During their seven-day stay, the Fitzgibbons were guests of the provincial governor and top Communist Party official, Zhao Zhihao, and Liu's company, Diamond Hill International.

It was a remarkable achievement for someone who four years earlier, according to Clague, claimed to be at risk of persecution.

The first inkling the Department of Immigration and Citizenship got that there were serious doubts over the validity of Liu's marriage to Shultz came in the form of a letter sent by opposition immigration spokesman Scott Morrison about 12 months ago.

Morrison last year requested that departmental secretary Martin Bowles investigate the marriages, citing potential "migration fraud". Morrison's letter came after Fairfax Media provided his office with information that cast doubt on the legitimacy of Liu's marriage to the Australian man.

Migration fraud and making false declarations to the Commonwealth are both criminal offences punishable by significant jail terms or hefty fines. In seeking permanent residency, Liu and Xu had to make sworn statements to the Commonwealth declaring a "genuine and long-term commitment" to an Australian national.

The application process also involved the provision of contrived photographs to prove the relationships were ongoing. This was all managed by the office of a Sydney migration consultant later deregistered by the Commonwealth for "not being a fit and proper person".

But instead of properly investigating Morrison's concerns, Immigration officials aborted their inquiry, claiming there was "insufficient evidence" to proceed.

Yet it appears that before deciding to shelve the probe, officials made no effort to locate the key players.

Fairfax Media has confirmed that the department did not contact Shultz, Clague or Xu about the circumstances of their marriages.

It is also understood that Liu, who declined to answer any questions about her marriage and residency application, was not contacted. Neither was John Lingham, the former migration agent whose office lodged paperwork for the Chinese pair's permanent residency applications.

Morrison is concerned by the department's inaction. "I referred a serious matter to the Immigration Department. I expected them to investigate it, not bury it," he said.

Although the department claims to have a "voluminous" amount of documents relating to its response to Morrison's request for an investigation, it has refused to release any under freedom-of-information laws for reasons of personal privacy. A small number of documents released in response to a separate FOI request show the department regarded the Liu case as warranting special security arrangements in regards to which officials could access their files.

One Immigration Department investigator considered it necessary to record her view that the department's handling of the matter did not pose "a reputational risk". However, much of a written briefing given to deputy secretary Peter Vardos has been redacted because it is claimed release of information would have "a substantial and adverse impact" on the department's operations.

The documents that have been released reveal immigration's view that the matter was "highly sensitive" because of Liu's connections to Fitzgibbon, who at the time of the request was chief government whip, and his father.

They also show that the office of former immigration minister Chris Bowen was consulted by the department on its decision not to release information concerning Liu and Xu. Bowen is a friend of Fitzgibbon and both are members of the NSW Labor Right faction.

Had immigration officials bothered to conduct a through investigation, they might have discovered that one of the key participants in the sham weddings, Harry Xu, has long maintained that, despite his marriage to Clague, he and Liu had been in a consistent de facto relationship from 1988 until 1994.

So confident is Xu in his assessment of the pair's relationship that he lodged an affidavit in the Federal Court in 1997 confirming the couple's long-term de facto status.

When Xu and Liu's personal relationship broke down down in 1994, their business partnership also soured. The former couple did battle in the Federal and NSW Supreme Courts in 1997 and 1998 over who had the rights to their companies' multimillion-dollar properties.

Xu's claims were supported by a signed statement from a Sydney landlord, who said the Chinese pair lived together between March 1989 and into 1990. In reply, Liu swore an affidavit in the Federal Court denying they had had a long-term de facto relationship and only admitting to living with him for a brief period in 1993. She did not refer in her affidavit to her marriage to Shultz by way of rebuttal.

Liu's affidavit did, however, provide a glimpse of her family's connections in China. Her father was described as a "ranking official" in the Chinese government, and reference was made to several other relatives in high-level government positions.

Other documents obtained by Fairfax from the NSW Supreme Court and Federal Court files raise further questions about the Chinese pair's marriage to Shultz and Clague. File notes written in 1997 by lawyers with the firm Hunt & Hunt, which was acting for Xu in his dispute with Liu, refer to a meeting he had with Liu and her lawyer, Donald Junn.

A file note dated June 17, 1997, records Liu telling Hunt & Hunt lawyers that she "agrees relationship [with Xu] 93/94" and that "relationship broke up 94". It states the pair had the "same immigration issues".

Another file note dated June 2, 1997, has a Hunt & Hunt lawyer referring to a conversation with Junn in which Liu's solicitor was described as being "careful re issue of de facto relationship".

A State Bank of NSW memo dated July 31, 1996, regarding an outstanding loan guaranteed by one of the Chinese couple's companies, also described them as having been in a "de facto relationship that has broken down".

The court files also contain letters written by Junn to Hunt & Hunt in 1997 in which Junn claims to have been contacted by the Immigration Department and the Australian Federal Police regarding the process Xu had gone through to obtain Australian residency.

Fairfax Media has confirmed that two of the migration agents either involved in the marriage of Xu and Liu to the Australians or in the submission of their residency applications have been deregistered by the Immigration Department.

Immigration Department records of interviews, obtained under freedom-of-information laws, show Lingham, the migration agent whose office submitted Liu and Xu's residency application paperwork, regularly advertised his services in Sydney's Chinese-language newspapers in the late 1980s and 1990s.

Lingham says he believes the paperwork for Liu and Xu's residency applications would have been submitted under the letterhead of his firm at the time, Lingham & Associates. However, he says he believes his then employee, Philip Everson - who was friends with the young Australians, Shultz and Clague - prepared the paperwork.

When contacted by Fairfax recently, Everson denied knowing anything about the marriages or the people involved.

Clague has a different recollection, saying that although Everson did introduce her and Shultz to the Chinese couple, he would not have had enough knowledge of Immigration Department procedures at the time to lodge applications unassisted.

FOI documents show Everson, like his old boss Lingham, was disciplined by the Migration Agents Registration Board in 1994 and 1995. A letter from the board to Everson alleges "[you] failed to act in the legitimate interests of your clients".

Court records of other migration fraud prosecutions show young Australians taking part in sham marriages between 1989 and 1991 could earn thousands of dollars. But Clague says neither she nor Shultz received any money to marry the Chinese pair. Shultz declined to speak to Fairfax.

Clague was shocked when first confronted by Fairfax about a part of her life that has remained a secret for so long. Although she realises what happened was wrong, she insists her intentions at the time of the marriages were good. She was a teenager who just wanted to help people she thought were in danger if they returned home.

"They seemed honest, caring people and I believed their lives were at stake," she says.

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