A legislator in Australia’s ruling coalition has admitted she had links with a communist group used by Beijing to advance its interests overseas. The potentially explosive revelation comes amid increasing scrutiny of political activities by ethnic Chinese in the country.

Gladys Liu, Australia’s first China-born member of parliament, confirmed on September 11 that she had an honorary role in the Guangdong provincial chapter of the China Overseas Exchange Association (COEA) from 2003-2015.

Then run by the Communist Party’s powerful State Council, the COEA is now part of the United Front Work Department, a shadowy state agency tasked with spreading Chinese influence abroad.

“I have resigned from many organizations and I am in the process of auditing any organizations who may have added me as a member without my knowledge or consent,” Liu said. “I do not wish my name to be used in any of these associations and I ask them to stop using my name.”

Liu did not refer to documents showing she had also belonged to the Shandong chapter of the COEA in 2010, but insisted she was “a proud Australian … and any suggestion contrary to this is deeply offensive.”

Gladys Liu (R) speaking to voters in the May 18 election for the Melbourne electorate of Chisholm where one in five households speak either Mandarin or Cantonese. Photo: AFP/William West

She has also denied reports that she has links with Ji Jianmin, president of Huaxing Arts Troupe, a cultural organization that is overseen by the State Council.

Ji has been identified as a junket operator who brings high-profile gamblers to the Crown Casino in Melbourne: one of those he brought to Australia recently was Ming Chai, a cousin of China’s leader Xi Jinping.

Interviewed about her political beliefs on Sky News, Liu declined three times to describe China’s actions in the South China Sea as illegal, saying only that she backed the Australian government’s position on the issue.

Canberra does not take sides in the dispute but accepted a ruling by an arbitral tribunal at The Hague handed down in July 2016 that China’s wide-ranging claims to the sea in its nine-dash line map were not consistent with international law.

“Our relationship with China is one of mutual benefit and underpinned by our Comprehensive Strategic Partnership. China is not a democracy and is run under an authoritarian system, Liu said in an apparent attempt to tamp down the controversy. “We have always been and will continue to be clear-eyed about our political differences, but do so based on mutual respect, as two sovereign nations.”

Prime Minister Scott Morrison said that Liu, who represents a Melbourne seat with a large Chinese population, is a “fit and proper” legislator.

Australian parliamentarian Gladys Liu (L) with Prime Minister Scott Morrison (R) in a file photo. Photo: Facebook

However, she may have breached laws against foreign political influence enacted last year and is now under pressure to resign her parliamentary seat from the opposition Labor Party.

If she eventually does, it would even one political score.

Sam Dastyari, a Labor senator, was forced to step down in late 2017 when it was revealed a company owned by Chinese billionaire Huang Xiangmo paid a legal bill for his office.

Dastyari came under fire for taking a pro-China position, in contradiction to his own Party’s line, on the South China Sea disputes in an interview with Chinese media. He also had notably asked Labor’s foreign affairs spokesman not to meet a political activist during a Hong Kong visit.

Huang, a tycoon with close ties to China’s Communist Party, was later banned from returning to Australia for legal breaches during his efforts to obtain citizenship. Spy agencies were concerned at his involvement with the Promotion of the Peaceful Reunification of China, a communist agency.

He has since become embroiled in an inquiry by the New South Wales Independent Commission Against Corruption into reports that he gave A$100,000 (US$68,747) to the state Labor Party, violating funding rules.

Chinese real estate developer Huang Xiangmo and then-Prime Minister Malcolm Turnbull in a file photo. Photo: Twitter

The state’s laws prohibit developers from giving any political donations. Investigations center around Chinese Friends of Labor, a lobbying group that holds functions to attract donations from the Chinese community.

The inquiry heard this week that the cash was handed to a Labor staffer in a supermarket bag after a fundraising dinner at Sydney’s Chinatown in 2015. “Straw donors” were allegedly used to hide the source of the funds.

One of the organizers, former Labor legislator Ernest Wong, was accused of selling a table to Huang for A$100,000 and then trying to cover it up by having fake donors sign declarations. Wong has denied both allegations.

“I wouldn’t ask Mr Huang to donate and I know he wouldn’t be able to donate,” Wong said at the hearing this week. “In all my previous fundraising … $60,000 is pretty easy for me to raise from the community.”

Huang said he attended the dinner “to lend weight to the event so as to further attract attendants”, but insisted he hadn’t made the donation.

“I do not know any of the alleged donors of the sum or any of the ‘straw donors’ [nor] have I had any contact with them,” Huang said in a statement. Huang said any donations he had made “have been declared in accordance with Australian laws and regulations, openly and honestly.”

Sam Dastyari makes a public apology after revelations property developer Huang Xiangmo paid a bill incurred by his office. – Photo: AFP/William West

Dastyari, who was once Huang’s staunchest defender, told the inquiry that he now believed the billionaire was an “agent of influence” for Beijing. He had earlier, however, warned Huang he was likely under counter-intelligence surveillance at one of their last meetings.

The Independent Commission Against Corruption does not have policing powers but can recommend legal action against individuals found to have breached political funding rules. Jail terms apply for anyone found guilty.

Dastyari said in a tweet on Wednesday that Liu’s statement on the South China Sea was “shocking” and that she should resign her position. “She should be held to the same standard that I was – a standard the PM set,” his tweet said.