The Independent Commission Against Corruption announced on Monday that it was investigating whether Councillor  McCloy "improperly sought to influence certain members of Parliament" by making donations during the last state election campaign.

The allegations against Cr McCloy form part of Operation Spicer, its long-running inquiry into Liberal Party fundraising, which is also investigating claims that embattled mining mogul Nathan Tinkler and associates at his property development group Buildev funnelled illegal donations to the campaign.

Cr McCloy’s office on Thursday confirmed he had launched the High Court challenge but declined to comment further.

Election funding records show Cr McCloy initially ran foul of donations laws in 2012 while attempting to make substantial contribution to his own Lord Mayoral election fund.

According to his disclosure to the NSW Election Funding Authority, Cr McCloy’s company, Acslament Constructions – wholly owned by his family trust - donated $50,000 to fund in August 2012.

At the time companies were prohibited from making political donations to NSW election campaigns – a ban which has since been overturned by the High Court.

“After reading more of the election funding rules, the official agent considered that it could not accept the contribution from Acslament Constructions … but needed to receive the contribution directly from the candidate,” the disclosure notes.

It says the $50,000 was refunded by Cr McCloy’s election fund to Cr McCloy’s company and then personally re-donated to the fund by Cr McCloy.

Greens MP John Kaye accused Cr McCloy of wanting “to take NSW back to the bad old days; when developers were able to purchase approvals and laws that fattened up their profits at the expense of local communities.”
"If the Baird Government fails to vigorously defend these laws, it will be very clear they are colluding with Jeff McCloy to reopen the doors of NSW politics to large scale influence peddling,” Dr Kaye said.

It is understood Cr McCloy launched the High Court challenge on the same day the ICAC announced its expanded terms of reference.

He is expected to argue the ban on developer donations is unconstitutional.

The Newcastle Herald reported that Cr McCloy’s family-owned McCloy Group of companies made substantial donations to the Labor and Liberal parties in the years prior to developer donation ban being introduced.

Property developers have been banned from donating to NSW election campaigns since 2009 under laws introduced by the former Labor government with the help of the NSW Greens.

In 2012 the NSW Parliament passed laws introduced by Premier Barry O’Farrell to ban all corporations from making donations, restricting them to individuals on the electoral roll.

But in December last year the High Court overturned the ban on corporate donations following a challenged by the union movement.

The ban on property developer donations and those from the alcohol and tobacco industry remained in place.