Kiwiblog

The Electoral Commission has done three things in response to NZ First’s 2007 donations return:

1. It has found the party secretary did not break the law with the 2007 donations return, but is not releasing the full decision as it may compromise the police investigation. They EC point out carefully “The determination is in respect of the actions of the Party Secretary for New Zealand First only, as considered under Part 6 of the Electoral Act.” This suggests that others are under investigation by the Police.
2. It has published amended returns for 2007 showing $80,000 of donations from the Spencer Trust. At this stage amended returns for 2005 and 2006 have not been published or possibly even received.
3. It has published a letter from the NZ First Auditor, Nick Kosoof.

No (1) is not a big surprise. The party administrators tended to be kept ignorant of the Spencer Trust. Both the Party President and the Party Deputy Leader have said they were unaware the Spencer Trust even existed.  So I guess the Party Secretary was also unaware of it.

The letter from Kosoof is interesting. He says:

We were advised that the sums totally $80,000 paid to the Spencer Trust were paid not for the credit of that trust but for the credit of the NZ First Party, and were received by the Spencer Trust as an agent for the NZ First Party. As each of the component parts of that sum were from different entities and each was $10,000 or under, they did not require to be returned under the Electoral Act 1993.

This raises many questions:

1. Who advised Kosoof of this?
2. Did he have access to the Spencer Trust accounts to verify that each component part was under $10,000?
3. Did he seek any legal advice on the situation or just take the word of the organisation he audits?

I wonder if NZ First wll file amended returns for 2005 and 2006? I suspect they may choose not to, even though they have acknowledged the 2005 return was false. The EC doesn’t actually have the power to force them to do this.

The Electoral Commission has given NZ First until 30 September 2008 to file new audited returns for 2005, 2006 and 2007 and explain why the ones they filed are incorrect.  Then they will decide what to do. The Police have announced regardless they are investigating the complaint over their 2007 return.

If I was the NZ First Auditor, I would be very very nervous about signing off any new return unless they get a personal undertaking in writing from the Leader and the President that all relevant financial records have been supplied.

Audrey Young has details of the $80,000 from the Spencer Trust to NZ First in 2007, that was never declared.

The Spencer Trust in turn had, it seems, eight $10,000 cheques from eight different Vela companies.

Now the irony is that if the eight Vela companies had donated directly to NZ First, then (as they had done in the past) they may legally not have to be disclosed.

But by having the donations go through the Spencer Trust, the donation from the Spencer Trust does have to be disclosed, in my opinion. I don’t think you can look at who donated to the Spencer Trust.

Even if they had donated directly, there may still be issues. Generally a seperate company is a seperate donor as they have their own legal personality. However if each company has identical shareholders and directors, then a Judge could possibly find an issue with that – especially if they were sole shareholder and director companies.

What is interesting is that the NZ First Auditor had access to the books of the Spencer Trust. This indicates how close the two entities were. Also of interest is the fact they paid almost $90,000 of invoices on behalf of NZ First in 2006. The Party President says he had never heard of the Spencer Trust. So who handed over the invoices for payment?

My guess is the Leader. The same Leader who was making speeches railing against secret trusts.

The NZ Herald has a story which reminds me of the Three Stooges, as NZ First officials have given four different reasons for their “administrative error” of not reporting a $50,000 donation in 2005:

1. Auditor Nick Kosoof issued a letter saying “the office of New Zealand First made an administrative error
2. MP Dail Jones, president when the return was filed in April 2006, yesterday said it was Mr Kosoof who “saw it [the donation] and forgot about it”
3. NZ First’s treasurer at that time, accountant Brent Catchpole, pointed the problem back to the party, saying he could not give Mr Kosoof the full records as “a lot of the information wasn’t handed over to me as it should have been”
4. Kaye Urlich, the treasurer when it was banked, denied Mr Catchpole’s claims that records were missing, saying “he got everything he needed”.

So what excuses will be made for the false 2006 and 2007 returns?

Also Peter Williams continues to show his ignorance of electoral law:

Meanwhile, Mr Peters’ lawyer friend Peter Williams, QC, yesterday revealed that the Spencer Trust had received $80,000 from the Vela family and that New Zealand First had handed over records to the SFO.

Mr Williams told Radio New Zealand he “presumed” the Vela money had gone to New Zealand First in amounts under $10,000.

The Spencer Trust was formed only in 2005 so the Vela family’s $80,000 is different from the reported $150,000 given to the party between 1999 and 2003.

That will be fascinating if the Velas have given $230,000 in total with no disclosure. Someone joked to me that if one of their horses wins the Auckland Cup, does that mean they have got their donations back!

But Williams is wrong in saying that if the money was paid over by the Spencer Trust in amounts under $10,000 it would not have to be legally disclosed (he said yesterday there had been only one accidential law break). The law requires donations from the same source to be totalled up over the calendar year, and if the Spencer Trust is a separate entity to NZ First then money from the Spencer Trust has to be added together over the year (even if the individual donors to the Spencer Trust were under $10k).

There are more and more questions over NZ First and their accounts. Both NZPA and the Dominion Post have said that Nick Kosoof is both NZ First’s Auditor and their Accountant. Surely not?

So can someone find out the following:

1. Who was NZ First’s Auditor in 2005?
2. Who was NZ First’s Accountant in 2005?
3. Who was NZ First’s Treasurer in 2005?
4. Who was NZ First’s Party Secretary in 2005?

To the best of my iformation the Party Secretary in 2005 was not some poor office person (as Helen suggests) but Edwin Perry who was an NZ First MP at the time.

Also Audrey Young blogged in February 2008 that the Party Treasurer in 2007 was also a former NZ First MP – Brent Catchpole. Was he also Treasurer in 2005?

And then we have an interview on Nine to Noon with Peter Williams. Parts are amusing as he rants about Matthew Hooton, and parts are clearly wrong.

Williams said around 5 minutes 20 secs in:

The money that they paid, I think it was about $80,000 wasn’t it? … The moneys that were subscribed by the Vela family were paid to the Spencer trust, and in turn the Spencer trust paid the money to NZ First.

But the Spencer Trust was set up in August 2005, and the Vela donations were between 1999 and 2003.

No wonder the SFO doesn’t go along with Mr Williams insistence that it can all be cleared up in five minutes and his latest line that they have made one little mistake in 15 years of flawless behaviour.

Two other stories of note. Martin Kay in the Dom Post says:

When The Dominion Post first put to him in July that NZ First received money through a trust, he said through a spokesman: “It’s a lie.”

Mr Peters’ brother, Wayne, is one of three Spencer trustees. Fellow trustee Grant Currie said on Monday that its only purpose was to channel money to NZ First.

So Peters said it was a lie, yet the lie was his.I am sure Helen just sees it all as another innocent mistake.

Ben Thomas at NBR also points out NZ First are recycling excuses:

New Zealand First’s explanation for why it didn’t disclose a $25,000 donation allegedly funneled through the Spencer Trust will sound strangely familiar to Winston watchers.

The party’s auditor said yesterday it failed to declare the $25,000 donation from Sir Robert Jones in the 2005 year because it slipped people’s attention “during a change in administrative staff.”

That is now the second time – and for the second separate set of accounts – that the party has used the excuse of a personnel changeover for ostensibly breaching electoral finance disclosure laws.

Like all Winston Peters’ rhetorical greatest hits – “if you stop telling lies about me,  I’ll stop telling the truth about you,” for example – “administrative error” may have been too exquisite a line to only use once.

In August this year New Zealand First was let off on the late filing of its return of donations for the 2007 year, because the Electoral Commission accepted its explanation the delay was caused by “changes in the upper levels of office holders such that many had not been through the donation return process before.”

New Zealand First missed the April 30 deadline for filing its donation returns. When the late return did arrive it didn’t disclose any donations – so why the delay? It should have been a simple matter to verify no donations over $10,000 (the minimum amount that has to be declared) had been received.

The party denied media reports that its president and secretary had been waiting for the return of Parliamentary party leader Winston Peters from overseas to sign off the accounts (which would have been unusual, since he is not a legal office holder as far as the party is concerned).

Instead the secretary offered up the “office-holder changeover” scenario, and aid there had been a miscommunication between the treasurer and the auditor. The commission decided that was a reasonable excuse, and so no breach of the Act had been committed.

Given how long it seems to take the New Zealand First party to sort out its finances after these periods of flux, the commission may be tempted to ask office holders to double check the zero-return filed for 2007. It is after all apparently quite easy for cash to slip between the cracks in times of HR churn.

I think it would be very prudent for the Electoral Commission to double check the zero return for 2007, especially before the deadline for prosecution expires. The fact that the Party President is on record as referring to a large anonymous donation (a stance he has never publicly recanted) gives them more than enough grounds to start checking.

To say NZ First’s latest explanation fails the Tui test, is putting it mildy. Before we totally dismiss it out of hand, let us look at what they say:

The New Zealand First Party has admited they made a mistake by not declaring a donation they recieved from Sir Robert Jones.

The party is putting the non declaration down to an administrative error which happened at a time when they say there was an extensive changeover in administrative staff, who were new to their responsibilities.

They say the $25,000 donation was correctly banked into the New Zealand First account, along with other donations which were unfortunately overlooked when it came to declaring anything over $10,000.

The latest revelation comes after the Serious Fraud Office obtained Spencer Trust records.

The letter from auditor Nick Kosoof says New Zealand First made an administrative error by not declaring the money.

It says the amount was banked into the party’s bank account in September 2005, and unfortunately went overlooked by error, along with other donations.

This fails the credibility test on so many levels, it is not funny.

1. The TV3 item on the Spencer Trust showed a payment of $50,000 not $25,000 paid to NZ First.
2. NZ First has never ever declared a single donation from the Spencer Trust, so are we to believe that in three years of existence it has only received and passed onto NZ First a singular donation from Bob Jones?
3. NZ First claim to have only had a couple of donations over $10,000 in the last decade, so how one could overlook your largest ever donation since 1996 is beyond belief.
4. Since the Jones donation was exposed a couple of months ago there has been speculation that the NZ First 2005 return may be inaccurate. Why did no one in NZ First check until today?
5. Why is the auditor, not the accountant, explaining the error? Are they the same person as suggested in the NZPA report?

There is a constant pattern here with NZ First – deny the donation until it is no longer credible to deny it, and then suddenly discover it somewhere. They do not deserve any benefit of the doubt. Thank God the SFO is investigating.

Even though they can not be prosecuted under the Electoral Act for the breach, it doesn’t mean that the SFO shouldn’t disclose how many other donations were illegally not declared to the Electoral Commission.

This also poses a challenge for Helen Clark. She has said she will act if there is evidence of illegal behaviour. We now have an admission from NZ First that it broke the Electoral Act 2003 in April 2006 (and maybe again since then). And filing a false donations return is not a minor or technical breach – it is incredibly serious.