Kiwiblog

The week before the election saw the Velas donate $200,000 to Labour First, or more formally $100,000 each to the constituent Labour and NZ First parties.

The donation was made on 31 October. The EPMU also donated $60,000 that day. Labour revealed the EPMU donation on 5 November, but held off revealing the Vela donations until after the election. They were able to do this legally as you have two weeks to declare large donations.

This reinforces to me the need for a Commission of Inquiry into the matters alleged in the Meurant papers. I hope the Greens keep pushing for it, and that the new Government agrees.

Readers will have followed how Winston denied on Agenda that he had ever used a helicopter for campaigning, and within hours photos of him doing just that emerged.

Well here is what he now says:

It is difficult to believe, but just five days from polling day and we are having to waste time talking about past campaigns and helicopters! This is just another media sideshow to divert voters from the real issues they face.

Actually the issue is whether you sold policy for use of the helicopter.

New Zealand First has used helicopters for travel during two election campaigns – but not for campaigning itself.

Oh, of course a vital difference. It only provided travel so you could campaign, but did not campaign itself. And here was me thinking the helicopter was actualyl going to front up and deliver the speech also.

The way a question was framed on Agenda yesterday implied that we had used a helicopter to campaign from, which of course was ridiculous because of the physical impossibility of speaking to crowds in a noisy gale.

Indeed that is ridiculous, which is why no one would interpret it that way. Everyone knows what was meant was did you have free use of a helicopter (normally $1,000+ an hour) for your travel for the election campaign.

We used a helicopter to travel and I do not deny that, but to suggest that I somehow stood at the door of a flying helicopter shouting at voters is preposterous. We were campaigning – not deerstalking!

It would almost be funny, if it were not for the very serious issues around why the helicopter was donated. That is the real issue – are the Meurant documents correct that there was a quid pro quo?

Phil Kitchin (and Oskar Alley) shows his independence by revealing that Peter Dunne also gets a mention in the Meurant papers with a $5,000 donation linked to his vote on a UN fishing plan. Dunne is denying a link.

While on a much much smaller scale than Winston (who appears to have had his entire policy process for sale), even one case like this is a cause for concern.

I agree with the Greens with their call to have a commission of inquiry into the Winston Peters cash-for-policies allegations. It goes without saying that any party implicated, should also be included in the terms of reference.

Just seen an additional story in the Dom Post. The timeline. Damning. And remember as you read this, Helen has personally granted permission for Peters to keep the $40,000 the Velas gifted him. Some extracts:

October 5 report: Mr Meurant records that Mr Vela met Mr Peters and indicated a promise of a board appointment on a state-owned enterprise.

December 1 report: Mr Meurant says Mr Peters is devastated by the party’s loss in the November elections. He tells Mr Vela that, if Mr Peters or Doug Woolerton ask for the promised $30,000, he should tell them they had agreed to put Mr Meurant on a government corporation board but could not deliver on that now.

Nor could NZ First get its policies that Mr Vela liked introduced. Remind them it had been agreed that Mr Meurant would head NZ First’s research unit on a taxpayer salary.

Tell them: “I have delivered. Two lots of 10 grand and the provision of a helicopter. I think it is time for you to produce something engage him [Mr Meurant] as your research manager.” Mr Meurant says: “If Winston does engage me, I still want to work for you and will give your projects priority.”

December 10: Mr Meurant writes to Mr Peters applying for NZ First policy adviser job (and sends a job application copy to Mr Vela). He says Mr Peters suggested a salary of $60,000 with a “top-up” from the private sector, which he has found. He says he will obtain donations for NZ First and suggests he be responsible for policy development in fishing and thoroughbred industries and “taxation”.

He says he will rebuild NZ First as a “sector interest (ie fishing, thoroughbred) party” and obtain corporate funding by producing “industry sector-friendly policies”. “Providing NZ First reflects the concerns of the sector groups it targets, financial contributions from the corporate groups will be forthcoming.

“Deliver on what you promise and the corporates I have exposure to will stay with you.” He tells Mr Peters to start with the commercial fishing and racing industries.

And he did deliver – once Helen Clark appointed him Minister of Racing.

The integrity of decision making in the Clark/Peters Government has been seriously undermined by two stories in the Dominion Post today. Firstly from the first story:

Money was paid to NZ First through former National MP Ross Meurant – who later accepted a job as a policy adviser to Mr Peters, private papers obtained by The Dominion Post show.

Mr Meurant brokered donations from Philip Vela, a senior member of the wealthy Vela family, before the 1999 election, when NZ First was in a coalition government with National, and after that time.

Mr Vela was told by Mr Meurant that he would have an opportunity to frame friendly policy in business areas to which Mr Vela was connected. The Vela family, worth an estimated $180 million, is involved in the fishing and horse racing industries.

So these documents detail the understanding that the Velas would donate to NZ First and in return have the opportunity to frame friendly policy in business areas of interest to them.

Some documents have parliamentary letterheads and include notes from a meeting at which Mr Peters said he had saved Vela interests “millions in tax liability”.

And in return they have donated hundreds of thousands it seems.

At the centre of the saga is Mr Meurant, who worked for Mr Vela and then worked as an adviser to Mr Peters from 2000 to 2004. In this job he received a taxpayer-funded salary – but he also sought a “top-up” from the corporate sector, including from Vela interests.

Mr Meurant told Mr Vela that he had “direct access” to Mr Peters “at all times”. His work included “major input” into Mr Peters’ speeches and he was “principally responsible for policy development in fishing and thoroughbred industries and `taxation’,” the documents show.

OK let us be clear on this. The staff member who wrote the party’s fishing, racing and taxation policies was being paid directly by corporates who happened to benefit from those fishing, racing and taxation policies.

When The Dominion Post revealed the scale of Vela donations to NZ First in July, Mr Peters said the money had no bearing on his party’s racing policy, which he said was written in 1993.

NZ First sources said the policy was introduced in 2006 – after Mr Peters successfully sought the racing minister portfolio in a support deal with Labour – and was substantially written by Mr Meurant while he was advising Mr Peters.

The Dominion Post revealed in July that the Vela family has donated at least $150,000 to NZ First or the Spencer Trust.

It is also worth remembering that $40,000 of that money paid off Winston’s debt to Bob Clarkson. This happened while Peters served as a Minister on Helen Clark’s Government. He needed her express permission to keep this donation. By not refusing permission Clark stands implicated as condoning this.

A box of documents sent to the newspaper this week shows that Vela interests made donations to NZ First as early as 1999. Mr Meurant suggested to Mr Vela that this provided the opportunity to give “input” into policy areas in which the family had business interests.

Mr Meurant sought money from Vela interests to travel as required in his taxpayer-paid job to liaise with Mr Peters, and for when he was “required to provide NZ First with material for debates in Parliament”.

He wanted help from Mr Vela “when required to show my face in Parliament to thrash out policy positions which I will have already developed with your people on taxation, fishing, thoroughbred with Winston’s bunch”.

The relationships between the Velas, Meurant and Peters sounds extraordinary. These documents make it sound like NZ First was the political arm of the Velas business empire.

In their second story:

Winston Peters repeatedly demanded that the Vela family provide him with a free helicopter to use for campaigning during the 1999 election, documents show.

And what if they did not obey?

On October 28 and 29, Mr Peters called Mr Meurant wanting the helicopter, the documents show. They include a transcript Mr Meurant made of the second call.

Mr Peters: Meurant, tell those bastards I need a helicopter. Don’t give me this crap about the machine needing repairs.

Mr Meurant: Come on, Winston, he has offered you his pilot. That’s a grand a week … he has personal reasons for not giving you his machine. He socialises with people who hate you.

Mr Peters: You gotta do better than that, Meurant. Don’t these people know how dangerous I can be [laughs]. [Mr Peters then says something to effect of Mr Vela having been saved millions in tax liability by Mr Peters.]

“Don’t these people know how dangerous I can be?” Sounds like a scene from the Godfather.

Mr Meurant: Come on, he is the only guy to give you funding.

Mr Peters: I have other funding. Don’t you worry about that.

But I thought Winston knew nothing about funding issues?

In December, after NZ First’s poor election showing, Mr Meurant advised Mr Vela to tell Mr Peters: “I have delivered. Two lots of 10 grand and the provision of a helicopter … it is time for you to produce something … make good on your commitment on Ross and engage him as your research manager.”

Which Winston then did.

Now remember that not only has Helen Clark not sacked Winston for any of his multiple misdeeds to date, she has explicitly said she will have him back in Government if NZ First makes it. Never mind the overwhelming evidence that he solicited the $100,000 from Owen Glenn, lied about it, and tried to get Glenn made Consul. Never mind the personal and party donations from the Velas and these documents showing the influence on policy it gained them.

Are there any people of conscience left on the left who think that putting Peters back into power would be a betrayal of everything they have railed against when it comes to money and politics? If so, how can you be voting Labour?

And once again the Greens refuse to say anything stronger than “we would have problems working with Winston” using the excuse their members would decide their bottom lines. That doesn’t stop them going much stronger and saying “The Greens Caucus has resolved to unanimously recommend to our members that we will not give confidence and supply to any Government that has Winston Peters in it”. They are keeping their options open because they will happily trade all their lofty rhetoric over political donations for some baubles of their own. By refusing to rule Peters out as strongly as they can, the Greens will be hypocrites if they ever try to lecture on political finance again.

John Key has ruled out Peters in Government. No ifs and no buts. As individual voters we can not affect whether or not 5% of the population will vote for NZ First and put Peters back into Parliament. But you can affect whether or not he gets to be a Minister again, by voting only for National, ACT or United Future. Any other vote may put Peters back into the Ministry.

The Dom Post reports on the trust which has received the money that was owed to the taxpayers by NZ First:

A trust set up to receive half the misspent $158,000 that NZ First was ordered to repay was not registered till three months after Winston Peters announced he had donated the money to charity, documents reveal. …

Mr Peters’ so-called “blood-brother” and lawyer Bryan Henry, his solicitor Dennis Gates, and Mr Henry’s colleague Brian Coburn have full control over how the money is spent, including the ability to pay themselves all reasonable expenses. …

Ms Couch is not listed as a beneficiary or a patron, and the only mention of her is in the title of the trust. The three trustees have full control over where the money goes.

Meantime more fascinating information emerges on the trustees and settlor.  Whale Oil blogs:

Kevin Gillespie is heavily involved in the Trinity Forest tax avoidance case – with links not to the Cook Islands as Winston is so fond of, but the British Virgin Islands. Gillespie held all the directorships for The Trinity Foundation (and related entities) and was a shareholder of The Trinity Foundation

Fact – Winston and his legal advisors are and continue to be involved with an Accountant at the centre of NZ’s largest tax avoidance case where the defendants were found guilty of a $3.7 billion tax avoidance

Now I hasten to add this is tax avoidance, not evasion. So Mr Gillespie personally has not been found to have done anything wrong. But as Winston has spent decades railing against corporates who avoid tax, it is ironic he donates to a trust controlled by his personal lawyers and an accountant in the centre of a $3.7 billion tax avoidance.

There are multiple links to media stories over on Whale’s blog.

Also just to show how small NZ is:

And the individual lawyers involved and named as promoters in the Trinity case?

None other than the same lawyers used by Vela Fisheries in their Court of Appeal case which surprisingly related to – TAX.

A very small world it is.

Few acts are more cynical than NZ First’s giving $78,000 to The Susan Couch and Crime Victims Charitable Trust (trustee: Brian Henry) instead of repaying the taxpayer the $158,000 of taxpayer money illegally spent by NZ First in the 2005 campaign.

What is even worse, is that the $78,000 isn’t really from the members and grossroots of NZ First. The Vela Family donated $80,000 to NZ First in late 2007, to allow this donation to be made.

So what you actually have is a very wealthy, foreign domiciled, racing industry family has donated $80,000 to NZ First (whose Leader has forced the Government to pur massive funding into the racing industry) so they could give the money to the Susan Couch trust – and claim this is somehow paying the taxpayer back.

I joked at the time that they had probably donated the money to the Spencer Trust. Instead it has gone to a trust partly controlled by Winston’s lawyer. Ms Couch will be Patron of the Tust which suggests she won’t even be a Trustee herself – are there other Trustees?

To be fair to Brian Henry, he has been acting for free for Ms Couch in her fight to sue Corrections, and he is definitely on the side of the angels on this occasion for his actions to help Couch. While critical of Henry’s statements and actions over Owen Glenn, I make no such criticism in regards to this issue.

But that doesn’t change the fact that NZ First should be paying the taxpayer back, not making charitable donations on our behalf, and that having decided to make such donations they are ill-advised to make the major donation to a trust controlled by their lawyer.

The Parliament website now records the amended return by Winston Peters for the year to 31 January 2007.

A gift from the Spencer Trust towards his electoral petition costs has been declared.

This would never have come to light if it were not for the SFO. Peters and Henry supplied false evidence to the Privileges Committee about this issue.

Now Peters has officially declared the gift, known to be $40,000, the ball is in the PM’s Court. The Cabinet Manual says:

Ministers who accept gifts worth more than the prescribed value must not only disclose them to the Registrar of Pecuniary Interests of Members of Parliament, but also must relinquish them, unless they obtain the express permission of the Prime Minister to retain them.

Helen Clark must give her “express permission” or Peters is required to relinquish the gift.

Will Clark give her permission for a Minister to keep what was effectively a personal donation of $40,000? That is 80 times greater than the disclosure limit and probably the biggest gift by a magnitude ever received by a Minister.

And is the Prime Minister at all concerned that the ultimate source of the money was almost certainly the Velas? Does she think Cabinet should have been informed of these personal donations to the Minister of Racing, when they accepted his recommendation to spend taxpayer money on bigger prizes for horse races?

Having now seen the evidence from the SFO, it is no surprise that the Prime Minister is furious that they told the truth to the Privileges Committee. Clark is still questioning the judgement of the SFO Director, and complaining he did not consult Crown Law.

Apart from the fact there is no requirement he do so, I say thank God he didn’t. Crown Law would have informed the Attorney-General who was moonlighting as Co Chief Defence Counsel for Winston Peters at the Privileges Committee.

Look at who the Director did consult:

1. The Clerk of the House of Representatives
2. The Auditor-General (who is empowered to investigate matters relating to the Register of Interests)
3. A QC

There really is no question that the Director acted properly. Those suggesting he did not, are trying to divert attention from the devastating evidence he provided. You see we learnt that the Spencer Trust did not just deliver money to NZ First, but to Winston Peters personally by paying off a $40,000 debt of his.

ACT tried to get the Privileges Committee to further investigate the Spencer Trust after the SFO investigation. And they are right that the issue of secret donations through the Spencer Trust to pay off a $40,000 debt of Peters is of massive concern.

The reason the PM is so furious is because the SFO evidence directly calls into question the integrity of decision making in her Government.

It is hard to not conclude that the ultimate donor of the $40,000 was the Vela Family. The descriptions in the SFO report strongly suggest that. And the Vela Family make much of their money from horse racing.

Now I am not suggesting the Velas had bad motives with their donations. I support their right to donate to parties they support. But there is a massive difference between a donation to a party and a donation or gift to an MP personally. The former is absolutely common. The latter is unheard of in NZ at the level of $40,000.

Winston Peters got the Government to give a lot of money to the racing industry. He had to persaude Clark and Cullen to ignore Treasury advice and go along with his plans for the Giovernment to provide prize money for some horse races.

Now if he was the personal beneficiary of a $40,000 donation (through paying his debt) from racing industry figures, then that absolutely 100% had to be disclosed. In fact the Prime Minister has to approve retention of any gift over $500 this is such a serious issue for Ministers.

Consider how scandalous this would be in a different portfolio.  Let us say Winston was Minister of Health and he persuaded Cabinet to fund a new drug against the advice of Pharmac. And then it turned out the drug company that manufactures that drug had given him $40,000. You start to get the idea of how serious it is.

The PM needs to urgently find out whether that $40,000 was in fact donated by the Velas. The secrecy of donations through trusts (a practice I sumitted to Parliament should end incidentially) has only ever applied for donations to political parties. There can be no secrecy for donations to Ministers of the Crown.

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.

Many on the left (and some journalists who should know better) have been pushing a theme (started by Helen) that all this nasty non-transparent stuff done by NZ First is due to the old Electoral Act, and could not happen under the Electoral Finance Act.

Now it is true the EFA does tighten up things in some areas, but it makes little difference to the three funding controversies that NZ First has had exposed. Let’s take them one by one.

The Owen Glenn $100,000 donation

As we now know, Owen Glenn donated $100,000 towards Winston’s legal bills – which made it effectively a donation to Winston personally as he would have had to pay $100,000 more if Glenn had not donated.

Now the Electoral Finance Act only deals with donations to parties, not to MPs personally.

So foreign billionaires could continue to make large donations to MPs, while seeking favours from them, and it would all be legal under the EFA, and there would be no requirement for it to be made public.

So the EFA in no way affects repeats of the Owen Glenn donation.

And here is the sad reality. The EFA probably makes such donations more likely and more common. If donations to parties have to be disclosed but donations to trusts which pay off bills for MPs do not have to be disclosed, then more and more donors may choose to donate to MPs personally instead of their parties.

And no the Register of Pecuniary Interests will not have much effect here either, if they do it through a trust.

The Vela $150,000 donations

Now what it appears the Vela did was make a series of $10,000 donations from different people and companies. Now surely this could not happen under the EFA?

Well yes it could. Every company and every adult is treated as a seperate donor under 21(2)

donor means a person who makes a donation

And even if the companies are all owned by the same individual, each is a separate donor as they are separate persons in a legal sense..

Now the EFA does have some provisions which tighten things up. For example if I have $30,000 I can’t give $10,000 to my secretary and $10,000 to my cleaner for them to donate to a party. If I supply the money to them for a donation, they need to disclose whom they are donating on behalf of under s 26(1).

But in the case of the Velas, each company and each adult has their own money so they can easily arrange to donate $50,000 or $100,000 in a year with none of it ever getting disclosed.

The Bob Jones $25,000 donation

As we know Bob paid $25,000 to the Spencer Trust, thinking it was going to NZ First. Now as the Spencer Trust was never disclosed as a donor itself, it is highly unlikely under the EFA Sir Bob would end up being listed as a donor.

The Spencer Trust may have made a series of anonymous $10,000 donations to NZ First under the old Electoral Act, and this would have been legal. They could still do this under the EFA but would have to make a series of $1,000 anonymous donations instead.

Under the EFA the Spencer Trust could donate $36,000 anonymously through the Electoral Commission to NZ First and not have this disclosed.

If the Spencer Tust pays expenses of behalf of Winston personally, then that is like the Owen Glenn donation and not something disclosed under the EA or EFA.

And even if the Spencer Trust pays for expenses of behalf of NZ First, then it is just as likely that would be illegal or legal under both the EA or EFA. Their definitions are pretty similiar. First the old EA, s214F:

party donation, in relation to a party registered under Part 4,-

(a) means a donation (whether of money or of the equivalent of money or of goods or services or of a combination of those things)-

(i) which is received by or on behalf of the party by any person or body of persons involved in the administration of the affairs of the party; and

(ii) which, either on its own or when aggregated with all other such donations made in the same year by the same person exceeds $10,000 in sum or value (inclusive of goods and services tax); and

(b) includes, where goods or services are provided to the party under a contract at 90% or less of their reasonable market value, the amount of the difference between the contractual price of the goods or services and the reasonable market value of those goods or services; but

(c) does not include the labour of any person which is provided to the party free of charge by that person;

So the old EA made clear donations include goods or services, and any discounting beyond 10%. And the EFA, s 21(2):

party donation means a donation (whether of money or of the equivalent of money or of goods or services or of a combination of those things) that is made to a party, or to any person or body of persons on behalf of the party who are involved in the administration of the affairs of the party, and-

(a) includes,-

(i) where goods or services are provided to a party, or to any person on the party’s behalf, under a contract or arrangement at a value less than their reasonable market value, the latter being a value which exceeds $1,000, the amount of the difference between the former value and the reasonable market value of those goods or services; and

(ii) where goods or services are provided by a party under a contract or arrangement at a value that is more than their reasonable market value, the amount of the difference between that value and the reasonable market value of those goods or services; and

(iii) where credit is provided to a party on terms and conditions substantially more favourable than the commercial terms and conditions prevailing at the time for the same or similar credit, the value to the party of those more favourable terms and conditions;

Some change and tightening up, but overall its is likely that the legality of how the Spencer Trust “assists” NZ First without disclosing it is a donor, is unchanged under the new law.

So don’t believe what Helen says about these are all problems of the old Electoral Act, and can’t happen under the Electoral Finance Act. Absolutely everything NZ First has been doing, could continue under the Electoral Finance Act. And in fact there is now a greater incentive for people to donate personally to MPs, rather than to their parties. And that would be a very bad thing indeed.

Bomber Bradbury Tim Selwyn at Tumeke has done this nice little slush fund diagram to help people understand how it all works. Good job.

If there is a second edition, one could add on Ross Meurant next to Roger McClay as a collector of money, and also the Vela family as funders.

NZPA reports on Winston’s response:

Television New Zealand News has shown Mr Peters saying he has no involvement with the Spencer Trust, into which Sir Robert Jones paid $25,000 when he believed he was giving a donation to Mr Peters.

Mr Peters also said Sir Robert was wrong when he claimed Mr Peters had asked him for the donation.

Mr Peters told journalists they should ask the Spencer Trust what they did with the money.

“I have been advised by party officials at the time that there is nothing NZ First is required to disclose arising from the Spencer Trust,” Mr Peters said.

The headline is that Peters has suggested Sir Robert’s memory is fading. I suspect that was very unwise of him.

He has issued a press release:

1. The Glenn contribution went to my barrister Brian Henry. As soon as I learned of it I informed the Prime Minister and alerted the media.

But he never thought to ask Brian earlier if the mystery $100,000 donor was Owen Glenn.

2. The issue of taxation on this contribution is without merit. Legal experts have said so.

Which legal experts? Opinion is divided as far as I can tell. In the end not that big an issue as the IRD will form its own view.

3. No gift duty is payable. Gift duty is based on the laws of the country where the donor is domiciled.

See earlier post for differing views on this.

4. No declaration of pecuniary interest is required. This was made clear by the official advice given to Nick Smith as he revealed in the House this week.

Not at all. In fact Nick Smith did declare a beneficial interest.

5. The Vela cheque is lawful.

I don’t think anyone has suggested it wasn’t. The issue is the hypocrisy of hiding your large donors when you rail against other parties that do the same.

6. The Robert Jones claim that he gave $25,000 to New Zealand First?

- The cheque was made out to the Spencer Trust.
- The cheque was not made out to New Zealand First.

Here is where he just won’t front up, and just states a truism. Everyone knows who the cheque was made out to. The issue is why NZ First representatives are soliciting money on behalf of NZ First and asking for it to be paid into The Spencer Trust.

Is Peters really saying that Sir Robert Jones decided on his own initiative to donate $25,000 to a trust he has never heard of, and that it is unlinked to NZ First?

And never mind the hypocrisy of his attacks on other trusts.

- I have been advised by party officials at the time that there is nothing New Zealand First is required to disclose arising from the Spencer Trust.

Your own President and Deputy Leader say they have never heard of The Spencer Trust so how could they know anything about what the Spencer Trust may have done on behalf of NZ First?

7. Neither I nor my barrister has any involvement with the Spencer Trust.

Note the careful use of language. He says “involvement”. That doesn’t mean he doesn’t know exactly who has paid money into The Spencer Trust and what that money has been spent on. Knowledge is not involvement.

And what Winston doesn’t matter is that his brother runs the Trust. Are we to believe this is a coincidence? And can Winston explain why members of his parliamentary staff were soliciting money for the Spencer Trust?

8. The claim that the 1997 Cushing case settlement of $125,000 was paid by an anonymous donor is untrue. I paid the costs and have offered to show the reporter in question the details. This offer has not been taken up and no withdrawal of the claim has been published.

However it is a mystery who paid the $40,000 costs to Bob Clarkson in the 2005/6 case?

I can’t wait for Sir Robert’s reaction!

One of the stories today is that John Key has made the NBR rich list – just. They estimate his wealth at $50 million, which is what most people have been estimating for the last few years.

I don’t do the politics of envy, but I will admit to a passing pang of envy as I read John has a stake in an Aspen ski resort. Oh God, if I owned property in Aspen you would never see me in NZ for a few months every year.

NBR also reports Graeme Hart’s rise to over $5 billion:

Graeme Hart’s wealth comes from timber and packaging, and he has more than doubled his fortune from $2.75 billion last year.

The NBR says the 53-year-old has joined the ranks of the “seriously wealthy”, sitting just one spot below the world’s top 200 Forbes list of billionaires – and higher than Donald Trump, Sir Richard Branson and Steven Spielberg.

Well done Mr Hart.

NBR also note the Velas are ranked 46th at $150 million and Sir Bob Jones 30th with $250 million.

From Wednesday:

John Key: Is the Prime Minister aware, and can she confirm, that Section 2.79 of the Cabinet Manual requires Ministers to obtain her express permission to keep gifts valued at more than $500; and will she not accept that Mr Peters, by his own admission, has now admitted that he received a gift of $100,000 from Mr Glenn, and, whether or not she likes it, has to determine whether he will be allowed to keep that gift?

Rt Hon HELEN CLARK: I say again that whether the sum is a gift is a matter for the registrar of pecuniary interests. But can I further make the point that immediately Mr Peters was told of the source of that particular donation to a legal fund, he declared it to me. The Cabinet Office advised me that the court case, of course, was one of particular public interest—considerable public interest—and in such circumstances, if, and I underline that word, such a sum of money were deemed to be a gift, there would be no reason to require a Minister to relinquish it.

Now consider the weasel words here. First of all we have the declaring the court case was somehow in the public interest – as oppossed to the very private interest of Winston Peters who was trying to overturn the acual election result.

But secondly she is suggesting that Owen Glenn paying $100,000 of Winston’s debts is in the public interest and okay. Now maybe you could argue this if the donation was made before the court case – in order to allow it to proceed. But the timing is that Peters took the case and lost, and then Glenn helped him pay the costs.

And remember that the PM knows that Owen Glenn was lobbying Peters to lobby her to be appointed Consul – and she has said it is okay for him to keep the $100,000 gift. She has now succesfully approved American style funding for NZ.

Rt Hon HELEN CLARK: As I told the House yesterday, I would be absolutely delighted to see corporate and large private donations banned, on the basis that there would need to be State funding.

Helen wants to ban companies from being able to donate, but not unions. This shows her true agenda.

Sue Bradford: Does the Prime Minister have confidence that the Minister for Racing acts at all times with the interests of the whole racing sector at heart, or does she have any sense, as some in the racing industry do, that his actions tend to favour those at the high end of the industry, which, incidentally, is the same end from which New Zealand First has received substantial donations?

Rt Hon HELEN CLARK: Obviously, I do not have any independent information about where donations come from, but I can say to the member that I have had absolutely no advice or, indeed, even any suggestion of the issue of preference that she has raised.

Clark needs to look at the last Budget.

John Key: Did Winston Peters ask for the racing portfolio when the Prime Minister allocated the portfolios in 2005?

Rt Hon HELEN CLARK: Yes.

Clark was ready with that answer.

Metiria Turei: Does the Prime Minister think that the Government’s failure to get the numbers to progress sustainability measures like the Marine Reserves Bill and the Fisheries Amendment Bill may have anything to do with the large financial contribution to the party of her Minister of Foreign Affairs from Vela Fishing

NZ First did not like this question.

Dr Russel Norman: Do any of the Prime Minister’s Ministers receive donations from industries they are meant to be regulating and taxing; and does she expect any Minister, including her Minister of Racing, who finds himself or herself negotiating tax breaks for party donors to bring that to her attention?

Rt Hon HELEN CLARK: I do think there was in that question exactly the implication that Mr Mark objected to before. I can say, in respect of Ministers, that they are not expected to receive donations from industry, at all.

The Greens may have been as silent as a mute on the Owen Glenn donation, but they are being zealous with the Vela donations.

Hon Dr Nick Smith: I raise a point of order, Madam Speaker. I contacted the registrar of pecuniary interests and sought advice as to what disclosure requirements I was to make. The registrar was clear that what I needed to declare was a pecuniary interest in a trust. I have done just that. I seek leave to table the pecuniary interest declaration that I made on that advice, which clearly states there was a trust that provided support for that legal action.

Rt Hon HELEN CLARK: It therefore follows from Mr Smith’s point of order that if that were the appropriate course for him to follow and that he does not have to declare either debts or gifts, then nor does Mr Peters.

Clark is being stupid or misleading here. Nick Smith has an actual legal trust established which has trustees and he has declared he is a beneficiary of this. That is different to Winston who has no such legal trust but instead donors just pay off bills on his behalf. The Standing Orders make it very clear how each situation is treated.

And in another question:

Rodney Hide: Has the Prime Minister asked Winston Peters whether he knew that Mr Brian Henry was soliciting and receiving funds on Mr Peters’ behalf, as Brian Henry has said he was doing, and has she asked also on what date Mr Peters learnt that his legal bill had been reduced by $100,000; if not, why has she not asked Mr Peters those questions—is she concerned about the answers?

Rt Hon HELEN CLARK: No, I have not asked those questions. The matter is clear to me. Mr Peters has advised me that he was advised late on Friday of the source of the money going to his lawyer. He had not known the source of that money before then. I believe that Mr Peters, like other sensible party leaders, keeps a great distance from the issue of soliciting funds.

Clark here ignores the salient point of the question. Rodney did not ask anything about the identity of the $100,000 – just why she did not ask Peters when he knew he had had his legal bill reduced by $100,000. For you see that is when he should have notified her.

Rodney Hide: Let us have something to look forward to here in the House. I raise a point of order, Madam Speaker. The Prime Minister is consistently and wilfully dodging the questions that Mr Copeland and I have been asking, by saying that Mr Peters did not know about the source of the donations. My question specifically asked whether Mr Peters knew that money was being solicited—not the source of the donations, but the fact that the money was being solicited.

Madam SPEAKER: I have listened very carefully. The Prime Minister, like all Ministers, is required to address the question. However, Ministers are not required to give the answer that members want to hear. The Prime Minister addressed the question.

Rodney caught on that Clark keeps refusing to answer that question. That is because she knows Peters should ahve declared the $100,000 the moment he knew his legal bill had been reduced by that amount.

Winston says that donations by wealthy racing industry families did not affect NZ First’s racing policy.

I actually believe him on this.

I generally have a firm view that money follows policies, not policies follow money. Unions donate money to Labour because they like their policies, Labour doesn’t design policies just to attract donations from unions.

But here is Winston’s problem. He has spent over 15 years alleging that policies do follow money. That MPs are venal and corrupt and will sell favours to donors.

So if people see something wrong with the Velas donating to NZ First, it is because of the climate that Winston and others have created.

Take National’s ACC policy. Now National introduced private competition to ACC in 1998, and had it as policy in 2002 and 2005 and again in 2008. National is a party which for 50 years has generally favoured more private sector involvement.

So I see nothing sinister in National’s ACC policy. But Winston and his mates allege (without foundation) that the policy was purchased by the insurance industry through alleged donations to National.

The mythical $1 million donation would seem an incredible waste of money to “buy” a policy considering National has had the same policy for over a decade.

So Winston is a victim of his own scandal-mongering. He can’t get away with a stance that other parties sell their policies to large secret donors, but he does not.

Winston says the donations are all legal. Yes indeed they appear to be. However it is apparent that arrangements were made to allow one family to donate in excess of the disclosure limit through (legally) routing it through different people and companies. Just as National has legally routed donations through its former Trusts. Perfectly legal, but designed to avoid disclosure of large donors.

So I do believe Winston in relation to the Velas. He has not (from evidence to date) broken any law and I don’t think he exchanged policies for donations.

But the reason people think that the donations may have influenced his policy, is beacuse Winston keeps insisting that is what parties and politicians do – sell their policies to donors. It is a classic case of tainted by your own rhetoric.

Let us start with John Armstrong:

If that was not enough, there were further shockwaves with yesterday’s Dominion Post making fresh allegations surrounding NZ First’s handling of donations, questions about whether the racing industry source of those donations has compromised Peters as Minister of Racing and claims that taxpayers paid his lawyer’s legal bills through Parliamentary Service funding.

Those allegations were largely unsubstantiated, making it fairly easy for someone with Clark’s experience to bat away the resulting questions. She may have only brief respite, however. The confidence with which the newspaper made the claims suggests it has the documentation to back them up – with maybe more to come.

Indeed, and remember Phil Kitchin here is the journalist who exposed Donna Awatere-Huata and the Police misconduct in Rotorua.

Peters dismissed the article as “a smear campaign of unsubstantiated allegations”. But Clark realises, even if Peters won’t, that such responses are no longer satisfactory given the seriousness of the allegations he is facing.

Well they had a photocopy of a cheque on their frontpage. That seems to have a degree of substantiation. But as Armstrong notes, Peters has problems claiming it is all lies, because he said exacly that about the NZ Herald e-mail. He said they fabricated the e-mail and that they were lying and they were not.

She urgently needs to move this dreadful mess off centre-stage – both for her sake and Peters’. She has accordingly dropped big hints to relevant Government agencies to investigate the claims if they see fit.

Those agencies are an ever-lengthening list – Auditor-General Kevin Brady; the Registrar of MPs’ Pecuniary Interests, Dame Margaret Bazley; the Electoral Commission; Inland Revenue; Parliament’s Speaker and privileges committee; the Cabinet Office; and even – as Clark mentioned – the police.

Ever since the issues of Taito Philip Field, I have believed that NZ now needs an Independent Commission against Corruption that has powers to investigate all aspects of corrupt or highly unethical behaviour from Ministers, MPs and other very senior holders of public office. Having six different inquiries taking place like a fragmented jigsaw is not as good as one competent investigation with full powers.

I would love National to pledge to establish such a Commission. It would be a noble thing for them to do, as their own Ministers would be the first one to be subject to its scrutiny – but it is needed as we have seen in recent years with Field, Awatere-Huata, the various Immigration Service affairs, the Benson-Pope affair etc.

Audrey Young reports:

Questions were also raised in Parliament as to whether Mr Peters declared that his party had received substantial donations from the racing industry, where the Vela brothers are big players, before negotiating the post of Racing Minister with the Prime Minister.

And then proceeding to force Cullen to such generous funding of the racing industry that they ignored strong Treasury advice against it.

Incidentally while the Velas have New Zealand citizenship, like Owen Glenn, I understand they are (or were at least) officially foreign residents and only visitors to NZ for tax purposes . So once again the great crusader againgst foreign investment is revealed as having his major funders being foreign residents.

New Zealand First did not dispute reports that Mr Henry had been paid an amount from the Parliamentary Service last year but that is understood to have been for contracted work on the Electoral Finance Bill, not for litigation.

Jesus Christ – $45,000 for advice on the Electoral Finance Bill. Considering how often NZ First keep breaking their own law, they should ask for a refund.

But she appeared to be thrown by a question from Green Party co-leader Russel Norman on non-declaration of possible conflicts of interest.

He asked: “Can the Prime Minister tell us whether the Minister of Foreign Affairs was involved in negotiating the very substantial tax breaks that this Government has delivered to the racing industry; if so, in those negotiations, did he declare the very substantial donations that New Zealand First had received from the racing industry?”

After over a week of silence, it is good to see the Green Party finding its voice.

Mr Peters’ New Zealand First colleagues all took turns to ask questions focused on an aspect of his achievements as Foreign Minister.

This was so sad, I actually felt sorry for them. Like lemmings, one after another asked a pitifully sycophantic question to Helen lauding the fact Winston had gouged the taxpayer for more money for MFAT or the such. None of them were allowed to even try and engage on the central issue of the secret donations.

What was also interesting is that NZ First asked more than their four allocated supplementaries which means Labour must have donated some of their quota to their good mates in NZ First.

Mark Keating does an op-ed on the taxation issues around the donation. This is a fuller version of what I summarised yesterday. I did find this line very funny:

Mark Keating is a senior lecturer in tax law at (ironically) the Owen G. Glenn Business School of the University of Auckland

Heh.

Finally we have Rod Emmerson:

Just spot on.

Phil Kitchin’s investigative prowess is at work, as he reveals up to $150,000 of donations to NZ First from the Vela family to NZ First or Winston Peters.

A special investigation by The Dominion Post can reveal that a series of donations from accounts linked to the Vela family – heavyweight operators in the racing and fishing industries – and totalling at least $150,000 were made to the party.

But NZ First sources say nothing like that much Vela money was deposited in the party’s bank account.

Well they seem to have so many. Their main account. Then the secret one that not even Party President Dail Jones knew about. And then the other secret one for Winston’s legal expenses.

The Vela family has an estimated wealth of $180 million, according to the National Business Review’s 2007 rich list.

The cheques from Vela family fishing and thoroughbred companies were written out to NZ First from around the year 1999 to 2003.

Hmmn isn’t Winston Minister of Racing? And hasn’t he delivered a massive amount of money to the industry? And he has been very involved in fisheries issues also as an MP.

The Vela donations were made in accordance with electoral laws, which allow sums of less than $10,000 to be donated anonymously.

Yes and no. If over a calendar year they exceeded $10,000 from the same source then they must be disclosed.

It is understood most of the cheques were collected by Ross Meurant when he worked for NZ First as an adviser to Mr Peters.

Mr Meurant, a former National MP, was at that time also a fellow director and shareholder of Digital Global Maps Ltd with Philip Vela, a senior family figure.

It is understood Mr Meurant sometimes worked out of Vela’s offices at Te Rapa, Hamilton, while advising Mr Peters.

Meurant was actually employed by The Parliamentary Service, not NZ First. It is an usual situation to have a parliamentary employee collecting money for a party. It is also unusual to ave a barrister touting for money to pay his own legal bills!

The cheques were understood to be for amounts of $10,000 or less – which meant they did not need to be declared, unless the party knew it was receiving more than $10,000 from the same company or person in a calendar year.

Yes.

The Dominion Post understands the cheques were written out to NZ First from Vela bank accounts including PJ Vela, PM Vela, Vela Fishing, Vela Quota Number 1 and Number 2 accounts and Pencarrow Stud.

Now if these were all seperate legal entities – ie seperate companies and people, then they avoid disclosure. But if they are just seperate bank accounts for the same entity, then you have to add them together.

The ones I would be interested in are Vela Quota Number 1 and Number 2. Are they seperate companies or seperate bank accounts for the same company?