NZH Editorial on GST

The NZ Herald editorial on ’s GST problem misses some key points, even though it does at least acknowledge the situation is considerably different to Labour’s unlawful spending (National co-operated fully with the electoral authorities, Labour lied and deceived the Chief Electoral Officer).

Even though National is not a company, as defined by company law, the obligations on directors of the party are not dissimilar. And one of the very first things you get taught as a company director (which I am) is you can not at any time vote to undertake an action you know to be illegal. This can expose any director who votes for such an action to personal liability. Even liability insurance is void and bull if you knowingly vote to commit an illegal act.

The subtleties may be lost on the NZ Herald, but the only people who can authorise the $112,5000 to be paid to the broadcasters is the National Party Board – not the Caucus or the Leader. And those nine board members have legal advice saying that voting for such a resolution is an illegal act. At this point they have no discretion. You can not be an officer or director of an organisation and vote for an illegal action – no matter how politically desirable it is.

Even if a majority of the board wanted to pay the money, the board chair is legally obliged to not even allow the matter to go to a vote if it would break the law. And the party general manager would be obliged to refuse to implement the decision, even if the board voted for it. This is basic company law and ethics.

The issue is not how likely it is the Police would prosecute. I agree it is unlikely. In fact the problem is that the Police did not prosecute in the first place. They should have, the matter should have gone to court, and I suspect a Judge would have as part of the case ordered any outstanding monies be paid, plus a fine.

Having accidentally broken the law by ordering too much broadcast advertising, the National Party is not allowed to deliberately break the law again by paying for broadcasting. And editorial writers and others should have a think about whether they really want to encourage a party to deliberately break the law. It sort of undermines the whole obey the law message we encourage of others.

I consider it highly misleading for the editorial to say:

“Another is that, like Labour, it is loath to bite the bullet and pay the money back.”

This is quite wrong. Labour to this day has denied they ever did anything wrong. They have spent months attacking anyone who suggests they have done anything wrong. They deny they are obligated to pay any money back.

National from day one has accepted full responsibility for the error (even though it could blame it all on its advertising agency). It has said it wants to pay the $112,500 back and has placed the money in a trust fund so it can be paid. However it is unable to do so, without further breaking the law so it has proposed legislation which will allow the debt to be paid. The Herald is again quite wrong when it refers to this as validating legislation. It in no way validates the breach of law when too much advertising was booked. It simply allows repayment without a *further* law breach. I really do expect an editorial to have a higher standard of accuracy.

My suggestion at the weekend was for National to convert its Member’s Bill to a Private Bill which would allow the legislation to be introduced without a ballot. If this is not allowed, the best option might be to persuade a broadcaster to seek a court order requiring payment. For if a Judge ordered the money to be paid, that would probably be grounds on which the Board could legally authorise payment.

But despite the fact it would obviously be politically useful to sort this issue out, it is not just a case of choosing to pay the money back. Directors are not allowed to choose to undertake an illegal action. And frankly I’m glad to be part of a party which puts regard for the law above political expediency. We should celebrate such virtues.

Comments (42)

Login to comment or vote

Add a Comment

%d bloggers like this: