Winston Peters, pictured with then MP Doug Woolerton who later went on to be an NZ First Foundation trustee, at the party conference in 2008. (Getty Images)

One possibility is NZ First has broken electoral law. The other possibility is worse

If what has been reported is both true and not a breach of the rules for political donations, then New Zealand’s reputation for being squeaky clean looks like a joke, writes electoral law expert Andrew Geddis.

Anyone paying attention to New Zealand political parties and how they run their election campaigns has been able to see for a while now that there’s something a bit odd about how New Zealand First manages its affairs.

First up, there’s what is missing. For a party of its size and pedigree, there’s a curious lack of any reported donations exceeding the legally disclosable $15,000 threshold. The only such gifts reported in the past decade occurred in 2014, when its MP Tracey Martin and shortly-to-be-elected candidate Darroch Ball decided to support their party to the tune of about $19,000 each.

Apart from these two generous individual members, no one else has seen fit to give the party more than the legally disclosable amount in any given year. Which makes NZ First something of a stand-out amongst those parties with MPs in parliament. Everyone else, from the Act Party to the Greens, has had at least the occasional donor wanting to give them a big enough sum for their name and address become public.

And knowing their name and address, we then can see if that donor gets anything for its generosity. Which is how things should be in a properly transparent, clean political process.

Of course, maybe this absence of “big money” support for NZ First is just because it represents the little guy; the hard battlers of this country who don’t have all that much to rub together but are proud of what they have got. So, while somewhat curious, an absence of relatively large, publicly disclosed donations is not in itself proof of anything in particular.

But the absence then sits alongside something else we know about NZ First and its funding. As extensively covered here by RNZ’s Guyon Espiner, Electoral Commission records show that a trust called “the New Zealand First Foundation” made loans to the NZ First Party in the tens-of-thousands of dollars. Who gave the foundation the money used to fund those loans, or how much they gave, or why they gave it, is not revealed in the Electoral Commission’s information.

All of which begins to look a little bit more dodgy, even if still technically legal. Note that the foundation’s two trustees are Brian Henry (Winston Peters’ and NZ First’s lawyer) and Doug Woolerton (a former NZ First MP). It appears to operate, in essence, as a NZ First run vehicle lending money to NZ First as a party. That money is then paid back to the Foundation, ready to be used again when-and-if needed.

The only reason for structuring a party’s funding in this particular way would seem to be to stop the public seeing who originally donated the money. Which is, while technically legal, a complete undermining of the purpose of our disclosure laws.

And then yesterday, Matt Shand’s Stuff article told us a whole lot more about the relationship between this foundation and the NZ First Party. According to his reporting, documentation shows that the foundation has received some $500,000 in donations, much of which came in amounts exceeding $15,000. This money has then been used to not only make loans to NZ First as a party, but also allegedly to directly pay for various expenses connected with the party and its MPs.

If what is reported is correct, then one of two troubling conclusions follow. The first is that this use of the foundation breaches electoral law, in ways that Graeme Edgeler explained to Stuff. In short, the failure to either disclose the foundation’s spending on the party’s behalf as a donation, or the identity of those who have given to the foundation, may constitute a “corrupt or illegal practice”.

That, obviously, would be A Very Bad Thing. And if it is the case, we might ask why the foundation has been able to operate in such a manner for a number of years without attracting any regulatory attention. But at least it would show that our laws work, insofar as they prohibit this sort of arrangement.

For the alternative conclusion is, if anything, even more worrying. If it turns out that the foundation and the party somehow are operating lawfully, as we should note Winston Peters maintains, then that demonstrates our electoral law simply is not fit for purpose.

Let’s pause and look big picture. We have a political party that is a keystone of the current government. Its members are ministers, with responsibility for (among other things) distributing $3 billion in government largesse around the country’s provinces.

And now we are told that a legally-opaque foundation intimately connected to the party has raised hundreds-of-thousands of dollars from “primary industry leaders, wealthy investors and multi-millionaires”. That foundation allegedly has used the money for the benefit of the party and its MPs. And no-one outside of the party and those that gave the money are made any the wiser.

If this is legal, then there’s no way that it should be. You can’t have a country’s political system run in this way and be considered the second least corrupt nation on the planet. Or, at least, you can’t do it for long.

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