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Getty Images/Archi Banal
Getty Images/Archi Banal

PoliticsJuly 25, 2022

What the NZ First Foundation ‘not guilty’ verdict means for money in politics

Getty Images/Archi Banal
Getty Images/Archi Banal

An off-the-books enterprise was set up to fund NZ First without the public’s knowledge, and a court just ruled that’s entirely legal. Laurie Duncan explains.

On Friday morning, Justice Jagose released his decision finding two individuals connected with the NZ First Foundation not guilty of criminal offending connected with that entity. In an earlier decision, he decided that these individuals should have their identities permanently suppressed. What does it all mean?

The NZ First Foundation … what was that again?

It was a trust set up to help out with the NZ First Party’s funding problems. In theory, the money paid into it would buy “capital assets” that would create a steady income stream for the NZ First Party. This model is used, entirely lawfully, by the National Party.

In practice, however, the NZ First Foundation appears to have worked more as an off-the-books slush fund for the NZ First Party. Whenever a bill needed paying for the party’s campaign activities, the foundation would fork out the money.

But if it was set up to help the NZ First Party, and it did help the party, what’s the problem?

The problem was that the NZ First Party’s secretary was never told about the money paid into the foundation – some $678,000 from a range of pretty well-off individuals. And because the party secretary never knew of this money, it was not included in the party’s return of donations to the Electoral Commission. Meaning that its existence never got made known to the public.

That all sounds just a little bit dodgy, doesn’t it?

That’s what the Electoral Commission thought, too. When information about the foundation’s activities came to light, it referred the matter to the police. The police then handed it on to the Serious Fraud Office (SFO). And the SFO brought charges under the Crimes Act 1961, s 240 (“Obtaining by deception or causing loss by deception”).

Which the judge has just rejected, right?

Yes – Justice Jagose found that as the SFO hadn’t made out all the necessary elements of the offence, the defendants were not guilty of it. Which is how criminal law works.

Why?

Well, like a lot of the law, the reason is a bit complicated. But in a nutshell, the offence under the Crimes Act could only be committed if the two accused had a legal obligation to give the money they received over to the party secretary. And that legal obligation only arises if the money they received met the definition of a “party donation”, being: “a donation … 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.”

The judge then decided that because the accused weren’t “involved in the administration of the affairs of the party” when they received this money, then it wasn’t actually a party donation. That’s irrespective of any roles that those individuals also played in NZ First; because they set the trust up as a separate entity, and received the money in their capacity as trustees, they weren’t wearing a party hat when they got it.

So, to recap, hundreds of thousands of dollars were given by people who wanted to help the NZ First Party win political power …

Yes.

To people who set up a trust purely to help the NZ First Party win political power …

Yes.

And then was spent on activities intended to help the party get its candidates elected …

Yes.

But this wasn’t considered a donation to the party?

No.

Isn’t that a bit, you know, crazy?

You may very well think that. I couldn’t possibly comment.

So, where does all of this leave us?

In a bit of a mess, really. The effect of this judgment is that it is entirely legal for a party to set up a shadow, off-the-books funding enterprise to pay for all its activities. As long as the people running the enterprise take in money as “trustees” for that enterprise, it won’t be considered a donation to that party. And if it isn’t a donation to a party, then nothing about it needs to be declared to the Electoral Commission.

So, the decision has pretty much gutted the transparency requirements in our Electoral Act?

Yep. Any donor can now effectively fund a party’s activities with as much money as they want without there being any legal obligation to tell anyone about it. And this includes overseas donors, who are otherwise prohibited from giving more than $50 directly to a political party.

Yikes! Can anything be done about this?

Well, in a bit of perhaps good timing, the government has just this week introduced an Electoral Amendment Bill into the house. It already includes a bunch of proposed amendments to require more donation disclosure by political parties. Let’s just say that its now going to need to have a whole bunch more put into it to undo the effect of this decision.

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Act’s David Seymour (Image: Getty Images, additional design Tina Tiller)
Act’s David Seymour (Image: Getty Images, additional design Tina Tiller)

PoliticsJuly 25, 2022

Act unveils its three-C plan for election success in 2023

Act’s David Seymour (Image: Getty Images, additional design Tina Tiller)
Act’s David Seymour (Image: Getty Images, additional design Tina Tiller)

The Act Party’s been filling venues as part of a cross-country policy tour. At an event yesterday, Stewart Sowman-Lund heard what the party wants on the bargaining table for next year’s election.  

On the same day that the Greens were facing questions over leadership quibbles, Act MPs were addressing a crowd of roughly 600 people, a near-capacity audience at the Waterfront Theatre in downtown Auckland. It was the latest stop in what the party has dubbed the “Real Change” tour, a series of nationwide rallies aimed at putting forward the Act agenda.

According to leader David Seymour, 2,500 people have attended the events and $50,000 of tickets were sold over the past three weeks alone.

With parliament in recess, the party has chosen now as the perfect time to visit as many of its potential voters as possible while rallying the troops more than a year out from polling day. “At each meeting we heard from Kiwis who are being hammered by the cost of living crisis, who see crime getting out of control and who are watching as our democracy is threatened by co-governance,” said Seymour in a press release. 

Those who braved Auckland’s icy weather yesterday appeared to lap up every word from the speakers. Those on stage seemed equally thrilled to be in front of such a large audience. Seymour himself turned around from his front row seat at one point to marvel at the packed stalls. On stage, the speakers were happy to crack jokes and revel in the spontaneous applause breaks.

Largely, the topics traversed in the speeches were those laid out by Act in its recent 100-day plan. Act, it seems, wants the next election to be about three Cs: crime, the cost of living and co-governance. 

Covid, another “C” word, barely got a mention – other than Seymour’s claim New Zealanders were “tired” of hearing about the virus and repeated call for an inquiry into the pandemic response. And in the same week both Jacinda Ardern and Christopher Luxon were caught in gotcha-style “no mask” controversies, Seymour and his team of MPs were largely maskless inside the Waterfront Theatre, despite signs on the doors asking all patrons to be wearing one.

David Seymour addresses the crowd (Photo: Stewart Sowman-Lund)

Of the three Cs, co-governance was clearly top of the agenda. It was referenced in practically all the speeches, dominating at least two. The headline speaker at the event wasn’t an MP at all, but Auckland University academic Elizabeth Rata. She’s one of the “Listener seven”, a group of academics who co-signed a letter “In Defence of Science” that was published in The Listener magazine. The letter said that “in the discovery of empirical, universal truths”, mātauranga Māori fell short of “what can be defined as science itself”, prompting widespread condemnation along with a smattering of support.

Rata described her speech as being targeted at New Zealanders of all political persuasions who were “deeply worried about New Zealand’s descent from democracy into ethnonationalism”. To rapturous applause throughout, at one point after nearly every sentence, Rata advocated for removing the Treaty of Waitangi from all legislation and said New Zealand’s education system was indoctrinating children. “This so-called decolonisation, indigenisation of the curriculum… it is a disaster,” she said. 

Rata concluded her speech with this: “To those who will seek to distort my words, I support the activities of those in civil society who value and engage in Māori language and culture… Society is at its most creative when diversity is practised and enjoyed by all.”

Act has proposed a referendum on co-governance, with David Seymour telling the crowd that the principles of the Treaty of Waitangi should be defined by parliament and put to the people. 

Earlier in the event, MP Karen Chhour, who is Māori, expressed concern that a Tiriti-centric society “divides” the country into tangata whenua and tangata Tiriti. “It cannot stand,” she said. In her speech, Chhour said that “the Māori Party’s narrow-minded view that we only exist as Māori and Pākehā in New Zealand is damaging and disappointing.”

She added: “When they stand and claim to speak for all Māori, I can guarantee you it’s not for Māori like me who dare to have a different view. And how do some respond to this Māori lady when she expresses a considered opinion? They resort to personal attacks… I’ve even been called a traitor to my race simply for trying to make a case for equality.”

The two parties have fired repeated salvos at one another, with each ruling out governing alongside the other. Te Pati Māori co-leader Rawiri Waititi told The Guardian he wouldn’t consider being in government with National and Act “because of the Act part of them, and the rhetoric that’s coming out of Act is emboldening racism across this country,” he said. “They’re not the Act that I remember.”

“All I see is a party that is just actively campaigning against the rights of tangata whenua,” Waititi said.

After co-governance came the second “C” of the day: the issue of crime. Act’s justice spokesperson, former gun lobbyist Nicole McKee, evoked a New Zealand of the past where children could safely play together on the street and crime was “less vicious, less destructive”. 

At number three on the party’s list, McKee has been one of Act’s more visible and vocal parliamentarians during this term. To gain any visibility in a party that is often considered simply a David Seymour vehicle is impressive in itself. 

In her speech, McKee called out the government for not just being “soft on crime” but also “wrong on crime”. 

“This government is… more interested in policing by consent and releasing people from prison than it is in holding criminals to account,” she said. “Gang numbers are out of control and more and more Kiwis are becoming victims of crime. We hear that 10-year-olds are participating in ram raids, almost as keen to win the gangs’ approval as the Labour government is.”

David Seymour and his candidates celebrate on election night in 2020 (Photo: Getty Images)

On the issue of cost of living, C number three and arguably the meatiest and most pressing political issue on Act’s agenda, it was deputy leader Brooke van Velden’s turn to address the crowd. She pointed out that she is one of only two qualified economists in parliament – “and if you think that’s bad, the other one’s Trevor Mallard”.

Van Velden was a familiar face in the Act camp before her meteoric rise into the deputy role, and to a seat in parliament, in the 2020 election, when Act gained nine new MPs. She was effectively Seymour’s right-hand woman during the campaign for the End of Life Choice Bill, helping twist the arms of reluctant MPs.

Her speech reiterated several key Act talking points from recent weeks, such as the need to fast-track the immigration process for overseas nurses, can the Covid-19 isolation requirements and tackle the Gib shortage by bringing in equivalent products. She also repeated Act’s goal to “simplify” the tax system into just two rates – 17% and 28.5% – which van Velden said would make it the “cleanest and most competitive” tax system in the South Pacific.

At the start of yesterday’s event, Act’s president Tim Jago implied the party would be prepared to bypass the “baubles of office” in order to progress its policy plan. With a number of demands, some that National has rejected, that may seem to rule out a functioning coalition. Or, it could mean National making more concessions than it would currently like to should it hold the balance of power in about 15 months’ time. Act has jumped the political gun on agenda-setting for next year, beating National to many of the issues that will inevitably dominate 2023.

And based on the turnout and reception in Auckland yesterday, National may need to up its game if it wants to have a good hold on the negotiating strings.

Clarification: This post has been amended to state that the letter by the “Listener seven” said mātauranga Māori fell short of what can be defined as science itself specifically “in the discovery of empirical, universal truths”.


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