Friday, November 24, 2006



A corrupt practice

Every time we talk about ending the practice of large anonymous donations to political parties, some right-wing shill pops up and says that its all OK because the politicians don't know who the donors are, and therefore they can't be influenced by them.

It's a lie.

According to The Press, The Hollow Men alleges that National failed to maintain a proper separation between donors and politicians, and allowed big donors to remain anonymous despite knowing their identities:

Hager names top New Zealand businessmen and women as the principal donors to National's 2005 election campaign, including Alan Gibbs, Barry Coleman, Craig Heatley, David Richwhite, Diane Foreman, Doug Myers, Michael Friedlander, Peter Shirtcliffe, Rod Deane, Colin Giltrap, and Michael Horton.

According to the book, donations were made anonymously through the Waitemata Trust, one of a series of secret trusts that gave substantial sums to National at the last election.

Hager's book alleges that Brash and his key advisors were in regular contact with the donors and regularly sought their advice on policy and strategy as well as soliciting funding from them.

There's a name for this: it's called a corrupt electoral practice. Section 214G of the Electoral Act 1993 requires party secretaries to file an annual return of donations, including the name and address of each person donating over $10,000 a year, or just the amount if the donation is anonymous. In order to be considered "anonymous" for the purposes of the Act, both candidates and party administrators must be unaware of the donor's identity (s3(1)). Knowingly making a false return is a corrupt electoral practice and carries a penalty of one year's imprisonment and a $20,000 fine. And from the above, it seems that people in National have been knowingly making false statements, falsely claiming their donors are anonymous while knowing full well who they are and what they want, and using the trusts essentially to launder donations to hide this fact from the public.

Unfortunately, it is now too late to prosecute. Declarations of donations were due by April 30th, and there is a six month time limit for prosecution. So, as in the case of their colluding to violate their spending cap, National gets to piss on the Electoral Act (and the voters) and escape legal punishment.

It's time we put a stop to this sort of political corruption - and the first step should be to outlaw large anonymous donations. Sunlight is the best disinfectant - and if the Gibbs', Shirtcliffes, Richwhites and Deanes of this world are unwilling to donate publicly, it strongly suggests that undue influence is what they were seeking all along.

Correction: As pointed out in the comments, National's donations are all attributed to specifc sources, so this is not a corrupt practice in terms of the Electoral Act. It does however make an absolute mockery of the right's constant claims that anonymous donations are OK because no-one knows who the donors are. National knows who its donors are, it just prefers not to name them. And the reason it does this is to prevent the public from seeing the obvious connections between donors and policy positions - i.e. as a mask for political corruption.

This needs to be fixed. In the UK, it is a crime to knowingly obfuscate the true source of a political donation. This effectively outlaws National-style money laundering, and it is something we should do here.

38 comments:

I find it quite worrying that Barry Colman - someone with widespread media interests - was involved in this deceitful and illegal behaviour.

This scam just shows what National really is - a collection of the rich and powerful who'll lie and deceive to get their way.

Posted by Crustacean : 11/24/2006 03:23:00 PM

So how much did they give and when and to which trust?

How can anyone be surprised that the people listed might have given money to a non-left political party. The surprise is that it is viewed as scandalous.

Insider

Posted by Anonymous : 11/24/2006 04:05:00 PM

NRT:

Your analysis is both incorrect and defamatory.

The donations were clearly identified as coming from the respective Trusts. The Trust is a legal entity. No illegality occurred. The donor of the money was the Trust, not the individuals concerned, and the Trust was identified, as required by law.

Get your bloody law straight before making accusations of illegal behaviour.

Posted by Insolent Prick : 11/24/2006 04:12:00 PM

> Unfortunately, it is now too late to prosecute.

if there is a breach of law (and I'll take your word for it for now) then THIS is the problem not the anonymous donations part. You are after all saying that the donations were NOT anonymous!

GeniusNZ

Posted by Anonymous : 11/24/2006 04:35:00 PM

As we know from the discussion about Labour's deliberate breach of the spending cap, National can't commit a corrupt practice. If the return was knowingly false it is the individual who filed it who commits the corrupt practice.

Posted by Graeme Edgeler : 11/24/2006 04:43:00 PM

Ah, but Graeme, the claim of a corrupt practice is also false. It's deliberate spin from the Labour Party and its supporters to justify Labour's actual illegal activities.

Idiot: there was nothing illegal about contributions from the Waitemata Trust. The Trust was required to be named by the official producing the return; the trust was so named. That is an entirely lawful activity.

If you're going to make allegations of illegal behaviour, you should try to be sure you've got your facts straight. No unlawful activity occurred. You know that, and you'd be smart to retract your claim.

Posted by Insolent Prick : 11/24/2006 04:53:00 PM

IP,

Your blatant dissembling is desperate. The Trusts have been clearly used launder the big name donors. Clearly the money was given to the National Party owned Trusts with the intention of it being used by the Party for electoral purposes.

For months you and your mates have been claiming that these Trusts were simply used to pool numerous small donations from ordinary mum and dad members, even though that explanation made no sense.

Now it is proven a lie. The Trusts were used for the exact purpose you have admitted; to allow Party officials to legally deny knowing who these major donors were; while in actual full knowledge of their names.

Posted by RedRag : 11/24/2006 06:53:00 PM

redrag:

I don't know who the contributors to the Trusts are. But they are a legitimate, legal vehicle. Just as the Labour Party has legally "laundered", to use your definition, money to the Labour Party through union donations, which has led to the Labour Party being stacked with union officials.

Idiot makes allegations of criminal behaviour. Those allegations are baseless and defamatory. There is clearly nothing illegal in an organisation choosing to donate money to a political party; there is also no obligation for the organisation to disclose where the money came from.

How do you know that Owen Glenn is not a convenient channel of funding for Labour's wealthiest friends?

They are both preposterous scenarios. You are simply following Hager, and this Government's current line of attacking National for lawful conduct, while the Labour vote collapses in a policy vacuum.

Posted by Insolent Prick : 11/24/2006 07:40:00 PM

The law:

"Anonymous ...

(b)in relation to a party donation (as that term is defined in section 214F), means a donation that is made in such a way that none of the following knows who made the donation:

(i)the candidates of the party to which the donation is made:

(ii)the persons involved in the administration of the affairs of that party".

Posted by Anonymous : 11/24/2006 07:52:00 PM

IP

As you know full well the Electoral Act requires all donations over $10k to be declared and named. Only if the Party Officials genuinely do not know who the donor is then they can safely attribute the donation to "Anonymous". A quick perusal of the 2005 returns will show almost all Parties have such declarations.

The ONLY rational purpose of using the Trusts as a vehicle is to frustrate the intention of the Electoral Act by permitting the National Party Officials (the only Party to exploit this loophole) to legally attribute the donation to the Trust, while in full knowledge of the actual source of the funds.

The Electoral Act clearly intends that large individual donors who are known to the Party, should also be known to the voting public. The use of these blind Trusts absolutely violates that intent, and indeed a Court may well have ruled so, despite the technical fig-leaf involved.

Posted by RedRag : 11/24/2006 08:00:00 PM

Piss off IP. I could probably search through a couple of kiwi and just left blogs to find posts where you claimed that trusrts di dnot have to be anonymous. When I pointed out the law to you you back track so fast you must have been shuffling on your arse.

You know that this stuff proves that the so called anon donatoions to National were anything but and that this is a breach of the law, deliberate and corrupt. If you want to retain any credibility on these forum now you will front up and admit it. Time to look beyond those emails from McCully that give you your daily talk back spin buddy.

Posted by noddy : 11/24/2006 08:13:00 PM

Redrag:

The trust donations were not anonymous donations, any more than donations from unions to the Labour Party are anonymous donations. The Labour Party received 22 large donations in 2005, many of which were anonymous. A large proportion of those donations were made by unions, with no consultation with the membership.

Do you really think that the Prime Minister was unaware that Glidepath made a large corporate donation to the Labour Party when she appointed its founder to run New Zealand Export Year 2007?

I haven't seen any evidence that any of the donations by the Labour Party were illegal. Nor is there any evidence that any of the donations through trusts were illegal. You are simply trying to distract voters from Labour's own inability to govern, and Labour's slump in the polls.

The Waitemata Trust has been operating for at least five years. Labour has had five years to change electoral law. It hasn't done so. It only became an issue when Labour was neck-deep in its own shit, in polling free-fall. Miraculously, suddenly those anonymous donations that Labour has willingly accepted--at a much faster rate every year for the last eight years bar last year--are too dirty for Labour to want to receive.

You want politics of deception? Look to your own leader, redrag.

Posted by Insolent Prick : 11/24/2006 08:19:00 PM

The donation from the Waitemata Trust alone was in the order of $1.2m. This is clearly larger than $10k. The absolute intent of the Electoral Act is that the voting public should be able to identify the source of that money.

The Waitemata Trust is owned and controlled by the National Party. A donation to that Trust is in effect a donation to the National Party itself.

Hagar's revelations about the EB merely proves that Brash and Key are poor liars, but this matter is reveals a far more sinister intent by the National Party to deliberately and corruptly evade the provisions of the Electoral Act.

"Hager names top New Zealand businessmen and women as the principal donors to National's 2005 election campaign, including Alan Gibbs, Barry Coleman, Craig Heatley, David Richwhite, Diane Foreman, Doug Myers, Michael Friedlander, Peter Shirtcliffe, Rod Deane, Colin Giltrap, and Michael Horton."

http://www.stuff.co.nz/stuff/0,2106,3877111a6160,00.html

If these names were genuinely unknown to the National Party, then their donations would have been safely attributed as "Anonymous". Indeed the 2005 National Party Return lists a number of these; so there can have been no obstacle to such a thing in principle or practise.

I repeat. The only rational purpose of the Trusts was to permit the National Party to lie about the real source of at least 92% of it's funding. The EB thing will pass with the resignation of Brash, and it remains to be seen if it damages Key; but as you know perfectly well THIS issue is the one that will hang you.

Posted by RedRag : 11/24/2006 08:38:00 PM

IP: You're right, and I've posted a correction. National's donations are all attributed to their donor's front organisations, and this is enough to avoid ilegality. However, it may not be illegal, but it damn well ought to be; my point that laundered donations are nothing more than a front to hide political corruption from public scrutiny remains.

Posted by Idiot/Savant : 11/24/2006 08:46:00 PM

Idiot,

The question of the "legality" of the Trusts may well have failed in Court if the Judge ruled that because the Trusts are owned and controlled by the National Party that a donation to them is effectively a donation to the Party.

Someone no doubt thought it all a clever dodge, but the Courts often take a dim view of such transparent scams.

Posted by RedRag : 11/24/2006 08:53:00 PM

If I was ever stupid enough to want to vote for National I need only remind myself that they are nothing more than the puppets of self-important, self-seeking, grasping individuals that are not satisfied with their current excessive wealth but are out there grasping for more! And they will be not be slow to be as deceitful and underhand as they can possibly be in order to achieve their self centred ends.

Posted by Macro : 11/24/2006 09:11:00 PM

I'm not sure why National uses the trusts. A bank cheque mailed direct to National cannot identify the owner.

Just send as many separately for $9,999 as you need to - you can count them all as separate donations, and while you might think you know who it came from, you can't be sure enough to have to make a declaration.

There is more than one way to skin this particular cat.

Posted by Michael : 11/24/2006 09:22:00 PM

Thank you I/S. I agree with you: I don't like either anonymous or screened donations. But this is a problem with the system, rather than with National - Labour has just as much to answer for. Less recently, but more in the past. I am troubled by H1's hypocrisy in this regard - but only a little.

Although, you could make the arugment that our system is working well. It is allowing Waitemata Trust to be questioned, and Owen Glen to be questioned. That is not too bad.

Although, I don't remember every hearing a denial from Owen Glen about the Maori party. What every happened to that?

Posted by kiwi_donkey : 11/24/2006 09:30:00 PM

"Just send as many separately for $9,999 as you need to - you can count them all as separate donations, and while you might think you know who it came from, you can't be sure enough to have to make a declaration."

Another transparent, ethically bankrupt scam to avoid the intention of the Electoral Act.

The whole point is that the names Hagar has listed as the real source of National's 2005 election funding, had openly backed the ACT Party for the three elections prior and had been soundly rejected by the electorate because of their ideological extremism. And the same list of characters then found it essential to resort to this barely legal Blind Trust scam in order to prevent the electorate from discovering that they were backing National in 2005.

To the tune of 92% of their funding.

Posted by RedRag : 11/24/2006 09:44:00 PM

All this fuss about bank cheques and trusts; what's happened to the suitcase of used oncers slipped under the door of the mens'?

Posted by Anonymous : 11/24/2006 09:49:00 PM

So were the donations to the trust made before the "no Brash, no cash" email?

If not, how soon after?

Posted by pascal's bookie : 11/24/2006 11:33:00 PM

Simple whinging and moaning by those who don't get money donated voluntarily by people who want to justify compulsory funding of their political vehicles.

If wealthy people want to fund the National Party who cares? It is THEIR money - THEIR choice - it's called freedom, something alien to the left.

The alternative is to force every New Zealander to fund incumbent political parties through taxes - and stop people funding the ones they want with their own money. In other words, prop up the parties that few can actually be arsed supporting, while denying support for those that people do support.

National got that support (which Labour also got in 1987 mind you) because it was promoting policies that the donors supported. You either let people be free to support whatever party they wish by their own means, or you institute a corrupt statist corporatist approach of fascistly forcing everyone to fund politics.

Posted by libertyscott : 11/25/2006 03:41:00 AM

Scott,

The issue at at stake here is NOT whether this group of extreme right wing business people were the major donors to National, but that they were doing it in SECRET.

And using a Trust vehicle that had no other purpose than to allow them to do it in secret...in direct violation of the intent of the Electoral Act.

Come on Scott you are an intelligent man, you know exactly what was going on here. The real problem is that for almost a year National has been leading a hysterical attack on the integrity of the Labour Party, while at the same time it now turns out they were neck-deep in a series of barely defensible scams themselves. I know us bloggers resort to the "hypocritical" word rather often....but in this case what else can we call it?

Posted by RedRag : 11/25/2006 07:35:00 AM

Redrag, I think that's a fair call. I certainly use the word 'hypocriical' too often! And yes, the 'stolen' election thing is grossly hypocritical.

I do still regard the pledge card as worse, as it involved a deliberate rort of public funds on a large scale in the week before voting. The only saving grace was that, IMHO, it was a pathetic effort that would have had no effect on the election outcome. Similarly, the saving grace of the EB stuff was that I think it cost National the election.

Posted by kiwi_donkey : 11/25/2006 07:54:00 AM

RedRag wrote:
The issue at at stake here is NOT whether this group of extreme right wing business people were the major donors to National, but that they were doing it in SECRET.

And using a Trust vehicle that had no other purpose than to allow them to do it in secret...in direct violation of the intent of the Electoral Act.

Ah, but as seems to happen so often in these kinds of debate it's always different for Labour isn't it? I know this is off-message, but Mike Williams seems rather uncomfortable about being pressed on Labour's own anonymous donors, money-laundering instruments and level of "co-ordination" with third-party attacks on National. I guess the proof is whether the Government has the balls to bring in real campaign finance reform, and give the Electoral Commission and Chief Electoral Officer real powers of enforcement instead of attacking their competence and integrity.

And I'm sure that will happen as soon as I've brought the flying pigs over the house in to land. Hope I'm being far too cynical, but I think there's going to be a lot of papper shredders working overtime this weekend - and not in National Party circles.

Posted by Craig Ranapia : 11/25/2006 07:55:00 AM

RedRag wrote:
The issue at at stake here is NOT whether this group of extreme right wing business people were the major donors to National, but that they were doing it in SECRET.

And using a Trust vehicle that had no other purpose than to allow them to do it in secret...in direct violation of the intent of the Electoral Act.

Ah, but as seems to happen so often in these kinds of debate it's always different for Labour isn't it? I know this is off-message, but Mike Williams seems rather uncomfortable about being pressed on Labour's own anonymous donors, money-laundering instruments and level of "co-ordination" with third-party attacks on National. I guess the proof is whether the Government has the balls to bring in real campaign finance reform, and give the Electoral Commission and Chief Electoral Officer real powers of enforcement instead of attacking their competence and integrity.

And I'm sure that will happen as soon as I've brought the flying pigs over the house in to land. Hope I'm being far too cynical, but I think there's going to be a lot of papper shredders working overtime this weekend - and not in National Party circles.

Posted by Craig Ranapia : 11/25/2006 07:56:00 AM

I guess the proof is whether the Government has the balls to bring in real campaign finance reform, and give the Electoral Commission and Chief Electoral Officer real powers of enforcement instead of attacking their competence and integrity.

Absolutely agreed. Can we now all put away the cans of "lily-white paint" and look forward to a Key led Opposition constructively participating in this now urgently required reform effort? Under Brash it was apparent that they were going to fight tooth and nail to prevent State paid "Democracy Funding" and the kind of enhanced Electoral rules you allude to.

As always the devil will be in the details, but we could do worse than look at Canada and Australia for a steer. Both of these countries have much more sophisticated systems in place than we do, and both have thriving Conservative govts in power....so a move in that direction cannot be quite the end of the world as we know it.

Posted by RedRag : 11/25/2006 08:15:00 AM

RedRag:

No, I think it's entirely fair comment to point out that Labour's not quite as firmly on the moral high ground as they'd like us to believe. If the organisational and parliamentary wings of Labour want to open their unsanitised books and e-mail archives, kudos to them. I just won't hold my breath waiting.

And can we dump the focus-grouped euphemism of 'democracy funding' and ask ourselves exactly why political parties are so keen to jam their hands even deeper in the public purse than they already are?

If you think state-funding of political parties is rort-proof (and to be fair, I don't think you're that naive), I have the Sydney Harbour Bridge to sell you. :)

Posted by Craig Ranapia : 11/25/2006 09:08:00 AM

And Scott, you prattle on offensively about freedom being an alien concept to the left, while at the same time defending a tiny cabal of wealthy business people to employ the National Party for their own purposes...in secret.

The IRD rules that if as a contractor more than 80% of my income comes from one source in any one year, then that source is no longer my client but my employer. The Nats can deny it all they like, but with 92% of their funding coming from the Business Round Table cabal....they had become the paid servants of this organisation.

Of course there is one way to refute this allegation....PAY IT BACK!!!

Posted by RedRag : 11/25/2006 09:09:00 AM

and ask ourselves exactly why political parties are so keen to jam their hands even deeper in the public purse than they already are?

Our democracy is for better or worse, founded on the healthy functioning of political parties. Unfortunately if the average person is not willing to directly fund these parties by becoming members, nor indirectly as a tax-payer, then inevitably they become open prey to that tiny minority wealthy enough to purchase their services. Whether we like it or not money talks. Surely Craig you are not defending a system in which that talk is conducted in secret whispers that only the well-connected are privy to?

Many years ago it was a commonplace for politicians to gerrymander electorate boundaries to bias the FPP electoral system in their favour. (Left to fester the same problem has created a huge bias in favour of the US Republicans.) After much kicking and screaming the job was taken off them and given to the NZ Electoral Commission. This disinterested State body was managed our electoral boundaries quite well with relatively little fuss ever since.

And again, left to fester the issue of campaign finance has reached insane levels in the US. I recall a quote from just a few days ago, that whereas in the 90's a whole State House campaign could be fought for $1-2m, they are now spending that kind of money EVERY WEEK. Senators and Congresscritters are now reportedly spending most of their time fund-raising, and rarely read the Bills they are voting on. Clearly this is not a system we want to emulate. Surely not.

You suggest that just because between us we cannot propose all the features required for a perfect "rort-free" democracy funding system right now, that such a system should not be attempted. That is an old dodge Craig. If the alternative is to do nothing and continue our drift towards the US model, then clearly we are better off to look at the Australian, UK and Canadian systems to see if there is not something we can adopt here.

After all we solved the old problem of electoral gerrymandering with a State mechanism; what then is the objection to solving obvious problems with party funding in a similar way?

Posted by RedRag : 11/25/2006 09:38:00 AM

RedRag:

Plenty of food for thought, but I've got to break the back of the Christmas shopping and expect that to take most of the day. I think you've confused some issues here, but I will be back to kick them around a bit.

Posted by Craig Ranapia : 11/25/2006 09:55:00 AM

There is are least 6 people in the National ranks that tend to agree with I/S Redrag etc.
Let's never forget where the information came from.

"The IRD rules that if as a contractor more than 80% of my income comes from one source in any one year, then that source is no longer my client but my employer."

since when?

Posted by Anonymous : 11/25/2006 11:19:00 AM

It's all ok folks! Gerry says that the whole thing is just a fiction.
I'm sorry Gerry your Party's credibility just ran out last week. You are now in serious overdraft!

Posted by Macro : 11/25/2006 11:38:00 AM

Anonymous wrote:
There is are least 6 people in the National ranks that tend to agree with I/S Redrag etc.

Let's never forget where the information came from.

Well, at the moment we only have Hagar's word for any such thingt - and , with all due respect, I'll take that with a pinch of salt because muckrakers never ever tell porky pies do they? On a less exalted plane, remember when Andrew Morton's sin-sational biography of Princess Diana came out and he swore blind that she was not a source, only to admit after her death that he'd flat out lied?

Hey, if the National Party Six exist, why don't they come forward to accept the kudos of a grateful nation? Don't be shy chaps...

Posted by Craig Ranapia : 11/25/2006 04:04:00 PM

I think you'll find that National won't be too worried about the law change - it'll hurt Labour the most in 5 years time when they try to get back into parliment.

Posted by ScrubOne : 11/25/2006 04:43:00 PM

On that National six. I will believe it when the MSM say they have anonymous corroboration from the people involved.

Not to say that I won't believe it otherwise, just that I won't give it too much credence.

Posted by kiwi_donkey : 11/25/2006 06:03:00 PM

Well, kiwi donkey, I've still got a problem with non-disclosure of sources - especially when the provenance of the material Hagar cites is (to put it mildly) highly contentious.

Now, if Hagar and his alleged National Party sources have nothing to hide and obtained these e-mails legitimately, why don't they come forward and let the public decide whether they're trustworthy? Considering the very big claims made for this book, it might be a good idea for the hollow men behind this book to come out into the daylight and practice what Mr. Hagar preaches.

Posted by Craig Ranapia : 11/25/2006 10:00:00 PM

"If wealthy people want to fund the National Party who cares? It is THEIR money - THEIR choice - it's called freedom, something alien to the left. "

That's a nice refrain from the right - freedom to make money how they want - and it is utter bollocks. Socialism believes in the only universal freedom society should be aiming for: *freedom from want*. Capitalism understands economics to be a zero-sum game, therefore for some to win, some must lose, it's just a pyramid scheme without the honesty.

Span has rumninated on whether those on the left who want to perpetuate capitalism (ie mainstream social liberals) are doing more harm than good. I won't go into that now, but will say that the political right has proved itself to be a bunch of liars & dissemblers whose goal is to perpetuate their own wealth and power. The Labour Party may have its faults (I don't usually vote Labour as a rule) and it is hardly lily white. But to suggest that only the right believes in freedom for more than an annointed few is utter bullshit.

Posted by Pablo : 11/27/2006 01:07:00 PM