Will the police do their job?

Rodney Hide has laid a complaint with the police over NZ First's failure to declare donations in 2007. The question now is whether the police will do their job and formally prosecute.

Unfortunately, I doubt it. The last time they were confronted with electoral cases - in 2005, over Labour's overspending on their pledge card and National's convenient "mistake" of not including GST in their broadcasting spending - the police dropped the ball and didn't prosecute anyone. The key problem seems to be that they just don't take electoral cases seriously; IIRC one of the detectives assigned to investigate those cases complained that they were a distraction from "real work" like burglaries and murders - the theft of our democracy apparently not being a serious crime in their book. But there's also the problem of the police's natural authoritarianism, which means that when they are confronted with apparent wrongdoing by those in power, their natural response is to sniff the arse of authority rather than kick it. And the result, in 2005, was parties getting away with egregious breaches of the law. While I'd like to think they've learned from their mistakes and changed, given their signal failure to learn anything from the police rape cases suggests that they are institutionally incapable of it. Which means that despite a clear case, once again we are likely to see corrupt lawbreaking politicians walk.

Not just historical

Over the weekend, we learned conclusively that NZ First violated the Electoral Act by failing to declare donations channelled to it by the Spencer Trust in 2006. Unfortunately, due to the six-month time limit on bringing charges, they can never be prosecuted for it. However, it seems that their offending wasn't just historical. The administrators of the Spencer Trust have admitted they channelled more than $10,000 to NZ First in 2007. Despite a clear requirement in the law, this money was never declared by the party in its annual return of donations - a prima facie breach of the law.

This cannot be allowed to pass. Transparency around donations exists for good reason: to ensure that we can have confidence in our political system and that our politicians are not being bribed or influenced by large donors. The Electoral Commission must investigate, and if a case can be made, bring charges. And they need to hurry - they only have until November 16 to do it.

As for the Spencer Trust, while they are disclaiming any responsibility for disclosure, under the Electoral Finance Act, they now have a positive duty to identify the original donor or contributors when passing on money. Failing to do so is a criminal offence carrying a penalty of up to $40,000. While this doesn't apply to last year's donations, it does apply from 2008 onwards, and you'd hope they are complying with the law. Otherwise, they too could (and should) end up being prosecuted.

Failing the Tui test

Yes, NZ First are seriously trying to claim that their gross and persistent breaches of the Electoral Act were just "human error". Like DPF, I think this simply fails the Tui test. In order to be believable, the staff who prepare their annual returns would have to be completely and utterly ignorant of the law, while the lawyers, accountants, party officials and MPs who presumably oversee them had to have failed completely to do their job. Electoral law is not rocket science, and such widespread and systematic incompetence is so far beyond the bounds of credulity that I doubt even Doug Woolerton would believe it, particularly when it seems to form part of a wider pattern of non-disclosure. But I guess claiming not to have a brain between them (and not being able to hire one either) seems better than admitting that they systematically and intentionally lied to the public about where the money was coming from...

Deeply corrupt and grossly hypocritical

Today in an effort to head off the Serious Fraud Office investigation into whether donations intended for NZ First reached their destination, the Spencer Trust handed over financial records to the SFO. It also showed some of them to TV3. The records appear to show that there was no fraud - the money was indeed laundered through the trust and paid to NZ First. But they also show absolutely clearly that NZ First violated the Electoral Act by not declaring donations. This isn't a violation of the spirit of the law, like National's laundering of millions through a series of trusts to prevent the public from learning who was buying influence in their party - it was a clear and blatant violation of the law, which would have been obvious to anyone with even a passing acquaintance with the Electoral Act. NZ First has not declared any donations from the Spencer Trust, ever, and certainly not in 2005 when this donation was made. And yet the trust's own records show large payments to NZ First's bank account.

Unfortunately, there is nothing the Electoral Commission can do about it. When they drafted the law back in 1993, politicians included a cosy little out for themselves in the form of a six month time limit on prosecutions. It's been more than six months since the donation in question was made, so no charges can be brought. And so Winston and his cronies get to walk on this one, despite pissing on the law and our democracy for years.

There is however something the public can do about it, and that is don't vote for New Zealand First. By their actions they have shown themselves to be deeply corrupt, not to mention grossly hypocritical. And we should remember that at election time.

Sanity prevails

According to Radio New Zealand, Winston peters has agreed to stand aside while the Serious Fraud Office conducts its investigation. No news on who will replace him (presumably Phil Goff), but it suggests that the government retains confidence and that we won't be having an election before the ETS can pass.

Phew.

Update: Helen Clark will be replacing Peters as Minister of Foreign Affairs. Given that she was doing much of the job anyway, this seems appropriate.

Putting up

This morning, Winston Peters challenged the Serious Fraud Office to "put up or shut up" on the question of his donations. Now, it looks like they've gone for the former option.

At this stage, now that he is the subject of a serious criminal investigation, I can't see how Helen Clark can possibly avoid suspending him. The question is whether he will accept it, or try and topple the government in retaliation.

Climate change: we have the numbers

NZ First has agreed to back the ETS, meaning the government now has the numbers to pass it. Hopefully this means it will feature in tomorrow's Business Statement. Unfortunately, though, the entire process - and years of hard work - may yet be derailed by Winston Peters' corruption and ego. I'm pretty sanguine about this - if it happens, it happens, and there's nothing that can be done about it; no legislation is worth turning a blind eye to corruption for. At the same time, if it does, it will be deeply disappointing, and another reaosn to hope for the rapid exit of this malign influence from our political system.

This'll be interesting

Rodney Hide has complained to the Serious Fraud Office about Winston Peters' donations. This'll be interesting. If the SFO begins an investigation (and the Bob Jones donation would seem to be a prima facie case), then under the precedent she's set for herself in the David Benson-Pope and David Parker cases, she will have to stand Peters down for the duration, or face allegations of inconsistency and pandering. And either could cost her her government in the short or long term.

Meanwhile, I think John Key can just kiss goodbye any chance of a post-election deal with NZ First. But National clearly doesn't want one - again, they're aiming for majority government or nothing, and would love to drive Winston out of Parliament. But if they're unsuccessful in the latter (and remember, Winston feeds off persecution), this could backfire significantly in a few months time.

Another NZ First slush fund

The interesting news in the Dominion Posts's story this morning that Bob Jones gave $25,000 to NZ First is not that he donated; rather, it's that it was never declared, instead being diverted into a party slush fund. Despite having written out the check directly to the fund, Jones seems to have been under the impression he donated to the party, and is reportedly concerned that it was used for another purpose.

(In his RadioNZ interview [audio], he makes it quite clear how corrupt the pre-EFA money laundering arrangements were; "every party" used trusts, but everyone involved knew that the donation was for the party. So, the trusts were purely there to circumvent disclosure and hide influence from the public).

The trust was "used sometimes to pay NZ First’s bills". None of this was declared either, either as an anonymous donation or an open one. While it is possible that bills paid by the Spencer Trust came to less than $10,000 in any one year, but if it didn't (and remember, Jones was unlikely to be the only donor), then it should have been declared. While Winston Peters may quibble, paying a party's bills is a donation (albeit in a roundabout fashion), and it needs to be declared. And that has always been the case - the old Electoral Act defined a candidate or party donation as including "money or of the equivalent of money or of goods or services or of a combination of those things", and this definition has been carried over into the Electoral Finance Act.

Unfortunately, the Electoral Commission can't do anything about any breach, as they have a six-month limit on prosecutions. But you'd hope that they would take this as a warning, and go over NZ First's annual return with a fine-toothed comb.

The good news is that if NZ First is still carrying on like this, it is illegal. Now, if money is passed on by a trust, the identity of the donor must be identified; if they don't disclose it, it must be treated as anonymous, and is capped at $1,000. If it is funded by multiple contributions, then the contributors must be identified as well. Failure to do either carries a penalty of a $40,000 fine. Deliberately colluding to make large anonymous donations is now a corrupt practice. If the trust wants to spend large amounts of money for electoral purposes in its own right, it must register as a third party (it hasn't) - which means it must likewise disclose its donations. So, either way, they're going to have to come clean. And given what we've been hearing in the last few days, it's about bloody time too!

Clark on Peters

I'm just listening to Question Time, and Helen Clark is getting the expected grilling about Winston Peters and his secret donations. Two interesting points:

• Despite clear Cabinet guidelines about the declaration of interests and a separate (but sadly confidential) process for Ministers to declare interests, Clark insists that it is nothing to do with her, but instead a question for the Registrar of Pecuniary Interests. This is simply false; the question of whether Peters has failed to properly notify Parliament of his interests and the question of whether he has failed to properly declare and manage his interests as a cabinet minister are completely separate.
• Clark says Peters can keep the money. Under s2.79 of the Cabinet Manual, gifts of more than $500 must be relinquished unless the Prime Minister permits them to be retained. According to Clark, the gift paid for a legal case which served a substantial public interest, and so she has no problem with it being retained. This isn't unreasonable, given the frequency with which MPs are involved in legal action, and it is nice to have it made clear.

Unfortunately, Clark entirely evaded the question of whether giving a minister $100,000 when you wanted a job from them created a conflict of interest. The answer is obvious, and it is shameful that she refuses to state it and stand up for proper standards in the executive.

The full transcript will be up on the Parliament website later today.

How many slush funds does Winston have?

The Dominion Post this morning reports that NZ First has been receiving money from one of New Zealand's richest families, seemingly structured to avoid declaration limits. So far, so normal - this sort of corruption was par for the course before the Electoral Finance Act's lower thresholds and tighter disclosure rules, and the old Electoral Act allowed parties to be wilfully blind about where money was coming from in order to keep the identities of their backers out of public view. but then it gets interesting:

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.

(Emphasis added)

Which raises the question: how many slush funds does Winston Peters have? The prospect that Winston was operating a "leader's fund" (as it was euphemistically put) was first raised by Ben Thomas in the NBR last Friday (column duplicated on Tumeke). And again, it raises all sorts of disclosure problems. Its one thing to have your party donations laundered through a nominally independent lawyer; it's quite another when its the party leader doing it. And its another thing again if this money disappears into a black hole and is never declared in the party's annual returns.

This smells very bad, and someone needs to get to the bottom of it. In the meantime, I'm just glad that the passage of the EFA will have put a stop to it.

Election funding: perfidy and hypocrisy

On 11 December 2007, during the committee stages of the (then) Electoral Finance Bill, NZ First leader Winston Peters reminded the opposition of the meaning of "perfidy":

I will tell the good doctor [Paul Hutchison] what perfidy is: it is deceit—saying one thing whilst acting the very reverse in terms of one’s behaviour. That is what perfidy is.

The term could now be applied perfectly to Peters himself. Having supported a bill which imposed much-needed transparency on election finance, forcing political parties to identify their donors and outlawing the money laundering used in the past to conceal their identities, it turns out that Peters has not been practicing what he preaches. Instead, he's been receiving donations from expat billionaire Owen Glenn, disguising their origin from the Electoral Commission so that they do not show up in annual returns, and lying about it to the public. Peters would no doubt claim that it was all legal, just as National's 2002 and 2005 money laundering schemes were legal, but that's not the point. It was wrong, and coming from a party which had spoken so strongly in favour of transparency, grossly hypocritical, even perfidious. This is exactly the sort of abuse the Electoral Finance Act was supposed to put an end to. Is it really too much to expect our politicians to practice what they preach?

The other point is that it may not have been legal. Even under the Electoral Act 1993 it was an offence to lie on an annual donation return. However, there was no ban on structuring donations to evade disclosure, and the definition of "anonymous" allowed wilful blindness on the part of party officials to the identity of a donor. But those are questions of fact, and on the basis of the Herald's story, NZ First's 2007 annual return must now be considered questionable. The Electoral Commission should investigate, and if any violation of the law as it applied at the time is found, prosecute. Parties should not be allowed to get away with evading disclosure and preventing the public from knowing who is funding them.

Meanwhile, Doug Woolerton, Peter Brown, and Ron Mark must be feeling pretty embarrassed about all this. They put their credibility on the line in the EFA debate, standing up for transparency and honest politics against National's secrecy and lies, and their leader has just cut them off at the knees. If I was in their position, I'd be feeling pretty annoyed about it, and it would be nice to hear one of them say so.

Why Parliament should be subject to the OIA

Last year, Speaker of the House Margaret Wilson called for Parliament to be subject to the Official Information Act. Today, we have a perfect example of why it should be: Tommy Gear. What does he do? Nobody knows. But he gets a Parliamentary Services salary of $50,000 a year for it.

This is a basic question of accountability for the use of public money, but the public has no right to know. That stinks. And its high time we did something about it, by opening Parliamentary Services to proper public scrutiny.

WTF?

Thanks to Winston Peters, ordinary New Zealanders will now be subsidising the racing industry - and specifically, its richest breeders and horse owners - to the tune of $9 million a year. And not by funding the construction of venues or by covering the costs of events to represent their presumed entertainment value to the public, but by directly subsidising prize pools.

Sure, it's not a hell of a lot of money, but its objectionable all the same. I'm dubious about subsidising sport as it is, but this is a particularly bad way of doing so, a direct subsidy from the poor to the rich. And from a Labour government, that stinks.

Once bitten, twice shy

Back in the 90's, New Zealand First got badly burned when the National Party they had gone into coalition with changed its leadership, leading to a change in policy direction which ultimately saw the coalition - and NZ First - fragment. Now Winston is faced with the prospect of potentially having to go into coalition with National again - and this time round, he's being a lot more careful, demanding that any deal be agreed to not only by National's leader, but by every single National MP as well:

We could work with either Helen Clark or John Key.

But, we do have a proviso about National because of our past experience.

[...]

And before we could go with National, we would make every single MP in the National caucus sign up to whatever agreement was reached.

That includes all the right wingers and Act look-alikes that lurk in the shadows.

It's good theatre, but I think the most important purpose is to provide Winston with an out to his promise to support the largest party if National's policies prove too unpalatable (OTOH, support on confidence and supply doesn't necessarily mean support on legislation - something that should be stressed a lot more).

Of course, all this is predicated on NZ First staying in Parliament. And on current polling, that's not looking too likely.

Does NZ First's FTA ad comply with the EFA?

When I saw New Zealand First's anti-FTA ad (The Inquiring Mind has a scan here), I immediately noticed the absence of a promoter statement and began wondering whether it complied with the Electoral Finance Act. It seems others have asked the same question. Unfortunately, I think Winston may not like the answer.

Section 5 of the Electoral Finance Act defines an "election advertisement" as:

any form of words or graphics, or both, that can reasonably be regarded as doing 1 or more of the following:

(i) encouraging or persuading voters to vote, or not to vote, for 1 or more specified parties or for 1 or more candidates or for any combination of such parties and candidates:

(ii) encouraging or persuading voters to vote, or not to vote, for a type of party or for a type of candidate that is described or indicated by reference to views, positions, or policies that are or are not held, taken, or pursued (whether or not the name of a party or the name of a candidate is stated)

While targeted at a specific issue, the ad also lays out NZ First policy and encourages approval of it ("Don't you agree?"). As a result, I think a reasonable person would regard it as an encouragement to vote for NZ First. This means it requires a promoter statement, and NZ First has violated s63 (2) (a) of the Act. However, it doesn't necessarily mean it counts against NZ First's election expenses cap. In order to be an "election expense", an advertisement must be a "candidate activity" or a "party activity", both of which specifically exclude communications produced by MPs in the course of their duties. And no matter what you may think of NZ First's policy stance, only the Auditor-General would think that explaining your position and inviting feedback on them isn't part of an MP's job. So, it's an election advertisement, but one which doesn't actually "count". That doesn't let NZ First off the hook - election advertisements must comply with s63 - but it does go some way towards explaining why NZ First may have forgotten it.

(Why is the law so confusing? It's entirely the fault of the National Party. Originally, the EFA excluded MP's communications from the definition of election advertising. But National squealed and beat a dead pledge card some more, and got it removed. The net result is that we now have the absurdity of election advertisements which are not expenses, a lot of hassle, and a barrier to MP's doing their jobs properly. But National got some headlines, which is all they cared about. And OTOH, how hard is it really to include a promoter statement in all Parliamentary Services advertising?)

Given the breach isn't particularly consequential, I don't think the Electoral Commission will prosecute. Instead, they'll probably use it as further education to parties about what not to do. But the grace period for adapting to the new law will be running out soon, and parties had better get their act together.

Two other thoughts on this: firstly, I don't think the ad would be considered an election advertisement if it had come from a group other than a political party. It's almost a perfect issue ad, and without those party logos and their implicit "vote for me" message, it would probably be in the clear. Secondly, I don't think NZ First will care if it counts towards their spending cap. They've never even come close to spending their limit, and if their expenses last election are anything to go by, even if their entire Parliamentary allocation was classified as election advertising, they would still have at least half a million dollars headroom. However, such a ruling would hurt the larger parties, who spend as much as they legally can (or, in the case of last election, more). Having to count their MP's Parliamentary communications as election expenses would at the least severely restrict their ability to campaign, if not breach the spending limit well before the election. A person with an evil mind might want therefore to see whether these are election expenses, just to watch them squirm.

Correction: I had the impression that the original bill was clearer about the place of Parliamentary advertising, and that this was subsequently amended. I was flat-out wrong. The law is absurd because it was drafted that way in the first place. However, as pointed out in this article (about which more later), the government cannot amend it to fix the absurdity because of fears of a voter backlash (which would be whipped up by - you guessed it - the National Party).

Up to their old tricks again

Sigh. There's an election coming up, and NZ First is polling badly, so they're up to their old tricks again, hauling out all the vile old rhetoric about an "asian invasion" and New Zealand being "inundated" (that's "swamped" with more syllables) by immigrants. The focus for their ire is the latest population projections from StatisticsNZ, which show the number of Asian New Zealanders almost doubling over the next twenty years to 790,000. To which my response is "so"?

Unlike the elderly xenophobes in New Zealand First, I am not afraid of difference. I do not think skin colour matters. And I certainly don't care whether the average skin tone of New Zealand in twenty years time is lighter or darker, yellower or browner. It doesn't matter now, and it won't matter then. Instead, what matters is whether we remain a liberal and tolerant society where people can be who they are and pursue their varied life-plans without interference. And that certainly isn't aided by NZ First's ugly triennial outburst.

Fortunately, Winston's fan club isn't getting any younger, which means natural attrition will soon take its toll. Unfortunately it may take a few more elections before we are finally rid of this poisonous cancer in our body politic.

Reported back

The Justice and Electoral Committee has reported back [PDF] on the Treaty of Waitangi (Removal of Conflict of Interest) Amendment Bill, and recommended that it not be passed. The bill would have prevented judges of the Maori Land Court from sitting on or chairing the Waitangi Tribunal, replacing them with retired High Court judges, ostensibly to prevent "conflicts of interest" (and possibly in an effort to remove tribunal members NZ First has taken a dislike to). But the committee found that the judiciary already had robust protocols in place to handle any conflict (generally involving recusal), that there was no inherent conflict of interest, and that these judges brought invaluable and irreplaceable expertise and knowledge to the Tribunal. Their conclusion:

We consider that the amendments proposed could severely limit the ability of the Waitangi Tribunal to draw on the expertise of those best qualified to act as members and to provide recommendations on matters of national importance.

Unfortunately, due to the Members' Day logjam, the bill may not get a vote before the election - meaning that it could still come back to haunt us if NZ First increases its political leverage.

(I have posted more on this bill here).

NZ First, National, and coalitions

Winston Peters has announced his post-election coalition preferences: as in 2005, he will negotiate first with the largest party. It's a perfectly reasonable position, which will give some certainty to voters about what the possible outcome might be (assuming, of course, that Winston makes it back in. He might not - on current polling, NZ First won't make the 5% barrier, and Winston is not guaranteed to win an electorate). It is also a fairly good strategy to maximise NZ First's leverage.

NZ First has learned from its disastrous 1996 coalition deal with National. Rather than push for a "cast iron" coalition agreement, with an agreed policy platform from the outset, in 2005 NZ First went with a much looser arrangement [PDF], promising confidence and supply in exchange for "consultation" and a limited set of policy concessions (most of which were "we'll look at it"). Sure, Winston is in outside Cabinet, but the rest of his party isn't, and they have a free hand to criticise the government. They also have an almost entirely free hand on legislative matters, forcing the government to bargain with them on a case-by-case basis for support on legislation. While they've been quite reasonable about this, offering support by default unless they have a serious problem with a bill, the fact remains that they effectively have a veto on legislation. And the mere possibility of that has significantly constrained the government's program.

This has worked because Labour is used to MMP, used to compromise, and is able to moderate its policy programme while finding areas of common ground it can work with other parties on (e.g. kiwisaver). But I can't imagine it working so well with National, firstly, because the party has not adapted well to MMP (it still has an arrogant "born to rule" attitude, and has systematically failed to exploit the government's weak position this term by building coalitions and running its own legislative agenda). And secondly, because of the policies it wishes to pursue. There's a much wider gulf between NZ First and National than between NZ First and Labour, and I can't really see Winston voting for privatisation, superannuation cuts, and looting the state, no matter how many baubles he's offered. If forced to rely on NZ First, National may find itself government, but unable to enact their core election promises or policy platform outside of law and order. The net result is likely to be hissy-fits and threats of an early election to "gain a mandate".

The same analysis applies to either of National's other possible partners across the centreline, except there the policy gap is even wider. Basically, if National has to rely on anyone other than ACT or Peter Dunne - in other words, if they fail to score more than 47% of the vote - they're crippled.

Donnelly resigns

NZ First MP Brian Donnelly has resigned from Parliament to take up a position as High Commissioner to the Cook Islands. While I'm sure he'll be good at the job, it's a shame - Donnelly was a good MP, and as his voting record shows, pretty much the only liberal in NZ First. Unfortunately, it seems he's likely to be replaced by Dail Jones - who as Colin Espiner points out, makes Gordon Copeland look like a liberal. The man is so reactionary that he's still fighting the battles of the 1970's. This represents the victory of the ultra-reactionary trend within NZ First (people may remember that last year Jones was threatening to purge Donnelly and Doug Woolerton from the party over their suport for the repeal of section 59) - but fortunately, on current polling, it doesn't look they'll be bothering us much longer.