Former Act MP Donna Awatere Huata told a Serious Fraud Office investigator that one of her main accusers was motivated by malice, a jury in the Auckland District Court heard yesterday.
Awatere Huata and her husband, Wi Huata, face seven charges, relating to $82,000 from the Government-funded Pipi Foundation.
Theyjointly face four charges of fraud and one of attempting to pervert the course of justice.
Two fraud charges are laid against Awatere Huata alone.
A former chairwoman of the foundation, Kathy Skipworth, who was prosecuted for stealing Pipi cheques in 2002, has told the jury that Awatere Huata used one cheque for $30,946 for school fees and for an $18,000 stomach-stapling operation.
The Crown says the couple covered up the frauds with phoney invoices.
When senior SFO investigator Stephen Drain put the Skipworth allegations to Awatere Huata during an interview in September 2003, she dismissed them as "absolutely untrue".
Mr Drain said it was an "extraordinary coincidence" that Mrs Skipworth had manufactured a story very similar to the actual events, including the purchase of two bank cheques to pay the hospital for the stomach operation.
Awatere Huata said Mrs Skipworth used her "malicious imagination" to develop a scenario that was not true.
"I have absolutely no idea why she's done that. It's absolutely untrue that I stole money from Pipi and used it for my stomach staple." She told the SFO she saved for more than two years for the operation.
She denied an assertion by Mr Drain that her story about putting money aside for her surgery was invented to fit the circumstances.
Mr Drain asked about a $3000 payment to Iona College in Havelock North for one of her daughter's school fee payments, but Awatere Huata said she had no recollection.
She had just gone through major surgery and the side-effects of the anaesthetic meant she could not recall paying the bill.
Mr Drain alleged that invoices had been concocted to disguise where money had gone.
Referring to one invoice, he suggested it was a "continuation of a cover-up" begun in January 2003 by Awatere Huata and her husband through the creation of invoices "to try and cover up your illegitimate use of Pipi funds".
Awatere Huata replied: "No, absolutely not."
She said she had nothing to do with preparing the invoices.
