Editorial: Banks must resign over gift scandal

John Banks. Photo / Getty Images

John Banks is in serious trouble. If we are to take the word of the internet entrepreneur Kim Dotcom, the former Auckland City mayor advised him to divide a $50,000 donation so that it could be anonymous in the statutory declaration of donors to the mayor's re-election campaign.

Mr Banks says he cannot recall the discussion, which is remarkable unless he is offered $50,000 with monotonous regularity. Choosing his words carefully yesterday, he said, "I was not aware that Mr Dotcom had made this donation to my campaign."

"This" could mean any one of five $25,000 donations in Mr Banks' mayoral campaign returns. Two of them came from Dotcom but the candidate might not know which two. That arrangement would be amusing if the subject was not so serious. Campaign finance declarations are our main check on political corruption.

The Local Electoral Act is clear enough. It defines an anonymous donation as meaning "a donation that is made in such a way that the candidate concerned does not know who made the donation". The plain meaning of that phrase is clear to the public whose trust Mr Banks has sought. Any other interpretation would be sophistry designed to defeat the act's purpose.

Anonymous donations should not be permitted at all but they have been allowed under strict conditions because political parties say few wealthy or corporate donors would contribute if their names had to be made public. Dotcom's testimony raises doubts about whose interest anonymity really serves. It seems not to have mattered to him whether his donation became public knowledge. According to him, his anonymity was all Mr Banks' idea.

Another worrying element is that Mr Banks might have given us a glimpse of a practice that is common in political party fund-raising.

He had been a National MP for many years before he retired and won the Auckland mayoralty. He may have been fund-raising for his mayoral campaigns in the same way that he had seen parties raise money for parliamentary elections.

Anonymity of big donors is probably more important to the parties than the donors. The parties stand to suffer more than their benefactors if the relationship becomes known.

This case warrants a reconsideration of campaign finance law to require the naming of all contributors of more than $1000 to a candidate or party. We no longer need listen to claims that private donations would dwindle and that much more public funding would be required.

But in the meantime, what should happen to Mr Banks? The best the Prime Minister can say for him is that Mr Banks believed he was acting within the law.

The law, it bears repeating, states an anonymous donation is one "that is made in such a way that the candidate concerned does not know who made the donation". If Mr Banks did know he was getting a donation from Dotcom, as Dotcom says he did, his position is untenable.

The incident arose during his last mayoral campaign, not last year's general election at which he won the Epsom seat in Parliament for Act. But he would not be the first MP to have to resign for an indiscretion before he stood for Parliament.

His departure would create a byelection in Epsom that National would need to win if the Government was to retain its majority.

Labour has called for his suspension pending a police investigation of a complaint Labour has filed, but the police should not be put in this position. Electoral law is a matter between those elected and the public they have asked to trust them.

Mr Banks must have known the identity of his big donor and did not disclose it. He has lost the public trust and should go.