ANALYSIS
NZ First is in the political fight for its life this election after the Serious Fraud Office announced it was charging two people relating to the party's donation's body – the NZ First Foundation. The question marks over donations could undermine leader Winston Peters' political legacy.
Seven months after the Serious Fraud started probing the NZ First Foundation, it announced it was charging two people, whose names are suppressed, for 'obtaining by deception' – a type of fraud.
The charges were announced little more than a fortnight before the election, after NZ First lost a battle in the courts to delay the announcement until after the election.
The SFO noted that no NZ First MPs, members, or board members were among those charged.
Peters responded angrily to that timing, saying other political parties whose donations the SFO was looking into it had not been subjected to such inconvenient timing.
Peters has also consistently insisted that the party had operated within the rules, and that the NZ First Foundation was nothing to do with himself or the caucus.
However, the NZ First Foundation is the body responsible for handling donations to the party and leaks of documents relating to that funding had raised questions about its role.
David Fisher looked at the background of the case and Peters' history with the Serious Fraud Office.
Over the course of the last year, there have been leaked financial and donation details that may suggest someone deep inside the party, someone who was unhappy with the party and someone with a dark sense of humour.
Many of the documents to have aired the party's secrets were placed in a box made to hold wine.
The humour - or nod to history - lies in the fact that much of Peters' electoral success was built on claims of tax rorts apparently contained in documents he produced in Parliament, originally held in a wine carton.
When Inland Revenue and the Serious Fraud Office studied the documents and did not press charges, Peters alleged corruption and incompetence at the agencies in the 1990s.
The subsequent Commission of Inquiry into IRD and the SFO's decisions became known as the Winebox Inquiry. To Peters' chagrin, after three years of hearings, the inquiry found no evidence to support his claims. Subsequent court action served only to muddy whether a victory had been seized.
Regardless of the substance of Peters' allegations, he and NZ First soared in visibility through the Winebox allegations. The party first contested an election in 1993 - the year after Peters alleged corruption in Parliament and the year before the Winebox Inquiry was set up to find out if there was any truth to the claims.
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In 2008, Peters and NZ First had another encounter with the Serious Fraud Office. Then the SFO was investigating donations to the party's Spencer Trust.
The SFO announced it would not lay any charges just a month before the election that tipped Peters out of Parliament for three years.
Now, 27 years after the Winebox, it is the Serious Fraud Office - that old target of Peters – that has delivered the news that could conceivably end Peters' chance of returning to Parliament, and finish NZ First as a party.
It would be an end that started in a wine box.
The documents that emerged around the NZ First Foundation almost never made it into the public arena. The Stuff journalist who was being directed through the Hamilton night to the documents, following directions sent from a range of mysterious mobile phone numbers, didn't find them where they were meant to be.
After literally ransacking a dumpster filled with dirty nappies, the journalist followed a hunch and visited the neighbouring daycare responsible for the output.
It was an initiative well rewarded. The daycare had found a box of papers. The internal documents of NZ First were intended to enjoy a second life as scrap paper - an outlet for preschool creativity.
The documents instead found life in journalism that has lifted the lid on the secrets of NZ First.
It wasn't the first leak from the party last year. Simmering discontent was foreshadowed in the October 2018 leak of internal party documents that contained member lists, minutes of post-election meetings and documents relating to internal party processes.
There had been rumblings of disquiet inside the party, which tends to be fractured across electorates and a step removed from the central party machine. That distance is eased through members' connection to Peters, a charismatic leader whose presence is believed to pull much of the party's support.
But that reliance on Peters, and distance from the party machine, appear to have come unstuck with frustration over the 2017 election result. Candidates and members were being told internal polling had the party close to 20 per cent early in the campaign. It was conveyed with such confidence that candidates felt they were all but promised - and many expected - high list placings followed by a seat in Parliament.
Even the emergence of Jacinda Ardern as new Labour leader didn't dash the hopes of a number of those who felt assured of becoming an MP. That confidence collapsed when - with just over three weeks to go until the election - the NZ First list came out with surprises that angered and upset those candidates and their many supporters.
The election result deepened those feelings when the party managed - on final count - to get just nine MPs into Parliament. It was well short of what members had been expecting, even though they had watched poll ratings fall as Ardern's star rose.
The coalition agreement with Labour did little to ease the rumblings in the base. While NZ First secured much, members from a range of electorates were out of sorts. Election post-mortems were held and complaints written by those who felt they were trampled over the path to power. A number wrote complaints to the board of the party, and then complained that the board hadn't taken the complaints seriously.
And then, in November, the party's electoral returns were used as the basis for a RNZ story on an organisation called the NZ First Foundation, which was listed as having made loans to the party.
In many ways, the existence of the foundation was hiding in plain sight in legally-required returns filed by NZ First to the Electoral Commission. Such returns are usually scrutinised by journalists and the politically-obsessed for information about who has donated to political parties. Usually, they produce little of interest because donations under certain levels do not require named donors.
In the returns for 2017 - filed in 2018 - the NZ First Foundation was listed as having made a loan of $73,000 to NZ First. Records showed that it again made a loan in the 2018 year for $76,622 and did so again in 2019 for $44,923. It raised questions because it was the only named entity to have provided money to NZ First since 2017.
And there were other questions, too, with the Foundation's trustees listed as Doug Woolerton, a former NZ First MP, and Peters' lawyer Brian Henry.
It seemed odd, then, when NZ First's secretary general Liz Witehira - who signs off on the documents filed with the Electoral Commission - was approached by Radio NZ for an explanation. She told reporter Guyon Espiner: "I don't know and I don't need to know… I didn't have anything to do with it. I have not been involved in any loans since I have become the secretary general."
Otago University electoral law expert Professor Andrew Geddis was asked for his opinion. He said the Foundation provided limited transparency from a political party - particularly one with ministers in government. It was unclear why it existed, he said, but it was possible it do so "to allow money to be given for the benefit of the New Zealand First party without going through the usual disclosure requirements".
Neither Henry or Woolerton would comment about the Foundation or the leaked information at the time.
Woolerton runs a political lobbying firm that offers special access to clients, saying "personal introductions to relevant Ministers and Members of Parliament can be facilitated" with "discretion and confidentiality". Asked about the foundation, he told Espiner: "It is not something that I am able to talk about. It is not something that you talk about at all."
While the Foundation's existence was there on public record - in plain sight - what came next was not.
A series of stories started to emerge in media based on documents that were clearly more sensitive. Around the time Stuff reporter Matt Shand sniffed around dumpsters in Hamilton, Radio NZ's Espiner was also receiving internal NZ First documents.
Among the documents were those showing Peters was present at a March 2017 meeting of NZ First's board of directors, at which there was agreement over setting up an entity like the foundation that would end "ad hoc" funding arrangements. The party had been unsuccessful maintaining funding in the past and its electorates were in a "weak state".
"The question must be posed though - is it reasonable to expect those electorates or for that matter the board to have the skills to produce funding of the magnitude demanded by a party seeking to be the dominant player nationally," Radio NZ reported.
Donors would be targeted and such an entity would offer a "tiered donation structure with benefits adhering to each tier".
The discussion at board level with Peters present raised the political stakes. He had already distanced himself from the Foundation when asked earlier that month, saying: "I look after the political wing of the NZ First party. That's an administrative matter and you've got to ask somebody else."
If it was the job of the party structure, then secretary-general Liz Witehira had already said she knew nothing of loans from the Foundation. And when approached about administrative matters by the Herald this month, she referred questions to Peters, saying: "I'm not a media spokesperson. Please contact the party leader's office."
Media stories based on leaked documents kept coming and included information about payments made by the Foundation and also about those who had donated money to the Foundation.
There were reports records showed the Foundation collected donations of more than $500,000 from April 2017 to March 2019.
The donations were not shown in records submitted to the Electoral Commission.
Nor were any of the expenses. The documents showed the Foundation paid rent for the party's 2017 campaign office, along with travel expenses and administration costs. There was an overtime payment for a staff member, a NZ First internet account which was challenged by Woolerton. One bill was sent directly to NZ First MP Clayton Mitchell's office in Parliament - $5000 to rent a 20-person tent at the Wellington Cup Day in 2018, Stuff reported, with the Foundation picking up the tab.
Mitchell, it was claimed in reporting, was the "bagman" for NZ First.
Stuff reported one donor as saying Mitchell provided the Foundation's bank account number. A party source told the news outlet that Mitchell was the point of contact for big donors. In early June, Mitchell announced he was leaving politics and would not stand again in 2020.
It emerged NZ First president Lester Gray had quit his position in October 2019 after refusing to sign off on that year's financial reports. In his resignation letter, he wrote: "As president, the limited exposure I have had to party donations and expenditure leaves me in a vulnerable position.
"This type of operation does not align with my moral and business practice values, and I am therefore not able to support the party any longer."
Gray featured when the investigation into the Foundation took a bizarre and disturbing turn. In February, surreptitious photographs of Espiner and Shand who were in Tauranga to meet Gray. The photographs then appeared on the BFD website, the successor to Whaleoil and operated by the same blogger, Cameron Slater - a client of Henry's. Peters initially said the party had taken the photographs, then scrambled to deny it had done so.
The reporting on the issue also saw the identities of donors emerge, and - according to Radio NZ - their confusion over the money they had put towards the party. All interviewed appeared to believe the money was going to NZ First, the political party, rather than the Foundation. Espiner also reported that Woolerton had also lobbied on behalf of donors. There were large donations, too, from the racing industry although just below the reporting limit. Peters, as racing minister, had delivered a string of benefits to the industry, including during the Covid-19 alert levels.
Over the months stories have unfolded from the documents, Peters has repeatedly insisted that NZ First operates inside the law. He does not speak of the allegations in detail, but offers broad assurances.
In February, the Electoral Commission had seen enough and decided there were questions to be answered and the police should do the asking. Almost immediately, the police passed the inquiry to the Serious Fraud Office.
In April, SFO director Julie Read said the SFO expected to complete its investigation before the election, which was then in September.
It did complete it before the second election date of October 17 - laying charges on September 23.
It appeared Peters' iron grip of discipline across the party had weakened.
Someone was leaking.
The party is famously close-knit, with Peters said to trust very few people. Chief among those is Peters' lawyer Henry. It is Henry who offers legal advice to Peters - he represented him at the Winebox Inquiry and since - and legal threats to those who would cross the NZ First leader's path. Henry is also Peters' closest adviser - NZ First candidates in 2017 have told the Herald of an address he gave in which he described himself as Peters' "dark shadow".
Also among the trusted are Anne Martin, whose daughter Tracey Martin is an MP and minister. Anne Martin was a key party official for decades, and seen by some as the most likely person to hold Peters' secrets.
Mitchell, too, was drawn into the inner circle despite a background that might give the politically cautious pause for thought. His involvement in bars with risqué stunts - dwarf tossing, for example - and a business relationship with a shamed police officer invited difficult headlines.
Ron Mark has been a constant figure in the party since 1996, serving as an MP consistently other than a spell in the political wilderness from 2008-2010 when the party was dumped out of Parliament, and while mayor of Carterton from 2010-2014. He has maintained distance from Peters, and never been part of his leader's inner circle.
Mark was Peters' deputy for much of that period, although has now been succeeded in that role by MP Fletcher Tabuteau, who comes with a connection to Peters through his family relationship to his leader's longtime fixer and minder, Tommy Gear, who died last year. Tabuteau is the nephew of Gear.
Neither newcomer Mark Patterson, Darroch Ball or Jenny Marcroft could claim a close connection with the party operation or its finances. Even Patterson, through his wife Jude and her temporary role as acting president, would be unlikely to have learned much of interest given how closely those secrets are held.
Newcomer Shane Jones - whose high list placing upset the party faithful - is an enigma in terms of party connections. He is fresh to the party, with his membership struggling to reach the four year mark, yet is the party's most recognisable figure outside Peters.
Jones is a key part of NZ First's election strategy this year, contesting the Northland seat against National's Matt King. A win in the seat Peters took from National in the 2015 byelection would pull the party back to Parliament, should it fail to reach 5 per cent.
If burdened with scandal, it may well struggle. Peters was crushed and sent packing from Parliament in 2008 after the Owen Glenn and Spencer Trust donations scandals.
Peters had denied taking a donation from millionaire Glenn, but Parliament's privileges committee censured Peters for failing to disclose a $100,000 which Brian Henry said was for the NZ First leader's legal fees rather than the party.
Peters is fond of pointing to New Zealand's history, inviting voters to trust him so that a bountiful history can repeat.
It will do this election, although whether it is the Winebox election of 1993 or the donation scandal of 2008 remains to be seen.