Todd McClay, left, and Lang Lin, right, at their July 2016 meeting in Beijing on the sideline of the G20 trade ministers' meetings.
KEY POINTS:
• Questions raised over National Party's largest donation of 2014-17 electoral cycle.
• Donation made through New Zealand-registered company after its Chinese.chairman and owner met then trade-minister Todd McClay in Beijing and Rotorua.
• Documentary evidence from former National whip Jami-Lee Ross connects McClay to $150,000 payment.
• Fears select committee
mulling foreign interference laws will keep loophole allowing donations to flow unchecked through foreign-owned companies.
Former National Party MP Jami-Lee Ross has dropped a fresh donation bombshell, revealing then-trade minister Todd McClay helped facilitate a $150,000 donation to his party in 2016 from a company owned by a Chinese racing industry billionaire known as "Mr Wolf".
McClay first met horse-racing mogul Lang Lin in July 2016 while the then cabinet member was in Beijing for a meeting of G20 trade ministers. The pair met again in April 2017 in Rotorua, McClay's electorate. A month later National declared a six-figure donation paid by Lang's company, Inner Mongolia Rider Horse Industry NZ (IMRHINZ).
The donation was largely organised by a phone call made from Ross' parliamentary office to Lang's representatives on the evening of April 4, 2017. Ross claims he was asked to make the call by McClay, who was in the office listening to the call on speaker, and the minister was kept informed of developments.
The revelations a minister was involved in facilitating National's largest donation of the most recent electoral cycle - with the cash coming from a China-owned business - comes as Parliament mulls how to counter foreign interference in New Zealand's political system.
Ross provided the Herald documentation around the IMRHINZ donation, including a cluster of calls to and from McClay around correspondence with Lang's representative, and an invoice showing the donation was paid into the party's Rotorua electorate bank account.
Ross said the episode should prompt action. He called the donation "the most obvious example from the last election, where a foreign individual was able to make a donation to a political party using a company. If we don't make the right decision now we're wasting our time."
McClay this week declined to be interviewed about the money or his relationship to the man behind it, but in a statement said his first meeting with Lang was arranged by Ministry of Foreign Affairs staff and the prospect of a donation was not raised until the second meeting in Rotorua.
"During that visit [in April] he indicated for the first time that Inner Mongolia Rider Horse Industry NZ Limited would like to support the National Party," McClay said. He asserted he had done nothing wrong as a minister, and the donation itself was handled in an "entirely lawful" manner.
Questions to Lang's Rider Horse group, which has been a big player at the annual Karaka stock sales and has airlifted 1700 New Zealand horses to China in the past six years, was answered with a statement describing McClay as Lang's "friend" and saying he expected nothing in return for his company's donation.
The justice select committee is currently deliberating on reforming the country's electoral finance laws, having heard from NZSIS director Rebecca Kitteridge in a rare briefing, saying foreign donations were a vector of concern.
"One of the main reasons we become concerned about these activities is because as relationships of influence, or a sense of reciprocity is established, they may be used as leverage to facilitate future interference or espionage activity," Kitteridge said.
Ross said he hoped the committee would make a decision to limit political donations to people - not companies or other legal entities, despite the problems this would cause for union and corporate donations to Labour and National respectively.
"I'm of the view if you're not able to influence the outcome through voting, you shouldn't be able to do it through donations," Ross said.
University of Canterbury professor Anne-Marie Brady said giving foreign donors the ability to use locally-registered companies allowed a "back door" into New Zealand's electoral system.
Lang first made his fortune in hot pot restaurants, and now also runs China's largest horse farm. Thanks to his keeping of two pet wolves and his name sounding like wolf in Chinese, he gained the moniker Mr Wolf.
Lang, McClay and lawyer Peter Kiely acting for the National Party, emphasised the donation was not from the man, but rather his company. Lang both directs IMRHINZ and is the chief executive and chairman of its sole owner.
New Zealand electoral law forbids donations above $1500 from foreign nationals but classes New Zealand-registered companies as local even if their control or ownership is foreign.
Otago University law professor Andrew Geddis said claims by politicians that foreign donations were effectively banned - with a $1500 limit on such donations - were undercut by allowing them from foreign-owned companies.
"It's one of these things that is technically true, while substantively false," he said of claims by politicians that foreign donations were banned.
Lang's donation was mentioned in Brady's groundbreaking Magic Weapons paper outlining China's influence campaign in New Zealand. It noted Lang's group was backed by a state investment fund set up as part of a "United Front" foreign influence apparatus.
Brady told the Herald New Zealand's foreign donations regime needed to be tightened: "What we need to do is change the situation where it's possible for a foreign person or foreign company to make a donation through setting up a New Zealand-based company."
She noted the World Bank had regularly awarded New Zealand the title of "easiest country in the world to set up a company" and called current arrangements a "back-door into our electoral system".
Geddis said the involvement of Cabinet members in personal and political fund-raising was a long-standing concern, and he hoped the "hat juggling exercise by ministers" who played multiple roles at different times, would cease.
He said the issue of involvement by ministers in party fund-raising was curious as the Cabinet manual was "completely silent" about the matter. "I suspect it's not an oversight. Successive governments have decided maybe the less said about it the better," he said.
McClay said a potential donation was not raised in Beijing when he was on official business, was first broached only in the latter meeting in Rotorua and he did not meet Lang again while a minister. "There could therefore be no conflict," he said.
Representatives for Lang said he expected nothing in return from the donation, and it was made in appreciation for National's "promoting trade between the two countries".
They added that the mogul had expressed an interest in a gong: "Lang also considered that he made so much effort to open the China market in exporting NZ horses to China, the NZ Government should award him an honour."
Since moving into Opposition, McClay said he had gone on to meet Lang at "some racing industry events and in a social capacity".
In the 2018 pecuniary interests register McClay declared having accepted gifts of travel and accommodation from the Yunnan Rider Jialize Horse Industry Co.
McClay said this related to a three-day trip to China facilitated by IMRHINZ. "It was entirely business-focused visit and there were no meetings with any government or party officials," he said.
Chinese companies office records show Yunnan Rider Jialize Horse Industry Co is another in Lang's Rider Horse group.
TIMELINE: The minister and the mogul
• July 12, 2016: Todd McClay, in Beijing for G20 trade ministers meeting, holds side meeting with Lang Lin. McClay says meeting was organised by Mfat staff and says, to best of his knowledge, it was his first meeting with the horse-racing mogul.
• Early April 2017:McClay invites Lang to visit Rotorua, his electorate, where McClay says the prospect of a possible donation was first raised.
• April 5, 2017 - McClay directs then National whip Jami-Lee Ross to call Lang's agents in New Zealand to arrange a donation. McClay sits in on the call and looped into developments
• May 15, 2017: A $150,000 donation is paid into the National Party's Rotorua electorate branch account.
• May 17, 2017: - National declares the receipt a donation from the Inner Mongolia Rider Horse Industry (NZ).
• 2018: McClay records in Parliament's register of interests gifts of international travel and accommodation from the Yunnan Rider Jialize Horse Industry. The company is another in Lang's group.
The donation to the National Party from Inner Mongolia Rider Horse Industry NZ Limited was disclosed publicly to the Electoral Commission as required by the Electoral Act. It appears on page 2 of the National Party 2017 financial return, published over a year ago.
It is entirely lawful for New Zealand companies, permanent residents and citizens to make donations to political parties they support, and, where required by law, donation disclosures are made. As was the case here.
The Cabinet manual is also very specific in this area. The donation in question was made to the National Party Rotorua bank account. The account is administered by the local National Party Electorate Committee and I have no access or control of these accounts.
In July 2016 I travelled to China as Trade Minister to attend the G20 Trade Ministers Meeting.
While in Beijing I was asked by Mfat officials, after my arrival, to meet with members of a delegation of New Zealand & Chinese Representatives of the Racing Industry. This involved two meetings.
One meeting with a representative of a New Zealand based Company, Inner Mongolia Rider Horse Industry NZ Limited (of which Mr Lang is a Director), and a second meeting that involved a meet and greet at the Embassy for the full delegation of racing industry stakeholders.
These meetings were arranged by officials on the day and were therefore not included in my advance Trip Briefing. Officials were present at all meetings.
Almost a year later in 2017, I invited Mr Lang to visit Rotorua as the tourism capital of New Zealand. During that visit he indicated for the first time that Inner Mongolia Rider Horse Industry NZ Limited would like to support the National Party.
My colleague at the time, Jami-Lee Ross, agreed to liaise with Inner Mongolia Rider Horse Industry NZ Limited on what that support might be (ie. a fundraising dinner for example), and those discussions resulted in a donation.
To the best of my knowledge I had never met Mr Lang prior to the Mfat request for a meeting. There could therefore be no conflict of interest. I also never met Mr Lang again after his visit to Rotorua, until after the 2017 election. I have since met him at some racing industry events and in a social capacity.
Regarding my pecuniary interest declaration, I received an invitation from the Yunnan Rider Jialize Horse Industry Co and travelled to Southern China for three days in my capacity as the Opposition Trade Spokesperson.
The purpose of the trip was to learn, and promote trade, business and the importance of the Southern China racing industry to New Zealand. It was entirely business focused visit and there were no meetings with any government or party officials. The visit was facilitated by Inner Mongolia Rider Horse Industry NZ Limited.
Bay of Islands Pastoral & Industrial Show on this Saturday.