Fraud office tracking National's $250,000 campaign gift

By VERNON SMALL and FRAN O'SULLIVAN

The Serious Fraud Office is investigating claims that a donation of about $250,000 to the National Party before the 1996 election was misused.

The investigation, which began 2 1/2 weeks ago, concerns a campaign contribution from Fay Richwhite interests which pledged substantial amounts to the National Government's re-election effort.

Party fundraisers were told the contribution would be made in two unequal instalments, expected to be funnelled to the party through solicitors' trust accounts to guarantee the donor anonymity.

But only one of the two promised instalments is understood to have reached the party's account.

It was not until preparations began for the 1999 election that concerns arose that not all of the 1996 money could be accounted for.

First, an American fundraiser who worked for the 1996 corporate effort questioned the fee the party had paid her, saying it did not relate to the sum she had raised.

A senior party source told the Herald suspicions were heightened when the party asked Fay Richwhite interests to increase their contribution for 1999 and were asked, "What do you mean? You did very well last time."

Former National Party president John Slater ordered an internal review.

A senior partner from a major Wellington accounting firm was brought in to run the investigation, which confirmed that party headquarters did not receive a second Fay Richwhite cheque.

He went through party records, but was unable to conclude the investigation because he was unable to get an affidavit from the donor.

The Serious Fraud Office has now stepped in and asked a number of former senior party officials to help with its inquiries.

National leaders yesterday denied that money had been misused and suggested Labour might be behind the complaint to the SFO.

SFO director David Bradshaw telephoned party leader Bill English last Friday, soon after Attorney-General Margaret Wilson was told of the investigation.

Mr English said the party had not complained. He did not know if the complaint had come from a member.

"The National Party has always run rigorous processes around funds, and I'm sure that will mean the investigation can be conducted quickly."

Asked if he was confident no money was missing, he said: "What I am saying is the National Party has run rigorous processes around its funding, and I am sure that will help the investigation."

Ms Wilson confirmed she was told of the investigation late last week, but was not given details.

"They said they were initiating an investigation into matters relating to the National Party with party funds."

It was normal SFO practice to tell the responsible minister when it started a serious investigation.

Party president Michelle Boag said the SFO should have told her, rather than Mr English, of the probe. And she questioned whether politicians should have been told at all.

"Bill is not the president of the National Party, and obviously funding issues have nothing to do whatsoever with the leader and the leader quite rightly has no knowledge of those issues," she said.

"As someone who represents the 'victim', I have not been informed of it, which seems a very strange way to go about an investigation.

If ... it is alleged that someone has made unauthorised use of National Party funds I would have thought I would have been the one complaining."

Ms Boag said she was working for Fay Richwhite in 1996, but had nothing to do with political donations and had no knowledge of anything from a National perspective.

She had sought legal advice and consulted Geoff Thompson, who was National Party president at the time of the donations.

"He brought with him his records of everything during that time and I had the opportunity to go through National Party records as well, so by the weekend we had a full picture of what this allegation related to.

"We then sought urgent legal advice over the weekend."

Mr Thompson yesterday confirmed that the allegation was about a Fay Richwhite donation.

He said he was confident no money had been misused under his "watch" as president, and the SFO was guilty of "naivety" in pursuing the investigation.

John Slater said last night: "I am aware that it appears an investigation is under way. I would assist any work they must undertake in any way possible."

Since the donations were made, electoral law has been changed to make it easier to identify contributors to political campaigns.

The Free Enterprise Trust acts as a front for donors to National who do not want to disclose their identity.

Yesterday, Ms Boag said lawyers for the party had asked the SFO why it had told the Government first.

They had also asked who had complained, and what the complaint was about.

"We have received completely unsatisfactory answers."

The SFO had not disclosed the name of the complainant.

"They said we would not get it. And this leads me to believe that this whole thing is totally politically motivated, that it is the product of a Government under pressure, that because we have been told it did not matter what we do we will not get the name of the complainant and yet Helen Clark is able to get the name of the complainant against her [over fake art works] by bullying and threatening.

"They said they are investigating allegations that money was improperly used from a donation that was made in 1995 and 1996."

She understood the allegation related to a Fay Richwhite donation which "was dealt with by the president and the finance committee at that time in a certain way. "There was a suggestion that it was dealt with improperly."

National had checked its records and was satisfied it was dealt with properly.

"I have seen all the records and I know exactly where it all went to. I can see that. We have a very specific paper trail that has been handed over to the SFO.

"We have very good systems in place. We have our accounts audited every year. We have disclosure obligations we must comply with and we have done so and I am therefore in no doubt that everything is totally above board.

"I am totally confident that the investigation will not produce anything untoward in terms of the National Party's books because those accounts have all been processed according to our rules and have been audited."

The party had given all the information the SFO needed for its investigation.

Ms Boag said it was possible Labour had laid the complaint as a diversion.

"I can only speculate that this is a political sleaze campaign by the Labour Party to take the pressure of their dishonest Prime Minister."

National had asked for the investigation to be completed quickly, but had received no commitment from the SFO.

She could not believe a National Party member would lay such a complaint when the party had the Government "on the run".

"If it is a National Party member, I will personally take responsibility for drumming them out of the party."

David Bradshaw, when approached by the Herald, would neither confirm nor deny that an SFO probe was being made.

But early last evening he issued a statement confirming that an investigation had started into an allegation "relating to an aspect of funding provided to the National Party in the mid-1990s".

"Having carefully considered the current case I have decided that it is in the public interest to make this release."

He said it was SFO policy to tell the responsible minister (Ms Wilson) about any important investigations.

It was not policy to reveal the name of a complainant to someone under investigation, because investigations could be prompted by various events, including the SFO's initiating a probe itself.