The ex-National Party leader was called to the witness stand at the SFO trial of former political ally Jami-Lee Ross. Video / NZ Herald
A group with political and business links to New Zealand's two major parties have had their verdicts confirmed in a trial over donations in the High Court today - with former National MP Jami-Lee Ross being cleared.
Ross was found not guilty of his charges, while all charges relating to the Labour Party also amounted to acquittals.
The Serious Fraud Office (SFO) prosecution involved seven defendants, including Ross and New Zealand Order of Merit recipient Yikun Zhang, over allegations they skirted the requirements of the Electoral Act.
Along with Zhang, businessmen and twins Shijia (Colin) Zheng and Hengjia (Joe) Zheng also faced obtaining by deception charges over donations to both Labour and National.
Zhang and the Zheng brothers were each found guilty of a charge over National Party donations, Justice Ian Gault revealed this morning after a lengthy judge-alone trial in Auckland.
However, the trio and three other defendants were found not guilty on all of the 12 obtaining by deception charges relating to Labour Party donations.
Former National Party MP Jami-Lee Ross with his lawyers Ron Mansfield KC and Hannah Stuart leave the Auckland District Court. Photo / Jason Oxenham
Zhang was found guilty of a charge for a National Party donation in 2018 but not guilty over a 2017 donation.
Colin Zheng was found guilty in relation to 2017 and 2018 National donations, while Joe Zheng was guilty over the 2018 donation and obstructing the SFO's investigation.
The three other accused were found not guilty on each of their two charges over Labour Party donations in 2017. Their names will remain suppressed pending a hearing for permanent name suppression.
Four of the seven accused in the political donations trial are Yikun Zhang, Shijia (Colin) Zheng, Hengjia (Joe) Zheng and Jami-Lee Ross. Photo / Jason Oxenham
The SFO alleged the identity of the true donors were not disclosed in either political parties' annual return of donations.
The Electoral Act requires a registered party to declare in its annual returns the identities of those who donate, contribute or loan more than $15,000 in a given year, regardless of how many donations make up the amount.
The allegations against Zhang, who was made an MNZM in 2018 for services to New Zealand-China relations and the Chinese community, involve buying five paintings from Labour for $60,000 in 2017 using other peoples' names.
PM Jacinda Ardern and her chief press secretary, Andrew Campbell, who gave evidence during the trial. Photo / Mark Mitchell
He also bought an antique imperial robe and two other works of art for $100,000 at a Labour auction event in September 2017.
The event was attended by Prime Minister Jacinda Ardern, then general secretary of the Labour Party Andrew Kirton and other senior party members.
Labour MPs and cabinet ministers Andrew Little and Michael Wood were called to testify on the allegedly sham art auction party fundraiser.
Other witnesses included Andrew Campbell, who has served as Ardern's chief press secretary since 2018, and Kirton.
Cabinet minister Andrew Little gave evidence during the judge-alone trial. Photo / Alex Burton
Zhang has since donated the robe to his hometown museum in China's Guangdong Province, his lawyers have said, while the paintings were displayed in his home.
The SFO's case over the National donations followed an inquiry into contributions of $100,000 in 2017 and $100,050 in 2018.
The investigation was prompted after Ross went public and went to police with claims former party leader Simon Bridges had asked him to collect a $100,000 donation from Zhang, which was then divided into smaller amounts in an attempt to hide it.
Yikun Zhang at a private dinner with then National Party leader Simon Bridges. Photo / Twitter
Bridges, now the CEO of the Auckland Chamber of Commerce, gave evidence during the trial. When asked about Ross' allegations that he had received instructions from his then boss to collect a donation in a covert way, Bridges responded: "I reject that entirely."
Ross' lawyer, Ron Mansfield KC, admitted his client was at the time "a desperate and unwell man" and the claims made about Bridges to SFO were unreliable and lies.
''The urban dictionary describes kamikaze by way of action as, complete and utter disregard to logic or rational thinking," Mansfield said.
Yikun Zhang, pictured with former Governor-General Dame Patsy Reddy when awarded his MNZM for services to New Zealand-China relations and the Chinese community. Photo / Supplied
Speaking to media outside court today, Ross said he was "very relieved" and the judge had come to the "right decision".
Reacting to the verdicts, SFO director Karen Chang said it was important the agency takes action when it believes the health and reputation of New Zealand's democracy is at risk.
"New Zealanders have the right to know who is funding the party they support and to be able to make an informed decision when they head to the voting booths," Chang said.
"Transparency around political donations is vital to the continued health of New Zealand's democracy and our global reputation for low levels of corruption, both of which deserve protecting."
Ross, Zhang and the Zheng brothers faced charges of obtaining by deception for allegedly adopting a "fraudulent device, trick, or stratagem" which resulted in the National donations being split into sums of money less than $15,000.
Hengjia Zheng was also charged with supplying false information to the SFO.
Zhang and the Zhengs will be sentenced on November 30.
Prime Minister Jacinda Ardern with Yikun Zhang. Photo / Supplied
Meanwhile, Crown Law has sought leave to appeal Justice Pheroze Jagose's judgment in the SFO's prosecution of two men with links to the NZ First Foundation (NZFF).
The court ruled that because the donations were never passed on to NZ First, the funds did not meet the definition of being a "party donation" under electoral law.
However, if the money was classed as party donations, Justice Jagose said: "[...] there is comprehensive evidence [the defendants] deployed the dishonest scheme in order to deceive the party and party secretary as to their better claims to the money paid into [one of the defendant's companies] and NZFF's bank accounts."
NZ First leader Winston Peters described the NZFF claims as "spurious allegations" after the trial. Photo / George Heard
During the trial, lawyers for the SFO alleged — over a more than four-year period to early 2020 — some 40 donors believed their donations were going directly to the NZ First, many of whom were supporters of party leader Winston Peters.
The donors, none of whom made complaints to authorities, included those in the horse-racing industry and business world, such as New Zealand's wealthiest person, Graeme Hart.
Peters, the former deputy prime minister, lashed out at what he called "spurious allegations" after the acquittal.
After the verdicts, Justice Minister Kiri Allan said the Government would close what she and others have described as a "loophole" in electoral donations law that had been exposed by the case.
She said the current law has enabled third parties not involved in a political party's governance and management to receive donations for the party without declaring it.
Justice Minister Kiri Allan said the Government would close a "loophole" in donations law after the NZFF case. Photo / Mark Mitchell
The amendment would clarify the definition of a party donation to be "when a person donates to a political party or any other person with the intention that the donation is for the benefit of the party".
"The change backs up the [Electoral Amendment Bill's] original purpose of improving the transparency and disclosure of political donations," Allan said.
"Without this change, an opportunity could exist for political parties to structure their financial affairs in a way that allows them to legally avoid having to disclose their political donations."
A report on the bill is due to the House of Representatives by December 5.
The Electoral Act requires a political party secretary to submit an annual return of donations to the Electoral Commission.
For donations greater than $15,000 in a calendar year, the identity of the donor must also be noted.
The Government has also proposed law changes in this area, including lowering the limit for public disclosure of donors from $15,000 to $5000.
