Labour Party art auctions: Charged trio of businessmen also accused in SFO's National donations case

Businessmen Yikun Zhang, Hengjia (Joe) Zheng and Shijia (Colin) Zheng at their first court appearance in the Labour Party donations case. Photo / Jason Oxenham

Three businessmen accused of making unlawful donations to the National Party can now be revealed to have allegedly made similar contributions to the Labour Party, including through art auctions and a Chinese imperial robe.

Six people were charged by the Serious Fraud Office (SFO) last May after an investigation into donations made to Labour in 2017.

The trio which can now be named are New Zealand Order of Merit recipient Yikun Zhang and brothers and businessmen Shijia (Colin) Zheng and Hengjia (Joe) Zheng, after their suppression lapsed today at 5pm. The remainder of the group continues to enjoy anonymity while the case progresses.

Zhang, 50, and the Zheng brothers, 36, were already facing an SFO prosecution over donations to National after being charged alongside former National MP Jami-Lee Ross in January 2020.

The trio will, however, not have to endure two High Court trials after denying their charges, with both the Labour and National cases to be heard at a single 10-week trial from July.

In a statement today from his lawyers, led by John Katz QC, and via PR firm Pead, Zhang welcomed the lapse in suppression "given the intense public interest in the case and the need to protect the integrity of New Zealand's political system".

The SFO's allegations against him stem from buying five paintings from Labour for $60,000 in March 2017.

"Most of the paintings came from an independent art gallery in Ohope and all of the paintings are on display in Yikun Zhang's home," the statement read, while his lawyers added he made no attempt to conceal the donation.

Zhang 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.

Zhang has since donated the robe to his hometown museum in China's Guangdong Province, his lawyers said. They said Zhang's purchases were "entirely innocent actions" and he will vigorously defend the charges after being "caught up in a misguided prosecution".

The six accused in the Labour case face a total of 12 charges.

Each are charged with two counts of obtaining by deception over a donation for Labour in March 2017. The SFO alleges the identity of the donor was not disclosed in the party's annual return of party donations.

The group are also accused of adopting a "fraudulent device, trick or stratagem" where the donation was paid via an intermediary account before being paid to, and retained by, Labour.

Prime Minister Jacinda Ardern with Yikun Zhang, who obtained a royal honour for his services to further New Zealand-Chinese relations in 2018. Photo / Supplied

Court papers, earlier released to the Herald, allege the group provided five names to "create the illusion" of five donations of sums of less than $15,000 to conceal the amount and identity of the actual donor.

A registered party must declare in its annual returns the identities of those who donate, contribute or loan more than a total of $15,000 in a given year, regardless of how many donations make up the amount.

All six are further accused of unlawfully obtaining a benefit for the true donor by allowing them "freedom from any public scrutiny".

After the charges were filed, Labour's general secretary Rob Salmond said the party has "complied with the law".

Ardern, meanwhile, indicated there needed to be legislative reform because of the number of SFO inquiries involving political parties, which include charges against two people linked to the NZ First Foundation and a police referral to the SFO over donations to the Māori Party.

Retiring Auckland Mayor Phil Goff's campaign expenses are also the subject of an SFO investigation.

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

Lawyers for Zhang, who was made a Member of the New Zealand Order of Merit in 2018 for services to New Zealand-China relations and the Chinese community, also wanted to dispel any suggestions he obtained a royal honour in return for donations.

They added that he was not a member of the Chinese Communist Party and had renounced his Chinese citizenship.

"He is a proud New Zealander and the contributions he has made to a wide range of community groups are a reflection of his commitment to give back to the country," the statement said, citing a $2 million fundraising effort for the St John ambulance service after the Christchurch mosque attacks.

Zhang has further founded an association and worked for the Teochew community in New Zealand, and organised an economic and trade cooperate conference between New Zealand and Hainan, China.

He is currently in China after the High Court permitted him, despite SFO opposition, to travel to see his dying and now late mother. Zhang is due to return to New Zealand later this month.

The National Party donations

The SFO's prosecution over National donations followed an inquiry into contributions of $100,000 in 2017 and $100,050 in 2018.

Like the Labour case, the corruption and financial crimes agency said the identity of the donor was also allegedly not disclosed in National's annual return of party donations.

Yikun Zhang at a private dinner with then National Party leader Simon Bridges. Photo / Twitter

The investigation was prompted after Ross went public 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.

Bridges has strenuously denied the claims, while Ross laid a complaint with police leading to the SFO's involvement.

National has maintained it was never involved in alleged criminal activity and said Ross acted on a "vendetta".

Ross, Zhang and the Zheng brothers were charged with obtaining by deception for allegedly adopting a "fraudulent device, trick, or stratagem" which resulted in the donations being split into sums of money less than $15,000.

Hengjia Zheng was also charged with supplying false information to the SFO.

They have pleaded not guilty to all the charges.

The National Party donations accused include Yikun Zhang, Shijia (Colin) Zheng, Hengjia (Joe) Zheng and Jami-Lee Ross. Photo / Jason Oxenham

After first appearing in court, Zhang and the Zhengs' lawyers, which include Paul Dacre QC and Rosemary Thomson, made their only public statement to date about the National donation allegations.

They said the charges came about during "unprecedented political infighting".

"Our clients are proud New Zealanders and philanthropists. They were urged to follow a process and are now deeply disappointed at being caught up in a donations fiasco," the lawyers' joint-statement read.

"They have supported numerous community groups over many years through fundraising activities and donations, including donating to many political parties and campaigns.

"Our clients believe they are casualties of the turmoil created through mudslinging during the high-profile fallout following Jami-Lee Ross' revelations and allegations about the National Party and will be defending the charges against them."

Ross, the former Botany representative who campaigned for the 2020 election with the minor and controversial party Advance NZ, has claimed he is a whistleblower on donations deception.

"There is no own goal," he proclaimed, alongside his lawyer Ron Mansfield QC, after his first court appearance.

In February last year, Ross also agreed to destroy an electronic copy of SFO documents inadvertently "leaked" to him. The papers, which Ross waved in the House of Representatives in 2020, contained confidential information regarding donors to National in 2017 and 2018.