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 wealthy Chinese-New Zealand businessman and twin brothers have been sentenced to community work after they were found guilty of skirting legal requirements when making donations to the National Party in a landmark prosecution.
New Zealand Order of Merit recipient Yikun Zhang and twins Shijia (Colin) Zheng and Hengjia (Joe) Zheng were last month found guilty, following a lengthy Judge-alone trial, of obtaining by deception relating to concealing the true identity of the source of donations to the National Party in 2018.
It is the first time anyone in New Zealand has been found guilty of obtaining by deception in relation to electoral donations and followed a lengthy Serious Fraud Office (SFO) investigation and prosecution.
Zhang and the Zhengs appeared for sentence in the Auckland High Court on Wednesday before Justice Ian Gault.
Zhang received 200 hours of community work, Colin Zheng 250 hours and Joe Zheng, described as a follower of his brother, to 150 hours. All three men were also sentenced to community detention with a curfew.
In the public gallery was veteran activist Tāme Iti, who provided the court with a character reference in support of Zhang, whose lawyer John Katz KC spoke of his charitable works.
The trio in court on Wednesday and three other defendants with ongoing interim name suppression were found not guilty on all of the 12 obtaining by deception charges relating to Labour Party donations. Former MP Jami-Lee Ross was also found not guilty on all charges.
Crown lawyer Paul Wicks KC said Zhang, who is a New Zealand citizen and was made an MNZM in 2018 for services to New Zealand-China relations and the Chinese community, was the key orchestrator of the fraud and sought a starting point of 18 months imprisonment. Obtaining by deception carries a maximum penalty of three years in prison.
“He was involved in the transfer of money from China to Joe Zheng’s bank account and he knew that others were taking steps to conceal who the true donor was,” Wicks said.
Yikun Zhang appears in the Auckland District Court, alongside, Jami-Lee Ross, Shijia (Colin) Zheng and Hengjia (Joe) Zheng. The Serious Fraud Office filed criminal charges in relation to donations paid into a National Party electorate bank account. Photo / Jason Oxenham
The Crown sought 24 months as a starting point for Colin Zheng, who was found guilty of two charges of obtaining by deception relating to a $100,000 donation and a $100,050 donation.
For Joe Zheng, guilty of one charge of obtaining by deception, Wicks said he played a lesser role and was acting on instructions from his brother. But he was well aware the total donation was over the $15,000 donation threshold, Wicks said.
The Crown sought nine months for Joe Zheng, plus a further six months cumulative on the other sentence for providing false information to the SFO.
Wicks said the offending involved the subversion and manipulation of the proper public process for political donations.
“It was not a victimless crime, the victims were the public at large,” Wicks said.
Zhang’s lawyer Katz said the offending did not amount to electoral fraud and came years before the 2020 election, so should not be seen as an attempt to influence its outcome.
“This was simply a misguided and completely hapless attempt to disguise or withhold from scrutiny the identity of the true donor.”
Katz spoke of the various glowing character references for Zhang speaking to his charitable work, including to survivors of the Christchurch mosque attack.
“He is seen, in Te Reo terms, as a kaumatua,” Katz said.
References were provided by, among others, politician and Waipareira Trust chief executive and Te Pāti Māori president John Tamihere. Veteran activist Tāme Iti also provided a character reference for Zhang, and was in court.
Katz asked Justice Gault to take into account the shame and the loss of face Zhang would endure.
“That concept may be a little bit alien, but it is very real for the Chinese community,” Katz said.
“The real penalty for Mr Zhang is his fall from grace.”
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
Katz said “media intrusions” in part forced their parents to send their children overseas for education to the United States.
He sought a discharge without conviction, in part because a conviction could jeopardise his ability to visit his children in the US.
If convicted, Katz urged Justice Gault to consider first a conviction and discharge, or a sentence of community work.
Colin Zheng’s lawyer Paul Dacre KC also spoke of his client’s fall from grace from a model immigrant with a successful businessman.
“Most acutely he’s let his brother Joe down in terms of getting him involved.”
Dacre sought a non-custodial sentence of community detention coupled with community work.
Joe Zheng’s lawyer Rosemary Thomson said a cultural report showed he had spent his life following and conforming to others in the family as the youngest child.
“He goes on to describe himself as a follower, never a leader,” she said.
He was naïve regarding the donation and simply followed the instructions of his brother, Thomson said. She also sought a sentence of community work.
Delivering his verdicts to the trio, Justice Gault told Colin Zheng must have known he was not entitled to split the donations into smaller amounts, as he did to evade declaration requirements.
Justice Gault said he agreed with the Crown that Zhang’s offending was not victimless and was moderate in seriousness.
“Your offending involved deceitful conduct in relation to our electoral system .. and the public’s right to know about large political donations.”
The Judge declined Zhang’s application for a discharge without conviction, saying the consequences of a conviction for the businessman were not out of all proportion to the moderate seriousness of his sentence.
Justice Gault allowed a 25 per cent discount for mitigating factors, including good character references and services to the community, giving a starting point of 11 months in prison, under the two-year limit where a Judge can impose a community-based sentence.
Zhang was sentenced to 200 hours of community work and four months’ community detention with a 10pm to 6am curfew.
Justice Gault adopted a starting point of 21 months in prison for Colin Zheng and said he took into account the loss of face he had endured, allowing a combined discount of four months.
“Your fall from grace is a punishment in itself.”
Colin Zheng was sentenced to five months of community detention, with the same curfew as Zhang, and 250 hours of community work.
Sentencing Joe Zheng, Justice Gault accepted he was acting out of a sense of obligation to his brother, adopting a starting point of eight months in prison on the obtaining by deception charge.
For the charge of providing false information to the SFO the Judge adopted four months, giving a cumulative starting point of a year in prison. The Judge allowed a combined discount of 15 per cent.
Joe Zheng received two months of community detention with the same curfew and 100 hours of community work for obtaining by deception and 50 hours of community work and one month of community detention for the false statement, to be served cumulatively.
The verdicts and sentencing followed a SFO prosecution involving seven defendants, including former National MP Jami-Lee Ross and Zhang over allegations they skirted the requirements of the Electoral Act.
Ross was found not guilty of his charges, while all charges relating to the Labour Party also amounted to acquittals.
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.
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 involve buying five paintings from Labour for $60,000 in 2017 using other peoples’ names.
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.
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.
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.
After the sentencing, SFO director Karen Chang said: “This was an important case which strikes at the heart of what we value in New Zealand – fairness, transparency and integrity.
“This was not a victimless crime. As Justice Gault observed in his sentencing, the public collectively suffers an injury when donations laws are circumvented.”
