KEY POINTS:
Winston Peters has called a Serious Fraud Office (SFO) investigation into NZ First "ridiculous in the extreme".
The SFO announced this evening it will use its powers to find out whether donations from Sir Robert Jones and the Vela brothers reached the New Zealand First party as intended.
SFO Director Grant Liddell said he had enough information to suspect the investigation may reveal "serious and complex fraud", the threshold for the statutory powers which can force documents to be produced or people involved to answer questions.
Mr Peters said nobody from the SFO had contacted him about the inquiry, and the issues could be "cleared up in a few minutes".
"We will meet this investigation head on," Mr Peters said.
Mr Liddell has been assessing a complaint from Act leader Rodney Hide for the past month.
He said he did not believe there was enough evidence to use the SFO powers on the Owen Glenn donation, because it was clear from both men's accounts the money was donated to Mr Peters' legal costs.
And while the allegations concerning the scampi select committee were serious, Mr Liddell said "seriousness of allegation alone is not enough".
He said it may be that further information was uncovered on these allegations that gave him "reason to suspect" and use the powers.
Following the SFO announcement Prime Minister Helen Clark told a press conference she would discuss the matter with Mr Peters again tomorrow.
She acknowledged her precedent was to stand ministers down when they were facing serious legal scrutiny. She wouldn't commit to that step until she had spoken with Mr Peters again.
Property magnate Sir Robert Jones' $25,000 donation was meant for the party but went to the mysterious Spencer Trust.
Fishing and bloodstock millionaires Philip and Peter Vela are reported to have made donations of more than $150,000 from six different accounts over four years (1999 to 2003) were made to the party.
Earlier today Mr Peters challenged the SFO to "either lay charges against him or to shut up and go away."
He claimed the SFO had been "creeping around back doors dropping hints and providing media speculation but not finding any evidence of wrongdoing or illegality on his part".
Mr Peters added: "I am prepared to wait on the court steps for them and if they don't turn up they can go away for ever."
After this evening's announcement Peters said: "This investigation can be laid at my past criticism of the SFO for failing to follow up on major taxation cases involving hundreds millions of dollars over 10 years and more."
The Owen Glenn affair
The latest news came as National leader John Key said Helen Clark needed to explain her "stunning" revelation this morning that she knew in February about Owen Glenn's donation towards Winston Peters' legal fees.
The Prime Minister today revealed billionaire Mr Glenn told her at a meeting on February 21 that he had donated the money.
Helen Clark then put that information to Mr Peters at the time and he gave her an assurance that the party had not received money from Mr Glenn.
In a letter to Parliament's privileges committee published yesterday, Mr Glenn said he gave $100,000 to Mr Peters' lawyer Brian Henry. A letter from Mr Peters contradicted Mr Glenn's version of events.
The new information this morning from Helen Clark means she has known for months of the conflicting sides of the story and Mr Key said the Prime Minister's comments left her with "explaining to do".
He said: "This is a stunning revelation. Months have gone by since Helen Clark was informed by Mr Glenn about the $100,000 donation.
"The public was firstly told that Mr Peters had not received any money from Mr Glenn, then the public was told that Mr Peters had in fact received a donation but had not known about it, and then finally yesterday they were told that Mr Peters had personally solicited the donation.
"Today, we learnt that Helen Clark herself had the relevant information all that time.
"The public are entitled to know why she withheld this crucial information for so long."
Helen Clark said the question of donations to New Zealand First was on the front page of the paper when she and Mr Glenn were at Auckland University to open its new business school in February.
"Mr Glenn on that occasion said to me pretty much what he said to the Privileges Committee," the Prime Minister said this morning.
"As you would expect, the first thing that I did was go away and ring Mr Peters, and Mr Peters has consistently maintained that he never made that phone call to Mr Glenn," she said, referring to the solicitation of the donation.
"So, there's always been a conflict of evidence."
Helen Clark said that at every time the issue had arisen, she had rung Mr Peters and asked for his word.
Peters v media
The Prime Minister this morning also criticised Mr Peters' handling of the donations issue since it arose, appearing to try to put some distance between herself and her Foreign Minister.
She said the handling of the issue "obviously leaves a great deal to be desired".
"Perhaps the legacy of that is that Mr Peters' relationship with the news media is a very confrontational one, and one that he almost delights in having," Helen Clark said.
"But it doesn't make for good handling of difficult issues."
While she said she wanted to see the matter "dealt with", Helen Clark said she felt she had a duty to be fair.
"I have not known Mr Peters to lie to me, and I have to take people as I find them," she said.
"He is utterly convinced that he never made that call."
The conversation between the Prime Minister and Mr Glenn came before Mr Peters' now infamous "NO" press conference at which he said the party had not received a dollar from the ex-pat businessman.
Mr Peters told Parliament last night he would hold his fire on giving his side of story until the privileges committee meets on Thursday next week.
On Wednesday
Parliament was stunned yesterday by two events which put Mr Peters under intense pressure and cast doubt on his future as an effective politician.
The first was the release by the privileges committee of a letter from Mr Glenn in which the billionaire said Mr Peters solicited a $100,000 donation during a personal conversation, and later thanked him for it.
Mr Peters has persistently denied asking for any money, and has said he did not even know about the donation, made in 2006 to help pay his lawyer's fees, until last month.
The second was Mr Key's announcement that he would not make any deals with Mr Peters after the election unless the NZ First leader came up with a "credible explanation" about the donation.
"I am ruling out Mr Peters," said Mr Key.
"He simply doesn't have the integrity in my view, unless he can somehow change that."
Mr Key said he thought it was highly unlikely Mr Peters would be able to prove Mr Glenn was wrong and he was right, and Mr Key called on Helen Clark to stand Mr Peters down as foreign minister, or sack him.
Helen Clark said yesterday she still had confidence in Mr Peters, the evidence was contradictory and she would wait for the privileges committee to report to Parliament.
Peters' counter attack
Mr Peters launched his counter attack in Parliament, saying Mr Key had made "a very, very silly decision" that he would live to regret.
He said he now knew the details of a conversation he held with Mr Glenn, and the information came from his ministerial travel diary.
"I've had a conversation this afternoon that tells me exactly what time this conversation happened, why it happened, who it happened with and what Mr Glenn said," he told Parliament.
"I know the dates and the times, and I'm going to be telling the select committee, in public, all the details about that."
It is the fourth time Mr Peters has promised to reveal the facts about the donation.
He was overseas when it first came to light two months ago, and he said he would clear it up when he returned.
Then he said he would reveal the facts in Parliament, and then he vowed to go public with all the details at last Monday's privileges committee hearing.
He did speak on those occasions, but nothing was resolved and the situation is now even more incendiary than it was at the beginning.
- with NZPA
