KEY POINTS:
Winston Peters has stood aside from his prized Foreign Affairs portfolio with an exit designed to give every suggestion of it being temporary.
A day after the Serious Fraud Office (SFO) announced it had enough evidence to conduct a formal investigation into New Zealand First's donations, Mr Peters volunteered to step aside from his portfolios, Prime Minister Helen Clark said last night.
"It is certainly my hope this matter is addressed very quickly."
She will take over his portfolios - Foreign Affairs, Racing and Associate Senior Citizens - as caretaker, a move that suggests they expect his suspension of duties to be temporary.
With a sense of urgency, Mr Peters and his lawyer, Peter Williams, QC, are taking documentation from the secret Spencer Trust to the SFO in Auckland this morning.
Mr Williams said last night it would prove that the donations under investigation, those of Sir Robert Jones and the Vela brothers, had reached their destination, New Zealand First.
NZ First is anxious the inquiry be completed before the election, to be held within three months. It is unlikely to be concluded before Parliament rises the week after next.
Helen Clark and chief of staff Heather Simpson met Mr Peters, Mr Williams and media adviser Frank Perry at a private residence in Parnell at 4pm yesterday.
Mr Peters would have been under no illusion that if he had not stepped aside himself, he would have been sacked. Helen Clark, however, said it was not an issue.
"Mr Peters has been thinking carefully about this. It's been clear to me that this was the appropriate course of action but there hasn't had to be a lengthy argument about this at all. It is accepted that this is totally proper and there are precedents for it."
The ministerial caretaker arrangement was made at Mr Peters' request and was the surprising aspect of the announcement.
Ordinarily former Foreign Affairs Minister Phil Goff might have expected to pick up the caretaker role. Helen Clark also said she would take Mr Peters back as a minister if he was cleared by the SFO.
"If the SFO finds no case to answer, the reinstatement is obvious."
But National leader John Key last night toughened his stand against Mr Peters, and has categorically ruled out working with him or his party post-election, even if he is cleared by the SFO.
"From National's point of view, we're ruling out working with New Zealand First and Winston Peters," Mr Key said.
Last week, Mr Key said he would not have Mr Peters in a Cabinet of his unless he could come up with a credible explanation for discrepancies in the story as to how ex-patriate billionaire Owen Glenn came to pay $100,000 of a Peters legal bill.
The Glenn donation is the subject of a privileges committee inquiry, which reports earlier than the SFO.
A damning finding from that committee could cause the Prime Minister to reconsider the issue of reinstatement, but it is unlikely to be conclusive or unanimous.
Helen Clark has been critical of the way Mr Peters has handled the donations allegations and stated yesterday that she would be offering "total co-operation" so the SFO could deal with it as quickly as possible.
That position is in contrast with the attacks Mr Peters has launched on the office as recently as Thursday when he challenged it to "put up or shut up". Helen Clark would not comment on Mr Peters' attacks.
"The best thing I can do is say to them as an autonomous agency that an expeditious inquiry would be appreciated by all."
Asked if she had been damaged, she said: "As Prime Minister you have to deal with these issues. You don't ask for them to come along but you have to deal with them and I am endeavouring to deal with this in a way which is fair and has some dignity.
"As someone who has been in politics a long time, I know how precious a reputation is and how hurt people get when there is a serious assault on their reputation."
Before the fateful meeting in Parnell, Mr Peters spent yesterday addressing two Grey Power meetings, in Snells Beach and at Orewa, where he received a hero's welcome.
After promising to clear his name, he listed his achievements as Foreign Minister - closer relations with the United States and the Pacific among them.
"It has been a privilege to be the Minister of Foreign Affairs."
- Paula Oliver and Patrick Gower
