KEY POINTS:
It has probably been the roughest week in Winston Peters' eventful political career, not that you would have guessed it from his behaviour. On Wednesday, the day it looked as though Peters had been caught out over Owen Glenn's $100,000 donation for legal fees, Peters held quite a party at his ministerial home in Wellington.
In traditional Peters party style, the drink, the music and the bonhomie flowed liberally. It was a party for diplomats from the Pacific posted in Wellington and had been planned. He even got Prime Minister Helen Clark along at the start of it.
The next day, Thursday, came the bombshell decision by the Serious Fraud Office to investigate whether donations to New Zealand First by Sir Robert Jones and the Vela brothers, fishing and racing magnates, had reached their intended purpose.
For Peters, who built his political brand on excoriating the failures of the Serious Fraud Office, this should be a disaster. But having taken so many bullets before and survived, he confronts life and politics with a dangerous sense of invincibility.
Perhaps because the SFO referral had been made by Act leader Rodney Hide when he was in his canary yellow jacket phase, Peters didn't take it seriously. So, with no hint of the gravity of the SFO decision, Peters' immediate response was: "If they had the courtesy to talk to me, this matter would have been cleared up in a few minutes" - making it sound like it was more about manners than fraud.
Peters finally abandoned his devil-may-care attitude yesterday morning in an interview with Sean Plunket on Morning Report. He sounded worried.
It was the first time Peters had publicly given assurance that the Jones and Vela donations - via trusts - had ended up with the party. He had never thought to offer them before or to the Serious Fraud Office, instead issuing a press statement telling the SFO to "put up of shut up" only an hour or two before it did.
Peters' inevitable decision - after meeting Helen Clark yesterday - to stand down as Foreign Minister may have capped the worst week of his career, but there could be worse in store.
Facing a Serious Fraud Office inquiry and a credibility-testing privileges committee inquiry less than three months out from an election is a recipe for annihilation. But he has returned from the political graveyard before.
Such is his reputation as a political houdini that his demise is, in fact, rarely predicted. And if it is, it can be retracted just as fast.
Earlier this month The Listener's columnist Jane Clifton felt that the allegations mounting against Peters could be fatal but a few weeks later felt: "I cheerfully admit that I wrote a couple of weeks ago that the allegations, combined with his hauteur at having to answer them, would finish him off sooner rather than later. Now I feel like a fox terrier waiting eternally over a rathole, instinct overriding the clear evidence that the rat has no earthly need to come out."
But while Peters has made an art form of political survival, nothing has been quite this serious and it is rubbing off on Labour.
Labour has had the benefit of the destructive side of Peters' character for most of the term while he has had his sights trained on National. Now Labour is reaping the downside, from its close association with him.
Clark this week, for the first time since the last election, publicly showed her frustration with Peters over his handling of the donations issue. "I think that his handling obviously leaves a great deal to be desired," she said before the SFO announcement "and perhaps the legacy of that is his relationship with the media is a very confrontational one - and one that he almost delights in having - but it doesn't make for good handling of difficult issues."
It has been a bad week for Clark too. She was forced to admit that Glenn told her way back in February that Peters had solicited a donation and received one. So when Peters held up his "No" sign to show reporters he had not had any money from Glenn, Clark knew that only the week before that, Owen Glenn had said "Yes" to her privately. Trevor Mallard has known about it as well because he was at the meeting.
They kept that explosive information to themselves, admitting it only when National was set to ask questions in the House about it this week.
The Peters donation scandal is now very much hers as well. The saga started to unravel in July with a series of revelations that he accepted secret money from very wealthy backers, revelations that started with the Owen Glenn connection in the Herald and Sir Robert Jones and the Velas in the Dominion Post.
In fact the Glenn story has its mistaken genesis in the Auditor-General's report of misspending by political parties at the 2005 election. New Zealand First's share of the $1.4 million misspend was $158,000 and Peters promised in November 2007 that it would pay it back - though in his case to charities, not to Parliament. It was that payment that former party president Dail Jones was thinking of when he alluded to a large mysterious donation that appeared a month later in the party account.
In fact the Glenn donation had been made two years beforehand, but with Glenn in the country and refusing to deny he had given the party money, the story gained legs. A few months later, the extent of help from wealthy backers emerged.
Even without the overlay of possible deception or fraud, it was looking at the very least like an open and shut case of hypocrisy. Even Peters' friends acknowledged that. Former Prime Minister Mike Moore writing in The Press on August 5 said: "His dodgy financial dealings and his explanations are not credible.
"He always pretended to be the honest, little guy fighting the big guys, while getting big donations from them ... "
"Unfortunately, I now know too much. The money being given by big business to Winston and others is stunning."
He finishes: "The New Zealand media, for a change, needs to be congratulated for doing some serious research and sticking to the story and not being bluffed or intimidated."
In a few short weeks, the allegations ballooned quickly from hypocrisy, to dishonesty, to fraud and corruption.
This week has been a triple-header for Peters. It has seen major developments in three separate stories about him and donations to his party - all in the same week.
As well as Owen Glenn disputing Peters' version of how he came by the $100,000 and the confirmation of the SFO inquiry, renewed allegations were made in Parliament about Peters having been bought off by Simunovich Fisheries during the scampi inquiry.
Serious Fraud Office director Grant Liddell makes special mention of the Simunovich issue in his press statement, with strong hints that he has been promised more information.
"In the case of the allegations concerning the scampi select committee, [they] are serious, but seriousness of allegation alone is not enough. There needs to be information available to support the requisite suspicion, and there is not, at this point."
He said it was possible that the investigation could be broadened some later time "as a result of whatever information comes to light in the course of the investigation about to commence".
Timing of the conclusion of the inquiries will be critical. If the SFO finds evidence of fraud, the inquiry could take a long time, probably beyond the election, and suspicion could hang Peters. But if there is a clear paper trail on the Jones and Vela donations to secret trusts and they were merely legally "laundered" in amounts to avoid statutory disclosure thresholds, Peters could be cleared quickly.
That would help him to rebuild the conspiracy brand that he has already been polishing up on the hustings - that the SFO was politically motivated against him because of his attacks on it over its failures in the Winebox.
It is not just a small band of Peters devotees in Grey Power who support the theory. Peter Williams, QC, gives it credibility. "I believe that the Serious Fraud Office could be jaundiced against him," he told the Herald.
Williams is not exactly a casual bystander on the matter of Peters, having been one of the trustees of the legal fund that paid Peters' appeal of the Winebox finding, along with former Attorney General Dr Martyn Finlay and accountant Max Gunn. "The whole thing was carried out with absolute propriety."
The Winston Peters that Williams describes bears no resemblance to one that Rodney Hide has his sights on every day in Parliament. It is the "very courageous" Peters who took on a David and Goliath fight against powerful adversaries and won. "It took a very special type of person to do that."
"I have always found him a person of impeccable character, a person who is prepared to go the extra mile, a person dedicated to New Zealand and improving the New Zealand reputation and he has a high degree of likeability."
Parliament's privileges committee will hear again from Peters next Thursday in the light of Glenn contradicting him.
While issues of honesty that concern the privileges committee may pail against the SFO concerns of criminality, the privileges committee process will be hugely important for Peters. It will be the judgment of his peers and it happens sooner. A damning finding from the committee - even slightly questioning his credibility - would carry great weight in the context of past events.
The worst outcome for Peters would be if it finds that Peters did know about the Glenn donation and should have disclosed it. A lesser outcome would be that it found he should have known.
The best outcome for him would be that it accepts he did not know about it.
It is possible the committee could be split and issue a majority and minority report, as sometimes happens from other select committees.
There is, of course, no guarantee what Peters' frame of mind will be by next Thursday and how he will choose to handle it. As Clark noted on Thursday: "I find that Mr Peters is one of the people who rather enjoys controversy but he gets on and does a lot of other things as well. Last night he was hosting Pacific diplomats from around the town as though nothing else was going on in his life.
"It's not the way that I would handle issues but there you go."
HOW TROUBLE HAS BEEN BUILDING
Feb 21: Herald raises possibility that Owen Glenn donated to New Zealand First after MP Dail Jones speculates on a mystery donation in party's bank account, December 2007. Peters denies it from abroad.
Feb 21: Helen Clark opens Owen Glenn building at Auckland University. Glenn meets Clark privately and reveals he donated to New Zealand First after Peters asked for it.
Feb 28: Peters holds press conference to deny he or his party received any donation from Owen Glenn. Clark says nothing.
July 12: Weekend Herald runs story saying emails between Owen Glenn and public relations consultant Steve Fisher imply Peters was wrong when he said "NO" donation from Glenn.
July 18: Peters issues press statement saying he has just been informed by his lawyer Brian Henry that Glenn gave him $100,000 for legal fees.
July 22: Dominion Post reports that the Vela family gave $150,000 from various accounts from 1999 to 2003: PJ Vela, PM Vela, Vela Fishing, Vela Quota Number 1, and Number 2 and Pencarrow Stud.
July 24: Dominion Post runs story about a $25,000 donation from Sir Robert Jones to NZ First via Spencer Trust.
July 25: Peters returns from Singapore and holds press conference in Auckland about Sir Robert Jones money, saying there has been no illegality but says he has nothing to do with the trust.
Aug 18: Peters tells privileges committee he first heard of Glenn donation on July 18. Lawyer Henry says he, not Peters, sought the money from Glenn and it was paid December 22, 2005.
Aug 26: Renewed allegations of corruption against Peters involving Simunovich Fisheries raised in Parliament.
August 27: Glenn letter to privileges commitee contradicts Peters and says Peters asked for the money, not Henry, and Peters thanked him for it at Karaka sales. National queries what Clark knows about the donation.
Aug 28: Clark reveals Owen Glenn told her about his donation back in February.
Aug 28: Serious Fraud Office launches investigation into NZ First political donations from Jones and Vela brothers and whether they reached the party.
SERIOUS FRAUD OFFICE
Investigates serious and complex frauds of over $500,000 instead of the police, but can take on cases deemed "serious" enough as in this case because of the potential political and legal corruption.
Who are they
Director and chief executive Grant Liddell leads 35 staff.
What they are investigating
* Whether a $25,000 donation from Sir Robert Jones that went to the Spencer Trust ever made it to the party.
* Whether money donated to the party from the Vela brothers reached its intended destination.
* Liddell has chosen to investigate because he suspects he will find "serious and complex" fraud.
* Liddell has specifically referred to allegations of lawyers acting inapproriately.
Powers
* The start of a formal investigation means the SFO can use its special powers to force people to answer questions, or to produce documents to track the "paper trail".
* Powers are far-reaching; it is not only those suspected of offences who must provide information, but anyone the director considers relevant - accountants, family members, former staff.
* If they don't comply, individuals can face a year's imprisonment or a fine of up to $15,000, and corporations up to $45,000.
* Liddell has statutory independence from any minister - Helen Clark symbolically learned of his investigation by the press release.
What it is "not yet" investigating
* Allegations of an attempt in 2003 to corruptly influence the Scampi inquiry, what Liddell referred to as "someone attempting to bribe a member of Parliament". While acknowledging it is serious, Liddell does not believe he has enough information to use the powers "at this point".
* The Owen Glenn donation, as Liddell does not suspect fraud because both Mr Glenn and Mr Peters agree that it was meant for his legal fees. The other elements are for Parliament's privilege's committee but Liddell has not ruled out investigating this too should he get more information.
Time it will take
Unknown. Winston Peters says he could clear it up in five minutes; Liddell says it could yet be broadened. It is not unusual for some SFO investigations to take a year or more.
Sanctions
The SFO can lay the full range of fraud-related criminal charges, from forgery to perjury. These are dealt with in the court system.
Side-issues
* The SFO was set to be abolished and folded into the police but legislation doing so has been put put on hold because of this inquiry - effectively saving the SFO if its supporters National are elected.
* Winston Peters has bad blood with the SFO, heavily criticising it for not inestigating the Winebox fraud. He has already implied bias because of this and NZ First's recent decision to support its abolition.
