KEY POINTS:
There's an old saying that goes, "be careful what you wish for, you just might just get it". The Labour Party and New Zealand First were the two main parties that rammed through new electoral finance laws to stop businesses and other vested interests from secretly funding their opponents.
They made much ado about sinister forces using money to buy political influence. Their fire was aimed at the National Party, which cynically arranged secret trusts into which big donations could be funnelled.
National's annual party returns show little money coming from business interests, yet well over a million dollars came anonymously via these trusts. Even businesses that had openly made donations to National found, to their surprise, that their contributions were deposited in the trusts. National's party and parliamentary leaders would then have us believe that they did not know where these donations came from.
The Exclusive Brethren's secret campaign funding almost cost Labour the last election. Labour was determined to halt this sort of subterfuge, so it pushed through the Electoral Finance Act. Ironically, its inept management of this decision damaged the party more than the Brethrens could ever have done.
This week's revelation of Owen Glenn's funding for Labour is potentially catastrophic. Labour's president, Mike Williams, normally extremely astute, has landed himself, Glenn and his party in deep trouble.
One of Williams' main tasks is to be bagman for corporate campaign funds, which he does well. I think it surprised everyone when Glenn made a half-million-dollar donation to Labour's last election campaign, and a close watch was kept on whether he was rewarded for it.
It's clear now that when Labour agreed to pay back the $800,000 to the taxpayer after the Auditor-General's findings, this money wasn't just raised by rank-and-file party members - Williams also tapped known business supporters for large cheques.
What I think has happened is that, given Glenn's high-profile donation at the previous election, there would have been a reluctance to be seen to be making another large public donation. The electoral laws require all donations to be declared, but a loophole allows someone to make a so-called interest-free loan with no settlement date without declaring it. What any fool can see is that these are, in fact, donations and are paid as loans to avoid disclosure.
In some way, these "loans" are more powerful than a straight donation. That's because, technically, they can be called in at any time, which make these parties financially vulnerable.
In Britain, before Tony Blair was ousted as Prime Minister, he and senior Labour Party officials were accused of giving knighthoods to wealthy people who had made secret, interest-free loans. A police inquiry is under way.
Of course, no one at this stage is claiming that this is what has happened here.
Meanwhile, there are questions over a $100,000 donation to NZ First. NZ First President Dail Jones seemed to imply there may be some connection with Owen Glenn. Peters, a much sharper operator, realised the danger immediately and quickly smacked Jones down, claiming he and the party had no idea where this money came from.
But anyone in politics knows that there is no such thing as an anonymous donation of this size. Someone has to give them the bank account number.
The problem for Williams and the Labour Party is that he went on record at Christmas time, saying Glenn had made no further donations to his party. Williams knew full well he had already drawn up a $100,000 loan document with Glenn. This was exposed when Glenn mentioned it in an interview.
Williams has done the right thing by offering his resignation. But Clark can't afford to lose Williams - he is arguably the party's best president and accepting his resignation would widen the impact of the saga.
National deputy leader Bill English now smells a big, dirty rat. No doubt English will ensure that the maximum political damage is inflicted on Labour, and, to a lesser extent, NZ First.
For Labour's sake, there had better not be any other so-called interest-free loans from benefactors on its books. If there are, its arguments for transparency in political donations when pushing through the Electoral Finance Act will be seen as deeply hypocritical, making an already difficult election year virtually impossible.
