KEY POINTS:
Prime Minister Helen Clark distanced herself from Foreign Minister Winston Peters last night, implying he could be judged to be hypocritical if his New Zealand First Party accepted donations from secret trusts.
And she also offered the bare minimum in terms of expressing confidence in him.
"As long as ministers are in their position, I retain confidence in them," she said at her post-Cabinet press conference. She dismissed any suggestion that the situation could lead to an early election.
Mr Peters, the New Zealand First leader, will meet Helen Clark today before question time at 2pm to brief her on the secret donation issue that has dogged him for two weeks.
Sir Robert Jones gave $25,000 for the New Zealand First Party in the 2005 election via the Spencer Trust - but Mr Peters has not given him an assurance it was spent on the party.
Helen Clark did not directly call Mr Peters a hypocrite but she referred to "contradictions".
And both she and Maori Party co-leader Tariana Turia yesterday referred to the likelihood of it being a "moral" issue rather than a legal one.
Asked if she viewed Mr Peters as hypocritical given his long-time railing over big political donations from secret trusts, Helen Clark said it was a political issue that would be judged in the court of public opinion.
"Stands have been taken over a period of time which could be read as being in contradiction to what is emerging in the public arena.
"The court of public opinion may have views on whether something is moral or not," she said earlier in the day on TV One's Breakfast show.
By shifting the focus of Mr Peters' test from one of "legality" to one of "morality" for the court of public opinion, she is offering him no support or defence, and setting a test that makes it more likely he will fail.
Mr Peters has denied claims that he solicited Sir Robert's donation.
Helen Clark said there was an implication of fraud in the donations issue and it was a serious matter.
Meanwhile, a former New Zealand First staff member said yesterday that in a discussion about Sir Robert and donations in the 1990s, Mr Peters asked for Sir Robert to be referred to as "X" in case the offices were bugged.
The staff member, who did not want to be named, said Mr Peters also had the office swept for bugs.
Another former staff member, Rex Widerstrom, said he recalled discussions of a $50,000 donation from Sir Robert in 1995 and the Spencer Trust being used "like a code word" for Mr Peters' litigation fund.
A witness to a 2005 discussion between Sir Robert and Mr Peters about the donation, Professor Malcolm Wright of the University of South Australia, said yesterday that Mr Peters had tried to get $50,000. But he had got only half of that after the property magnate caved in out of "mateship".
Mr Wright, who was working for Sir Robert, said they met Mr Peters and his "offsider" - understood to be former National MP and former Children's Commissioner Roger McClay - "over a few drinks".
Mr Wright said Mr Peters was out of the room when the donation was first discussed and came back and "quite aggressively asked who raised it" before having a long discussion that included Mr Peters trying for $50,000.
"There was an argument, not least because Sir Robert disagreed with the anti-Asian immigration policy Winston had," said Mr Wright.
"In the end Sir Robert said, 'well I'll give you $25,000 for mateship' and they shook hands on that."
