KEY POINTS:
The Serious Fraud Office's decision to investigate the Winston Peters donations controversy means it can use its special powers to force documents to be produced and its questions answered.
SFO director Grant Liddell announced the investigation, saying there were serious questions and allegations "that go to the heart
of the democratic process".
He had until yesterday been assessing a complaint made by Act leader Rodney Hide a month ago.
Mr Liddell said he now 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 even people involved to answer questions.
Mr Liddell notified Mr Peters of the investigation by the same press release given to media. He hoped Mr Peters would co-operate with the inquiry.
Mr Liddell said the two allegations that met the threshold were whether donations from Sir Robert Jones and the Vela brothers reached Mr Peters' New Zealand First party as intended.
Sir Robert's $25,000 donation went to the Spencer Trust instead of the party. Neither Mr Peters nor the trust's administrator, his brother Wayne, have offered a further explanation but the SFO's powers mean it can now ask to see the "paper trail".
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).
Mr Liddell's statement referred to allegations of the donations "not reaching their intended destination".
Mr Liddell said the SFO powers meant it could "ascertain how funds were applied" - which could include how they were spent or where they were banked.
The SFO would not be using its powers to investigate the donation from billionaire Owen Glenn or allegations of corruption in relation to the scampi quota, as he did not have the "reason to suspect" at this point.
On Mr Glenn's donation, he said it was not suspicious as it was clear from both men's accounts the money was donated to Mr Peters' legal costs.
The SFO would not look at any issues of failing to report the donation as required by the Electoral Act, which was a matter for Parliament's privileges committee.
Mr Liddell's statement said the scampi allegation related to "an attempt corruptly to influence the Primary Production Select Committee that inquired into allegations of corruption in relation to the Ministry of Fisheries in relation to scampi quota in 2003".
He told reporters it was about "someone attempting to bribe a member of Parliament".
The scampi allegations were serious, but "seriousness of allegation alone is not enough".
The investigation could still be broadened to include these allegations should more information come to light.
Ordinarily, complaints of fraud involving less than $500,000 were dealt with by the police, but Mr Liddell said in matters he deemed sufficiently serious, the SFO could take the case on.
The matters involved funding of a political party "which go to the heart of a democratic process, and involve a minister in the Government".
He said the other serious factor was the involvement of lawyers "who as officers of the court have fundamental obligations to uphold the law".
Neither the Velas nor Sir Robert saw themselves as complainants, he said.
Mr Peters said it was "ridiculous in the extreme" and he could have cleared it up in a few minutes if the SFO had contacted him.
ON THE LIST
The Serious Fraud Office is likely to want to talk to
* Winston Peters: NZ First leader.
* Wayne Peters: His brother, ran the Spencer Trust.
* Brian Henry: Mr Peters' barrister.
* Dennis Gates: Mr Peters' solicitor.
* Philip and Peter Vela: Bloodstock and fishing millionaires whose donations "may not have reached" NZ First.
* Sir Robert Jones: Gave $25,000 to to the Spencer Trust, intending the money to go to NZ First.
* Roger McClay:Former NZ First adviser who allegedly asked Sir Robert to make his cheque out to the Spencer Trust.
LEGAL ADVISERS ARE LIKELY TO BE TARGET OF INVESTIGATION
Winston Peters' legal advisers are likely to be targeted by the Serious Fraud Office investigation.
SFO director Grant Liddell's statement referred to the actions of lawyers "who as officers of the court have fundamental obligations to uphold the law".
Mr Liddell said the involvement of lawyers was part of the reason he had deemed the matter serious enough for his office rather than the police.
A central figure will be Wayne Peters, Mr Peters' Whangarei-based lawyer brother and the administrator of the Spencer Trust, to which Sir Robert Jones' $25,000 donation was given instead of the New Zealand First party.
Mr Peters has not made any details about the trust available publicly or to Sir Robert since questions were raised.
Wayne Peters last night said he had not had any contact from the SFO.
"I don't have the slightest concern about the Spencer Trust."
Wayne Peters, who has served on the board of both the Auckland Law Society and the New Zealand Law Society, said he was looking "very closely" at Mr Liddell's comments about lawyers.
If they referred to him, he said, "I would regard that as defamatory - and you can print that lot."
Brian Henry, Mr Peters' barrister, did not return calls last night.
Dennis Gates, Mr Peters' longstanding solicitor, said he had had no contact from the SFO, and "I've got nothing to hide There is no fraud as far as I am aware, and as far as I have seen or with my knowledge of Winston and I'll leave it at that."
Mr Gates said he had no knowledge of the Spencer Trust - but would not comment when asked if he had dealings with the Vela brothers.
