Prime Minister Helen Clark has been left red-faced after allegations she made against National leader John Key over his involvement in the sale of the rail network backfired in Parliament.
Blog: Clark gets Key attack wrong
National has accused Labour of "gutter politics" after Clark used parliamentary privilege to claim Key had personally benefited from the sale of TranzRail by the former National government in 1993.
She further implied that Key had profited from statements he made as an MP while holding shares in TranzRail before it was bought by Australian company Toll in 2003.
Key denied both claims, and Clark was forced to accept Key's word that he had sold his shares in TranzRail before his statements.
In a concerted attack on Key in Parliament, Clark alleged that his position as a director of Bankers Trust in 1993 saw him benefit from the money paid by the then National government for advice on the privatisation of New Zealand Rail.
"There was one person who fully backed that sale and that was Mr Key, who was a director of Bankers Trust, which got the contract to advise the New Zealand Government on that sale," Clark said.
"Bankers Trust pocketed $39 million in profit. Ask yourself the question: who benefited from the sale of TranzRail? Mr Key and his friends."
Clark alleged Key made comments as Opposition associate transport spokesman that supported a bid by Toll Holdings to buy TranzRail in June 2003 after his family trust bought 30,000 shares in the company in 2002.
Clark was referring to comments made by Key on June 18, 2003, when he said institutions were telling him they had no faith in TranzRail's management and would support the Toll offer over the government's package.
"The Government is playing chicken with Toll and they are going to get run over by a locomotive," Key said at the time.
Clark said yesterday it was plain why Key had made that statement.
"Well, he would, wouldn't he, because he was a shareholder and yet he was purporting to be speaking in the public interest as the Opposition association transport spokesman," she said.
Key did not respond to the attacks at the time but later sought to make a personal explanation to Parliament, which was denied by New Zealand First MP Ron Mark.
Key managed to state that neither he nor his family trust held any shares in TranzRail at the time he made his remarks about the company in 2003, and that Clark had misled Parliament.
Labour was engaged in a "smear and fear" campaign, he said.
A spokesman for Key told The Press that Key's family trust had bought 30,000 shares in TranzRail in 2002 but sold them before Key began commenting on the company.
Key had directed the sale to avoid any appearance of conflict of interest, the spokesman said. To the best of his knowledge, Key had not made any statements about the company while he was a shareholder. Key also took issue with Clark's claim that he had benefited personally from the sale of TranzRail while a director of Bankers Trust.
Key had led the trading arm of the company, not the merchant bank arm that dealt with advising the government on the sale. He had no involvement in the sale and had not profited from it.
A spokesman for Clark said later she accepted Key had sold his shares by 2003. She still believed Key had indirectly benefited from the money Bankers Trust made advising on the sale in 1993 because as a director he would have been entitled to a share.
She would not be apologising to Key, the spokesman said.
Services Toll threatened to close down, according to the Government:
* The Overlander passenger service;
* The Central North Island section of the Main Trunk Line (Te Kuiti to Palmerston North);
* Northland Line;
* Taranaki Line;
* Hawke's Bay Line;
* Napier to Gisborne Line;
* Wairarapa Line north of Masterton;
* Picton to Christchurch (freight and passenger services);
* Greymouth to Hokitika Line;
* Invercargill to Bluff Line; and
* Invercargill to Wairio Line.
- © Fairfax NZ News
A referendum on the flag will be held in the next parliamentary term. What do you think?Related story: Flag vote to go ahead
The Little Things, Dilbert, Tom Scott and others
Test your mind with our puzzles
What do the stars have in store for you today?
Dig into New Zealand's archives
Decide what news you want to receive when it suits you
Keep up with the latest news by making us your homepage