Nats accuse Govt of corruption over honour

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National has accused the Government of corruptly awarding billionaire expatriate Owen Glenn a New Year's honour after revelations Prime Minister Helen Clark knew about a $100,000 interest free loan he gave to the Labour Party.

Mr Glenn was made a member of the New Zealand Order of Merit on December 31.

Miss Clark is chairwoman of the Cabinet Appointments and Honours Committee, which recommends honours.

Mr Glenn, who gave $500,000 to Labour in 2004 and 2005, revealed last week he also loaned the party $100,000 interest free after the election to help it fundraise to pay back the $880,000 it was found to have wrongly spent on electioneering.

The loan has ignited a political row, with National accusing Labour Party president Mike Williams of misleading the public over the matter.

After the announcement of the New Year's honours, Mr Williams said Mr Glenn had not donated anything to Labour since the election.

However under electoral finance laws - past and present - foregone interest is treated as a donation.

National today tried to link Mr Glenn's loan with the New Year's honour and revelations the Government was considering him for a position as honorary consul in Monaco.

National Party leader John Key said the Government's consideration of him for the honour and the Monaco role appeared "very murky indeed".

National MP Maurice Williamson went a step further, saying Labour was guilty of "corruption".

A spokeswoman for Miss Clark said the Prime Minister "absolutely rejects any suggestion of corruption".

Under questioning Miss Clark said she knew about the loan ahead of Mr Glenn's honour. However the honour was given to Mr Glenn "in spite" of his help.

Mr Glenn's donation of $7.5 million to Auckland University's business school, coupled with $600,000 in scholarships, has been cited by many as the reason for his honour.

Miss Clark also said if Mr Glenn was appointed honorary consul in Monaco, he would only receive "minor" expenses.

"People don't do it for money. It actually costs them money."

She said Mr Glenn had expressed an interest in becoming honorary consul in Monaco, but Foreign Minister Winston Peters was considering whether New Zealand actually needed anyone in that position.

National deputy leader Bill English also today attacked Mr Williams contradictory statements on whether Mr Glenn's loan should be treated as a donation.

Mr Williams yesterday conceded the interest foregone on a $100,000 interest-free loan by billionaire expatriate Labour backer Owen Glenn should be treated as a donation.

However he then muddied the waters in an interview on Radio Live.

"An interest free loan is not a donation under any electoral act. It's an interest free loan and we do have a lot of them, mainly from rich branches of the Labour Party," he said.

"It never entered my head to treat it as a donation and it shouldn't be treated as a donation."

Mr English said Mr Williams' incorrect comments suggested an investigation of Labour's interest-free loans dating back to 1993 was warranted.

Mr Glenn has also said Miss Clark told him he was "a sitter" for a Cabinet post.

Miss Clark has said she would be "surprised" if she ever made that comment and Mr Glenn has since distanced himself from his comments, which he said were "lighthearted" and taken out of context.