Peters' party admits `error'

New Zealand First will try to correct its 2005 electoral return after admitting it broke the law by not declaring $50,000 it put through a secret trust to avoid the donations being made public.

After months of insisting it had broken no laws, New Zealand First last night admitted through its auditors that owing to an "administrative error" involving inexperienced staff who were "new to their responsibilities", the party had failed to declare the donations funnelled through the Spencer Trust before the last general election.

The about-face came after a Spencer Trust trustee, Grant Currie, handed over documents sought by the Serious Fraud Office (SFO) under the office's special powers to gain access to confidential material, including banking records.

The office is investigating donations to New Zealand First from Sir Robert Jones and the wealthy Vela family that it says may not have reached their intended destinations.

New Zealand First leader Winston Peters has been stood down as foreign minister during the inquiry.

Currie said yesterday that he had given information to the SFO that proved Jones's donation had reached the party.

He confirmed he had banked the proceeds of two donations one from Jones and one from an anonymous donor into New Zealand First's bank account in August 2005, the same month Jones wrote a cheque to the trust for $25,000.

Currie said the trust was formed in 2005 for "the sole purpose" of funnelling money to New Zealand First.

The practice of sending donations through secret trusts was legal under the previous electoral law, and National and Labour have also used such a scheme.

Peters has denied any knowledge of the Spencer Trust or how it operates.

New Zealand First did not declare any donations of more than $10,000 in its 2005 return to the Electoral Commission as required by law. The party cannot be prosecuted, however, as a six-month statute of limitations applies to alleged breaches of the Electoral Act.

Peters has always assured Clark that neither he nor his party has done anything illegal.

New Zealand First auditor Nick Kosoof said late yesterday that Jones's donation, along with several others, was correctly banked into the party's accounts, but the party's office had made a mistake by not declaring the money to the Electoral Office.

"The declaration for 2005 will need to be amended to include this donation," he said.

Peters failed to front his accusers in the House yesterday, leaving his MPs and Prime Minister Helen Clark to defend him.

National leader John Key said New Zealand First's admission it had broken the law was one of the reasons he could no longer work with Peters.

"On the face of it, it would appear that New Zealand First is in breach of the Electoral Act and it is one of a number of allegations that now needs to be cleared up by Winston Peters," Key said.

"I've reached the conclusion that I can't rely on the word of Winston Peters and on that basis I can't have him as a minister."

In Parliament, Clark was questioned at length by Key about her knowledge of another donation to Peters from businessman Owen Glenn.

Key said Clark's decision to hold on to a key piece of evidence implicated herself.

"Does she accept that by failing to disclose what Mr Glenn had said to her at a time when Mr Peters was emphatically denying such a donation, and calling editors and senior journalists liars and demanding their resignations, she made herself complicit in Mr Peters' attempts to mislead the New Zealand public?" Key asked.

In a line repeated many times in Parliament yesterday, Clark said she had worked on the assumption that "both men were honourable gentlemen and it may well be that there was some innocent explanation".


The Press