How serious is an MP’s failure to declare $178k in donations?

It’s being explained as an “inadvertent error”.

However, National MP David MacLeod’s excuse for failing to disclose $178,000 in donations for his election campaign last year is not necessarily enough to prevent some serious consequences. A Police investigation is now likely, and the result of his non-disclosure could even see him lose his seat in Parliament.

MacLeod is the MP for New Plymouth, having beat the Labour incumbent last year in a large vote swing to National. He did so with an enormous war chest of over $200,000 for his election campaign. But when it came to disclosing his donations, as all candidates are obliged to do, MacLeod omitted the details of 19 donations, totalling $178,335.

Some donors were Rich Listers who had given significant amounts to various rightwing political parties. Mark Wyborn and Trevor Farmer donated $10,000 each.

Prime Minister and National Party leader Christopher Luxon announced this morning what had occurred and said that he was punishing MacLeod by stripping him of his two select committee roles, including his Chair of the Environmental select committee, which is currently considering the Fast Track Approvals Bill.

For more on the details of the story, see Julia Gabel’s Herald report: National MP David MacLeod stood down after failing to declare 19 donations

According to this, MacLeod’s missing donations turned up in an audit carried out by the National Party “as part of the Party’s annual consolidation of accounts.” And Luxon was informed of the problem a week ago, on 14 May.

Should MacLeod be facing more considerable consequences?

The problem for MacLeod and his party is that he has broken the law by filing an incorrect donation disclosure to the Electoral Commission. And you can’t necessarily escape the consequences of law-breaking just by correcting your mistake, saying “sorry”, and arguing that it was just an innocent mistake.

Failing to declare the $178,000 in donations, which MacLeod admits he did so in full knowledge of the existence of the donations, looks like a corrupt or illegal practice. Of course, MacLeod claims that he wasn’t aware of the law, but that isn’t usually a defence that gets you off the hook if your crime is significant enough. Therefore, it might boil down to how important it is to fail to disclose $178,000 in donations for an election.

MacLeod says that the reason he failed to disclose 18 of the donations (totalling $168,335) was that these were given to him during the year 2022, and he was under the mistaken impression that he was only required to declare donations for the 2023 election year. But this amounts to a failure to understand a basic rule that all other candidates have not had trouble navigating. National is a large and professional party that can barely claim to be inexperienced in dealing with electoral law.

Secondly, MacLeod failed to declare a $10,000 donation he received in 2023. The MP does not have a good answer for explaining how he missed declaring this.

The Role of the Electoral Commission

The Electoral Commission will have to decide whether to pass the issue on to the Police for investigation. According to Otago University law professor Andrew Geddis, “The Electoral Commission has a statutory obligation to report suspected breaches to the police unless the Electoral Commission believes the matter is so inconsequential there is no public interest in doing so” – see Jo Moir’s RNZ article, National MP David MacLeod may face police probe over undeclared donations – law professor

Geddis believes the Electoral Commission will pass this on, saying the “Commission’s duty will be to report this to the Police, who will then have to decide whether to prosecute.”

Talking to RNZ’s Midday Report today, Geddis also explained MacLeod freely admits that he knew about the donations and decided not to include them as he was obliged to do, which on the face of it is either a corrupt or illegal practice, which could have significant implications. Here’s Geddis’ statement: “If he knew that the return was false, then it would be a corrupt practice. And a corrupt practice automatically vacates the seat in Parliament; in other words, he would cease to be a member of Parliament at that point. So a lot is going to turn on what degree of knowledge is required here. He says he knew that these things weren’t in the return but he didn’t think that they had to be. And the question is whether that ignorance of the law – that failure to properly understand your legal obligations – is enough to get him off the hook here” – see RNZ’s National MP stood down over donations

Should MacLeod be facing more significant punishments?

In stripping the National MP of his select committee roles, his leader has expressed how contrite MacLeod is. Luxon said today: “He takes full responsibility for it and good on him, he’s been upfront about it and contrite about it. He feels terrible about it and I get it he’s disappointed in himself and frankly I’m disappointed in him as well.”

National-aligned blogger David Farrar says that the punishment is appropriate: “A stand down from select committees is a robust response from Luxon, especially as this is far from the first MP who has had to do an amended return” – see: Very sloppy

However, Farrar doesn’t pull back in his evaluation of how serious the problem is: “This is very sloppy and disappointing. It is true that party returns are annual, and candidate returns are not. But you should be aware that all significant donations have to be disclosed, and were not previously disclosed.”

But is the punishment big enough? One leftwing blogger is clear that MacLeod should resign, arguing that the rules and integrity around political donations are too great to allow such significant transgressions. The No Right Turn blogger says that the excuse of not understanding the rules doesn’t cut it: “Which really makes you worry about whether he is properly understanding the laws he is voting on. He has been stood down from his committee positions, but it is not enough. Because filing a false donation return isn’t just a mistake – it is a crime. And one that is utterly inconsistent with remaining in Parliament. MacLeod should resign. If he does not, it will tell us something significant about his, and his party’s, attitude to electoral fraud” – see: Unacceptable

He also points out that the large amount of undeclared donation money is too massive for a politician to forget: “The amount of money involved – more than five times the candidate spending cap, and two and a half times the median income – is boggling. How do you just ‘forget’ that amount of money?”

Others are more forgiving in their commentary. Herald political editor Claire Trevett says that MacLeod can “rely on the rookie mistake card to recover”, and that it shouldn’t have any long-term impact on his rising role in politics – see: National MP David MacLeod’s donations paperwork stuff-up will hurt but not end his ministerial hopes (paywalled)

Trevett also argues that the punishment dished out by Luxon is more than appropriate: “That is not a small punishment for a first-term MP. Doing a good job on a select committee is one of the few ways to catch your leader’s eye and prove you’re up to the job of a minister. It was clear MacLeod was one of those new MPs in line for a quick ascendancy to the ministerial benches. He was the chair of a committee in his first term and parties put the cream of the crop on the finance and expenditure committee.”

However, Trevett does believe that MacLeod’s mistake is “likely” to result in the Electoral Commission recommending that the Police investigate him. But she doesn’t think MacLeod’s motivation was to hide the donation. She explains how the candidate’s confusion could have occurred, given the different disclosure methods for donations: “Individual candidates only do returns in an election year. Political parties have to do them every year.” Furthermore, in his defence, she points out that “The form for the candidate returns does not specify what timeframe the return should cover.

However, MacLeod is not an inexperienced politician – something Trevett also highlights. He’s been a professional politician since 2000 – he was an elected member of the Taranaki Regional Council until 2022, and for 15 years of this, he was the Chair. In addition, he’s a businessman and has been a director of companies like Fonterra and Port Taranaki. Hence, governance arrangements and declarations of donations are things he’s very familiar with.

Nonetheless, MacLeod does have some history of electoral integrity issues and difficulty following electoral rules – see Glenn McLean’s Stuff article from last year, New Plymouth National candidate’s tsunami of billboards must come down after falling foul of new council signage rules and Robin Martin’s RNZ report from 2019: Taranaki Regional Council chair David MacLeod under fire for ‘unfair’ ads

Who donated to MacLeod?

A long list of donors who contributed to MacLeod’s election campaign in 2023 is disclosed in the newly amended return published today by the Electoral Commission. Most of the donors were local New Plymouth residents, but there were also some conspicuously wealthy donors who normally feature on the NBR Rich List and are well-known donors to parties of the right. These donors gave $10,000 each.

These were mainly property developers: Mark Wyborn (who donated $200,000 to NZ First last year), his business partner Trevor Farmer (who donated $115,000 to Act, $100,000 to National, and $50,000 to NZ First last year), and Hugh Ross Jones (who donated $100,000 to National).

None of this is inappropriate, but the public does need to know about such donations. In this situation, a fast-rising MP has failed to meet their obligation to be transparent. And as with Labour’s Michael Wood’s failure to deal with his conflicts of interest last year, there must be severe consequences when politicians don’t take these rules seriously.

Dr Bryce Edwards is Political Analyst in Residence, Director of the Democracy Project, School of Government, Victoria University of Wellington