Why NZ First shouldn’t get any apologies for the SFO’s failed prosecution

New Zealand’s biggest-ever political donations scandal is finally at an end.

But what is the conclusion? No one can really be sure.

The Court of Appeal released its judgement on Tuesday about the Serious Fraud Office case against the NZ First Foundation. On the face of it, the court found in favour of the NZ First side, saying that the SFO hadn’t fully proved its case for a criminal conviction over the large amounts of political money raised between 2015 and 2020 which were never declared to the public.

But the court’s dismissal of the SFO’s case isn’t the same as proving that those involved had done no wrong. Essentially, they only won based on a minor technicality. Nor does the Court’s dismissal of the case mean that New Zealand doesn’t have a serious problem about how large donations are given to parties without proper public disclosure.

The Court of Appeal’s dismissal of the SFO case

This week’s verdict was the second time that a court has acquitted those involved in the NZ First Foundation. The first time was in the original High Court trial of 2022. The SFO had been unsatisfied with that ruling and therefore took the case further to the Court of Appeal, alleging a miscarriage of justice had occurred.

The Court of Appeal dismissed the SFO case this week, saying that the SFO failed to prove the two men involved – who now have permanent name suppression – knew they were not entitled to the money. Electoral law expert Andrew Geddis says this was a “minor technicality”.

It’s certainly true that the Crown managed to prove most of their case against the NZ First fundraisers. And in fact, the Court of Appeal agreed with the SFO that the original judge got it wrong in saying that the prosecution had failed to prove that the money involved could be classified as being “political donations”.

For the best news story covering the Court of Appeal ruling, see RNZ’s report by Kate Newton: Serious Fraud Office’s appeal against NZ First Foundation acquittal dismissed

NZ First’s view: A total vindication requiring apologies

Deputy Prime Minister Winston Peters is certain what the Court of Appeal’s dismissal means: that his side has been proven innocent. He claims that the final ruling from the Court of Appeal was “a straight-out victory” for the party and its fundraisers, showing that “there was no wrongdoing”.

In terms of the whole scandal, Peters said this week that it was “a lie from the beginning”. And he alleges that it was a “malicious unfounded” conspiracy against NZ First, which attempted to damage it politically. And he quite rightly says that in 2020 the scandal “dramatically effected New Zealand First’s public image”. The controversy surely played a part in his party falling below the five per cent MMP threshold at that election, kicking it out of Parliament.

As to who the malicious enemies are, Peters points his fingers at the SFO, the Electoral Commission, and the media. He says that this involved $4m “of taxpayers’ money misused against us in these attacks”. And he points out that “to defend ourselves in court, and our innocent officials and members, New Zealand First is out of pocket hundreds of thousands of dollars.”

Peters is therefore demanding apologies from everyone involved. His main target is the SFO, but he also focuses on the Electoral Commission “who referred the case to the SFO when they clearly had no grounds to.”

Unsurprisingly, however, it’s the media that Peters directs most of his invective against. The suggestion is that media outlets started the campaign against the fundraising, stoked up malicious attacks, and didn’t cover the controversy with fairness and balance.

Peters is now demanding apologies from the media and journalists: “New Zealand First deserves an apology from those individuals in the complicit media for their relentless, venomous, biased, and politically motivated attacks directly prior to, and for the years following, the 2020 election.”

He is even going so far as to threaten that he won’t give interviews with one media outlet, RNZ, saying that the state broadcaster “ran 27 attacks against me on this matter and never apologised to me when we won”.

Peters gave an interview to Heather du Plessis Allan on Newstalk ZB, telling her that he would eventually get an apology from RNZ: “I’ll get one alright. I’m not having people call me a crook, not having 27 attacks on me and think there won’t be consequences… Because they are not going to get an interview out of me on this matter, or any matter, if they don’t play the game… If they think that they’re not going to be held accountable, they couldn’t be more wrong” – see Newstalk’s Winston Peters fires back against media, Serious Fraud Office, following appeal verdict

Why NZ First shouldn’t get any apologies

There are no signs that the agencies of the state are about to apologise for their roles in taking this prosecution to court. The SFO has put out a press release which reasserts that they were right to attempt the prosecution and then to take the case to the Court of Appeal – see: SFO welcomes Court of Appeal decision on political donations case

The SFO frames the Court of Appeal’s judgement as more than a partial success, highlighting that the verdict corrects some of the key points that the original judge got wrong. They point out that the ruling “left undisturbed the original conclusion that the two defendants had engaged in a ‘dishonest scheme’ and intentionally and deceptively misled the party about the nature of the donations.”

The SFO are particularly happy that the Court of Appeal overturned the original ruling which said the large donations given to the NZ First Foundation could not be classified as “party donations” under the Electoral Act. The fact that these donations went into a trust bank account rather than the party’s bank account was no longer a reason to disregard the case.

SFO Director Karen Chang asserts in the press release the importance of the principles that SFO had been fighting for: “Transparency is key to a well-functioning democracy. New Zealanders have a right to know who is funding our political parties, and this right should not be as easily circumvented as through depositing funds into a trust.”

Others have also argued that Peters shouldn’t get an apology from the state. Peters’ own Cabinet colleague and Police Minister Mark Mitchell went on Newstalk ZB this week to talk about the case, dismissing the idea of an apology, saying the criminal justice system is designed to test cases like this without apologies being appropriate: “[It’s] why we have a court system – so that those cases can be put through our court system and can be tested. We have a world-class system that is trusted, and we need to continue to put our trust in that system” – see Newstalk’s ‘Winston is always looking for an apology’: Whether the Government should apologise for dismissed cases (paywalled)

The University of Otago’s Andrew Geddis has also been interviewed by Mike Hosking, and says no apology is appropriate. And he explains what prevented the NZ First fundraisers being convicted: “What the Foundation was doing was illegal. The problem was that under the Electoral Act there was no specific offence provision that they could be charged with. So, the Serious Fraud Office had to reach for the Crimes Act and the ‘Obtaining by deception’ charge which just didn’t really fit the sort of hole that was here. The Foundation was unlawful. What was happening was illegal. It’s just that there was no offence provision that people could be charged under.”

Geddis says the SFO was right to continue with the prosecution: “The Serious Fraud Office had to act here. Because if this Foundation was allowed to operate with no consequences it would have completely ruined New Zealand’s system of funding political parties. The Serious Fraud Office had to bring charges. It was just a quite minor technical detail that allowed the people behind this – who incidentally we don’t know because they still have name suppression, which is ridiculous”.

Has the NZ First Foundation loophole been fixed?

In talking to Hosking, Geddis also challenged Peters’ belief that the fundraising involved no wrongdoing, saying: “if Winston Peters’ foundation was all lawful, the question to ask would be ‘why didn’t you re-set it up?’ And the answer would be because the laws changed”.
Geddis is referring to the fact that since the NZ First Foundation controversy emerged Parliament has amended the Electoral Act, adding a clause which makes clear that donations raised for a party must actually be passed onto the party organisation, with a fine of up to $40,000 for those doing so without a good excuse.

So, has the problem been fixed? Not if you study how politicians and fundraisers have long found ways around every rule that gets put up to attempt to regulate political finance. As Geddis told Newstalk, the parties are “always looking for ways to get those donations in without them appearing in the light. And that’s the big problem.”

The main lesson of the NZ First Foundation scandal and failed prosecution is that the Electoral Act has holes in it that you could drive a bus through. Yes, one of the holes has now been plastered up, but there are plenty of others to exploit.

Finally, it’s worth noting that NZ First is now back in Parliament and Government. Indeed Peters is Deputy Prime Minister again. The party will therefore continue to face allegations of selling favours via political donations. There have been numerous stories published about donations made from fisheries and mining interest that could be taken to have an influence on policy and Government decisions.

This is something that Winston Peters is particularly sensitive about, and this month he angrily told Parliament that his party was “not up for sale”, and he accused the Green Party of inferring that policy was being pursued on the basis of donations – see Jamie Ensor’s Winston Peters challenged over ‘lies’ claim against James Shaw

The argument came about in parliamentary debate over the new fast-track resource consents framework that the Government is introducing. Outgoing Green Party co-leader James Shaw had sought assurances from Infrastructure Minister Chris Bishop that the projects “being considered for inclusion in the Bill are not connected to any people or companies that have made substantial donations to any of the Coalition parties”.

Peters responded by raising a point of order, effectively calling Shaw a liar, and saying that the notion that NZ First had been bought by mining interests was “absolute balderdash”, and that such allegations required evidence rather than inference. He pointed to the fact that his party complied with the Electoral Act in declaring all donations to the Electoral Commission, concluding: “We are not going to put up with those lies anymore”.

At the time of writing, however, none of the $750,000 in party donations to the NZ First Foundation from between 2015 and 2020 have yet been declared to the Electoral Commission, as is legally required.

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