Bryce Edwards: The Seriousness of electoral fraud in NZ

Bryce Edwards: The Seriousness of electoral fraud in NZ

The Police passing over the National Party’s electoral donation case to the Serious Fraud Office is more than a “bad look”, even though that’s the phrase being used by commentators to describe this latest headache for the National Party and Simon Bridges.

The best coverage of this latest issue can be read in Derek Cheng’s article, Simon Bridges on Serious Fraud Office probe into National donations: ‘My hands are clean’.

And the best analysis so far, comes from electoral law expert Andrew Geddis in his blog post, Simon Bridges, National and the Serious Fraud Office – what does it all mean? In this, Geddis argues that, despite the Serious Fraud Office (SFO) becoming involved, it’s not possible to make judgements about the guilt or otherwise of those involved in this case. But he concludes that the optics are still very bad for National and Bridges: “as any political commentator worth their salt will tell you, not a good look. At all.”

It’s also a “bad look” for the integrity of the political system as a whole. For the public, this will fuel greater suspicion about unethical financial arrangements in New Zealand’s political parties and elections.

It’s likely the current rules and arrangements will now come under more scrutiny. For regardless of what the SFO now does, we are already seeing other revelations and allegations about corrupt practices and the ineffectiveness of the current laws to keep the system honest.

For an immediate indication of this, it’s well worth listening to former politician Peter Dunne comment on political parties and wealthy donors circumventing the electoral law by splitting up large donations into smaller ones. His five-minute interview about this on Magic Talk can be heard here: Ryan Bridge and Peter Dunne discuss Serious Fraud Office investigation.

Dunne makes some stunningly strong allegations about corrupt practices, essentially arguing that all the political parties are guilty of evading electoral law. On being asked about the SFO looking into parties evading the rules, Dunne says: “Every party has done it since time immemorial. So, there will be quite a lot riding on this.”

He explains why the parties might want donors to split their large contributions into smaller amounts: “If I’m a large donor then either I make the donation in a way that protects my anonymity, if that be my wish, or I don’t make it all. But the political parties are keen to get the money, and if someone says ‘I’m happy to donate but I don’t want my name splashed all over the paper’, then it’s almost logical that the parties then say ‘Well here’s a way that you can do it and not have to do it’. Now, is that unethical? I think that some people would say ‘In some senses, yes’. And in other cases there might be very good reasons why someone doesn’t want their name disclosed. It might be that they are giving similar amounts of money to other parties as well, for instance.”

Dunne elaborates on the fact that parties say to potential donors, “Don’t give us one big donation” because he says “people often don’t want to disclose, for various reasons. So, you say to them, ‘Give it to us in a series of smaller donations’. So, if the Serious Fraud Office takes the view that that is fraud, then that will not only affect the National Party but will affect just about every other party as well.”

It has to be remembered that Dunne is an extremely experienced politician, having been in Parliament from 1984 until just 18-months ago. He had a long career in the Labour Party, then as leader of United Future, and also as a Minister in various Labour- and National-led governments. So his knowledge and experience is substantial and credible.

When asked if party donors are often asked to split their large donations into smaller amounts to avoid disclosure, Dunne says, “As a general point the practice was common across political parties.” And he talks about his own experience detecting it: “I can honestly say that I didn’t [know this was happening in United Future] but you could work out after the event when the disclosures are made, you know when the records are declared after the election, you can work out that actually that was a series of donations.”

The interviewer, Ryan Bridge asks Dunne: “So you might have been aware that there was an offer of a big donor and then it comes out in the wash ‘oh look we had ten amounts of ten thousand dollars that equals one hundred, I assume it’s the same guy’.” Dunne replies: “Well I never got a donation that large, but essentially yes.”

Dunne’s account of what appears to be a corrupt practice, is that it is the norm amongst parliamentary parties: “This practice has been more honoured in the breach than anything else. And if the Serious Fraud Office finds that it is a fraudulent behaviour – which will be contradicting the Electoral Commission’s handling of it over the years, incidentally – but if they do, then that will set the cages rattling amongst all the parties, and that may be not a bad thing”.

I’ve responded to Dunne’s interview and talked generally about the latest developments in the donation scandal in an eight-minute interview this morning with Brendan Telfer – see: National Party ‘have major headache’ with Serious Fraud Office.

In this, I argue that “corruption is corruption” and if this is found to be occurring in more than one political party then that’s no defence for anyone who is caught out. I also call for further debate and a review of whether New Zealand’s electoral finance laws are fit for purpose.

After all, the current allegations are not just about a potential “technical” breach of electoral law. Disclosure about who donates large sums of money to politicians and parties can be seen is a fundamental cornerstone of any democracy worth the name. It doesn’t take much to work out why large donors may want to keep their identity secret. Those reasons are precisely why the public is unhappy with donations being made in secret.

Finally, in the case of the National Party, much will hinge on whether the $100,000 that was apparently donated to National was really from one person or many. Did the one wealthy donor essentially divide up the $100,000 and have it distributed to National in these smaller amounts in order to keep the whole donation from having to be declared? Or were all the eight donors that individually gave $12,500 (which combined to $100,000) genuinely using their own money? The first scenario would be a corrupt practice, while the latter would be fine. And the configurations of what went on will determine who has liability if any laws have been broken. For a good discussion of this, see David Farrar’s Donation legality.