Puzzle of politicians and donation laws
Those who create the laws seem to be the ones who go to great lengths to find the loopholes and get around them
If there is one truth in politics, it is that the letter of the law is not always a defence. That truth has arisen time and time again over donations to politicians and political parties.
Most donations scandals in New Zealand’s history have been perfectly legal under the law that existed at the time.
Examples include the Exclusive Brethren funding a campaign against the Labour Government in 2005, and National’s use of the Waitemata Trust to filter anonymous donations to avoid disclosure.
Those activities are now illegal — or at least greatly restricted — courtesy of changes to donations laws made by Labour in 2005 and kept by National when it overhauled electoral finance laws in 2009.
One modern equivalent of the “perfectly legal” donation is National’s receipt of a large donation from a New Zealand-based company that is owned by a Chinese billionaire, Lang Lin.
This was perfectly legal, and was disclosed. It is also fair to say that the company in question was not simply a shell company, but did do business in New Zealand buying and exporting horses to China.
But in August, Prime Minister
Jacinda Ardern questioned it, saying it appeared to be “outside the spirit of the law”.
That was the law banning donations of more than $1500 by foreigners — a step intended to restrict foreign influence on New Zealand elections by people who could not vote in them.
But there is a wider “spirit of the law”, and that is in favour of transparency.
When it comes to donations, the general political rule is that if something raises questions you are not willing or able to answer, do not do it.
At least we knew where National’s donation had come from.
Now the “spirit of the law” spotlight has turned to Ardern’s coalition partner — NZ First.
Questions are being raised about the NZ First Foundation, which has loaned the political party significant sums of money.
NZ First has had problems with donations in the past when it used an entity called the Spencer Trust, and had to rectify its donations returns as a result.
Now nobody from the party will say what the NZ First Foundation is, or how the NZ First Foundation gets the money in the first place. But it would hypothetically be perfectly lawful for donors to give money to that foundation, which could then “loan” it to the party — a little oneclient bank. No donations would have to be disclosed by the NZ First Party because the donations were not to the party itself, and were not handed on to the party but were instead loaned to it. In theory, it could also work as a money-go-round: the big money goes to the third party while the party gathers the small donations that do not have to be disclosed.
The loan is rolled over, or the party repays the third party through its smaller donations and it can then lend the money back to the party when it needs it, in an election year. But would Ardern consider it “outside the spirit of the law”?
It is almost certain she would look askance at it. If it were not questionable, all political parties would indulge in such measures.
But it is doubtful Ardern would publicly say so, or even privately say so to her coalition partner.
It is a curious thing that it is the politicians who pass those electoral laws – and the same politicians then go to great lengths to find the loopholes in them.
Electoral laws seem to be viewed as some form of challenge to be solved; the electoral equivalent to Sudoku.
The further irony in this is the rules around loans were brought in to close one loophole — but appear to have created another.
Loans have only had to be disclosed since the 2015 election. It came about because Conservative Party founder Colin Craig had “loaned” money to fund his party in that year.
Those were not disclosed until after the election, when Craig forgave the debt and the amounts were duly disclosed as a donation.
The Justice and Electoral Committee is considering whether to recommend further changes to donations laws as part of its review into the 2017 election, which will also consider foreign interference in elections.
Justice Minister Andrew Little has suggested he will beat them to the punch if the committee tarries too long. He said that in the context of scrutiny of National’s donation from Lang Lin’s company.
Whether he will bring the same urgency to bear on the loophole within the use of loans is debatable.
Getting change through Cabinet and through Parliament would require the support of the very party that may be benefiting from it.
The spirit of the law may prove to be a very flexible concept.