Painting a picture of foreign influence in NZ politics
John fancies buying some art for his home. By happy co-incidence, his friend Sid is a local Labour activist, and he’s holding a fundraiser for the party. At the silent auction, John buys a painting for $2500. Because Sid had the painting valued at $2500, the law says John has not made donation to the party.
If John paid $40,000 for the painting – legally he would have contributed $37,500 to Labour’s election war chest and the donation must be declared to the Electoral Commission.
That’s pretty straightforward. But it is an element of electoral law that the Serious Fraud Office (SFO) failed to grasp, in a case that opens up some troubling questions about our democratic defences against corruption and foreign influence.
Yikun Zhang, Shijia (Colin) Zheng and Hengjia (Joe) Zheng – were charged by the SFO over donations made to the National Party in 2017 and 2018. Last week, the three businessmen were found guilty in relation to the $100,050 donation in 2018. Colin Zheng was also found guilty of the $100,000 to the party in 2017.
Three people (with name suppression) were acquitted in regard to a Labour Party donation over five paintings bought at auction in 2017, that hang in Zhang’s home. (The trial merged two cases, one concerning a $35,000 donation to the Labour Party and another concerning two $100,000 donations to the National Party).
Justice Ian Gault’s judgment revealed how an SFO decision not to obtain a valuation for the paintings played a key role in the aquittal of those connected to the Labour donation. But for the SFO’s failure, he would have found they intended to deceive (by breaking up their donation into small parcels).
Without a proper valuation it wasn’t clear to
the court what the true worth of the paintings was – and therefore whether this was a donation that should have been declared.
A cloud already hangs over the SFO following the wrap-up of the New Zealand First Foundation case in July. Two men charged over donations to the foundation were found not guilty by the High Court. (The SFO is appealing the decision.)
The SFO’s failings in both cases are one thing (for which they should be held accountable). But the latest trial throws grave doubt on our resilience to foreign election interference.
It is necessary to introduce the dragon in the room: this was Chinese money. It came from Yikun Zhang, an influential man with ties to the Communist Party’s united front work (a strategy that the ruling party uses to neutralise overseas opposition) and extensive business interests in his home country.
In court, much emphasis was placed by the prosecution on assumptions about Yikun Zhang’s motivations: that he made the donations in an effort to obtain influence with the largest parties, perhaps because he wanted a royal honour.
It’s plausible that Yikun Zhang sought secrecy because he didn’t want his honour (eventually awarded in 2018) tainted with a suggestion of influence, or because he didn’t want each party to know he was giving gifts to the other.
But the greater concern isn’t that Zhang sought advantage by hiding his name. It’s that someone went to huge lengths to pump money into the New
Zealand political system, and hide it from both mainstream parties and the public.
Yes, the case opens up the SFO to criticism, not least that it failed to understand electoral law. But it is also reasonable to conclude that those behind the scheme had a better, deeper understanding of the fundraising regime.
It was such a sophisticated exercise that it hoodwinked experienced party operatives in both Labour and National who’d been dealing with electoral finance for years. It took two to three years before it even came to light, and only after Ross went rogue in a bid to take down his friend and former party leader Simon Bridges.
The performance and decisions of the SFO certainly bear scrutiny.
But we need to ask if there is a hole in New Zealand’s democratic defences. And can we be confident that we have the right people and agencies, who both understand the growing threats, and can adequately protect our democracy from corruption and foreign influence?
The performance and decisions of the SFO certainly bear scrutiny. But we need to ask if there is a hole in New Zealand’s democratic defences.