An investigation into donations made to a foundation for the benefit of New Zealand First has ended with criminal charges against two people – but Winston Peters is trying to claim vindication while promising vengeance against investigators

Two people have been charged with “obtaining by deception” over donations made to the mysterious New Zealand First Foundation, the Serious Fraud Office has announced.

New Zealand First leader Winston Peters has tried to claim “complete exoneration” despite news of the charges, citing the fact no MP or candidate has been charged while ducking questions about how his party financially benefited from the foundation’s existence.

Peters’ party also unsuccessfully attempted to injunct the SFO from revealing it had laid charges over the foundation until after the October 17 election, newly released court documents show.

In November last year, an investigation by Stuff journalist Matt Shand reported that financial records showed donations to the foundation had been used to fund an array of campaign and political expenses, but with the donors’ identities not disclosed.

In February, the SFO confirmed it was investigating donations made to the foundation and whether they broke the law, after receiving a referral from NZ Police.

In a brief statement released on Tuesday afternoon, the SFO confirmed it had filed a charge of “obtaining by deception” against two defendants on September 23 in relation to its investigation.

While the defendants had interim name suppression and could not be named or identified at present, the office confirmed neither person was a sitting MP, candidate in the upcoming election or their staffer, or a current member of the party.

Peters attacks SFO

In an Auckland press conference timed for the release of the SFO statement, Peters alleged the party had been “fully cleared”, basing the claim on the agency’s clarification of who had not been charged.

“Unlike the recent National Party donation scandal, no party member has been implicated or charged by the SFO.”

The New Zealand First leader attacked the SFO for the timing of its decision, accusing it of “a James Comey-level error of judgment” in reference to the former FBI director’s decision to confirm an investigation into US presidential candidate Hillary Clinton days before the 2016 election (although unlike the New Zealand First Foundation case, the FBI did not lay any charges over the Clinton investigation).

“It’s an appalling intrusion in a period when the people begin to think seriously about the shape of their next government,” Peters said.

“It is quite shocking for any who believe in fair elections that the SFO, one day from overseas voting and four days from advance voting beginning, would interpose itself into the general election in this poorly conceived fashion.”

Peters said the foundation was “an entirely separate entity” from the party but said the distinction would be lost on some “and deliberately confused by others”.

New Zealand First had instructed lawyers to take action against the SFO in the High Court, seeking a declaration that its actions had “amounted to an abuse of its statutory powers and has been unreasonable”.

He sought to compare the SFO’s decision unfavourably with its investigations into National and Labour.

While the agency did in fact lay charges against four people over the National donations investigation, Peters said that was not enough and claimed investigators had been provided more serious information that had not resulted in charges (although he did not provide any proof).

He also asked why the SFO had not received the outcome of its investigation into Labour (the agency only launched that investigation in July, while it first began looking into the New Zealand First Foundation five months earlier in February).

Peters said the foundation was “an entirely separate entity” from the party but said the distinction would be lost on some “and deliberately confused by others”.

When asked about the party’s relationship with the foundation, he said New Zealand First was “only ever a discretionary beneficiary”. However, he would not discuss in further detail exactly how the party had financially benefited, citing sub judice rules.

Peters said his legal action against the SFO would not be completed before the October 17 election date but he was still determined to persevere: “The reality is, this is a very expensive business but in the end, honour and integrity and a fair go is worth defending.”

An attempted injunction

Newly released judgements show the SFO had originally planned to announce the charges last week, only for New Zealand First to seek a High Court order barring the agency from revealing the news until a government had been formed after the election.

The judgement shows the party’s lawyer, Fletcher Pilditch, argued that “publicity in the sensitive time close to an election can influence voters’ decisions and needs to be considered carefully”, suggesting it had been improper for the SFO to tie the completion of its investigation to the election date.

“The announcement will clearly be damaging and have an impact on the electorate and the presumption of innocence is only honoured in the breach by the media.”

Pilditch said the SFO director would not be prejudiced by a delay in the announcement of charges, adding that there was a distinction between what was in the public interest “and what the public finds interesting”.

“There may be public interest in knowing what is happening with enforcement agencies’ investigations and in knowing what politicians are doing during an election campaign. But at their highest here, the charges are unproven allegations against defendants who are presumed innocent, the merits of which will not be decided for many months.

“Against that, publication of the charging decision will be front page news, the constant focus of questions to the leader of NZ First and he will not be in a position to respond because the charges will be sub judice and he will be bound by SFO secrecy provisions.”

Responding for the SFO, John Dixon QC said while the SFO “may be damned if it does make an announcement and damned if it does not”, it was inconsistent to say it could not take the election into account for the timing of its investigation, but needed to do so in the timing of the announcement of charge. 

“There is a public interest in open justice, in seeing the outcomes of investigations by the SFO and what charges are laid, especially where that concerns donations to a political party. Mr Pilditch says all that should be kept from the public for the benefit of NZ First in not being damaged by publicity.

While the announcement of charges had the potential to create confusion between the party and the foundation, there was “a significant public interest in the New Zealand voting public being informed during an election campaign about criminal charges of serious fraud against people or organisations related to political parties”.

“But that disregards the damage to the public interest by a lack of publicity and voters not being more informed by knowing that charges have been filed but not against candidates for public office. The publicity may even be helpful to NZ First in that respect.”

Given New Zealand First’s application had sought to delay the announcement until the point at which a new government was formed, Dixon said “the natural corollary is that it would also keep the information from other political parties which may or may not want to form a government with NZ First if in a position to do so”.

Justice Palmer ruled in favour of the SFO, finding that there was no evidence the agency’s decisions around its investigation were influenced by political considerations.

The political neutrality of the public service also likely meant that law enforcement agencies had to approach investigations related to politicians in the same way it approached investigations that were not, Palmer said.

“Both counsel accept the SFO has a usual practice of making public announcements about the outcomes of investigations. The SFO website suggests it is a very common practice.

“For the SFO not to adhere to that practice because the subject of the investigation is political, as NZ First’s foreshadowed ground of judicial review might suggest, could well be at odds with the principle of the political neutrality of the public service.”

While the announcement of charges had the potential to create confusion between the party and the foundation, there was “a significant public interest in the New Zealand voting public being informed during an election campaign about criminal charges of serious fraud against people or organisations related to political parties”.

A party in peril

Peters has repeatedly insisted the foundation’s structure is entirely lawful, while distancing himself from its creation and operation.

However, the Electoral Commission – the first body to receive a complaint about the foundation, referring it to police – said it had “formed the view that the New Zealand First Foundation has received donations which should have been treated as party donations for the New Zealand First Party”.

“In the commission’s view, the donations were not properly transmitted to the party and not disclosed as required by the Electoral Act 1993.”

The ongoing investigation into the foundation is believed to have scared off potential donors, making it more difficult for New Zealand First to raise the funds needed for the election campaign.

The party’s chances of returning to Parliament for another term appear remote, polling at 1.9 percent in Sunday’s Newshub-Reid Research poll and just 1 percent in Monday’s 1 News-Colmar Brunton equivalent.

Labour and National have also been investigated by the SFO during this electoral term in regard to political donations.

Former National MP Jami-Lee Ross and three businessmen will face trial next year over the investigation related to National Party donations, while the Labour investigation is still ongoing.

Sam Sachdeva is Newsroom's national affairs editor, covering foreign affairs and trade, housing, and other issues of national significance.

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