Yikun Zhang says the SFO threw a series of challenges and indignities at him, including preventing him from visiting his dying mother and searching officers refusing to remove their shoes in his house
The wealthy Chinese donor in the political donations case offered to hand over legal rights to $30m of properties in New Zealand – the highest bail security ever – so he could visit his dying mother in China.
The Serious Fraud Office, having charged him with obtaining by deception in donations to both Labour and National, opposed him being allowed to travel despite the $30m pledge. After a second application to the High Court allowed him to go, his mother died as he was serving time in quarantine on arrival in his homeland.
Details of the Crown and SFO’s strict approach to Yikun Zhang, who they deemed a flight risk who might not return to face trial, emerged in Zhang’s trial at the High Court at Auckland on Monday morning.
Remarkably, it was revealed that when Zhang left for China the Crown did not follow through and get the legal paperwork completed on Zhang’s offer of them placing caveats on all his and his family trust’s properties in New Zealand – effectively leaving him both out of the country and still in control of his $30m in assets.
His home in Remuera, Auckland, that had been the scene for private dinners in 2017 with both National leader Simon Bridges and Labour’s president Nigel Haworth and general secretary Andrew Kirton would have been among the properties offered as security.
Zhang’s defence team outlined the bail offer, Zhang’s missing his mother’s death and the Crown’s failure to secure the offered assets to make him return, during cross examination of the SFO’s main investigator on the political donations case, Lee Taylor.
“Mr Zhang agreed to forfeit these properties if he did not return when he said he would,” his lawyer Lauren Lindsay said.”At the time, it was the largest surety ever offered in New Zealand.”
Asked why the Crown did not follow up and place legal caveats on the properties, Taylor said: “I do not quite understand the process. I’ve not applied for caveats on properties in relation to bail matters.”
Lindsay: “Because the SFO did not take such steps, Mr Zhang could have transferred his assets and stayed in China and you could have done nothing about it.”
Taylor: “I couldn’t say whether that’s possible or not.”
Lindsay: “You took no steps. But Mr Zhang did return to New Zealand to participate in this process.”
Lindsay’s questioning said the SFO had thrown a series of challenges and “indignities” at Zhang, including seizing 26 electronic devices, including those of his children, via a search warrant at his home timed just four days before he was to lead an international Teochew convention in Auckland. The nine searching officers had failed to remove their shoes, as requested and as expected in Chinese homes, citing “health and safety reasons”.
She said there had been nothing to suggest he had not been upfront, cooperative and consistent with the SFO in interviews.
Crown lawyer John Dixon QC intervened twice when Lindsay suggested Zhang had been cooperative and consistent, telling Justice Ian Gault the questions were “dangerous”.
“I cannot say why,” Dixon said. “It opens all sorts of doors, your honour.”
Four days after Zhang left New Zealand for China, Taylor tried to contact his wife, Anna, to arrange an interview, despite it being two years after her husband had been charged.
Lindsay asked Taylor why he had pursued Anna Zhang directly, despite knowing she had legal representation, by both email and a visit to her home when he knew her husband was in China.
Mrs Zhang was eventually interviewed, but Lindsay said her attendance at the political dinners at her home had been long known by the SFO.
The extent of the SFO’s use of its powers to compel witnesses to appear for interviews or to produce documents is becoming increasingly evident through the court process.
On Monday, it was revealed the office had just last month used its power under Section 9 of the Serious Fraud Office Act to force the media company Stuff Ltd, to give it a document that turned out to be a press release issued by a PR firm in 2020 that included a line that Zhang would “vigorously defend” the charges.
The Section 9 notice compelled Stuff’s chief editor Mark Stevens to produce the ‘document’, which he did.
Lindsay, in her questioning, told the court the SFO had issued 170 notices to individuals and organisations during the twin investigations into National and Labour’s donations.
As well as defendants, the Labour Party, and supposed donors in this case, these included notices to the Ministry of Business, Innovation and Employment (MBIE), domain hosting companies, banks, airlines, the Immigration Service and telecommunications businesses.
She showed the court a Section 9 notice to Spark’s call investigator in April 2019 demanding subscriber details and all details of phone and text messages for six phone numbers between January 2016 and April 2019. This even included cell site polling data. Similar information was required from Vodafone and 2 Degrees.
The lawyer said to Taylor: “You have obtained vast amounts of documentation,” and noted that a previous SFO technical witness had “agreed it was in the millions of documents”.
Zhang, Ross, Colin Zheng and his twin brother Joe Zheng are on trial for obtaining by deception in relation to two $100,000 donations to National, in 2017 and 2018, that the Crown alleges were broken up to small amounts and through other “sham donors” to hide their origin and conceal identities from the public.
Those four defendants and three others with name suppression also face similar charges over a net $35,000 donation to Labour from an art auction in 2017. All defendants have pleaded not guilty in the trial, which is in its fifth week.