Did a top Labour official know a big donation from a leading Chinese businessman was disguised as five donations from others in the community and fail to tell the Electoral Commission?
A defence lawyer told the High Court political donations trial there was “more than a reasonable possibility” Labour’s general secretary Andrew Kirton knew of sham donations in 2017 – and that it was fatal to charges the defendants faced of trying to deceive the party or the Electoral Commission.
Lawyer Blair Keown, acting for Yikun Zhang, one of seven defendants in the case brought by the Serious Fraud Office, said evidence in the case suggested Kirton was “apprised of the circumstances” of one big donation of $60,000 being broken into five smaller ones to Labour in March of that year.
If that was the case, the obligation was on him to then report the real donor’s identity and the full sum to the Electoral Commission. His failure to fulfil that obligation would render any preceding actions by others irrelevant, as the charges required that those on trial had intent to deceive the party or commission.
That meant even if there had been a scheme to break up the large donation among multiple other individuals, Kirton not identifying the actual donor to the commission meant he had, in legal terms, “broken the chain of causation”.
“The party secretary’s knowledge just cuts that down the middle. It breaks any causative effect an antecedent stratagem could have had.”
Keown’s claim is the first direct suggestion during the seven weeks of the trial that Labour’s hierarchy might have known the donation for five paintings had been deliberately broken up to avoid Electoral Act declaration obligations.
It came as the 15 lawyers who have filled defence benches in courtroom 13 at the High Court at Auckland over seven weeks began their closing statements.
Seven people face charges of obtaining by deception over the donation to Labour in 2017 and two separate $100,000 donations to National in 2017 and 2018 which the Serious Fraud Office alleges were similarly broken up to keep the donor secret by avoiding the public reporting thresholds.
When Kirton, who in 2017 was general secretary and campaign manager for Labour, gave evidence last month he denied knowing the donation to his party might have been from anyone other than the named individuals supplied to the party.
But Keown told Justice Ian Gault on Tuesday that Kirton’s responses to some questions in court were incoherent, and his responses to other questions, how he presented as a witness, and what he was unwilling to admit all coloured his evidence.
“There is a reasonable possibility – the evidence goes further than that – that Mr Kirton was aware of the true position at the time [ in 2017].”
As Kirton was not regarded by the Crown as an uncharged co-conspirator, Keown said, he should be regarded as an independent actor, and one with legal obligations to record the true donor and amount within 10 working days because of its dollar value.
The lawyer said under the charges laid by the Serious Fraud Office, the party secretary for Labour (Kirton) “is alleged to have been deceived. [But] The party secretary is fully aware of what occurred. Whatever happened before just cannot have any operative effect.”
Keown said the evidence showed Kirton had from 2016 been active in trying to obtain support for Labour from the Chinese community, including Keown’s client Yikun Zhang. The general secretary had described support from the Chinese as being of high importance and stipulated he wanted to attend as many events as possible. Keown said the focus of that aim was to get close to Zhang.
Soon after the paintings donation landed in Labour’s bank account – an amount Keown said would have been the biggest for the party that year – Kirton was invited to a dinner at the home of Zhang and had said in evidence he might have flown from Wellington especially to attend.
“It was plainly an event of significance for Mr Kirton. Senior members of the Labour Party don’t just attend dinners at someone’s house, particularly, as Mr Kirton had said, [as] the host didn’t speak English. There must have been a reason.”
The very paintings Yikun Zhang had bought from Labour, paying $60,000 for a net $35,000 donation, were displayed on the walls of his home when Kirton attended the dinner. Photographs of the political officials and Zhang were staged in an otherwise nondescript part of the house where the paintings were hanging.
“It was impossible for Labour attendees to have missed them,” the lawyer said. “From Mr Kirton’s perspective, being aware of the fundraising activity and documents relating to the paintings and then having flown up – it would have been impossible for him to have missed that, and there is certainly a reasonable possibility of his awareness.”
Keown said Labour received a request via one of the other defendants in the case, who has name suppression, for receipts in the names of the ‘sham donors’ to be issued and for Kirton to take them to the dinner at Zhang’s house. He did not do so. Three days later they were printed for him to sign. Supposed purchasers of the paintings did not receive the receipts.
Asked by Justice Gault if he was “suggesting something untoward might have happened to those receipts” Keown said Kirton had had the receipts printed. People didn’t receive them. “They didn’t receive them because he didn’t send them because the real position would have become known.”
Some of the supposed painting purchasers had not been told by defendants who had contacted them to use their bank accounts to transmit money for Labour, that they had ‘bought’ a painting.
Keown said Kirton had given evidence about a second Labour fundraising event in 2017 that he attended (in which Zhang paid $100,000 for an imperial robe, Helen Clark portrait and wine) that had proven to be incorrect. Kirton had been unsure in court if he had been at the event when the auction took place, but he had had to accept under questioning that he had earlier said in his brief of evidence for the case that he had been there.
Where MP Michael Wood had given evidence the robe had been prominent on the night and had sold for a high amount, Kirton, who had been at the top table with Jacinda Ardern and Yikun Zhang, did not know what had happened in bidding, saying he couldn’t hear and his view was impeded.
In court, Kirton had been “curiously emphatic” that Yikun Zhang was not the purchaser.
But the Labour Party in the days after the event listed Zhang as the buyer in a spreadsheet; a defendant with name suppression sent Zhang a thank-you note on Kirton’s behalf and the party president Nigel Haworth sent him a thank-you letter, to which Zhang replied.
Keown: “It is very difficult to escape the fact that contrary to what he said, Mr Kirton was aware Yikun Zhang was the purchaser.”
He said contrary to assurances Kirton signed off with Labour’s auditors, the annual return of donations for 2017 listing five others as the painting purchasers “were untrue, they were contrary to any reasonable interpretation.
“Those representations were false. That all falls on Mr Kirton.”
When the names of Yikun Zhang, two associates of his, Colin and Joe Zheng and the former National MP Jami-Lee Ross became public in early 2020 in connection with prosecutions over two donations to National in 2017 and 2018, Kirton no longer worked for Labour.
However, Keown said, he had called one of the name suppressed defendants on the day of the naming.
“He’s working at Air New Zealand. There’s no professional reason for him to be making that contact unless there’s a particular issue with which he’s uncomfortable.”
Another call soon afterwards lasted 27 minutes – “quite something”, Keown claimed. “The only inference is that Mr Kirton was discussing his knowledge of what we say is the true position” regarding the 2017 paintings donation.
Later, Kirton had through his lawyer told the SFO he had had no conversations with the defendant with name suppression at that time.
“The reason he did that was to avoid having an interview with the SFO and it was a blatant lie.”
Keown urged Justice Gault not to exclude the reasonable possibility Kirton knew what the real position was over the donation, and then that would necessarily undermine the charges connected to the Labour donation – that the defendants had deceived the party secretary.
He said Zhang had been open about buying the paintings, had hung them in his home from the time of purchase and through a dinner he hosted for party officials and they were still there two years later when the SFO executed a search warrant. He had not been involved in any arrangement to split the donation for recording with the Labour Party – what the prosecution calls a fraudulent stratagem – and had no intention to deceive anyone.
Keown said his client had not made the $100,000 donations to National in either year, with funds identified by the SFO as being the source of the money in China and here not being his.
Defence closing statements continue.