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Open up the trusts

Written By: - Date published: 8:50 am, July 24th, 2008 - 55 comments
Categories: election funding, national, nz first - Tags:

Bob Jones confirmed on Morning Report that he gave $25,000 in 2005 to New Zealand First. The money was to be funnelled to NZF through the Spencer Trust but, according to the party’s declaration of donations the money was not passed on (parties’ declarations of donations are supposed to include any donations from a legal or natural person totalling over $10,000 in a financial year, NZF reports no donations over $10K since 2004 and none from the Spencer Trust).

Now, we have what appears to be proof of wrongdoing in New Zealand First. Either the money donated by people like Jones through the Spencer Trust was used to pay NZF bills and it wasn’t properly declared or the money was not used to pay the NZF’s bills but for some other reason, which is not why the money was donated. It may be that Peters was not aware that this was happening but something is rotten inside NZF.

The only way to clear all this up now is for all parties to open the books of their secret trusts so that Kiwis can finally be certain of who has been donating to parties and that the money has been used as donors intended. Here is a list of all secret trusts, the party each gave to, and the totals of declared money funnelled through them since 1996.

National:
NZ Free Enterprise Trust – $635,000
South Free Enterprise Trust – $17,999
Waitemata Trust – $2,100,188
Ruahine Trust – $318,948
Holland Memorial Trust – $152,168.71

NZF:
Spencer Trust – ?

(some parties, mostly National, also received money funnelled through law firm trust funds but there is no way those could be opened to scrutiny)

Fortunately, these trusts are now illegal thanks to the Electoral Finance Act but that’s useless if money from them is simply not declared. Now, parties must prove they’ve been honest. So, how about it National and NZF? Restore our faith; open up the trusts.

[Update: To be clear. I would love to see all large (say $200+) anonymous donations banned but it’s not possible to open the lawyers’ trust accounts or name past anonymous donors, whereas it is possible to open up the books of the trusts. For the record, since 1996 declared donations through secret trusts, lawyers trusts, or given anonymously have totalled: Nats-$4.3mil, Lab-$2.1mil, Act-$0.8mil, Greens-$20K, UF-$37.5K, Progs-$40K, NZF $6.3K]

55 comments on “Open up the trusts ”

  1. What would Bob box Jones or Winny the Sly old Fox know about trust in a land where corrupt politicians from all colours constantly duck and dive the truth. No wonder the country is fucked!

  2. vto 2

    This time the quicksand seems to have no bottom…

  3. AndrewE 3

    I think we should ban all anonymous donations. I wonder why Labour chose not to?

    And I think you’ll find the the EFA does not make these trusts illegal.

  4. Tane 4

    Andrew, I think we should ban them too. My understanding is that after public funding didn’t happen Labour were worried they’d have no money without anon donations. That’s no excuse, but it’s the reasoning behind it.

  5. “I wonder why Labour chose not to?”

    I wonder why Labour scrapped the Serious Fraud Office.
    It’s not rocket science!

  6. Vanilla Eis 6

    This primarily is a legal matter for Bob Jones to take up with the Spencer Trust. Whether it is political or not depends on who manages the trust, and what the money was used actually for.

    Of course, there’s nothing saying that the Spencer Trust didn’t make multiple donations, totalling $25k over a number of years. Again, this is an issue for Bob Jones to bring up with them – assuming that this is not what he requested.

  7. vto 7

    Tane, good to see some brutal honesty.

    But banning anon donations? Would people stop giving? Politics is a funny thing – anonymity plays a crucial part given the feelings it can arouse. For example, voting is secret. Further example, I personally (and I imagine many others) would not post without anonymity. Politics can arouse such feelings and passion that it can get very dangerous for participants. i.e. actual physical threats etc.

    So it is a difficult area and anon has a role. tricky tricky.

  8. Money buys everything else in a bent world.

  9. Felix 9

    vto while I agree with the sentiment you express for anonymity there is a crucial difference between anonymous voting and anonymous donation – and that is that we all get one vote, regardless of the size of our pocketbooks.

  10. Joker 10

    Why do the unions crap themselves everytime there is a chance of National getting into power?

    Because they fear vindictive legislation from National which may compromise their viability due to their support for Labour.

    Many companies and individuals have the same fear when providing financial support to the party of their choice.

    It is a shame that people are scared of retribution from their Government if they have supported the opposition but acts of petty revenge do happen.

    This is why annoymous donations are still needed.

  11. Rob 11

    Winnie is going to drag Labour and HC down soon if she doesnt cut him loose, We now know that Bob Jone s gave $150 k to NZF in 1999 hes not sure where that money went. Then in 2005 he gave $25000 which didn’t appear on their audited books, One thing I do know in a battle of facts with Bob Jones Winston will surely lose.
    We also know that Brian Henry as a Barrister cant run a Trust Account this was pointed out in the house yesterday by Judith Collins
    Who’s for open and Honest Government then !! Like we were meant to have under NZF and Labour!!

  12. Honest government in New Zealand is impossible !!

  13. Rob. He didn’t say in 1999 – he said ‘at the start’ which would be back before 1993.

    vanilla Eis – it is posible that doantiosn over a number of years were made, none of them totalling mroe than $10K in a year but that seems unlikely, why set up a trust for such small sums? and why space Jones’ donation actually going into NZF’s coffers over 3 years?

    AndrewE. Funnelling is illegal now, see s24 of the EFA. http://legislation.govt.nz/act/public/2007/0111/latest/DLM1093005.html

  14. D4J. If that’s the level of contribution you’re going to make, can you do it on Kiwiblog please, not here?

  15. Impossible at the moment Steve and I get your drift. Must go, as politicians leave a sour taste in my mouth. What a sick joke.

  16. Rob 16

    Ok Steve fair point but where did the $150 k which is more to the point. Also what about barristers not being able to run trust accounts its getting murkier by the minute you must agree.

  17. monkey-boy 17

    I like this post. In the interst of balance, are we to infer that Labour has received no similar types of donation since 1996. If they have, wouldn’t it be useful and instructive to list those too?

  18. lukas 18

    1999 Total number of Anon donations for Labour 1999 12 $ value $824,000
    1999 for National total number including trusts 5 $value $940,000

    2002 Labour total number 8 $ value $380,000
    2002 National total number invcluding trusts 8 $ value $405,000

    2005 Labour total number 8 $ value $315,000
    2005 National total number including trusts 6 $ value $1,741,00

    If you add in the unions to Labours totals in 99 and 02 they would probably be ahead… the only election year the National has had a significant $ advantage was 05…

  19. monkey-boy. Labour has not received any donations from fornt trusts since 1996. If they had I would have listed them. Look at the link.

  20. lukas 20

    just looking at the other years now… at a quick glance the years in between election years Labour seems to be getting more anon donations than National in terms of number of donations and $ value

  21. Lukas.
    – It’s misleading to only look at election years,
    – the other two election years you’ve chosen 1999 and 2002 happen to be the ebb points for Natioanl when donations were low,
    – there’s no reason why you would include the unions (they’re not anonymous and you may as well be against donations from all legal persons if you’re going to attack them – banning all donations from non-nautral persons is a subject for another post),
    – and I’m only talking about the secret trusts in this context, not anonymous donations in general.

  22. Vanilla Eis 22

    SP: Agreed, it is highly unlikely. Simply pointing out that it is a bit rash to assume so early – I’ll wait for Jones to come out with whatever he uncovers. It was his money, afterall.

    Of course, Winston is still a slimy power-monger. Don’t take this post as apologising for him at all. Also blatantly hypocritical after criticising National for their use of trusts to hide the identity of donors.

    Also: Just read in the Dom that the Spencer Trust was/is administered by Winstons brother. Interesting indeed.

  23. BeShakey 23

    vto – I agree with your claim that anonymity is an important thing and losing it could dissuade people from donating. But two points: one – this only applies to people donating more than $10k. If you want to donate anonymously you could still give $9,999. That seems like more than most people would or could give. Two – the issue could be done away with by public funding.

  24. djp 24

    Yeah funny how there is no mention of the ~$650K of anon donations that Labour has has collected from 2005-07.

    lukas: cheers for adding that up

    Seems that labour was happy for anon donations when theirs were on par with nationals.

    I am generally have a laissez-faire attitude to these things but I could easily live with no anon donations over something like $200-500 (just keep public funding away from political parties)

  25. djp 25

    SP, so if National had got its funds from anon donations (like Labour have) instead of “front trusts” that would be ok?

    What makes an anon donation not associated with a front trust any better then an anon donation that has come from a front trust?

  26. monkey-boy 26

    New Zealand Labour Party 2007

    Palmer Theron, Solicitors, on behalf of an undisclosed client PO Box 2721717, Papakura 2244 $150,000.00

    New Zealand Labour Party
    Simpson Grierson, Barristers & Solicitors, on behalf of an undisclosed client Private Bag 92518, Auckland $50,000.00

    New Zealand Labour Party
    Morrison Kent, Lawyers, on behalf of an undisclosed client PO Box 10035, Wellington $30,000.00

    Is this the same kind of thing? Taking this as a hypothetical (possibly low) average, at $230,00 a year since 1996 this would equate to about $2,530,000
    donated on behalf of ‘undisclosed clients’ through solicitors to Labour also.

  27. monkey-boy 27

    I tell you what I’d be a damned sight more interested to see who is secretly donating to Labour that oto the Nats. Afterall we have already established tht national have supped from the chalice of satan, whereas, Labour, on the other hand are ‘whiter than white’. (Apart from arms/nicotine/petroleum trader Owen Glenn, of course.)
    Throw Open The Books! We, the public demand the truth.
    goowan …
    You know you want to….

  28. Steve – you opened yourself to lukas and monkey-boy’s posts by pretending that Labour hadn’t received anonymous donations, which is patently untrue. Of course, up until 31 December 2007, it was perfectly legal to receive money in such a way, and I have no criticism of any political party who reeceived money in this way. If you want transparency, at least have the decency to put all the facts forward.
    [I didn’t pretned that at all. I was simply only talking about the trusts. If you want to attack my honesty you can do it on your own blog where everyone will read about it. SP]

  29. monkey-boy etc. Read my post.

    There aren’t any books to throw open in the case of anonymous donations, they’re money given to the parties without a name attached – the parties don’t know who the money is from, so there’s nothing they can tell you.

    Going delving into lawyers trust funds would be a very messy business, all kinds of things do through those funds and they are strictly confidential.

    On the other hand, there are some trusts that have been set up specifically and exclusive to funnel funds to parties. The books of those trusts can easily be opened up.

  30. lukas 30

    SP I am sure if the powers that be wanted to know who donated what to whom they would be able to find out.

    Most transactions are done electronically these days… I am not 100% up on the play with how these things work but I am pretty sure there would be a way of tracking who paid what to who and when

  31. monkey-boy 31

    Anyway that is not why we are here is it? The real story is that NZF have been perhaps caught with their fingers in the till. What is Helen going to do?

    A snap election? Nahhh.
    Sack Winston? Nahhh.

    Throw National a tiddler in the shape of this latest revelation, and then suggest that if Nationanal put any more pressure on her to pursue the matter she will dish the dirt on National’s ‘secret trusts’

    hmmm, that might work – not.

    But even if it does, I still think that Owen Glenn is not quite finished with her yet though….

  32. Tane – in terms of advocating the ban of all anonymous donations, do you believe in banning *all* anonymous donations or are you just in favour of lowering the threshold significantly? I.e. would parties still be able to receive 50 cent donations (or whatever) in buckets at public meetings etc? And would parties therefore have to publicise every $5 donation declared from a member or supporter?

    Steve – to what extent do you think the ban against funnelling will be effective? I genuinely don’t know the answer to this, but assume that in practice this is unworkable and that trusts will still be able to get away with receiving money from another non-transparent source in a way that legally avoids the funnelling ban.

    Bryce
    http://www.liberation.org.nz

  33. Tane 33

    Bryce – to be precise a don’t have a problem with under a hundred dollars or so. My concern is the current regime is nowhere near tight enough.

  34. Camryn 34

    SteveP – I think everyone can understand that distinction. You’re saying that there’s no “moral” distinction between different routes of anonymous donation, but that trusts should be opened up because they can be, whereas lawyers trusts funds can’t be so what’s the point discussing it.

    I will do you the benefit of assuming that you’d love to see all opened up, but are resigned to settling for just what is possible… and that if Labour had donations funneled through trusts then you wouldn’t change your point.

    The issue I have with your post is that you request/demand that National open up its trusts on the basis that NZ1 may have had some funny business with its trust. (My instinct would be to replace ‘may’ with something more definite because I have little faith in NZ1).

    Basically, you’re saying all trusts can’t be trusted because one trust can’t be trusted. My take away would be that the only lesson from NZ1 and the Spencer Trust is that NZ1 can’t be trusted. Clearly, it is the actions of corrupt individuals that is/was the problem, not the system. Calling for National to open the books in the absence of any complaints or evidence of misappropriation smacks of opportunism.

    You’re taking a very long shot at tying this back to National and it’s an extremely transparent modus operandi that undermines you in the long run. I’m now more inclined to assume, on future issues about which I know less, that you’re doing the same thing… even when you may have a valid point that could’ve otherwise had traction with me.

  35. insider 35

    Camryn

    You obviously missed the real point – it is all National/John Key’s fault. End of story. Please read the script more carefully next time.

  36. Camryn. thanks for that. I would “love to see all opened up, but a[m] resigned to settling for just what is possible”

    I have had a bee in my bonnet about these trusts for a while though and I’m not alone in that. One of the cornerstones of the Coalition for Open Government’s proposed finance reforms was getting rid of funnelling. It seems to me that they are an invitation for corruption and this instance just proves it. Of course, it may be somewhat academic (sorry, Bryce) since donations from them to political parties are now banned but it would restore some faith to get it all out in the open.

  37. polaris 37

    Clinton- can you explain how the National Party (one legal entity) can force xyz Trust (another legal entity) to disclose who has given money to it?

    I think what you mean is: the trustees of the various trusts, should disclose who the beneficiaries of the trusts they are the trustees of.

    In some cases, this may involve breaching the trust deed and thereby committing a breach of fiduciary duty and reneging on their legal obligations – opening themselves up to civil legal action.

    Is this what you really want?

    It is unfortunate that, as in most things, the standard don’t understand how the law works.

    [these trusts do nothing other than funnel money for the parties, they are usually controlled by senior party members (eg. the NZ Free Enterprise Trust was run by an ex-Nat President, the Spencer Trust is run by Peters’ brother). If they want to, National can hide behind legal fictions, hell that’s why they set up the trusts in the first place. However, I’m sure if National asked nicely, their trusts would open their books. SP]

  38. Bryce. I’m not sure if it will work perfectly, I guess we have to see what the first set of donations declarations entirely covered by the EFA look like but it’s better to try to ban them than allow these mechanisms which seem to have no purpose other than to enable corruption and dodgy dealings to exist unfettered.

  39. Draco TB 39

    Clearly, it is the actions of corrupt individuals that is/was the problem, not the system.

    Unless it is believed that those trusts that were set up could be used so that large donors could influence the party policy without being known. That, of course, is the problem with anonymous donations and why they should be banned (down to around $100 because anything less than that would be impractical).

  40. lukas 40

    SP other than ease of identifying who is behind trusts vs anon donations… whats the difference between them in terms of what they achieve?

  41. insider 42

    Where is COG these days? They seem to have disappeared in a puff of “all care no responsibility”.

    They were very good at pushing the EFA and now don’t seem to be interested in dealing with the consequences at a time when open government seems a major issue. Funny that.

  42. lukas 43

    SP then why no mention of the vast amount of $$ Labour has received by anon donations throughout the years?

  43. lukas. for the reasons given in the update and earlier comments

  44. insider. Graeme Edgeler of the COG is with the EC now and Steven Price is regularly in the media on EFA issues.

    It should be remembered that the COG’s proposals were more akin to the Canadian system – more public funding, lower anonymous limits etc – than the one adopted

  45. monkey-boy 46

    but lukas we really need to discuss this rather irelevent diversion from the very real problems the government is now having to face with NZF.
    Sack Winston?
    Election looming?
    Or pretend it’s business as usual?

  46. Camryn 47

    Draco – but the anonymous donation part isn’t the issue here. It’s whether the anonymous donation actually made it to the party.

  47. lukas 48

    sorry…hadn’t seen that updated bit of your post

  48. Anita 49

    If I were a Nat strategist right now I would

    1) Publicly write to the trusts asking them to ask their donors if they are willing, in the name of transparency, to be publicly named.

    2) Release letters from the trusts saying “Yes”.

    3) Wait a week.

    4) Release a small list of entirely innocuous names, and say the Trusts are still following up the rest.

    5) Smile, take the moral high ground.

  49. High risk strategy, Anita. Even the Tracy Watkins and Audrey Youngs of the world would start asking questions if they give names to a few hundred thousand of donations through the trusts and over $2mil is still unanswered for.

  50. Rob 51

    I believe this blog need to get back to what do Helen Clark & Heather Simpson do with Winston.
    obviously he is the one under the gun at the moment. Even though it may be a good time for the rabid left to come out and have a go at National its not them in the firing line
    The chief Baubleeater the man whiter than white on Election spending appears to have some very creative accounting going on. It also appears that quite a bit of the money never reached NZ1 where did it go?

    If you were the Prime Minister of an open and Honest Government wouldn’t you want to know? Especially as this man is acting as a Foreign Minister for her Government.

    I think Clark has to make a stand and the longer it goes on the more damage it will do for Labour!!

  51. polaris 52

    Clinton – once again talking out of your ass.

    “these trusts do nothing other than funnel money for the parties”

    Are you a trustee? How do you know this?

    “they are usually controlled by senior party members”

    So?

    “If they want to, National can hide behind legal fictions, hell that’s why they set up the trusts in the first place”

    A trust is not a legal fiction.

  52. Anita 53

    SP,

    Even the Tracy Watkins and Audrey Youngs of the world would start asking questions if they give names to a few hundred thousand of donations through the trusts and over $2mil is still unanswered for.

    Or it would give them a great chance to talk about National transparency and turn the spotlight on Labour and NZF.

    National could claim rock-and-a-hard-place – genuine commitment to openness vs commitment to privacy (not to mention, it’s the trusts’ decisions).

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