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Ross saga quiescent, but donations scandal needs addressing

Written By: - Date published: 4:26 pm, October 25th, 2018 - 21 comments
Categories: Abuse of power, capitalism, corruption, democracy under attack, electoral commission, parliamentary spending, Politics - Tags: , ,

While the Jami-Lee Ross saga has quietened down as National hopes, there are many issues raised that have not been resolved including the central question of political party donations.
Whether the $100,000 donated by Chinese-born New Zealand businessman Zhang Yikun to the National Party was illegally redistributed by members of the “Cathedral Club” is now in the hands of police.

What is clear from the tape recording of National Party leader Simon Bridges with Ross is that money buys influence and that matter needs to be addressed.

The sum of $100,000 might seem a lot to give away to a political party, but in the greater scheme of things it is relatively paltry given, as the tape strongly suggested, it would buy one extra parliamentary seat for China’s interests.
Aotearoa already has relatively tight laws regarding anonymous donations to political parties with a $15,000 limit. It may be simply a matter of ensuring the law is upheld.

The issue of money wielding influence is best seen in the US. Political donations in the US were also tightly controlled until a 2010 Supreme Court decision declared that spending money on political causes qualified as free speech protected by the First Amendment. The decision opened the floodgates for unlimited political expenditures by corporations and unions so long as they didn’t give to campaigns directly.

That decision, according to the independent tracker of political money in the US, Open Secrets, opened the door for individuals and companies to pour millions of unregulated and uncapped “soft money” into what is called Super Political Action Committees (Super PACs) to influence the outcomes of elections without contributing to an individual candidate.
Super PACs can accept “dark money” from donors that shield their identities through shell corporations and political nonprofits which don’t have to reveal their donors.

The political donation activities of the Koch brothers, David and Charles, are most notorious. Sons of Fred Koch, who founded Koch Industries, the second largest privately held company in the US, of which they control 84%, the brothers make mind boggling financial contributions to libertarian and conservative causes, often through so-called “think tanks”. They contribute to the American Legislative Exchange Council, which promotes laws limiting lawsuits from people with terminal illness as a result of asbestos. Koch Industries own Georgia Pacific, which has been subject to these lawsuits.

Through non-profit Americans for Prosperity, the Koch brothers have organised to defeat public transit projects in several cities, (Government-funded transit contradicts the brothers’ free-market, small-government views, and they also profit from people using cars.)

A network of like-minded donors organized by the Kochs pledged to spend $US889 million from 2009–2016 and its infrastructure has been said by Politico to rival that of the Republican National Committee.

They actively fund and support organizations that contribute significantly to Republican candidates and in particular they lobby against efforts to expand government’s role in health care and combating global warming.

Among Open Secrets’ list of the top 10 donors this year is Sheldon Adelson’s Las Vegas Sands casino operation, which has contributed over $US200 million to conservative candidates and causes in recent years.

Not all big donors support conservative and right wing causes. Hedge fund operator Tom Steyer, founder of Fahr, has donated $US29 million to the current election cycle so far in his quest to impeach US President Donald Trump and back Democrat candidates in next month’s elections.

George Soros’s Soros Fund Management has put $US14 million in 2018 into his Take Back America campaign.
And Michael Bloomberg, the billionaire former New York mayor and founder of Bloomberg News plans to spend $US80 million through the SuperPac , Independence, this year to ‘flip’ the House election the Democrats way.

These examples show us the corrosive effect of what can happen when money is used to wield influence.
That it can be used by a foreign entity such as China to exert its so-called “soft power”, as has been alleged in the case of Zhang Yikun and others in New Zealand, is even more disturbing.

The question is what can be done to limit such behaviour?

Since the Jami-Lee Ross affair broke, a number proponents ranging from the New Zealand Herald editorial to former British Labour Party deputy leader Bryan Gould favour public funding of political parties.

Victoria University political scientist and media darling Dr Bryce Edwards, has come out in a blog on Newsroom against this idea.

He notes political parties already get around $130 million of government funding through such vehicles as Parliamentary Services and this has caused parties to be less responsive, coinciding with a plunge in party membership, with National down to 20,000 from 200,000 and Labour down to 10,000 from 100,000.

“This state funding has already had a very strong impact on the parties.

Undoubtedly, it has reduced the organic attachment of political parties to society,” he writes.
He also argues that many on the Left favour state funding of political parties “because of the misconception that money equals power and only wealthy parties can compete”. He cites the success of unmonied parties like the Alliance, NZ First and the Greens and the failure of monied parties such as ACT, TOP and the Conservatives as refuting that argument.

Greater state funding will make the political system more moribund, entrenching the power of existing parties, Edwards says.

Gould says New Zealand should be very protective of its low level of corruption and high level of transparency, assets that are very easily undervalued.

“In cultures less accustomed than our own to the rules as to how democratic politics should function, it is natural to assume that political support can be bought,” he says.

He recalled how, when he was an MP in the UK, constituents from immigrant communities sought help bearing gifts and saw nothing wrong about expressing their gratitude for services rendered or anticipated in this way.

“The current saga is just one instance of the murky waters in which we could become swamped if the notion became established that the way to political influence lay through political donations,” Gould says.
Whether we like it or not, parties are an essential part of our democratic infrastructure and their proper functioning is central to any democratic system worth the name, he says.

“The opposition to public funding seems to stem from the view that political parties are voluntary organisations which must be responsible for their own welfare and survival, and should not therefore look to the taxpayer for support. But this is unrealistic; their role as public institutions should not be obscured by the fiction that they are private associations.”

“As the current scandal demonstrates, that fiction places us all at risk. We cannot afford to tolerate a situation where private money buys influence in public affairs. A properly functioning democracy is the responsibility of all of us; some of us might give up our time and effort to ensure that the necessary infrastructure is in place, but others should, as taxpayers, be ready to make a similarly valuable financial contribution to that essential purpose.”

The Green Party has long advocated both stricter rules on anonymity of donations and increased public funding.

“The fact of the matter is, as long as political parties are accepting donations from powerful vested interests, there is a constant risk of corruption,” said Co-leader Marama Davidson.

Prime Minister Jacinda Ardern says she is open to taxpayer funding for political parties if there were public appetite for it. Asked if the climate was right, she was equivocal, saying she was open to having the debate if that was something the public wanted.

National will almost certainly oppose public funding because it would give away the huge funding advantage of the rich favouring National.

Germany, Sweden, Israel, Canada, Australia, Austria and Spain have subsidised party activity for decades. More recently among others France, Japan, Mexico, the Netherlands and Poland have followed suit.

An important consideration in the debate is that the rich are getting richer and are therefore more easily able to wield their influence. In 2005, the Koch brothers had a combined net worth of around $US 9bn – now they’re worth over $100bn. Mike Bloomberg has added $46bn to his fortune during this same period. $20 million doesn’t make much dent in such fortunes.

And while some super rich support the progressive side of politics, polls show the wealthy are invariably socially conservative, which explains why very little money, even from left-of-centre donors, goes to support work that strongly challenges inequality.

(Simon Louisson reported for The Wall Street Journal, AP Dow Jones Newswires, New Zealand Press Association and Reuters and briefly was a political and media adviser to the Green Party.)

21 comments on “Ross saga quiescent, but donations scandal needs addressing”

  1. Stuart Munro 1

    It needs to be stopped in its tracks.

    But other parties rely on donations too, so they’re reluctant to take it on.

    The first step is mandatory full reporting of political donations with real penalties for not doing so.

    • Dukeofurl 1.1

      Thats what happens in US mandatory reporting, sometimes around every month, of every donation to a political candidate. With a maximum of something like $2500 per person per candidate.

      What happens is that 3rd party groups advertise for or against candidates or parties without any disclosure.

    • Anne 1.2

      The first step is mandatory full reporting of political donations with real penalties for not doing so.

      The problem with that Stuart Munro is that people who donate to left-of-centre parties stand a chance of being marginalised by the state apparatus in particular. It has happened many times in the past and there are no assurances it won’t happen in the future. Many of us have hairy stories to tell about harassment by state employers based on bigoted, political perceptions.

      Left-of-centre supporters are not wealthy people and they will donate say $20/$40/$60 if and when they can spare it. Hence the reason why Labour has so many more ‘undeclared’ donations than National. The other day someone from the Nats (can’t recall who it was) attempted to spin the difference in the numbers as an example that… Labour does it too. Unfortunately the level of ignorance among the voters is so abysmal, many will think… yeah, look Labour does it twice as much.

      The best way to stop the donation scams by National is to reduce the maximum amount of so-called anonymous donations to [arguably] $2000? That covers the small donations but it would soon become obvious if a political party was playing dirty by the number of donations at $1999 they accumulate. 🙂

      • Stuart Munro 1.2.1

        Yeah – the problem is it’s obvious now.

        How much more obvious does it have to be before the hammer falls on the Gnats?

        They’ve been cheating six ways from Sunday and the motherfuckers are selling seats in OUR parliament.

        Someone needs to go to the block for that.

        Or they’ll keep doing it until our country is as messed up as the US.

  2. JohnSelway 2

    An interesting post though I have one sticking point – I don’t think the rich are ‘are invariably socially conservative’. I don’t think the rich donors on the right you highlight really give a damn about social policy. It’s all economic to them – whether it be social conservatism or social liberalism, the vote with their bank accounts and cheque books, not their moral compass.

  3. Draco T Bastard 3

    In 2005, the Koch brothers had a combined net worth of around $US 9bn – now they’re worth over $100bn.

    All of which is unearned but that is typical of the rich. Very few have actually ever done anything that is beneficial to society and the world.

    The fact that such wealth gives them huge amount of political influence is just one more way as to why we can’t afford the rich.

  4. Dennis Frank 4

    The relevant principle is equality of representation, eh? When the wealthy exercise more leverage than most people, representative democracy gets skewed in their favour. It’s reassuring to hear Labour making noises about a law change to rebalance the situation: there’s a policy that it would be timely to prioritise! Likely to get consensus from NZF & GP without much difficulty.

  5. Graeme 6

    The thing that has stood out to me is the prominence that fundraising has in a National (and probably other parties as well) MP’s job description.

    This was brought out by Paula Bennett’s interview on TVNZ and highlighted in a Stuff editorial https://www.stuff.co.nz/national/politics/opinion/107904457/editorial-the-murkiness-of-political-donations

    ” “Because that’s his job. We fundraise,” Bennett replied.

    It was a startling and revealing moment. It has been said before that the Labour Party exists to make change and that National exists to govern. But the comment from Bennett suggests the party exists only to gather the money it needs to perpetuate itself.
    ….
    The usual practice is that a party leader keeps well away from conversations with fundraisers. If a donation is offered, the would-be donor is steered towards the party president or another functionary. The leader should be above knowing where the money comes from, to reduce any potential risk of influence.

    This is why Bennett’s comment was so surprising. ”

    This practice of selling face time with front bench MPs is well on the way down the slippery slide to a corrupt banana republic and not part of the New Zealand I thought I was a citizen off.

    There should be a total separation between party fundraising and MPs, both in law and political culture. Parties can still fundraise through their membership and the public and business donate to the parties at national or electorate level, but there should be a separation of the parliamentary wing of the party from all fundraising.

    • Anne 6.1

      … there should be a separation of the parliamentary wing of the party from all fundraising.

      Labour has always operated that way Graeme and still does. All donations are processed through the party machine not the parliamentary machine. If an MP is handed a large cheque he/she will pass it on to the General Secretary (I presume) for processing. There are very strict rules around the acceptance and processing of all donations.

      I’m sure it is the same with the Greens and NZ First and to be fair, my understanding it was the case with National until more recent years……..

      • Graeme 6.1.1

        It’s not the processing of donations but rather the soliciting, and eventually requiring them for service, of them that’s the problem. When MPs are selling themselves for donations and negotiating them as well things are going downhill fast.

        The line to full blown corruption gets crossed really easily.

        Toad Barclay moved his electoral office from Gore to Queenstown because “that’s where the business was”. We’re starting to see what the National Party’s “business really is now, and it came as a shock to some National people here when they found out what Barclay was up to as well.

  6. SPC 7

    The Green Party has ramped up calls for reform of the political donation regime, saying the more than $3.5 million the National Party received in anonymous donations in 2017 shows the need for transparency.

  7. patricia bremner 8

    Jacinda said “It would be good not to have to worry about fund raising.”

    In a discussion she and Andrew Little said it would cost taxpayers $10 000 000 an ele.ction.

    She had not been aware of a demand for it as yet, though that could change.

    A cheap price to avoid outside influences. It would need to be strictly policed of course.

    • McFlock 8.1

      yeah, ten mill is f-all compared to government income and removing play-for-pay incentives for politicians to be compromised

  8. Michelle 9

    Of course the rich are getting richer because the economic and social conditions have been created to enable them to get richer as have the conditions to ensure those that are poor remain so. But what happens when the poor become much more and decide they have had enough = rebellion & civil unrest

  9. esoteric pineapples 10

    “While the Jami-Lee Ross saga has quietened down as National hopes”

    Thanks to him being put in a strait jacket

    • mickysavage 11.1

      Thanks Graham. Your eye of the storm point is a good one. Will borrow it for a post with acknowledgment!

      • veutoviper 11.1.1

        Read the Selwyn Manning article too, MS.

        The two together are some of the best I have seen. Mind you also read Whaleoil’s latest this morning ………..

    • veutoviper 11.2

      An excellent article, Graham. Thank you.

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