By Tim Murphy for the press room
As New Zealand’s first fraud trial enters its third week, the Serious Fraud Office explains how party donations were diverted to a second account beyond the control of elected officials.
The money donated to support the New Zealand First Party went into the account of a company owned by one of the two men now responsible for obtaining funds by deception – even before the NZ First Foundation was created and started to take funds beyond the reach of party officials.
The Serious Fraud Office described the extent of funding received by the company in 2015-2016, and its expenditures, then the establishment of the foundation in 2017 and the receipt of $677,885 which donors believed was to support the political party NZ First.
Two men, whose names are removed, each deny two charges of obtaining by deception and are being tried in Auckland High Court before Judge Pheroze Jagose. The SFO alleges that the money received by the company and the foundation was used without the permission of party officials and was not reported to the Electoral Commission as political donations as would be the case for cash on an official party account.
Prosecution witnesses explained how they were approached to make a donation and who provided them with company and foundation account numbers, and party officials testified to their lack of knowledge of accounts, funds raised and how they were spent.
A picture emerged of a party struggling to pay its bills and modernize its databases, sharp divisions between board members and officials over the secrecy covering the foundation and the company, and internal warnings as early as 2018 that the establishment put New Zealand First at political and investigative risk. A witness for the prosecution had written to the president and party secretary that year:
“The political risk and legal liability here is unnecessarily high”, and “We’ve spent years rigging things… We have a chance to set the standards and do things above the edge.”
The defense noted that the head of NZ First, Winston Peters, was not among the prosecution witnesses and suggested that Peters knew the background of certain donations and supported the expenses of the foundation.
The SFO case is expected to conclude on Monday or Tuesday, with the defense set for the remainder of this week and a further fortnight if necessary.
A former SFO senior investigator accountant, Fiona Reid, told the court she worked on the case from February 2020, after media revelations about the foundation and the donations.
The SFO executed a search warrant at the home of at least one of the defendants, obtained detailed banking transactions, emails and text messages between party officials, the defendants, MPs including Peters and his partner Jan Trotman, and interviewed over 40 people who had given money between 2015 and 2019.
Reid said: “I couldn’t find any of the donations received by [company name suppressed] and the foundation’s accounts were reported as party donations to the Electoral Commission.”
However, she said: ‘Based on my analysis, the funds were used for the benefit of the party.
She traced the history of the company, of which one of the defendants was the sole director, and listed the total filings linked to NZ First in 2015-2016.
His accounts received $42,000 from party MPs as donations or loans, $28,600 from one defendant, $8,000 from the other, $4,614 from party official Apirana Dawson, $15,000 from a New Zealand bank account and $68,996 in donations or pledges.
He spent $154,466 during that time, including $92,000 for a political party database system known as Nation Builder, which remained under the control of that company or its successor, $41,000 for websites and digital consultants, $10,000 for graphic design projects and $4,190 for a 2017 NZ First campaign contractor work.
Donations deposited into the company’s account included three donations from prior prosecution witness Ron Woodrow of $9,998, $4,999 and $4,999 between 2016 and 2017, $14,000 from Peter Kraus in 2015, a month of 1,000 $ from horse breeder David Ellis over 10 months. in 2016-17, and $15,000 from racing figure Sir Peter Vela in March 2017.
Pre-trial evidence showed that some key party officials did not know at the time the background of the company whose bank account was receiving the money or who was in control of it.
Reid showed that for a payment made by the company to Nation Builder, Winston Peters emailed a party official directly in April 2017, when the multinational software company suspended access to NZ First due to the no -payment of fees, confirming that a payment had been made. .
She said that when NZ First’s “executive committee” cleared the party’s deal with the defendant’s company in 2015, it stipulated that NZ First would “open a specific bank account” to deposit money into. However, Reid found no evidence for this account.
The SFO found no standard business documents for the business in question – “no typical documents like financial statements or records or business activity [it] had driven. The only thing we identified were bank statements with a handwritten annotation. There were no GST returns or income tax records located.”
Reid went on to outline the total monies received and spent by the New Zealand First Foundation, which earlier prosecution evidence said was established in February 2017 – weeks before the party council approved a motion aimed at developing the concept.
The SFO had gone through the foundation’s bank account transactions with ASB. An initial email from the second defendant to the bank requesting a credit card stated: ‘This account is a stand-alone account for the purpose of furthering the interests of the New Zealand first party.’ But since it was classified as a “company”, the credit card could not be issued.
The foundation collected $899,220 during the period under investigation, Reid said.
A total of $677,885 came from donations and pledges of support to NZ First, and $213,335 was deposited from NZ First Inc accounts. Vector, the powerline company, paid $8,000 (for MMP environmental policy briefings to senior company officials by the NZ First Foundation, hosted by Vector’s government relations manager, Nicholas Albrecht).
Withdrawals from the foundation’s account included $190,461 for Nation Builder, $79,000 for one of the defendants through his business, $80,000 for that defendant’s family member, $64,000 for a manager from the party who worked on the Nation Builder database business for the defendant’s company and $14,000 in taxes for Inland Revenue for the defendant’s family member.
Congressman Clayton Mitchell was reimbursed $18,363 for expenses and Peters’ partner Trotman received $4,685 in reimbursement for airline flights.
The foundation paid $9,643 for boxer Joseph Parker to address its convention, $7,453 for a Wellington Cup party hospitality event and $430 per fortnight in rent for the family member of the defendant works from home for foundation business.
Reid’s testimony is expected to continue after another prosecution witness, whose identity has been suppressed.
The story was first published on Newsroom website.