March 10, 2014 12:00pm by David Farrar

Geddis on donations

There’s been a bit of lefty gloating going on around the traps aboutPatrick Gower’s interview with John Key on The Nation, in which he sought to draw an equivalence between David Cunliffe’s use of a trust to receive donations for his Labour leadership campaign and donations that National received back in 2010 and 2011 through a dinner held at “Auckland’s pricey Parnell restaurant Antoine’s”.

The fact that the Herald, Fairfax and TVNZ have all ignored the story is either evidence that, like Geddis, they think it is bullshit (my term) or a vast media conspiracy. I think the former considering they have all been covering the Collins story in a critical way.

But much as I would love to grab a pitchfork and torch and follow in behind the crowd all the way to the door of Key’s castle on a bleak mountain top (which is what he lives in, right?), my goddam conscience just won’t let me do it. So I’m going to have to break ranks and say, “nice try, but not quite.”

The asserted equivalence seems to be that Cunliffe’s trust lumped together a bunch of money and passed it on to him in ways that did not reveal the individuals who donated it, whilst the “Dinner at Antoine’s” likewise generated a bunch of money from individuals that then got passed on to the National Party without anyone getting to see who really gave it. That’s true enough. But it’s a superficial and misleading similarity.

Because the important difference is the intent in each case.

This is a point I made around 50 times on Twitter at the weekend. A trust hides the identity of the donors, and that is the intent. A dinner does not hide the identity, nor is it designed to. In fact it increases transparency.

Cunliffe’s use of a trust was deliberately meant to enable individual gifts that otherwise would have to be declared to Parliament’s registrar of pecuniary interests (which has a $500 threshold) to remain “faceless”, in that it permitted only the Trust’s gift to Cunliffe to be declared. It’s the exact same strategem that the National Party used for years with its Waitemata Trust donation laundering vehicle – a practice that Labour criticised heavily at the time and enacted the Electoral Finance Act to stop (amongst other things). Which is why Cunliffe’s decision to adopt the same strategy was so very, very silly.

I’d use another word starting with H!

In comparison, none of the individual donations made at the Dinner at Antoine’s (in the form of a $5000 payment to attend) had to be declared to the Electoral Commission, as the threshold for declaring party donations was at that time $10,000 (its since gone up to $15,000). So there was no necessary reason for the donations to be bundled together and passed over in one lump sum. It just seemed to happen that way because the owner of Antoine’s got the attendees to first pay him for the dinner, then gave a single cheque to National a few days later, rather than the attendees writing out cheques to National directly. If they had done the latter – which would have been entirely legal – then we would not have had any record of the dinner taking place at all.

That is a useful point. The individual donors were not disclosed, because their donation was below the disclosure limit. And yes if they had paid National directly for the tickets, then the dinner itself would not be disclosed. National could have structured the dinner in a way that it never appeared on the books at all, yet they didn’t. Quite the opposite to Cunliffe.

(Oh, and in case anyone’s wondering how we know how many places any individual person bought, note that National’s financial return for 2010 states that the donation from Antoine’s was made up of “contributions” … so National must have been told who each of the guests at the dinner were. And had any of these guests paid for more than one place at it, their identity would have had to be disclosed under s.210(1)(b) (as the disclosure threshold stood at that time). So the fact that no-one’s name was disclosed tells us that each attendee paid for only one place.)

Yes, and if any of those people had made other donations to National and over a year it exceeded $15,000 they would have been exposed.

That’s why Cunliffe’s decision to use the Trust actually does feed into the whole “tricky” label that National is trying to pin on him. Itwas a strategem to avoid an outcome he did not want, in a way the Dinner at Antoine’s episode was not.

Indeed. The dinner is not a strategy for avoiding disclosure. It is a strategy for getting people to hand over money to the National Party 🙂

The rationale for permitting this is that, in the scheme of fundraising for a political party’s campaign, $5000 is such small change that it doesn’t raise any real concern that you’ll get anything in return for it. Indeed, it’s only once someone gives $15000 in a year that we (now) require the political party tell the world who they are. Anything given below that amount is kept strictly between the donor and the party.

OK. That’s fine. But let’s say that the guest list for the Dinner at Antoine’s got leaked. And let’s say that it turned out six of the places around the table were taken by Chris Moller, Bruce Carter,Peter Cullinane, Nigel Morrison, Rod McGeoch and Brent Harman. (Note to Chapman Tripp or whomsoever may be asked to look at this paragraph – I am not saying that these individuals were at the dinner, but rather posing a purely hypothetical point for the purpose of academic discussion.) Would it not be of considerable public interest to know of that fact? In particular, would it not be relevant to us that (in the purely hypothetical case discussed) members of SkyCity’s Board of Directors had given National $30,000 between them prior to the last election, so that they could spend an evening in private conversation over dinner with the PM? And then let’s say that each of their wives also had chosen to buy a place at the table in their own names – adding another $30,000 to the pot.

I’m not saying that this was what the Dinner at Antoine’s was all about. It probably wasn’t – more likely it was an amalgam of social climbers and old friends taking the chance to hang out with a guy who is (by all accounts) good company. What I am saying, however, is that because New Zealand has set the legal disclosure level for donations to political parties at such a high level, we may never know if and when such a dinner ever does take place. And that, I think, is a problem.

Andrew supports a lower disclosure limit than $15,000. It used to be $10,000 which I supported but National and Labour voted for it to increase to $15,000 in 2010. But as I pointed out yesterday that is still under 0.5% of a party’s allowable spend during the election year.

In the hypothetical case above, I’d point out that each director and spouse would have to pay for their ticket personally. If one person or company was reimbursing them for the ticket or paying for it, then they have a legal obligation to reveal that.

The other thing worth noting is that a dinner is in fact a transparent fundraising device as everyone there sees who everyone else is. Just send a cheque to a political party, and no one knows but them and you. Turn up to a dinner and everyone else there will see. And I’m sure people would notice an entire board of directors there and their spouses 🙂

So a very good post by Andrew on this issue. His hypothetical is just that. As it happens I think $10,000 is a better limit than $15,000 but I put this in the context of a party’s likely total spend in election year being between $3 million and $5 million.