More law breaking by NZ First

Radio NZ reports:

A lobbying firm run by a New Zealand First Foundation trustee pushed for a law change on behalf of a property development company, which then donated tens of thousands of dollars to the foundation.

Doug Woolerton, one of two trustees running the secretive foundation which has been bankrolling New Zealand First, took on apartment developer Conrad Properties as a client for his firm, The Lobbyist.

There is nothing wrong with being a lobbyist.

There is nothing wrong with being a party fundraiser.

There is a lot wrong with being both. The two roles should be ethically incompatible.

And there is even more wrong when your clients are also secret donors to the party you fundraise for.

Between July 2018 and January 2019 Conrad Properties, and entities which share the same two directors, donated $55,000 to the foundation in four amounts, which all fell below the public disclosure threshold.

Foundation records show deposits from Equity Growth for $10,000 on 18 July, 2018 and $15,000 from Mayoral Drive the next day. Both those companies have only two directors: Jamie Hutchens and Ben Dearlove of Conrad Properties.

On 15 October, 2018, Conrad Properties donated $15,000 and followed that up on 22 January, 2019 with another $15,000 donation – both were one cent shy of the disclosure threshold.

Let’s look at these three companies.

• Equity Growth Ltd – owned by K A Law Nominees Ltd, Directors Hutchens and Dearlove
• Mayoral Drive Tenancy Trustee Ltd – owned by KA Law Nominees Ltd and Robert Holden, Directors Hutchens and Dearlove
• Conrad Properties – owned by KA Law Nominees Ltd, Directors Hutchens and Dearlove

So the same directors and basically the same shareholders. The directors control the company and would make decisions on stuff like donations. This is important because of the Electoral Act. S207LA states:

(1) A person is guilty of a corrupt practice who directs or procures, or is actively involved in directing or procuring, 2 or more bodies corporate to split between the bodies corporate a party donation in order to conceal the total amount of the donation and avoid the donation’s inclusion by the party secretary in the return of party donations under section 210(1)(a).

(2) A person is guilty of a corrupt practice who directs or procures, or is actively involved in directing or procuring, 2 or more bodies corporate to split between the bodies corporate a contribution to a party donation in order to conceal the total amount of the contribution and avoid the contribution’s inclusion by the party secretary in the return of party donations under section 210(1)(b).

On the facts as they are known, those involved in the donations may have committed a corrupt practice as the three 2018 donations combined are $40,000 and should have been disclosed under both subsections of s210(1). The law explicitly says it is a corrupt practice to avoid disclosure by splitting a donation between two or more body corporates.

No doubt the SFO will be very interested in this. The parties of interest will be both those who directed the splitting (if it occurred) and anyone who procured it (if someone suggested it to them).

The SFO will need to have regard to the specific facts. Sometimes two or more body corporates with similar directors might genuinely donate independently. For example if say Fletcher Building made a $10,000 donation in February and Placemakers (owned by Fletchers) made a $10,000 donation in August, and the decision makers were quite independent, then probably no offence.

But as two of the donations occurred a day apart, it strongly suggests it was one donation split to avoid disclosure.

So what is the penalty for a corrupt practice? A maximum $40,000 fine and/or two years imprisonment.

Now again that while on the facts known, I think it is very likely the law has been broken, only the SFO can determine if a prosecution is warranted, and who should be charged. And a judge or jury would them determine guilt. So my comments are based on what has been reported, but is not saying any particular individual has broken the law. That is again for the SFO to determine.