SFO announces investigation into Labour’s 2017 donations

The Serious Fraud Office has announced:

The Serious Fraud Office has commenced an investigation in relation to donations made to the Labour Party in 2017.

This is very interesting. If I had to guess, I’d say the investigation was into Labour not naming people who paid tens of thousands of dollars for artworks as a donation to Labour.

And who ran these art auctions:

Wellington artist Karl Maughan provided Labour with two paintings for auction in the last year. He said he gave them to campaign staffer Barbara Ward, who works for Labour leader Jacinda Ardern.

If I am correct that this is what the SFO is investigating, then it will come down to whether Labour valued the artworks fairly. That determines who get listed as the donor.

Let’s say a painting went for $25,000. Now if the painting is worth $20,000 normally then the artist is deemed to have made a $20,000 donation and the bidder a $5,000 donation as they paid $25,000 for something worth $20,000.

And only donations over $15,000 get the identity published, so the person who paid $25,000 for it, has their identity hidden.

But what if the painting wasn’t really worth $20,000. Let’s say that is a nominal value but in reality it is only worth $7,000. Then the donor has made an effective donation of $18,000 and should have been disclosed.

And the story quoted gives us a clue that may be the case:

At the last Labour art auction, they sold three works by Mt Eden artist Stanley Palmer, from a numbered series of 20 prints of the end of the road at Karamea, on the west coast of the South Island.

Palmer believed the $20,000 paid for the three was what they were worth – but admitted they would usually have sold for around $2400.”They went for a lot more than I expected.” 

If they would normally only go for $2,400 then the donation value is $17,600.

So it will be a very interesting investigation, if I am correct in guessing this is the focus of it.