The fight against political donations and what the government plans to change

After some high-profile scandals, a politically controversial bill that will remove the anonymity of political donors giving more than $5,000 has passed its first reading in the House. But the bill now has another dimension: it will make it illegal to channel donations through “ghost entities”.

why is it important

Political parties need donations to fund their campaign, erect billboards and print flyers in order to persuade you how to vote.

• Certain legal obligations oblige political parties to publicly register their donations, but who donates to politicians is not always clear. Under the Elections Act of 1993, for example, a political party need not file details of donors giving less than $15,000 to a party.

• Donation scandals in recent years have sparked political debate about the role of money in politics and how political parties should be held accountable to the public.

READ MORE:
* What place for anonymous people in political financing?
* Prohibition of anonymous political donations among election law reform options
* Call for change to campaign donations law amid Bureau of Serious Labor Fraud investigation

The breakdown

The Labor government now wants to amend the law and is taking a two-pronged approach.

• The first is a bill, the Election Amendment Bill, which passed its first reading in the House on Tuesday afternoon. This bill will reduce the legal threshold for anonymous donations from $15,000 to $5,000.

• It will also require the identities of the largest donors, $20,000 or more, to be publicly recorded within 10 days during an election year, and donations under $1,500 that were not given anonymously will have to be disclosed. Loans from “unregistered” lenders – not mortgages or credit cards, but loans made by party sympathizers – will have to be made public.

• The second measure is a thorough review of election law as a whole, including issues such as the voting age. This review will report to the government after the 2023 elections.

• Last month, another problem appeared. A High Court judge has ruled that two men linked to a trust, the NZ First Foundation, which collected undeclared donations to support NZ First were not guilty of obtaining by deception, a charge brought by the Serious Fraud Office.

• The judge ruled that the donations collected were not party donations within the meaning of election law.

• In response, legal experts and some MPs said the judgment had created a “loophole” allowing one party to legally collect donations outside the disclosure regime through “shadow entities”.

• Justice Minister Kiri Allan has now added two more changes to the law to close this alleged loophole: changing the definition of a party donation and making it an offense to receive party donations but not not forward them to the party secretary within 10 days. .

Arguments

Labor’s planned changes to the threshold at which donors must be declared are politically controversial. The change to prevent “ghost entities” from collecting donations outside of the disclosure regime is less so.

• The government says the changes will improve the transparency of party funding.

• The Green Party supports the reforms but wants them to go further by adding a maximum limit on donations from a single donor to $35,000. The Maori party also backed the bill.

• The National and ACT parties have accused the government of “screwing up the fray”, essentially changing the rules to favor the Labor Party. The bill will make fundraising harder for parties, the two say, because there are legitimate reasons people want their donations to remain anonymous – such as fear of being targeted, or their business or job targeted, for the party they support.

• In addition, changing the law would have a greater effect on National and ACT, if claims that donors are reluctant to be named are true. David Seymour, leader of the ACT party, said of the $1.2 million in reported party donations of between $5,000 and $15,000 after the 2020 election, $575,000 went to the National and $300,000 to ACT.

• On changing the law to close the claimed loophole in the donations law, there seems to be some cross-party support. National said if there was a loophole, he would support closing it. The Green Party supports it. As of Tuesday afternoon, he was unsure how far that support would extend.

who said what

• “We know money talks and New Zealanders have a right to know who funds our political parties,” Allan said.

• “Is there any evidence that there is undue influence on the New Zealand political scene by people donating between $5,000 and $15,000 anonymously?” National Party justice spokesman Paul Goldsmith said.

• “Democracy lends itself to equality, inclusion and access. None of this works when our democracy, our basic human rights, are for sale on the free market,” said Justice Green Party spokesperson Golriz Ghahraman.

• “People say, ‘Listen, I support what you’re doing. I agree with your party, but my company has government contracts and I think the guys there right now are being vindictive,” ACT party leader David Seymour said.

The story

Yes, there have been scandals. The handling of political donations to three parties – Labour, National and NZ First – has resulted in three court cases.

• A 10-week trial over National Party and Labor Party donations continued to be heard in the Auckland High Court this week. The Serious Fraud Office alleges donation fraud occurred and charged six people in relation to Labor donations and four people in relation to national donations – including former National MP Jami-Lee Ross, who explosively alleged that his party was corrupt in 2018.

• It is alleged that some people were named as donors who did not actually donate to the parties, hiding the donors’ true identities, and that the donations were split into sums of less than $15,000. This is something that the government’s proposed amendments to the act do not directly address; such fraud – if proven – seems already covered by existing law.

• Some of the Labor Party donations being considered by the courts are said to have been funneled into the party through a “mock auction”. Allan, the attorney general, said Monday that requiring disclosure of non-anonymous donors giving less than $1,500 “would provide greater transparency regarding the funds parties receive from fundraising dinners and sales to auctions, for example”.

• In the NZ First Foundation case, two men were found not guilty of obtaining by deception, as alleged by the Serious Fraud Office, for their connection to a trust, the NZ First Foundation, which collected donations to support NZ First which have not been publicly registered. as gifts of the party by the party.

And after

• The Electoral Amendment Bill will now be considered by Parliament’s Select Justice Committee, which will hear public submissions on the proposals.