The contemptible behaviour of both Peters and KeySeptember 23rd, 2008
By Gordon Campbell
This week, the public itself could be forgiven for treating Parliament with contempt. In a majority decision, the privileges committee has found that New Zealand First leader Winston Peters had “ some knowledge’ of the $100,000 gift made in December 2005 by businessman Owen Glenn, and should have made “an honest attempt” to file a declaration about it.
Within the space of 12 hours, National party leader John Key also stood accused of (a) initially concealing the existence and then (b) of lying about the extent of the shares in Tranzrail held by him and his family trust in 2002 and 2003.
On the evidence, Key seems to have used parliamentary processes to seek commercially sensitive information on Tranzrail around the period when he was buying and selling shares in the rail operator, and while occupying the post of National’s associate transport spokesperson.
Specifically, Key used Parliamentary questions to enquire about the Government’s mooted re-purchase of the country’s rail tracks. When the story first broke about the possible conflict of interest Key was reported to hold 30,000 shares a figure – a figure that he did not dispute and correct. It now transpires he and his family trust held as many as 100,000 shares – including a bloc of 50,000 shares that Key bought and sold in 2003 at a 100 % profit that would have helped mitigate the losses made by the family trust investment in the rail operator. Even yesterday when approached by journalists who did not at first reveal they knew the higher figure, Key repeated the misleadingly lower estimate.
The only thing missing from this descent into banana republic standards of behaviour was a fist fight in Parliament. Oh, but we’ve had that already.
As expected, the privileges committee split along political lines over Peters, with only Labour and New Zealand First left to argue that the case had not been conclusively proven. The Greens and United Future – who were the two most prominent and vocal “swing votes” on the committee – sided with National and Act. As did the Maori Party, who are evidently willing to weather any criticism from their support base about them joining in the censure of a Maori MP. It will be interesting to hear how the Maori Party defends its privileges committee stance in the House debate later today.
In the end, as Greens Co Leader Dr Russel Norman explained to Scoop below, the three communications that took place on December 14, 2005 were decisive. The majority concluded that causation – and not just mere co-relation – best explained the phone call from Glenn to Peters, then from Peters to his barrister Brian Henry, and with both these calls quickly followed by Henry’s supply of his bank account details to Glenn, in an email that began with the deadly words : “Further to your discussion with my client….” Taken together, the sequence and the phrase were enough to convince the majority that there had been some discussion of the donation between Glenn and Peters.
In its first real test case, the Pecuniary Interests Register has been shown to have some teeth. Crucially, the committee has established that the onus of responsibility in this largely self-regulatory process rests with the MPs themselves. In return for not having precise instructions written into the black and white letter of the Pecuniary Interests Register, the Peters case has established – retrospectively, Peters defenders would argue – that MPs have a corresponding duty to be vigilant and pro-active about whether a gift to their benefit has been made.
This puts an onus of reportage onto MPs that they may struggle to meet in future. After all, this is a system where a “don’t ask/don’t tell’ policy is commonly observed across all parties, in order to guard against corruption, or the perception of corruption. The committee’s findings go in the opposite direction – and indicate that MPs have a duty to enquire energetically about donations. Otherwise, they will be open to claims by disgruntled donors that the MP probably should have had some prior knowledge of a gift, but failed to investigate further and report it.
The majority verdict also assumes that it is usually clear when something is a donation to a party, as opposed to when it is a personal gift to an MP, and therefore needs to be recorded on the Register. That distinction can be unclear. It was not always clear in the Peters case, even to the key participants – as witnessed by the testimony of Owen Glenn, who thought ( most of the time) that his $100,000 contribution was a personal gift to Peters, but who also described it ( in a February 2008 email) as a donation to the New Zealand First party.
As widely predicted, there was a political split in the committee findings. The partisan nature of the committee deliberations was evident to anyone who sat in for five minutes at any of its public hearings, and is an inevitable aspect of the privileges committee structure. One wonders about the outcome if the reverse political configuration had applied – if say, the donor had been the Exclusive Brethren and the recipient was a National MP.
It is depressingly easy in that scenario to imagine then that – if faced with exactly the same evidence – we would be seeing Labour politicians howling for blood, and National politicians arguing that the evidence proved only a circumstantial co-relation of events, and not hard evidence of a causal link. That is not to say that Peters shouldn’t be found– on a balance of probabilities test at least – guilty of contempt of Parliament over the reporting of his pecuniary interests. Yet while the privileges committee did its best, the process is inadequate in terms of due process – and the standard of proof too low – for the task it was given.
Looking ahead, the precedent value is also dubious. The majority verdict assumes MPs can and should be pro-active in tracing the source and extent of the donations that come in, even though distance on these matters has hitherto been thought to be desirable. Secondly, it presumes that MPs can usually distinguish between a gift to them, and a donation to their party. For their own safety, MPs may want to ensure they have access to a neutral source of confidential guidance on this issue in future.
Late last night, Scoop political editor Gordon Campbell discussed aspects of the privileges committee report with Greens Co-Leader Dr. Russel Norman, the Green Party representative on the privileges committee.
Campbell : Do the majority findings hold that Peters willfully misled Parliament ?
Norman : It says he filed a misleading return for his Register of Pecuniary Interests. It was misleading because he had some knowledge of the $100,000 donation…and therefore he had a responsibility to make an honest attempt to declare that in his return and he did not declare that…
Campbell : So he has willfully misled Parliament?
Norman. Yes, that’s the view of the majority.
Campbell : And does he have full culpability for that – or was this seen as some partly unintended combination of omission and commission on his part ?
Norman : There is some discussion in the report about that. It was new, the Register was new in 2005. There hadn’t been previous kind of… case law about it. And so one could make an argument around that it was hard to know what you should do. But the majority, nonetheless, said that given that he had some knowledge of the donation –
Campbell : The onus was on him to clarify the situation?
Norman : Yeah. The onus was him to make an honest attempt to clarify it.
Campbell : So going forwards, this gives some indication about how this Register is meant to be interpreted by MPs. It places an onus on them to inquire, and not to simply assume a don’t ask/don’t tell position ?
Norman : That’s right. We received advice from David McGee, the former Clerk of the House. His advice was that when the Register was being discussed and put together, they had two options. One was a statutory option, to put it in law, that you’ve got certain legal rights. At which point, he said, you could make a legal argument and approach it legalistically. But given they didn’t go down that path, and given that MPs have chosen to regulate themselves through Standing Orders, rather than let the courts get involved in it, there was [as a result] a higher standard.
Campbell : Right. You’re saying that since they’re not going to be externally regulated, there’s a corresponding, even higher obligation on MPs to be self starters in terms of their reporting obligations. But how does that sit with the parallel argument run by NZF and by other parties, that a ‘don’t ask/.don’t tell’ policy about donations is meant to serve as a guard against corruption? Do those two things sit comfortably together?
Norman : The don’t ask/don’t tell argument – which frankly, I don’t believe – [is used] in relation to party donations. Its said that its best that politicians don’t ask about donations to the party. But the Register of Pecuniary Interests is about donations to the politician. Its about gifts to the politician.
Campbell: Okay, and that’s the distinction that should be made here. This is a contempt in relation to a donation to Winston Peters and not in relation to a donation to New Zealand First.
Norman : It was in relation to a gift, actually. One of the points that had to be resolved was whether a gift had in fact occurred. Because one of the [Brian Henry and Winston Peters’] arguments was that there was no gift – because Brian Henry never enforced the debt. So the committee agreed that there was no debt, but that nonetheless the gift to Mr Henry was of benefit to Mr Peters. Because it was a benefit in terms of ongoing access to legal services that he was able to gain – and in particular, the benefit he would gain if he won the Tauranga electoral petition. Which was a largely political [benefit], but still real.
Campbell : And besides, even if one accepted in this case that an agent [Henry] had solicited the gift and discharged the debt, wouldn’t their capacity to do so come down, at the end of the day, to a belief by the donor that they were acting on behalf of Peters ?
Norman : That’s one element. There’s also the element that there has to be benefit to the politician.
Campbell : You mean, as aside from the benefit to the party ? Because as you know, Peters’ argument was that he was only the nominal head of the Tauranga petition. He was merely the guy whose name was on the paper and therefore –
Norman : Yes. [laughs] The ‘titular head’ was the term used.
Campbell : Therefore, the argument goes, New Zealand First was the true beneficiary, as reflected in Owen Glenn’s own confusion on this point.
Norman : And Henry [had] added that even more than New Zealand First, actually there were National Party people involved [ in instigating the petition] But even so, there was clear benefit to Mr Peters in the view of the committee.
Campbell : In terms of creating a majority view on the committee, were the events of December 14, 2005 the smoking gun?
Norman : Yes.
Campbell : So the view of the majority was that those two calls and the email were not just a co-relation, but were evidence of causation?
Norman : That’s right. The triangle is the key. Billionaire rings politician. They talk about something. We don’t really know what. There are different accounts. Politician rings lawyer. They talk about something. We don’t really know, their accounts roughly co-relate. Lawyer then emails billionaire and says “ Further to your conversation with the politician,’ here are my bank account details. Not my contact details, not any old details, but bank account details. Those three hard pieces of evidence which no one has disputed were really core to the findings of ‘ some knowledge.’
Campbell : Yes, but just for completeness, the Henry argument was that there had been a parallel process instigated by him of soliciting a donation from Glenn – starting somewhere around November 22 and including December 5 or thereabouts – and the December 14 exchange was therefore to be seen merely as the trigger that inspired him to clinch the deal by forwarding his bank account details. Why did the committee conclude this version did not hold water ?
Norman : There’s nothing in the majority decision which would come to a definitive conclusion about who contacted who first, before December 14. We couldn’t come to a conclusion about whether Mr Henry contacted Mr Glenn –
Campbell : Because the phone and email logs don’t really tell you anything on that point ?
Norman : Yes, you couldn’t prove a thing. Although we couldn’t come to a conclusion, we understood the narrative that Mr Henry was putting forward in an attempt to explain away the email, which obviously is significant.
Campbell : So is there any suggestion in the report that Mr Peters was actually lying ? Is lying a component of the censure for contempt?
Norman : Hmm. What’s my answer ? I think I’ll just stick to the language in the report. The language in the report is that he had some knowledge, in the view of the majority, of the donation. And therefore he made a misleading return.
Campbell : Which by implication, means that ‘I only came to know of this donation on July 18, 2008’ is untrue.
Norman : That’s a fair implication… that’s a fair deduction. But as I say, I would stick to the language of the report.
John Key and Tranzrail
So far, our fledgling election campaign has been conducted solidly in code. Yesterday’s coded warning by John Key for instance that the global financial crisis now precluded any lolly scramble of big ticket Labour election promises was touchingly selective. Obviously, the global meltdown would be kind enough to overlook National’s own tax cut lolly scramble, which currently commits National to exceeding the $10.6 billion that Labour has already allocated for tax cuts over the next four years. More likely, the Key warning was a signal meant to pre-empt any ‘October surprise’ that the government might have in mind – such as say, a universal student allowance.
Code-wise, it also becomes clear now what Helen Clark meant last week when she talked about framing the election campaign in terms of “trust.” Yesterday, Michael Cullen’s release of documents on Key’s Tranzrail share-holdings were meant to make Key look shifty, and Key more than obliged the government.
Lapses of recall – as we saw at the privileges committee, parliamentary Alzheimers can strike so suddenly – figured prominently in Key’s frantic scramble to find a credible narrative. He forgot. No one had asked him about this before. Come to think of it, you’re right. The real figure is double or treble what I just said.
To backtrack. In May 2003, as the NZ Herald says Key bought 50,000 shares in Tranzrail after he had actively pursued information from the Government about the company, via parliamentary questions and public comment. He then sold these shares five weeks later for $51,000, at slightly more than a 100% profit. This transaction would have helped mitigate the losses made on a previous 50,000 shares bought by his family trust in February 2002, which were sold in June 2003 at a loss of $132,000.
Had Key told his caucus colleagues that his family trust held shares in Tranzrail at the same time he was serving as their associate transport spokesperson ? Did they know he was wheeling and dealing in Tranzrail shares in May 2003 ? What did he tell them, and when did they learn of it ? Leaving aside the ethics of an MP using parliamentary procedures to gain information that could have been of personal gain – and while making public comments on Tranzrail that could affect its profitability – there is an issue of credibility. As the Herald report goes on to point out :
Questioned on the issue before he was aware the information had been released, Mr Key told One News his shareholding ranged between 25,000 and 50,000 shares up until June 2003.
But when pressed on the issue he admitted there were more shares.
“Actually maybe 100,000 from memory, sometimes 50,000, sometimes 100,000, yep,” he said.
“Yeah, sorry, there was 100,000 in total.”
And how is this for lameness :
Mr Key said no one had questioned him previously on exactly how many shares he had owned.
For much of this year, Key has been hammering Peters and the Prime Minister on ethical grounds, for failing to disclose information where there was a clear obligation to the public for them to do so. Over the Tranzrail shares, Key would seem to have comprehensively failed to meet the standard that he has sought to impose on others. There’s a term for that sort of behaviour – it is called ‘hypocrisy.’