NZ’s two major parties Labour and National in court over ‘secret’ donations

A secret-donations trial involving a multi-millionaire businessman and both Labour and National is shining an unwelcome light on the relationship between NZ MPs, their donors, and the law.

Jacinda Ardern and Yikun Zhang.

A secret-donations trial involving a multi-millionaire businessman and both of New Zealand’s main parties shining an unwelcome light on the relationship between NZ politicians, their donors, and the law.

Seven people including former National Party MP Jami-Lee Ross are on trial in Auckland for obtaining by deception in relation to party political donations. Mr Ross, wealthy Auckland property developer Yikun Zhang and brothers Colin and Joe Zheng are facing charges laid by the Serious Fraud Office (SFO) relating to two NZD$100,000 (AUD90,000) donations to National in 2017 and 2018. Mr Zhang, the Zheng brothers and three other people whose names are suppressed also face charges over donations totalling at least $34,840 (AUD $31,450) to Labour in 2017.

Yikun Zhang (L), Joe and Colin Cheng in court.

The SFO alleges the fundraising operations of both parties used similar methods to hide the donations from the public. Under NZ electoral law, parties must declare any donations over $15,000 from any one individual in any year. The SFO claims that in both parties’ cases, large donations were split into smaller amounts and divided between a number of “sham donors.” According to the SFO the real donor to both parties was Mr Zhang, who moved to NZ from China in 2000.

Witnesses to be called include Simon Bridges, the former leader of the National Party, while Jacinda Ardern has already been mentioned in court as being present at a fundraising dinner with Mr Zhang which resulted in the property developer allegedly paying $90,000 for an imperial Chinese robe, with the proceeds going to the party.

Among the 54 witnesses are other major political names, including two serving cabinet ministers, Jacinda Ardern’s chief press secretary and NZ’s ambassador to Jakarta, as well as serving and former Labour and National party officials.

The trial’s origins began in 2018, when National Party fundraiser Ross turned whistle blower on his party, taking to the police audio recordings of conversations with then leader Simon Bridges about fund raising. Mr Ross claimed his one time friend and colleague was a “corrupt politician,” who had made Mr Ross help divide up the donations. But it is Mr Ross himself who has ended up in the dock.

Former National Party leader Simon Bridges and Yikun Zhang. Picture: Twitter.

At the start of the case, the court was played a series of WeChat messages between Auckland businessman Jason Xie, and Colin Zheng, who asked if Mr Xie’s account could be used to make a political donation.

“Need to ask a favour,” Colin Zheng’s audio message said. “The Association Chairman (Mr Zhang) needs to donate money to the National Party but it is too much in one transaction and registration will be required, so he is splitting up the amount into $14,000 per lot. It will probably have to be transferred through your account to the National Party to make it work.”

Mr Xie replied: “No problem, transfer of any amount is fine. Ask your association chairman to remit a million or two for me to spend for a period of time before I help you send it over.” He then suggested he hold onto the $14,500 for a couple of days.

Colin Zheng answered: “Any donation over $15,000 needs to be registered. The association chairman is donating $100,000 so he must split it into multiple lots. He does not want his name registered.”

The Labour party case relates to the purchase of five paintings in which the SFO alleges were “sham” art auctions to disguise the source of donations to the party.

The court heard that in March 2017 Mr Zhang agreed to buy five paintings totalling $60,000 at a party fundraiser. The payment was then allegedly split between five individuals to hide its source. According to the SFO, the artworks were subsequently found hanging in Mr Zhang’s house.

National Party fundraiser Jami Lee Ross, then National leader Simon Bridges, Yikun Zhang and Joe Cheng.

The court also heard that September 2017 Mr Zhang purchased an Imperial Robe and two other items at a Labour fundraising auction for $100,000; the auction at which Ms Ardern was present. There is no suggestion that Ms Ardern knew of Mr Zhang’s bid.

Mr Zhang was made a member of the New Zealand Order of Merit for services to New Zealand-China relations and the Chinese community in 2018 after both parties lobbied on his behalf. The Crown argues that one of the motivations for keeping his identity secret was so the public wouldn’t connect the donations with the honour.

The trial follows hard on the heels of another donations trial involving the New Zealand First party, led by maverick politician Winston Peters, over claims large donations to the party were kept secret. The accused party officials were acquitted, but the government has moved to lower the levels at which donations must be publicly disclosed from $15,000 to $5,000, with legislation expected to pass as early as today.

However, the new bill not-with-standing, the current trial is likely to prove damaging to both parties.

The lawyer for one of the accused whose name is suppressed argued for his client’s anonymity partly on the grounds that he understood “inflammatory” expert evidence would be called to suggest one of the defendants was an “operative” of a foreign government with a mission to influence New Zealand political parties.

Mr Zhang put out a statement shortly before the trial began, denying that he was a member of the Chinese Communist Party and saying he had renounced his Chinese citizenship.