Land Information Minister Maurice Williamson says he rebuffed his old friend John Banks' attempt to intervene in internet billionaire Kim Dotcom's application to buy a luxury mansion last year.
The donation scandal engulfing Mr Banks spread last night as it emerged he lobbied personal friend Mr Williamson over internet tycoon and donor Kim Dotcom.
Last night Mr Williamson told the Herald Mr Banks had lobbied him over a property purchase in Coatesville, just north of Auckland, Dotcom wanted to make.
Minister Williamson's admission came four days after questions were first lodged.
Yesterday, Mr Williamson's office maintained at 5pm that it had "no knowledge" of whether the minister and Mr Banks had discussed Dotcom's application.
But at 7.22pm, Mr Williamson said: "John Banks did call me to advocate on behalf of Kim Dotcom with regard to the OIO [Overseas Investment Office] application on the Coatesville property.
Mr Banks and I have been good friends for years. It is a matter of record that the ministers considered the application, but declined it."
Today Mr Williamson said Mr Banks made contact with him about Dotcom's application in the middle of last year, "maybe around June maybe around May".
That was before he and then-associate Finance Minister Simon Power made a final decision in July not to approve the purchase but after Mr Williamson had given his initial approval.
During Mr Banks' discussion with Mr Williamson, the fact Mr Dotcom had donated money to Mr Banks' mayoral campaign was never raised, Mr Williamson said.
"I know nothing about what Mr Banks received by way of donation and nor should I."
"Mr Banks was advocating as a member of the general public at that stage and he just phoned me up and said Kim Dotcom had been a very good friend to Auckland city. He told me that Kim Dotcom had funded a very large fireworks display for Auckland and he hoped we would give it favourable consideration.
"I made it clear that it didn't work that way. We had to follow through a very careful statutory process which is what we did."
DOTCOM: BANKS SAID HE WAS 'VERY CLOSE' TO WILLIAMSON
Dotcom told the Herald Mr Banks referred to being "very close" to Williamson, whose approval was necessary before he could buy the $30 million Coatesville mansion he rents.
He said the comment was made by Mr Banks in reference to his application to buy the mansion.
"He said he knows lots of people from when he was a minister. He knows Williamson ... They are very close."
Dotcom said he believed Mr Banks spoke positively to Mr Williamson about his application.
Overseas Investment Office officials left the decision on the application to ministers, and Mr Williamson approved it in April last year.
But it was eventually declined after it was rejected by Associate Finance Minister Simon Power.
Three months after approving it, Mr Williamson changed his mind and joined Mr Power in rejecting it.
PRESSURE MOUNTS ON KEY
The admission by Mr Williamson will place added pressure on Mr Banks, who yesterday had the support of Prime Minister John Key.
Mr Key said his staff had been told by Mr Banks that the law had been followed, "which is good enough for me".
Asked if he was happy for ministers to act unethically as long as they complied with the law, Mr Key said: "There is quite a wide definition of ethics ... The test I have to apply is the law."
He said reports Mr Banks asked Dotcom to split the $50,000 into two payments "wouldn't necessarily mean someone's in breach of the Local Government Act".
BANKS ON DOTCOM DONATION
Mr Banks yesterday continued to refuse to be interviewed, but issued a statement in which he said he was unaware Dotcom had donated to his campaign and denied ringing the internet magnate to thank him.
"I could not have, as any such contribution was anonymous."
But he said he had spoken to Dotcom on "other matters".
In an interview in January, Mr Banks said those other matters included advice on Dotcom's OIO application and residency.
He said the advice was "just the process", and their conversation was "in total of 15 minutes, maybe 20 minutes".
It has since emerged the pair met at least four times.
In April 2010, they had a two-hour meeting, after which Dotcom emailed Mr Banks stating: "Thank you for your call yesterday and your kind offer to help me become a resident."
The pair met again in June over lunch for two hours at the mansion with their wives.
It was at this meeting, Dotcom said, that the request for election campaign funding was made. He said the discussion about splitting the donation happened while their wives and his bodyguard and butler were present.
The third meeting was on New Year's Eve at Princes Wharf when Dotcom put on a $500,000 fireworks display.
Weeks later, Mr Banks was at Dotcom's birthday party, during which he proposed a toast to his host.
The two cheques that made up the $50,000 donation emerged yesterday. They were recorded in Mr Banks' electoral return among 45 other anonymous donations. Of those, five were for $25,000.
Three donations are now part of a police inquiry into payments to Mr Banks' mayoral campaign. They are the two Dotcom donations of $25,000 and a $15,000 payment from SkyCity, also listed as anonymous.
The cheques signed by Dotcom have sequential numbers showing they were written one after the other from the same ANZ chequebook.
They are dated June 9, 2010, and bank records show they were cleared from Dotcom's account on June 14, 2010.
Dotcom said: "It doesn't make much sense why anyone would write cheques that way unless they were asked to."
SFO SHOULD INVESTIGATE BANKS - PETERS
New Zealand First leader Winston Peters, who stood down in 2008 over election donation allegations for which he was later cleared by the SFO, told Radio New Zealand today that Mr Banks should also stand down and the SFO investigate.
"I mean, it's above the threshold (for the SFO to investigate) - the threshold is $500,000 - and therefore, if there's any enquiry to be done it should be done, in my view, there (the SFO),'' Mr Peters said.
"Mr Banks has a big problem in that you've got someone like Kim Dotcom who you could not possibly, surely - given his character and size - forget.''
At the time of the allegations against Mr Peters, then-opposition party leader John Key said: "Helen Clark must stand Mr Peters down as a minister. That is what I would do if I were prime minister. Helen Clark has stood ministers from Labour down for much less.''
Mr Peters said this showed Mr Key had double standards.
"Mr Key has certain principles, if you don't like them than he's got others,'' he said.
STRAIGHT QUERIES, QUEER ANSWERS
Late last week, RadioLive rang John Banks to see how well he knew Kim Dotcom - and his response was extraordinary.
Banks: "Are you saying that Dotcom's at SkyCity?"
RadioLive: "No, no - that you had donations to your mayoral campaign from SkyCity and two from Kim Dotcom."
Banks: "Oh, look, look, look, look, look, look, look [pause] this matter. I don't know if you're caught up with it ... I have never been to SkyCity with Dotcom."
RadioLive: "And what about donations to your campaign? Did you have a relationship with Kim Dotcom?"
Banks: "What's your relationship? This is offensive! He's a married man, what are you talking about?"
RadioLive: "[Laughs] Not a relationship like that."
Banks: "No, look I don't want to go down ... I've had no relationship with Dotcom - he's got a wife."
RadioLive: "Not like that, a business relationship."
Banks: [hangs up]
RadioLive: [calls back]
RadioLive: "Hi, I was just wanting to clear up something, I wasn't meaning to ..."
Banks: "Just a minute, just a minute - I have never had a relationship with Dotcom, he is a married man. And I have not been to the SkyCity with the guy. So thanks for your time, thanks for your call."
- additional reporting: Claire Trevett