John Key. Photo / Sarah Ivey

John Key. Photo / Sarah Ivey

Labour has gone to extraordinary lengths to derail John Key's election campaign and uncover his knowledge of a notorious 1980s white-collar crime.

It pulled back from what it believed was a "neutron bomb" blast against the National leader, but has pushed on with a concerted effort to tarnish his reputation.

Allegations centre around the so-called H-Fee - two payments totalling A$66.5 million ($75m) to Equiticorp funnelled via sham foreign exchange transactions in 1988 - and a Herald interview with Mr Key last year.

Labour president Mike Williams spent several days last week reading court documents in Melbourne, backed up by Wellington-based members of the party research unit.

Last weekend, the party believed it had a smoking gun - a signature on the A$39m first H-Fee cheque bearing a striking resemblance to Mr Key's. Senior party figures advocated making the document public immediately.

Within days, though, court documents proved that what would have been the campaign's most explosive allegation was wrong.

The January 11 cheque was actually signed by an Australian-based executive of the firm Mr Key worked for.

Mr Key said last night he had nothing to hide and accused Labour of a smear campaign.

'Catwoman'

Addressing the Kapiti branch of grey Power today he made a brief reference to the issue at the start of his speech, saying that while Helen Clark couldn't work out what she had signed - a reference to the Paintergate scandal - she was now trying to work out what he hadn't signed.

Speaking to reporters afterwards he referred to one of the sources of the H-Fee story who calls himself Batman.

"Maybe Catwoman will have something to say this afternoon," he quipped - a possible reference to the fact that Labour appears to have gone to ground over the story.

He earlier told Radio New Zealand he was "absolutely not" involved with the H-Fee transactions and had made no attempt to mislead anyone when talking to the media about it.

"What we have seen is the Labour Party going on a dirt digging exercise, sending their research unit and their president to Australia. It's just more of a smear campaign from Labour.