Peters 'hurt but calm' in stepping down

Winston Peters. Photo / Herald on Sunday

Prime Minister Helen Clark negotiated the best possible solution to a political crisis today when Winston Peters stood aside as foreign minister while the Serious Fraud Office investigates donations to his New Zealand First Party.

Mr Peters' future now rests on the outcome of the inquiry, and before he met Miss Clark in Auckland he angrily rejected the allegations that led to it.

He vowed to present her with evidence that would prove false the "vile, malevolent, malicious and wrong" claims that have been laid about undeclared donations and whether the money was used for the purpose the donors intended.

But after an hour of talks at a secret location, Miss Clark calmly announced Mr Peters had offered to stand aside and had asked her to take over his foreign affairs, racing and associate senior citizens portfolios.

"Mr Peters has been thinking very carefully about this," she told reporters.

"It's been clear to me this would be the appropriate course of action but there hasn't had to be a lengthy argument about it at all."

Miss Clark said Mr Peters would be reinstated if the SFO cleared NZ First, and he would co-operate fully with the inquiry.

The first meeting between the SFO and Mr Peters' lawyers, led by Peter Williams QC, would take place tomorrow, Miss Clark said.

If there had been a confrontation at today's meeting, or if Mr Peters had refused to stand down without a fight, the consequences for the Government and NZ First would have been severe.

The National Party has been demanding action for weeks, and after Miss Clark's announcement party leader John Key said she had taken too long to deal with the crisis.

"It's now up to the prime minister to answer questions ... she is implicated in this," he said.

Act Party leader Rodney Hide, whose complaint led to the SFO inquiry, said the stand down was not good enough.

"Miss Clark hasn't been prepared to do what's right - sack a minister who has misled her and the country and who is under investigation by the Serious Fraud Office," he said.

Mr Hide said Miss Clark was treating Mr Peters' behaviour as "some temporary aberration" and voters would judge her.

Miss Clark described Mr Peters as "hurt but calm" after their meeting.