Owen Glenn, the billionaire who is among Labour's biggest all-time financial sugar daddies, has taught political parties a classic lesson on why they should choose and treat donors wisely.

Glenn deserves applause for exposing New Zealand First leader Winston Peters' confused attempt to bury a $100,000 donation Glenn made to the MP's legal costs.

Peters was odds on to get the high jump from the Foreign Minister role after Glenn produced the evidence which went a good way toward corroborating his claim that Peters has all along been dissembling over the donation.

If Glenn had confined his comments to Parliament's privileges committee, Helen Clark would have wielded her knife by now.

But the billionaire's subsequent suggestion that Labour Party president Mike Williams had used part of his party's $500,000 donation to "shout" 200 Pacific Islanders KFC to vote at the 2005 election went too far.

Williams would probably have shrugged off Glenn's claim that he was an unmitigated falsifier of veracity for some short-term embarrassment.

But the suggestion that Labour had exchanged KFC for votes is off-the-planet, even for the party which unlawfully raided the taxpayers' purse to the tune of $800,000 to fund its 2005 campaign.

Such an action would put Williams in jail for "treating" voters.

If Glenn could be so far off base in his claims about Labour's president, what then did that say for the veracity of his claims about Peters?

That is the conundrum that Helen Clark has been wrestling with as her advisers pick through the forensic muddle now in front of the privileges committee inquiry to see if there is any chance Peters' credibility can be even vaguely resurrected.

But unfortunately for Clark, Williams may also have created a new - and much more serious - problem for the Government.

It is clear that Glenn is mighty piqued that Peters has not appointed him as honorary consul to Monaco in accordance with his expectations. But what has not become public until this week is the allegation the businessman told Williams he wanted the job for tax reasons.

Williams reportedly said that Glenn believed being honorary consul would give him a diplomatic passport which would enable him to get in and out of the United States to visit family without triggering residency qualifications and therefore his tax status.

"He thought the honorary consul was purely Winston's gift. I said to him, 'Does a diplomatic passport mean you can go in and out as though you don't exist for tax purposes?' and he thought you could," Williams told the Dominion Post.