Winston Peters was defiant to the last minute of a two-hour debate in Parliament today but at the end of it MPs voted 62-56 to censure him over the $100,000 donation from billionaire businessman Owen Glenn.
The privileges committee called for him to be censured in a report it released last night, saying the New Zealand First leader must have had some knowledge of the donation which was made in December 2005.
The committee decided he had knowingly misled Parliament by not declaring the donation, and was therefore in contempt of its rules.
Mr Peters still insists he knew nothing about the donation until July this year.
The committee's conclusion was supported by eight of its 13 members. The other five did not agree, and those opinions were reflected when the censure vote was taken.
National, the Greens, the Maori Party, ACT, United Future and two independent MPs supported the censure motion. Labour and NZ First opposed it.
During the debate attention focused on the events of December 14, 2005, when Mr Peters held a phone conversation with Mr Glenn.
Immediately after that he called his lawyer Brian Henry, and minutes after that call Mr Henry emailed Mr Glenn giving his bank account details so the donation could be paid into it.
Mr Glenn's evidence to the committee's inquiry was that the donation was discussed when he spoke to Mr Peters.
"Members of the committee believe it is extremely unlikely that the donation wasn't mentioned," said National MP Simon Power, the chairman of the privileges committee, when today's debate began.
"The email indicates it must have been."
Green Party co-leader Russel Norman said the sequence of events was compelling evidence, and he believed Mr Peters did know about the donation.
United Future leader Peter Dunne said there had been a lot of drama around the inquiry but the issue hinged around the events of December 14.
It boiled down to whether or not the donation was mentioned during Mr Peters' conversation with Mr Glenn.
Deputy Prime Minister Michael Cullen, a member of the committee, said there had been contradictory evidence about that because Mr Peters said the donation was not mentioned.
He said some of Mr Glenn's testimony had been contradictory, and he did not think Mr Glenn had been an entirely reliable witness.
Dr Cullen said a higher degree of proof was needed to take a step as serious as censure by Parliament, which had happened only three times in the last 35 years.
Mr Peters said the inquiry had been a premeditated attack on himself, his MPs and his party.
Mr Glenn's donation was used to pay his lawyer's legal fees, and Mr Peters said other MPs had used donations for the same purpose without declaring them.
He spoke of "a hymn of hate" over the years and said he had been singled out.
"This inquiry was about politics... MPs cannot make decisions based on what they think probably occurred," he said.
The committee's process had been "a banal, useless facade" about a donation he could not have declared because he had not known about it.
"The only court I will stand before is on November 8," he said, referring to the election.
The committee has ordered Mr Peters to submit accurate declarations of donations for the last three years.
The Serious Fraud Office and the Electoral Commission are holding separate inquiries into other donations to NZ First.
Earlier Dr Cullen said there were still no grounds for Mr Peters to be censured or sacked as a minister even if MPs believe he lied about Owen Glenn's donation.
Mr Glenn's $100,000 donation to Winston Peters sparked the investigation which ended last night with Parliament's privileges committee finding that Mr Peters had knowingly provided false or misleading information about the gift and recommended that he should be censured.
The committee's report also recommended that the party be ordered to provide amended returns for 2006, 2007 and 2008 to the pecuniary interests registrar.
Mr Peters has maintained he did not know about the December 2005 gift so could not declare it but the majority of the committee did not believe that. Labour MPs and NZ First MP Dail Jones on the committee disagreed with the majority finding.
The Deputy Prime Minister said the evidence had to be greater than MPs believing it to be true, because Mr Peters and his lawyer Brian Henry denied it.
"I think there is a credible explanation along those lines which should not be discarded because the finding of contempt and the censure of Parliament is a very rare event, it is a very serious matter," Dr Cullen said.
But even if Mr Glenn's version of events was accepted the committee had applied a retrospective test on whether Mr Peters should have declared the donation.
Dr Cullen said if Mr Peters had sought advice in 2006, he would have been told not to declare it.
Asked about Mr Peters remaining as a minister, Dr Cullen said he had stood down from his portfolios and "I have advised the prime minister in my view the committee's recommendations are not fair...Mr Peters should not have been found guilty of a contempt."
Glenn on report
Mr Glenn said today he doubted Mr Peters would be worried by being censured.
The businessman gave evidence to the inquiry and was able to give records showing he called Mr Peters and minutes later Mr Peters' lawyer sent an email with his bank account information.
Today Mr Glenn said he participated in the inquiry to clear his own name and did not think the penalty had anything to do with him.
"I didn't really rate it as a vote of confidence or anything. I just told the truth and it was up to 13 men and ladies good and true to make a decision."
Mr Glenn said Mr Peters' actions were clearly inappropriate and he was bound to be caught.
He said the censure finding was "nothing to do with me. You know if you do something wrong you've got to take the consequences. Do you think it will really worry him?"
Mr Glenn said he was offended by Labour's attempt to discredit his evidence and suggested that was something that could be investigated.
"They don't do that on their own, they take orders."
Mr Glenn was asked if he thought Mr Peters should lose his ministerial roles, he said that was up to the Prime Minister.
"What criteria does she go by in terms of selecting ministers? There's questions of ethics and integrity here that she should be standing up for. She is the leader of the New Zealand people and there are a lot of questions she has to answer in my opinion."
He added: "I think it's a very sad place New Zealand at the moment. And I think we need more adult people in Parliament."
Parliament will debate the report's recommendations this afternoon.
This morning NZ First's Mr Jones said the committee had used a "corrupt system", was inquisitorial and had accepted inferences and circumstantial evidence.
He said it had developed an interpretation of Parliament's rules (Standing Orders) and then applied it.
"In other words in 2006 you had to know what a committee would decide would be the interpretation of this form in 2008 which is impossible," he said on Radio New Zealand.
Mr Jones and Mr Peters said the committee's actions reflected what happened in Zimbabwe.
"Majorities impose their will on minorities."
Labour and NZ First said there was insufficient evidence to conclude Mr Peters had any knowledge of the donation.
But National, the Greens, the Maori Party, ACT and United Future believed he did, and between them those parties have the numbers to endorse the report through a vote in Parliament.
Prime Minister Helen Clark yesterday said the privileges committee inquiry was tainted.
"This process has become so politicised, that it's clear that some MPs went into that committee having made up their mind before they had heard a single piece of evidence," she said.
"I think that members have to be very careful not to go beyond the evidence to draw conclusions which are fundamentally politically motivated."
Green Party co-leader Russel Norman disagreed. He said he went into the inquiry with an open mind and based his decision on the evidence put before him.
United Future leader Peter Dunne said he had gone into the committee with an opinion: "I entered the committee thinking this was probably a beat up."
But after hearing evidence he changed his mind.
Mr Dunne said Mr Peters had repeated opportunities to give his side.
"Really I think the committee genuinely tried to get to the bottom of what went on and reached its conclusions accordingly."
Mr Dunne said crucial for him was contradictory evidence and then "cute" recall of events by Mr Peters' lawyer Brian Henry after evidence was presented.
Mr Dunne said there was not great dispute around the committee that if Mr Peters knew about the gift then it should be declared.
Dr Norman said the committee's chairman, National MP Simon Power, ran a fair process. He would not comment on whether National or Labour MPs on the committee had open minds.
- NZPA, NEWSTALK ZB