Act MP John Banks has been cleared of any charges relating to donations to his 2010 mayoral campaign which he declared as anonymous, despite police finding he personally solicited them and in one case physically received the cheque.
Police Assistant Commissioner Malcolm Burgess said investigations into whether Mr Banks knowingly transmitted a false electoral return had found insufficient evidence to consider a prosecution.
Police were unable to consider other charges related to filing a false return because complaints about the alleged offence were laid too late.
The complaints, received from Labour MP Trevor Mallard and others, related to donations to Mr Banks' campaign from internet multi-millionaire Kim Dotcom and casino operator SkyCity along with free radio advertising his campaign received.
Referring to two $25,000 donations from Mr Dotcom, police said they had established Mr Banks personally solicited a donations which were subsequently recorded as anonymous in Mr Banks' electoral return.
However, in a letter to Mr Mallard, Detective Superintendent Peter Read said police were unable to establish that Mr Banks had the necessary knowledge that the donation had been recorded as anonymous in the return before he signed and submitted it.
The return was compiled by a campaign volunteer and Mr Banks sought and received confirmation that it was an accurate return of his expenses before signing and transmitting the return.
Police were therefore of the view there was insufficient evidence to consider a prosecution under the Local Electoral Act for knowingly submitting a false return.
Police also said they were unable to another charges under the Act related to submitting a false return because any such charges had to be laid within six months of the return being supplied. Police first received the complaint on April 27, about ten months after the expiry of that period.
The police findings were similar for the $15,000 donation from SkyCity and for the anonymous radio advertising.
However in relation to the Sky City donation, police said they had established Mr Banks received a sealed envelope containing a $15,000 cheque made out to his campaign organisation during a May 24 2010 meeting with the company's chief executive.
That donation was subsequently recorded in his electoral return as anonymous, but again police said they were unable to establish Mr Banks knew the donation had been recorded as anonymous in the return before he signed and submitted it.
Labour Leader David Shearer said Mr Banks appeared to have got off on a technicality.
"This is a guy that's gone to a donor asked for money and in one case received a cheque in his hand and then has turned around and said he can't remember receiving it.
"Police can't prove it but everyone in New Zealand knows what's going on here. John Key knows as well and should stand him down."
But Mr Shearer said Mr Key would keep Mr Banks on, " and I think that says something about his ethical standards".
In a statement, Mr Banks said he and his team had "always maintained that our 2010 electoral affairs were conducted within the law, and we are glad that these matters can now be put behind us".
He acknowledged "the very professional and diligent way in which the police have approached this investigation, and the way they have interacted with me and members of my campaign team".
He said he would make no further comment.