New Zealand First leader Winston Peters looks set to escape censure under one set of rules guiding the conduct of ministers after the Prime Minister said she was likely to allow him to keep the $100,000 Owen Glenn gave towards his legal costs.
Facing her second day of defending Mr Peters over revelations about the donation, the Prime Minister said it seemed an exception to the rule that says ministers should give up any gifts worth more than $500.
"The Cabinet Office advises me that if the sum were deemed to be a gift, there would be no reason to require the minister to relinquish it, given the considerable public interest in the court case for which that money was paying."
Under the Cabinet Manual, gifts worth more than $500 must be declared and handed over unless the Prime Minister gives express permission to keep them. The manual also states ministers should not solicit or accept cash.
The money was to pay for the legal costs of Mr Peters' electoral petition against National's Tauranga MP, Bob Clarkson, following the last election.
Helen Clark said it remained unclear whether Mr Glenn's donation was considered a "gift" under the manual, which did not address money towards legal costs. It was the role of the Registrar of Pecuniary Interests to make such a decision.
The Prime Minister said the Cabinet Manual did not set down rules but provided "guidance" which ministers were expected to follow.
The comment prompted criticism from National that she was applying a different standard of acceptable behaviour to Mr Peters than to other ministers.
The Prime Minister repeatedly praised Mr Peters' role as a minister as questioning continued into the Glenn donation and further allegations were printed in the Dominion Post of donations from the Vela family that were unaccounted for.
Under questioning from National, Green Party and Act MPs, Helen Clark said he would have "a strong case" to apply for the job of foreign minister in any future government and she retained confidence in him.
National deputy leader Bill English said the Prime Minister's defence was because Labour still needed to secure his support to get the Emissions Trading Scheme through.
"[Labour] is in there telling Winston Peters they will do whatever they can to keep him out of trouble so they can get his support for the one piece of legislation Labour wants to claim as its legacy."
Helen Clark turned the attack back on National, saying if Nick Smith's disclosure of the existence of a trust - used for donations to pay his legal costs - was sufficient without specifying the amounts of donations into it or any debt owed, Mr Peters could not be expected to do more.
Although Mr Peters may have escaped the Cabinet Manual, he could still face censure under Parliament's rules if it is decided he breached rules by failing to declare the sum.
The Speaker is considering whether to refer the issue to the privileges committee and the Prime Minister has said other authorities - including the Auditor-General, police, Inland Revenue and the Pecuniary Interests Registrar - have the power to investigate it.
Mr Peters is due back from Singapore tomorrow in time for the arrival of US Secretary of State Condoleezza Rice on her first visit.
On National Radio yesterday, he said he intended to clear up allegations - which he has described as a "tissue of lies" - upon his return.
He also said he would take legal action against the Dominion Post for its story about the Vela brothers' donations, saying it was wrong.
Mr Peters revealed the $100,000 donation from Mr Glenn last Friday after previously denying it.
He said his lawyer Brian Henry had not told him of it until that day because of Mr Henry's long-standing practice of not revealing who donors were.
Mr Peters has continued to maintain he has not broken any of Parliament's rules or the law but said he would talk to the Speaker about it.