KEY POINTS:
The Serious Fraud Office probe into New Zealand First's finances announced late yesterday makes Winston Peters' suspension as a minister unavoidable.
Mr Peters was defiant last night in the face of the announcement of an investigation into the fate of donations to his party, calling the inquiry "ridiculous
in the extreme".
However, the serious nature of the probe makes it impossible for him to hold a Government role as crucial as Minister of Foreign Affairs.
Prime Minister Helen Clark has set precedents of standing down ministers during inquiries and last night she conceded this immediately - while offering no defence of Mr Peters.
"I think it's best if he listens to his advisers this evening, and I will talk with him tomorrow," she said.
"I hope to be able to be clear about the way ahead tomorrow, yes."
Her comments indicate that she will sack Mr Peters if he refuses to step down voluntarily while the investigation is in train.
For a month, the SFO has been looking into allegations surrounding donations property magnate Sir Robert Jones and the wealthy Vela family made to NZ First.
SFO director Grant Liddell said last night he had been satisfied that the threshold had been met for commencing an investigation into allegations the money did not reach its intended destination.
"I have sufficient information that gives me reason to suspect that an investigation may reveal serious and complex fraud," he said. "I want to emphasise that it is entirely possible that there are innocent and honest explanations."
Shortly after the SFO announcement, Helen Clark told a press conference that she needed to talk to Mr Peters and would do so today.
"I think in these matters it's best to proceed with all due care and deliberation," the Prime Minister said.
"And of course people are always innocent until proven guilty."
Mr Peters issued a statement last night that said nobody from the SFO had spoken to him about any of the matters it had allegedly been making inquiries about.
If staff had had the courtesy to talk to him, the matter "would have been cleared up in a few minutes", the minister said.
"They did not even have the courtesy to tell me about their decision - I heard it on the radio."
Mr Peters said he would meet the investigation "head on".
The SFO's announcement came late on a day of fast-moving events in the ongoing political donations scandal surrounding Mr Peters.
They included a bombshell revelation from the Prime Minister that expatriate billionaire Owen Glenn told her as long ago as February that he had given money to Mr Peters.
She said she was told about the donation by Mr Glenn - who gave $100,000 to a legal fund for Mr Peters - during a private meeting at Auckland University on February 21 when she attended the opening of the Owen G. Glenn Building, to which the Monaco-based Kiwi had contributed $7.5 million.
Helen Clark said she immediately phoned Mr Peters in South Africa to ask what the situation was and he insisted he knew nothing of any such donation.
She took his word for it, and just days later Mr Peters hosted his now-famous press conference at which he held up a 'NO' sign in response to questions about whether he had received money from Mr Glenn.
Although doubt was cast on that statement several weeks ago, Helen Clark never revealed what Mr Glenn had told her until directly asked yesterday by reporters.
"No one asked," she said in response to questions about why she hadn't disclosed the information earlier.
"Probably all media think now, `Why did we not ask what was discussed?"'
Helen Clark's disclosure now puts her centre-stage of the ongoing scandal surrounding the Glenn donation and appears to increase the possibility Labour could get caught up in the political fallout.
National leader John Key yesterday called Helen Clark's admission "stunning" and his party accused the Prime Minister of not saying anything in order to protect her own political interests.
"Helen Clark has got a lot of explaining to do to the New Zealand public," Mr Key said.
Mr Peters maintains he knew nothing about the donation to the legal costs of his challenging the Tauranga electoral result until his lawyer, Brian Henry, told him about it on July 18.
- additional reporting: Herald political staff
