An analysis of electoral finance declarations shows more than 80 per cent of donations to National Party candidates were channelled through party headquarters in a loophole described as akin to legal "laundering".
National's heavy reliance on funding candidates with donations from the party - shown in a Herald study to account for more than $1m out of $1.2m raised by their candidates for the 2014 general election - was a "striking use of electoral law that appears to be laundering the money", said Otago University political science lecturer Bryce Edwards.
Electoral law requires candidates to reveal the identity of donors who contribute $1,500 or more, but political parties can keep donors secret even if they give up to $15,000.
Dr Edwards said the channelling of candidate donations through parties had "become a way around" having to disclose more information about the source of campaign funds.
"It's not illegal and it's up to different interpretations whether it's ethical or not, but there should now be heat on politicans to explain what's going on and to tighten up this loophole," he said.
National Party president Peter Goodfellow strongly rejected any suggestion that donations to candidates from the party were used to obfuscate the source of funds.
He said the practice had more to do with time-frames around candidate selection and a longer-term fundraising cycle. "National is fundraising pretty actively throughout the three-year election cycle. People are donating to support a race before there's even a candidate selected," he said.
Mr Goodfellow said these donations were therefore impossible to tag to candidates and, "as our people often really give to the party", were not be subject to the $1,500 declaration thresholds for candidates.
But the level of National's donations to candidates through party structures remains striking when compared to Labour, whose donations to candidates accounted for only 35 per cent of campaign income.
(Internet-Mana and the Conservatives had higher rates of party contributions to candidates' campaign budgets, but these funds are well known to have come from, respectively, Kim Dotcom and Colin Craig.)
Labour Party general secretary Tim Barnett said Labour operated a system which decentralised fundraising to a local level and this structure, allied with the stricter disclosure levels for candidate donations, was inherently more transparent.
"We'd certainly support having a more transparent system. Unless we're clear where the National Party are getting money from, we're not sure of where their local candidates are getting it from."
Mr Goodfellow rejected suggestions National's sources of funding were murky, saying the bulk of party funds came from 30,000 paid-up members whose contributions would fall below even candidate contribution thresholds.
"We get the bulk of our funding from these thousands of members," the party president said.
Money in politics
These findings were uncovered by a crowd-sourcing experiment to process and analyse donations and expense returns for all 462 candidates at the 2014 general election.
The New Zealand Herald built its own microsite, Money in Politics, to upload nearly 900 documents and allow members of the public to interact with and process the data into a consistent and useable format.
Nearly 500 readers contributed to help create a database tracking the $2.8 million of donations to candidates on which this story was based. Figures have been verified by Herald staff and the complete spreadsheet of candidate finance data will be publicly released next week. Further analysis and investigations into relationships between candidates and donors, and public processing of 2011 campaign finance data, is ongoing.
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