Foreign Minister Winston Peters' job is safe for now but his future would not be bright under a National government.
In an explosive letter to Parliament's privileges committee released this morning billionaire Owen Glenn wrote that Mr Peters sought, obtained and thanked him for a $100,000 donation.
Mr Peters had denied knowledge of the donation which he says his lawyer Brian Henry obtained in December 2006 to pay legal costs. Today he said Mr Glenn was wrong and that he would prove it.
Prime Minister Helen Clark will await the outcome of the privileges committee investigation about the donation, but National's John Key has all but ruled out any coalition or support arrangement with Mr Peters following this year's general election.
Mr Key said unless Mr Peters could provide a credible explanation, something he thought unlikely to happen, he would be unacceptable in a government he led.
Asked if he would negotiate with Mr Peters after the election towards a support arrangement or coalition, he said: "I am ruling out Mr Peters. He simply doesn't have the integrity in my view unless he can somehow change that."
He said Mr Glenn had no motive to give wrong information but Mr Peters did.
Mr Key said Prime Minister Helen Clark should stand down her foreign affairs, associate senior citizens and racing minister.
Miss Clark told reporters she sought an explanation following the privileges committee releasing Mr Glenn's statement this morning.
"And I have received an explanation which is that he refutes the suggestion," Miss Clark said.
"The fact that a minister is in his or her job is a statement that I have confidence in them."
Asked if Mr Peters' position remained tenable, Miss Clark said there was a process to be followed and she had a duty to be fair.
"I think we really need to see the privileges committee work through the issue."
Mr Peters slammed Mr Key's approach.
"He was behaving tough with a wriggle out clause. It's not clever, it's not experienced, it's not smart and it's not wise," he said in Parliament.
National was strongly represented on the privileges committee and Mr Peters questioned why Mr Key would not wait for its finding.
"The answer is that they know they are going to lose."
Mr Peters said in July a newspaper reported Mr Glenn gave the money to NZ First while in his letter today he said he gave it to Mr Peters, not the party.
Mr Peters said there was no fraud and that was backed by Mr Glenn's comments.
Mr Key said that was not the point: "In the early part of this year Mr Peters held a press conference where he held up a statement and said at no time had he been involved in solicitation or receipt of $100,000 donation. That according to Mr Glenn is factually incorrect."
Mr Peters said after checking this afternoon he had details of the conversation seeking the donation - "Why it happened, who it happened with and what Mr Glenn said."
Mr Peters said he had critical information which he would give the select committee which showed he was right.
Green co-leader Russel Norman, who also sits on the committee, said this morning that Mr Peters could not remain foreign minister if it was found his account was untrue.
ACT leader Rodney Hide said Mr Peters had misled the country.
"Winston's in a spot now where the whole world is wrong and only Winston is right. I'm afraid it's Winston Peters' credibility that has been shot to bits."
* Mr Glenn says Mr Peters asked him for a donation - Mr Peters denies this
* Mr Peters says his lawyer Brian Henry solicited the money - Mr Glenn says he paid Mr Henry without having met or spoken with him
* Mr Glenn says Mr Peters thanked him for the donation at the 2006 Karaka yearling sales - Mr Peters says they were at the yearling sales the following year but that he did not thank Mr Glenn until being advised of the payment on July 18 2008.
'Conflict of evidence'
The glaring discrepancy presents a credibility crisis for Mr Peters, who is also Foreign Minister.
Helen Clark is expected to call Mr Peters in to explain the differences between what he told her and what Mr Glenn says.
Asked how the Prime Minister could sack Mr Peters when it was a case of one person's word against another, Mr Hide said people should examine the motives of both men.
"There's no motive for Owen Glenn to mislead Parliament," Mr Hide said.
"And then look at Winston's track record."
Mr Hide noted Mr Glenn had donated hundreds of thousands of dollars to Labour in recent years along with his donation to Mr Peters' legal fight - now his credibility was being questioned.
"That's a disgusting way to treat a person who's been very charitable when he had no need to be.'
Mr Glenn's letter says: "The payment was made by me to assist funding the legal costs incurred personally by Rt Hon Winston Peters MP concerning his electoral petition dispute, at his request.
"Mr Peters sought help from me for this purpose in a personal conversation, some time after I had first met him in Sydney.
"I agreed to help in the belief that this step would also assist the Labour Party, in its relationship with Mr Peters. I supported the Labour party."
Mr Glenn said he had never made a donation to the New Zealand First Party.
"I declined an earlier request to so do."
Mr Glenn does not specify the date on which he met Mr Peters in Sydney but Mr Peters believes they met at a Bledisloe Cup weekend on August 13, "well before the 2005 election."
The implication in Mr Peters' letter is that - because it was well before the election on September 17 - they could not have discussed the electoral petition which was begun after the election.
However it was common knowledge at the time that New Zealand First was concerned at the spending of the eventually successful National candidate Bob Clarkson, and that an electoral petition was a possibility.
According to the judgment of the electoral petition, Mr Peters' electorate chairman, Roy Townhill wrote on August 24 to Mr Clarkson's campaign manager, Wayne Walford, telling him his $20,000 must have been breached - just 11 days after Mr Glenn and Mr Peters had their conversation in Sydney.
Mr Glenn says in his letter that he met Mr Peters socially at the Karaka yearling sale, he thinks in 2006.
"He thanked me for my assistance."
Mr Peters in his letter says he believes the meeting at Karaka took place the following year.
"I recall that in 2007 (and my diary confirms this) Mr Glenn and two others joined the table in which I and a friend shared a sit down lunch with about eight leading names in the horse racing fraternity."
Mr Peters does not directly challenge Mr Glenn's statement that Mr Peters had thanked him for the donation but refers to previous statements he has made.
"In my evidence to the committee and in my press statement 18 July I did not thank him until my lawyer advised me on July 18 2008."
'Deep contradiction' - Greens
Greens co-leader Russel Norman said there was now a "deep contradiction" between the statements of Mr Glenn compared with those made by Mr Peters and his lawyer Mr Henry.
"I think that the Prime Minister must have serious doubts now, because there is clearly contradiction on one of the key points," Dr Norman said.
He pointed to Mr Glenn saying Mr Peters had asked him for the money.
"And Mr Peters - when he made his great song and dance of holding up a 'no' sign - denied any knowledge whatsoever of it," Dr Norman said.
"I think it would be fair to ask your Foreign Minister what's going on."
Dr Norman also said it would be helpful if Mr Glenn gave oral evidence to the Privileges Committee by video link so that questions could be asked. He could not comment about whether this was likely.
- NZPA, NZ HERALD STAFF