Key Points:

It is inconceivable that Helen Clark would have blithely offered a wealthy donor to Labour Party coffers a seat at the Cabinet table. It is utterly inconceivable that she would have done so while dressed up as a paua.

The suggestion that she had told Owen Glenn he was a "sitter" to be Minister of Transport was always faintly ludicrous, and made more so by her revealing yesterday that her first memory of meeting him was at a tourist function in Sydney in 2004 where she was modelling one of the more extravagant costumes from New Zealand's wearable art awards.

Anyone who knows what makes Clark tick knows she is far too clever and far too cautious ever to trap herself into making such promises of patronage.

National may have lured Don Brash away from the Reserve Bank before the 2002 election on the expectation he would vault up National's rankings and be given the party's senior finance role.

But there is a world of difference between the high-profile Brash, who had stood as a National candidate twice previously, and a relatively unknown expat businessman whose official home is in Monaco and who does not seem to have had any great inclination to enter politics in the first place.

Taking a punt on Glenn would have run totally counter to Clark's modus operandi.

Even had she wanted to get him into Parliament, it is not in her sole power to determine rankings on Labour's candidate list.

Moreover, Clark has always been careful not to upset caucus rankings with big promotions once someone becomes an MP. She has adjusted Labour's parliamentary pecking-order only when absolutely necessary and then only to a minimal extent, rather than put MPs' noses out of joint.

Glenn yesterday belatedly sought to put the matter to rest, saying - contrary to a report last Friday - that he had not been offered a Cabinet post and his remarks had been lighthearted and "taken out of context".

It is easy to blame the media when you are in a fix - too easy. Rather, Glenn may have misunderstood something Clark had said to him on the occasions they met or might have met. Clark says they also shared a table at an Auckland University dinner in 2006, and they both attended a yachting regatta function on Kawau Island in 2003.

Regardless, Labour prays that is the end of the matter. However, politics is about perception. The episode may have been only mildly embarrassing for the Prime Minister. But it's on top of Glenn's becoming an officer of the New Zealand Order of Merit in the New Year's honours.

However justified the award - he has built a global transport empire - the inevitable impression is of Labour rewarding someone who donated half a million dollars to the party before the 2005 election and who subsequently gave it a $100,000 interest-free loan - the existence and source of which Labour has been far less transparent about.

In the short term, the whole episode has become an unnecessary distraction for Labour which was unnecessarily prolonged by Glenn taking three days to confirm Clark's version of events.

It is the kind of distraction that Labour made a New Year's resolution to avoid. And there is a longer-term downside for the governing party.

Thanks to Glenn, National now has some ammunition of its own to fire back when its main rival highlights National's campaign funding.