In the past decade, political fundraising has turned into a minefield that has claimed the parliamentary career of Act leader John Banks, interrupted that of NZ First leader Winston Peters (possibly changing the outcome of a general election) and cast a shadow over Labour leader David Cunliffe.

Political parties need money to survive in non-election years and to flourish when election day looms. Unlike Australia, most European democracies and the United States, New Zealand has not instituted state funding of political parties beyond the broadcasting grant that pays for (and limits) television and radio advertising during an election campaign.

If parties want to support an administration, employ organisers and advertise anywhere other than radio and television, they must raise their own money.

All parties are attracted by large individual and corporate donations but the catch with these is that the donor often wants anonymity.


One way of achieving this is to have the money accumulate in a trust which then passes it on to the intended party.

National did this from time immemorial via the Waitemata Trust and other vehicles but, until recently, anonymity could be gained simply by passing the donation through a lawyer's trust account.

Between 1998 and 2009, the Labour Party raised millions of dollars through a programme of corporate and individual fundraising without the use of trusts and without compromising the integrity of our politicians.

As Labour Party president, I observed some simple rules.

• Politicians should never go after donations. This job should be in the hands of a party president, secretary, campaign manager or agent. Had Banks left the approach to Kim Dotcom to his campaign manager, the donation would have still arrived and Banks would not have his current problem.

• Fundraisers should not discuss their success or failures with politicians. Although I spoke to Helen Clark on a weekly basis, we had an agreement that no donor (or non-donor) was ever discussed and she was unaware of our funding sources, unless, as in the case of Sir Owen Glenn, the donor chose to make the contribution public.

Later in the life of the Labour government, reporting of all big contributions became mandatory.

Peters was vehemently attacked in the lead-up to the 2008 general election for allegedly accepting a $100,000 contribution from the same Sir Owen two years earlier, then denying it.


Despite a leaked email in which Sir Owen said he'd made a donation to NZ First, when Peters was asked if NZ First had received the money from Sir Owen he held up a sign that read "No".

He was widely pilloried. NZ First fell short of the 5 per cent threshold by 20,000 votes in the forthcoming general election, disappeared from Parliament and gave John Key's National Party the election.

As I facilitated the donation in question, I can report - for the first time - that Peters was in fact telling the strict truth.

Shortly after the 2005 general election, I travelled to Sydney on a personal matter and went to visit Sir Owen at his beautiful Double Bay property.

We discussed the outcome of the general election, where Peters had lost Tauranga by 730 votes to "Bob the Builder" Clarkson.

I was asked if I thought an electoral petition might change the results and answered that I did. I had already seen reports of what seemed to be heavy overspending by the National candidate.

It was then resolved that a contribution would be made to defray the costs of the court action and a payment was made to the fees account of the lead lawyer, Brian Henry.

The transaction did not involve Peters and no money ever went near him or the NZ First Party. However the privileges committee and media chose to believe the leaked email - and the rest is history.

Cunliffe undoubtedly feels bruised by revelations around his leadership campaign fundraising. However, the use of a trust should have been no man's land. He will wake up a wiser man and, like Peters, will live to fight another day.

The Herald on Sunday will publish a range of different views "Out Of Leftfield" over the next couple of months.