The government is being told to urgently close a loophole in political donation rules that legal experts say make this country ripe for overseas exploitation.
Photo: 123rf
The blind spot was brought to a head on Friday when the High Court acquitted two men accused of mishandling nearly $750,000 given to the New Zealand First Foundation.
The judgement underscores the legality of shadow entities bankrolling political parties, without otherwise-standard requirements to declare who's signing the cheques.
Now there are calls for reform before next year's general election but the government won't commit to acting before then, saying there's not enough time to do it properly.
Constitutional law expert Graeme Edgeler said the New Zealand First Foundation case showed the Electoral Act was clearly not fit for purpose.
"I think the intention of those who wrote this law was that donations like the ones that were made to the New Zealand First Foundation would count as donations to the New Zealand First Party and have to be declared.
"A High Court judge has said that's not what the law says and so I think we probably need to change it."
The Electoral Act sets the rules for New Zealand's political system, including reporting thresholds for political donations.
It's supposed to safeguard transparency so the public knows who's funding who but for these rules to apply, the money has to be considered a party or candidate donation.
In this case, the High Court found the money didn't qualify as either, a loophole Edgeler said had potentially serious implications.
"There have been a number of suggestions over the last few years, in Select Committee inquiries and things like the SIS and GCSB giving evidence about the attempts by governments or organisations overseas to influence political systems generally, including New Zealand."
Constitutional law expert Graeme Edgeler. File photo Photo: VNP / Daniela Maoate-Cox
There is no suggestion of unlawful overseas donations in the New Zealand First Foundation case but Edgeler said the case had exposed a vulnerability - dodge the rules by dodging the definition.
"A High Court judge has said if overseas donations were made in this way to another foundation before the next election the Electoral Act wouldn't apply to them."
The Electoral Amendment Act 2022 - introduced to Parliament just last week - sets out changes to be made before the next election, like lowering the dollar threshold at which donations have to be declared.
A high-level independent panel is also reviewing electoral law including how parties are funded but it's report isn't due back until the end of next year.
Prime Minister Jacinda Ardern did not want to comment directly on the New Zealand First Foundation case, as an appeal is still being considered.
But she said if it was clear there was the "intent or principle of any of our electoral laws is not necessarily being upheld in the spirit in which it was potentially intended by Parliament - you would want an avenue to go and look at that".
She would not commit to pushing through any law change before the 2023 election, saying amendments to electoral take time and consideration.
"At the moment we have one piece of legislation that's already quite well advanced, and ... the process of working through the complexity of electoral laws, and we have seen examples of where it's been quickly and badly.
"Even if you introduced something tomorrow... I'd say the amount of time may make it tight for 2023."
RNZ has spoken to two law experts who say it can be done - one pointing to the legislation now before Parliament as a prime vehicle for change.
These experts agree its scope is wide enough to sort out the definition of a 'party donation' before the next election and ensure shadow entities can't be set up to secretly bankroll political parties.
That change could garner support across the House, with National's Paul Goldsmith saying any loopholes should be tightened up quick-smart.
"We'd be up for the discussion but the government doesn't seem to be interested in that," he told RNZ.
"They're only interested in ramming through legislation which is frankly about screwing the scrum in their favour when it comes to fundraising."
Ardern said that panel, due to report back around November 2023, was better placed to examine the loophole and any necessary changes.
The Serious Fraud Office has not yet said whether it will appeal the High Court's decision in the New Zealand First Foundation case.