Money trail in Nats and Labour ‘sham donors’ trial unfolding in High Court

Advance NZ co-leader Jami-Lee Ross outside the High Court at Auckland.

Seven people, including former National MP Jami-Lee Ross, are defending charges related to electoral fraud.
Photo: RNZ / Simon Rogers

The first week of a major trial concerning political donations has started to unravel the alleged money trail from anonymous donors to Labour and National.

A rollcall of former and current politicians and officials from the country’s two biggest parties will take the witness stand during the High Court trial in Auckland, set down for 10 weeks.

The snug courtroom is bulging with lawyers elbow-to-elbow, so much so that cardboard desks were assembled to ease the congestion.

Seven people, including former National MP Jami-Lee Ross, are defending charges related to electoral fraud.

The Crown alleges three separate donations were split into smaller amounts among “sham donors” to avoid triggering the $15,000 disclosure limit and keep party officials, the Electoral Commission and the public in the dark about the identity of the true donor.

Crown prosecutor John Dixon QC says that person was Yikun Zhang, who was aided by party insiders – Ross for National and two others with name suppression for Labour.

Amongst the flow charts and bank statements, there is political intrigue.

The court is hearing about the social-political networks of the businessmen on trial, dinners at upmarket restaurant Cibo, covert recordings, and how other claims such as imperial robes and paintings helped to conceal the true donor’s identity.

The trial was sparked after a 2018 complaint to police about potential electoral fraud.

The whistleblower was Ross himself, a National MP at the time, who took a recording he had made to the police in which he was speaking to then party leader Simon Bridges about a $100,000 donation – the Crown says the court will hear more tapes of the pair.

Ross maintained Bridges – who was not charged – or National had something to do with the donation being split, in order to avoid it having to be declared, but denied any involvement himself.

The police referred the matter to the Serious Fraud Office (SFO) and the trial began this week with Ross among the seven defendants and Bridges, a former Crown prosecutor, among witnesses for the Crown.

The defendants and the charges

The trial merges two separate cases concerning two large donations to National and one to Labour.

These are being heard together because three of the seven people facing charges laid by the SFO were involved in donations to both parties.

They are Chinese Auckland businessman and royal honour recipient Yikun Zhang and his right-hand man Shija (Colin) Zheng and Zheng’s twin brother Hengjia (Joe) Zheng.

The Crown has laid obtaining by deception charges under the Crimes Act, alleging attempts to deceive by way of a fraudulent device, trick, or stratagem.

Alongside Ross, the trio are charged in relation to two $100,000 donations paid to National in 2017 and 2018.

The trio and another three individuals with name suppression face charges related to a $35,000 donation made to Labour in 2017.

Joe Zheng also faces charges of supplying information knowing it was false or misleading during interviews conducted by the Serious Fraud Office.

The defendants in both cases deny all charges.

Week one

The first week of the High Court trial in Auckland took place under the shadow of Covid-19 after one of the defendants, Yikun Zhang, tested positive before appearing in court the first morning.

That delayed proceedings for a day, then on Tuesday another defendant whose name is suppressed had to hurry home and dial in by video link after his wife tested positive.

For the National Party donations, Crown prosecutor John Dixon said the money came from accounts linked to Zhang (and possibly Colin Zheng in one instance) but was funnelled through “sham donors” from the Chinese community who paid smaller amounts to National to sidestep disclosure rules.

For the Labour Party a donation of $35,000 is on the table, linked to five paintings people paid $60,000 for to – the Crown says – split the money. The Crown will submit evidence that Zhang was the source of the money and the true owner of the paintings.

Dixon said the defendants did not follow proper procedure.

“The proper recording should have been that Yikung Zhang was the donor of one hundred thousand dollars or potentially Yikung Zhang and Colin Zhang and that information should have been provided to the Electoral Commission within ten working days of that donation being made.”

Over coming weeks the witness stand will host an array of familiar names from the political sphere and the public sector.

Among the 54 witnesses are former National Party leader Simon Bridges, Labour MPs Andrew Little and Michael Wood, the Prime Minister’s press secretary, Southland mayor Gary Tong and the NZ Ambassador to Indonesia Trevor Matheson.

Unable to move the trial to a larger courtroom, the press bench is likely to overflow into the dock and the public gallery.

The judge-alone trial before Justice Gault is due to resume on Monday at 10am.

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