Wellington - New Zealand's Serious Fraud Office announced Thursday that it had launched a preliminary investigation into donations by wealthy entrepreneurs to Foreign Minister Winston Peters's political party.
Director Grant Liddell said the inquiry would centre on donations made to the nationalist New Zealand First party by millionaire property developer Sir Robert Jones and the Vela family of companies after allegations that they 'did not reach their intended destination.'
'I have sufficient information that gives me reason to suspect that an investigation may reveal serious and complex fraud,' he said while adding the proviso, 'It is entirely possible that there are innocent and honest explanations.'
'The allegations concern important matters relating to the funding of a political party, which go to the heart of the democratic process, and involve a minister in the government,' Liddell said.
Earlier in the day, as a political row over a donation he received from another wealthy businessman continued to rage, Peters challenged the Serious Fraud Office to prosecute him or leave him alone.
Peters immediately dubbed the office's subsequent statement 'ridiculous in the extreme,' adding, 'We will meet this investigation head-on.'
Liddell said his agency's investigation would not include a 100,000-New Zealand-dollar (70,000-US-dollar) donation to Peters from expatriate New Zealand billionaire Owen Glenn that has dominated headlines this week because it was clear it was donated for the minister's legal expenses.
The Glenn donation has stirred a major political row, and Prime Minister Helen Clark, who has refused calls to sack Peters, cast herself into the centre of it Thursday when she revealed for the first time that Glenn told her about the donation in February.
Peters persistently denied receiving the money until last month when he said that his attorney had just informed him about the donation, which had gone anonymously into a trust fund to meet fees for a legal action.
Clark said Peters consistently denied getting the money when she questioned him. Faced with conflicting statements by the two men, she accepted Peters' word as an honourable member of parliament, in line with parliamentary convention, she told reporters.
Opposition politicians accused Clark of concealing the information to preserve her 9-year-old minority government, which is trailing in opinion polls as it faces an election by mid-November.
Peters' party agreed to support Clark's government after the last election in 2005 in exchange for him getting the foreign affairs portfolio.
Rodney Hide, leader of the free market ACT party, charged Clark with putting the retention of power ahead of ethics, and John Key, who leads the main opposition conservative National Party, said Clark's 'stunning revelation' left her with a lot of explaining to do.
Key, who, polls indicated, would be the next prime minister, told reporters Wednesday that he would not have Peters in his government without a 'credible explanation,' which he thought there was an 'extremely low' chance of Peters providing.
Clark said she was standing by Peters, pending the result of an inquiry into the affair by parliament's powerful privileges committee, which is considering Hide's complaint that Peters did not declare Glenn's donation as he was obliged to do.
But after the Serious Fraud Office's statement, commentators said Clark had little choice but to stand Peters down, pending the result of its investigation.
The prime minister said she would do nothing before talking to Peters Friday.
Glenn, an expatriate billionaire New Zealander who lobbied to be appointed the country's honorary consul to Monaco, where he lives, told the committee in a letter released Wednesday that Peters had asked him for a donation and subsequently thanked him.
Peters continued to deny Glenn's version of events, telling the committee that Glenn's statement was 'not factual and does not coincide with my recollections.'
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