A mystery donation to National has people asking how secure our electoral system is from corrupt foreign actors. Law expert Andrew Geddis explains what’s at stake

By Andrew Geddis*

Following some damn fine newspapering by Matt Nippert, a $150,000 donation given in 2017 to National from the Chinese billionaire owned “Inner Mongolia Rider Horse Industry (NZ) Ltd” is back in the news. While not necessarily raising any questions of illegality or impropriety, the sheer amount involved and the fact that it came from an entity controlled by an overseas national has focused attention on how our law controls (and doesn’t control) the use of money in our electoral system.

So, given this recent interest, let’s try a little thought experiment. Let’s pretend you’re a malign actor with money to spare who wants to use it to get something from New Zealand’s democracy.

It might be some policy win in an area you’re interested in. It might be establishing general influence over those who wield public power. It might simply be messing with the system in order to destabilise it. All of these are goals that we’ve recently seen pursued in many places around the world.

How, then, could you do so within New Zealand’s existing legal framework? That is, how could it be achieved either without breaching the law, or by breaching it in ways that probably won’t ever get noticed or punished?

1: Buy yourself a party or politician

We all know New Zealand is one of the least corrupt nations around. After all, Transparency International keeps on telling us this, and we keep on proudly touting it.

But let’s say there’s someone out there who didn’t get the memo and decides to try and buy themselves a NZ politician or party. What, apart from our political actors’ sense of ethics, stands in their way?

The first point to note is that if you are a NZ citizen, resident, company or association, there’s literally no limit on how much you can donate to either a party or an individual candidate. If you want to give it, and they’re happy to take it, then that’s all copacetic.

Of course, if you donate more than $15,000 to a political party, or $1500 to an individual candidate, then your name eventually will have to be disclosed to the public via the Electoral Commission. And if you’re trying to buy politicians, you probably won’t want to do it quite so openly.

In which case, it’s a good thing that you can give a party $15,000, and each of its individual candidates $1500, and still never have your name appear in public. That’s up to $121,500 to a party running candidates in all 71 electorates.

And let’s say you usefully happen to have friends and family with money who coincidentally share your political goals. Each of them also can use “their” money – and, really, will anyone ever find out if it actually is their money? – to donate.

A donation of $15,000 here, $15,000 there … pretty soon that starts to add up to some real cash, the source of which will (again) never have to be exposed to public view. So even if you’ve crossed some lines in how the donations have been funded, how will anyone outside the party ever know to ask?

Above, an action station campaign flyer. 

However, what if you live outside of the country and are not a NZ citizen or voter? Can your money still help to fund the activities of some party or candidate?

Not directly it can’t – or, at least, not all that much of it. Such “overseas persons” can only give $1500 at most to a candidate, or $1500 a year to a party.

Unless, that is, they happen to own a company that is registered in New Zealand. In which case, it’s perfectly legal to direct that company to give as much of “its” money to a party or candidate as “it” wants to. Such is the magic of a legal fiction in action.

Or, it may be that the overseas person has friends, relatives or loyal subjects living in New Zealand who are prepared to pass on money under their name. While that would be illegal, it’s also hard to detect for the reasons given above.

Which may help to explain why the head of the SIS, Rebecca Kitteridge, recently told parliament’s Justice Committee that “more stringent disclosure requirements” would assist that organisation’s investigative work by improving its ability to trace donations. One is tempted to conclude that there’s something already going on that the SIS thinks needs looking at a little bit more closely.

2: Spend your money on your own advertising

Even if done entirely legally, giving money directly to a party or candidate carries an obvious risk. The pesky news media might not always be that quick out of the blocks – it took over two years to really question whether an overseas owned company should be giving six figure amounts to a political party – but it sometimes gets there. And when it does so, embarrassing inquiries will start being made.

So, why not avoid the risk of exposure, cut out the middle man, and try to get the outcome you want by spending your own money on advertising? After all, that’s what politicians and parties mostly will use your money for anyway, so why not just do it for yourself?

Outside of the three-month period before an election, there’s virtually no restrictions on such spending by anyone. You can spend as much as you want on any sort of advertising in any medium.

The only legal controls are that you can’t directly tell people to vote for a candidate or for a party unless they agree in writing that you can do so. But that doesn’t stop you dissing their political enemies, or talking up issues in a way that favours them.

Further, if you do pay for an “election advertisement” (one that basically tries to influence how people will vote, even if it doesn’t mention any party or candidate), then you have to put your name and address on it in a “promoter’s statement”. That’s meant to let people see who is behind the ad and so assess it accordingly.

However, if you were to set up (say) “New Zealanders for a Brighter Tomorrow” to conduct the advertising, and have a lawyer front this entity for you, then all you’d need to do is put the group’s name and the lawyer’s address on your ad. And if anyone asks the lawyer who is behind it, client confidentiality precludes an answer.

Once we get to three months before an election, things tighten up a bit. From that point until polling day, anyone wanting to spend more than $13,200 on election advertising in any medium has to register with the Electoral Commission. And an overseas person can’t register in this way (but any NZ company they may own still can).

Registering requires the disclosure of a bunch more information about who is behind a group, as well as limiting overall advertising spending to $330,000. That’s still a shit load of cash, but at least it’s something, right?

Facebook's Mark Zuckerberg delivers the opening keynote address at the F8 Developer Conference April 21, 2010 in San Francisco. Photo by Justin Sullivan/Getty Images.

Except, all of this regulation relies on someone being able to monitor just who is out there running election ads. And monitoring such ads requires us knowing that they even exist in the first place.

Back in the mass media days, that was at least possible. Everyone looked at the same papers and TV channels for their news. And even if pamphlets got stuck into lots of individual letterboxes, this was public enough that people could notice, talk about it and join the dots.

But today? Where advertising largely has moved on-line and can be micro-targeted at individuals on their social media sites? How will an urban-dwelling creative professional who likes cycling ever know what political ads a rural-dwelling farmer who owns a ute is seeing on her Facebook feed? And once those political ads have run their course and been replaced with the next set of messages, how will we ever know if the same people are behind those messages?

Let’s be honest here – there’s no way that our Electoral Commission or any other government agency can monitor this. And even if someone were complain to them that the rules around promoters’ statements or spending caps look like they’re being broken, the Commission (or the police) are going to winkle out information from the likes of Facebook, Twitter or Google to even start to investigate.

Which raises the scary fact that our laws controlling the use of money in our democracy now rely on these social media behemoths voluntarily agreeing to monitor just who is running ads about New Zealand politics and share that data. Because if they don’t, then our laws will only have as much practical force as those running the ads want to give them.

And if you were a malign actor with money to spare who wants to use it to get something from New Zealand’s democracy, that might not really be much force at all.

*Andrew Geddis is a Professor in the Faculty of Law at the University of Otago. This article first appeared on The Spinoff here and is used with permission.