PM moves to control damage

The Government will move quickly to repair the damage to its image now New Zealand First leader Winston Peters has stepped aside from his ministerial portfolios to deal with a Serious Fraud Office inquiry.

Lawyers for Mr Peters will meet the SFO this morning as it conducts an inquiry that has been given priority status.

The SFO is investigating donations made to NZ First, particularly allegations that funds donated to the party by Sir Robert Jones and Vela family interests did not reach their intended destinations.

After an hour of talks at a private residence in Parnell yesterday afternoon, Prime Minister Helen Clark announced Mr Peters had offered to stand aside and had asked her to take over his portfolios.

The NZ First leader was Foreign Affairs, Racing and Associate Senior Citizens Minister outside Cabinet under his party's support agreement with the Government.

He is at the centre of controversy regarding donations to his party and the Serious Fraud Office on Thursday announced an investigation.

"It is to be hoped that the SFO will address their matters expeditiously," Miss Clark said yesterday.

"Mr Peters is offering his total co-operation to the SFO and the first meeting between his lawyers [including Peter Williams, QC,] and the office will take place tomorrow morning."

Mr Peters would open all relevant books and documents to the SFO, which Miss Clark thought would help the inquiry progress quickly.

Miss Clark said there had been "no difficulty" reaching the position that Mr Peters would step aside.

"Mr Peters has been thinking very carefully about this. It's been clear to me this would be the appropriate course of action, but there hasn't had to be a lengthy argument about this at all. It's accepted this is totally proper and there are precedents for it."

The Prime Minister will be able to use the release of the Labour Party list tomorrow to start rebuilding her own reputation.

The list will be used as a launching pad to show she is once again running the political agenda of the country and her party.

Miss Clark has been under repeated attack in Parliament this week for failing to act decisively over Mr Peters.

She has much to gain from yesterday's decision.

She can distance herself from Mr Peters and Labour can put some distance between itself and NZ First while still having the numbers in Parliament to pass the contentious emissions trading legislation on Tuesday.

It is unlikely the powerful privileges committee will meet next week to consider whether Mr Peters personally solicited a donation of $100,000 from expatriate billionaire Owen Glenn to help fight an election petition.

And if questions are asked of her in the coming week about the SFO and privileges committee inquiries, Miss Clark can refer to "due process", something she did during the past week.

National Party leader John Key appeared last night to distance himself further from having Mr Peters as part of any National-led coalition after the election.

But Miss Clark said that if the SFO inquiry cleared Mr Peters, he would return as a minister.

The willingness of Mr Peters to co-operate with the SFO could indicate he does have the proof of where the Jones and Vela donations landed, and that he expects to play the victimised fighter of injustice once again.

National has been consistently ahead of Labour in the polls but the numbers needed to form the next government have started to change.

If Mr Peters survives this latest controversy, and the privileges committee fails to act quickly enough, he could scrape back into Parliament above the 5% threshold, taking six or seven MPs with him.

The Green Party is likely to win 5% and if Labour can get to 38%, Miss Clark will be in a position to form another government.

Progressive leader Jim Anderton will be part of any Labour-led administration and United Future leader Peter Dunne will be available to work with either Labour or National.

The Maori Party will then become the kingmaker.

It is likely to win six of the Maori electorates but not feature in the party vote.

It could take over the role of the Greens, ensuring a confidence and supply agreement with Labour, or possibly National.

Mr Key has decided that National can either win alone or he can cobble together the numbers with Act New Zealand leader Rodney Hide, who should win Epsom, and Mr Dunne.

He is gambling on taking the moral high ground into the election, the timing of which could be announced next week when the emissions trading scheme is safely through into legislation.

 

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