Labour has pulled back from a "neutron bomb" blast against the National leader John Key over his alleged knowledge of a notorious 1980s white-collar crime.
Allegations centre around the so-called H-Fee - two payments totalling $A66.5 million ($NZ75 million) to Equiticorp, funnelled via sham foreign exchange transactions in 1988 - and a New Zealand Herald interview with Mr Key last year.
Labour president Mike Williams spent several days last week reading court documents in Melbourne, backed up by Wellington-based members of the party research unit.
Last weekend, the party believed it had a smoking gun - a signature on the $A39 million first H-Fee cheque bearing a striking resemblance to Mr Key's. Senior party figures advocated making the document public.
Within days, though, court documents proved that was wrong.
The January 11 cheque was actually signed by an Australian-based executive of the firm Mr Key worked for.
Mr Key said last night he had nothing to hide and accused Labour of a smear campaign.
Prime Minister Helen Clark distanced herself, saying: "This is not a story I am handling at all."
Labour minister and campaign strategist Pete Hodgson was more forthcoming: "Either [the Herald] have been misled or the Serious Fraud Office has been misled - I don't know.
''If the SFO has been willingly misled, issues of perjury arise, but I'm a veterinarian, not a lawyer."
In last year's interview, Mr Key confirmed he was a foreign exchange dealer at Elders Merchant Finance, part of Australian-based Elders IXL, which made the payments to the Allan Hawkins-controlled Equiticorp.
But he said he left Elders in 1987, before the transactions were processed.
The comments were quoted in a story the next day.
A Weekend Herald profile of Mr Key this year correctly reported he left Elders in 1988.
Checks by the Herald of Melbourne court documents have raised questions about several aspects of his version last year, including his memory of when he left.
He resigned from Elders in June 1988, six months after the first payment.
There is no evidence he was involved in the shams.
Mr Key said yesterday he did not know about the January 11 transaction until told about it by the Herald.
The court documents show it was handled in Australia by Ken Jarrett, who confessed to his role.
"That's why I've never known about it because it never went through our [Elders Merchant Finance] books," Mr Key said.
In a statement to the Australian National Crime Authority in May 1991, Mr Key said he resigned on June 24, 1988, and was placed on leave because he was going to a rival, Bankers Trust.
The second H-Fee of $A27 million was on September 7.
Mr Jarrett told the court that because auditors had raised a query about the first payment, he needed to take more care with the second.
He travelled to Wellington and attended a meeting which included trader Paul Richards - Mr Key's friend and former colleague who took over as the head of foreign exchange in Wellington from Mr Key.
Mr Richards told the court the meeting was on the same day he and Mr Key went to lunch to mark Mr Key's last day with Elders, August 31. Mr Richards and Mr Key told investigators Mr Richards was called to the meeting during lunch.
Mr Key told the Herald last year Mr Jarrett denied being in the country when that meeting took place.
He said he was able to back up Mr Richards' story that Mr Jarrett was in the country because he - Mr Key - had paid for the lunch and had the credit card bill to prove it.
In fact, the court records show Mr Richards paid for the lunch, not Mr Key.
Neither do the records show that Mr Jarrett denied attending the meeting with Mr Richards, though Mr Jarrett did say it was on August 26, as he was not in the country on August 31.
Mr Key said yesterday he always believed the credit card used was his, but conceded it could have been Mr Richards'.