It was also disturbing that the donation appeared to be sanctioned by Labour after Mr Glenn contacted party president Mike Williams before making the payment, Mr Key said.
Mr Glenn, a New Zealand billionaire who lives in Monaco, said yesterday he was vetted for the position of honorary consul to Monaco and that Mr Peters supported his bid.
"There's a lot of murkiness about this whole donation scandal," Mr Key said.
"Both parties can't be right here. I can only go back to the fact that Mr Glenn has provided all the way through compelling evidence."
Mr Key said he believed Mr Glenn's version over Mr Peters'.
Mr Glenn made his comments yesterday after giving evidence on Tuesday before Parliament's privileges committee over whether Mr Peters broke rules by not declaring the donation from the wealthy Labour supporter.
Mr Glenn told Radio New Zealand yesterday that he was vetted for the consul role.
He met New Zealand's ambassador to France, Sarah Dennis. She had sought a meeting in Monaco but scheduling problems saw Mr Glenn meet her in Paris at a later date.
She told him she was vetting him.
"I said 'OK, what's your decision'. She said, 'you seem to be all right'," Mr Glenn said.
"But it was at her invitation and that's what she said to me."
In February, Mr Peters rang him the day he was leaving for a trip to South Africa, Mr Glenn said.
Mr Glenn was in Raglan at the time and says he has a witness to the call.
"He (Mr Peters) said; `I'm still supporting this, I want to push it through, I need a letter from you confirming that you are going to live in Monaco..."
The letter was subsequently leaked and reported.
"There's nothing wrong in the letter," Mr Glenn said.
Mr Glenn said he talked to Miss Clark on February 21, when they were at the opening of a new Auckland University business school building he had put money towards, about the honorary role bid.
"She said, `well look, it might be best to let it lie and let's not at this stage stir the pot'."
Mr Key said he thought Mr Peters had not managed to clear up the controversy around what he knew of the donation at yesterday's privileges hearing.
"The reality was that he's now acknowledged that he received a phone call from Owen Glenn, he's acknowledged that it's likely he gave his lawyers details -- that would probably be the client, therefore, that Brian Henry was talking about when he emailed Owen Glenn.
"Frankly I don't think there was anything in there that refuted the critical evidence provided by Owen Glenn to the privileges committee."
There had been two different versions all along and Mr Glenn's version was more credible, Mr Key said.
"There's only one person right in this situation and it's almost certainly Owen Glenn."
Mr Key said Miss Clark had not shown leadership and was "up to her eyeballs" in the donation scandal.
He accused her of putting political expediency ahead of setting standards for ministers.
"And I think she will be punished for that."
