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Viewing cable 08WELLINGTON227, WINSTON PETERS' GREATEST POLITICAL CRISIS?

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Reference ID Created Released Classification Origin
08WELLINGTON227 2008-07-23 07:49 2011-04-28 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Embassy Wellington
VZCZCXRO3924
OO RUEHNZ
DE RUEHWL #0227 2050749
ZNR UUUUU ZZH
O 230749Z JUL 08
FM AMEMBASSY WELLINGTON
TO RUEHC/SECSTATE WASHDC IMMEDIATE 5334
INFO RUEHGP/AMEMBASSY SINGAPORE IMMEDIATE 0525
RUEHNZ/AMCONSUL AUCKLAND 1707
RUEHBY/AMEMBASSY CANBERRA 5219
RUEHDN/AMCONSUL SYDNEY 0698
RHHMUNA/CDR USPACOM HONOLULU HI
UNCLAS WELLINGTON 000227 
 
SENSITIVE 
SIPDIS 
 
SINGAPORE PASS TO SECRETARY'PARTY, STATE FOR EAP/ANP, EAP/FO, PACOM 
FOR J01E/J2/J233/J5/SJFHQ 
 
E.O. 12958: N/A 
TAGS: PGOV PREL NZ
SUBJECT: WINSTON PETERS' GREATEST POLITICAL CRISIS? 
 
Reftel: Wellington 71 
 
1. (SBU) Summary.  As Prime Minister Helen Clark and Foreign 
Minister Winston Peters prepare to welcome the Secretary of State to 
New Zealand, they find themselves preoccupied with an ugly domestic 
political battle.  FM Peters is fighting off press allegations that 
he failed to disclosure to authorities two separate large donations 
from wealthy supporters.  Clark could sack Peters, but will be very 
reluctant to undermine her slim parliamentary majority.  More 
likely, the controversy will simply drag on, weakening Clark's 
government without forcing an early election.  End Summary. 
 
The Accusations 
---------------- 
 
2. (SBU)  Foreign Minister Winston Peters is embroiled in two 
separate political donation controversies that threaten to hurt him 
and his New Zealand First Party politically and perhaps even 
legally.  After years of attacking others for alleged fund raising 
improprieties and after months of denying press accusations, Peters 
admitted on July 19 to receiving a large donation from New Zealand 
businessman Owen Glenn, a controversial expatriate  billionaire 
(reftel), to a legal defense fund established in Peters' name. 
Subsequently, the press has accused Peters of receiving additional 
large donations from the wealthy Vela family, prominent in New 
Zealand's horse racing industry, which he oversees as Minister of 
Racing.  The size and nature of these political donations may have 
breached both New Zealand parliamentary ethical and legal 
restrictions. 
 
The Consequences 
---------------- 
 
3. (SBU)  If these press accusations are borne out by evidence, 
Peters could face legal action that may force him to resign from 
Parliament or even face criminal charges.  But that prospect is at 
best months or years away.  In the near term, PM Clark faces a 
difficult choice.  If she sacks Peters, she protects her Labour 
Party's hard-won reputation for ethical politics, but she loses her 
governing majority, which is contingent on New Zealand First's seven 
seats.  If she retains FM Peters and his party's support, she opens 
Labour to claims of sleazy impropriety as the election looms with 
the opposition National Party leading in the polls.  Peters has put 
her in a very uncomfortable position. She has sacked Labour Party 
ministers for far less. 
 
Clark Temporizes 
---------------- 
4. (SBU)  While Peters has been in Singapore for the Post 
Ministerial Conference and ASEAN Regional Forum, PM Clark has borne 
the brunt of the questions about Peters conduct in Parliament.  She 
has protected him but also sought to deflect any collateral damage 
to the Labour Party by its association with Peters' New Zealand 
First Party as a Government support partner.  Asked whether she had 
confidence in her Foreign Minister and whether he can credibly 
continue in this role in light of the funding allegations, Clark has 
continued to offer support, albeit cautiously.  She also stated that 
there is an established process to follow in which allegations of 
wrongdoing are investigated and urged that judgment be suspended 
until that process is concluded.  However, if the Peters predicament 
continues to grow then Labour runs the risk of getting dragged down 
by association.  If it comes to this, Clark may be compelled to cut 
Peters loose and ask for his resignation from his ministerial 
responsibilities. 
Short-Term Forecast: More Mud 
----------------------------- 
5. (SBU)  We do not expect either Peters or his media accusers to 
retreat.  Both political sides have been spoiling for such a fight 
for many years.  Clark will avoid making a choice as long as she 
can.  The National Party will enjoy the opportunity to raise further 
questions about the Labour Government and its willingness to honor 
the standards it proclaims.  The most immediate victims of this 
bitter dispute will be substantive discussion and civil discourse. 
MCCORMICK