Archive for 2 May 2012

Money in the Banks (Part #Wha)

As previously reported (Money in the Banks Part #Toru), ACT President confirmed that John Banks had requested Kim Dotcom to split his $50,000 donation into two lots of $25,000, so they could be recorded as “anonymous”. He told Checkpoint’s Mary Wilson,

He has given me an indication as to why he made that suggestion – and that was that he initially was going to put in $25,000 of his own money and he figured that other people should be putting in the same sort of numbers.”

However, in a bizarre twist, that original story has been removed from Radio NZ and has been replaced with this “correction”,


Full Story


The story  “ACT president confirms Banks suggested donation be split” no longer exists on the Radio NZ News page, and the hyper-link goes to the new story, “ACT president ‘mistaken’ over donation comment”.

Audio link: Listen to Radio New Zealand’s political editor on Checkpoint

George Orwell would be doubleplusgood happy at this example of  re-written history – or “error correction”, as it was described in the novel of “1984”.

However, be that as it may, this blogger heard the original interview between Mary Wilson and Chris Simmons, and can confirm that Simmons did say,

He has given me an indication as to why he made that suggestion – and that was that he initially was going to put in $25,000 of his own money and he figured that other people should be putting in the same sort of numbers.”

It occurs to this blogger that Simmons slipped up; inadvertantly stated a truth he did not intend to disclose; and has somehow pressured Radio NZ to remove all traces of that interview from the broadcaster’s website. (A screenshot of the above “correction story” has been kept, in case that story disappears as well. We are living in strange times.)

The issue was discussed on this evening’s  “News and Late Edition”.





Mark H

Related Media

NZ Herald:  Act Party president flip flops on money

Dominion Post: ACT chief retracts statement on Dotcom gift

Dominion Post:  Five questions Banks must answer

NBR:  NBR readers don’t believe Banks

Duncan Garner:  If Banks called Dotcom – he’s gone

Related Blog Posts

Frankly Speaking:  ACT woefully behind the times?

Tumeke:  ACT Party President tells truth then retracts comments #dotcomgate

The Standard:  Resignationwatch: Oopsie

The Dim Post: The source of the Prime Minister’s confusion

Waitakere News: Banks denies engaging in homosexual relationship with Kim Dotcom at SkyCity

Pundit: Why John Key’s doing the right thing, but is still in trouble



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Money in the Banks (Part #Toru)






In an interview on Radio NZ’s ‘Checkpoint’, ACT President Chris Simmons confirmed that ACT MP John Banks did ask Kim Dotcom to split a $50,000 donation in two.

Chris Simmon, ACT Party President

Chris Simmon, ACT Party President

He told Radio NZ’s Mary Wilson,

He has given me an indication as to why he made that suggestion – and that was that he initially was going to put in $25,000 of his own money and he figured that other people should be putting in the same sort of numbers.”

See:  ACT president confirms Banks suggested donation be split

This astounding admission contradicts John Banks’ earlier assertions that he had no knowledge of any donation from Dotcom,

If someone says to me, ‘How can I put money into your campaign?’ what would be wrong with telling them that – if that was that case? “

See: Banks sought split donation: Dotcom

John Key must stand down Banks as a Minister, whilst the matter is investigated by Police. In fact, this blogger goes further; there is now sufficient evidence that John Banks has consistently lied on this issue; provided a false campaign donations return; and tried to cover up the donations from both Sky City and Kim Dotcom.

As John Key said to then-Prime Minister Helen Clark, over Winston Peters,

It is no longer acceptable or credible for Helen Clark to assert a facade of confidence in her Foreign Affairs Minister and to fail to ask the plain questions of him that she has a duty to the public to ask. Helen Clark must stand Mr Peters down as a Minister. That is what I would do if I were Prime Minister. Helen Clark has stood Ministers from Labour down for much less.”

Key is now Prime Minister. He should know what to do next.

See:  Banks denies calling Dotcom over donation

As this blogger wrote in a previous blogpiece ( Money in the Banks ,Part #Rua ); again, Dotcom’s claims are confirmed – whilst Banks’ story changes almost daily.


Previous Blog Posts

Money in the Banks

Key on Banks; Staunch, stupid, or stuck?

John Banks – Demented or Slippery as an eel?!

Money in the Banks (Part #Rua)



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Guest Author: David Cunliffe, Get your invisible hand off our assets

– David Cunliffe, MP for New Lynn, Labour Economic Development Spokesperson



David Cunliffe


You know that at the last election, the one that we lost so badly, nearly 1 million people didn’t vote. Over 800,000 people: a fifth of the population didn’t vote.

Now you know, there are lots of reasons that people didn’t vote, and there were even more reasons why people didn’t vote for Labour. Let me give you just a few.

The major reason that voters didn’t vote for Labour, and sometimes didn’t vote at all, is simply that Labour failed to inspire voters that it was a credible alternative to National.

This is the first of a series of speeches on economic development. I am going to start with the basics – why the invisible hand of the market failed us and why we need a clear and distinct Labour view on economics; why you can’t cut and sell your way out of an economic hole; and what a Labour economic development plan should contain. We need to be clear about the context before we can go on the policy journey.

I want to be clear from the outset that this speech represents my own views and does not pretend to represent overall Labour policy. All policies are being reviewed in the post-election period.

The Invisible Hand

The Labour Party was traditionally a left-wing party. Before we debate the future of the Labour Party, we should define what the terms left and right-wing mean.

Left-wing generally means community ownership and or control and/or responsibility.

Right wing means individual ownership and/or control and/or responsibility. By modern standards, even the National party would have been a left-wing party until the 1990s. That’s because most New Zealanders accepted the idea that the government has not just a right, but also a duty to be there for them.

New Zealanders wisely accepted that finance companies needed regulation. New Zealanders wisely accepted that it was the government’s job to ensure that the electricity didn’t go off. They wisely accepted that it was the government’s job to ensure the children didn’t grow up in poverty, that medical care was available for people who needed it, that decent housing was available for the poor and the elderly.

However, by the 1980s, the New Zealand economic system had grown clumsy and slow. Most people agreed that it was in need of reform. That’s what most people wanted, economic reform. That is, they wanted the existing system, but they wanted it to function more smoothly, more efficiently and more fairly. They did not want it replaced with a system that simply handed over most of the wealth and power to rich people.

Yet, that’s what happened, and to our eternal shame, the Labour Party was the party that introduced many of the so-called economic reforms that have proved so disastrous.

The National Government that followed it took the experiment further; with the ‘Mother of All Budgets’ that savaged social services, more privatization and deregulation, and the odious Employment Contracts Act that set us on the path of becoming a low wage economy.

You hear the National government talking about the need to sell assets because we have so little money in this country. Do you know why we have so little money in this country? It’s because a large percentage of our economic assets are overseas-owned. For example, when the Australian-owned banks make billions in profits here (and it’s up a quarter to a third this year alone). That money isn’t returned to New Zealanders. The money goes straight back overseas.

And, as if that were not bad enough, the National government now wants to sell our other major state assets, which is simply going to mean higher prices for ordinary New Zealanders and it’s going to mean still more profits disappearing overseas. It’s madness, and you know it’s madness and most ordinary Kiwis know it’s madness.

But let’s go back a bit.

I know that most of the people in this room think of the 1970s as a period of long-haired hippies and revolution. However, beneath the events that were happening on the surface, there was a much more sinister revolution going on in the background.

While the hippies were out protesting in the streets, a professor at the University of Chicago called Milton Friedman, was selling his students the idea that taxation was evil and that businesses worked best when they were deregulated.

Does this sound familiar? It should be. The Republican Party in the US, the Conservative Party in England and the Labour Party in New Zealand enthusiastically took up Friedman’s philosophy, which is now called neo-liberalism. Neo-liberalism has become such a dominant economic philosophy that it is now the only economic philosophy taught in many universities.

Friedman revived a belief in the “invisible hand” of the market. It was a fairy tale that Adam Smith had said a century earlier would automatically deliver the best of all possible economic worlds.

Of course many of the rogues who benefited from it have never believed that – they remember how they got rich. However, neo-liberalism was a convenient way of selling the idea of inequality to the masses.

Hands off our assets!

Let me repeat, none of this happened by accident. The people who were the most enthusiastic supporters of neo-liberalism were the people who stood to make the most money from it. Let me give you just one example:

In the 1980s and 1990s, merchant bankers Michael Fay and David Richwhite were advisors to government.

Michael Fay and David Richwhite recommended that the government sell the state-owned New Zealand Rail.

The government agreed and put the company up for sale. Fay and Richwhite and some partners, then purchased New Zealand Rail at a bargain price.

That’s right: Michael Fay and David Richwhite, the consultants that government hired to advise them on state asset sales, advised the government to sell New Zealand Rail, then Michael Fay and David Richwhite bought a large chunk of New Zealand Rail.

The story gets worse: Fay and Richwhite and their partners then sold many of New Zealand Rail’s most valuable assets, such as land, without improving the company as a true rail operator would.

Then, in 1995, Fay and Richwhite sold their shares in New Zealand Rail, having made hundreds of millions in profits.  Because Fay and Richwhite had sold many of New Zealand Rail’s most valuable assets without investing in trains or tracks, New Zealand Rail was virtually bankrupt.

The government was then forced to spend hundreds of millions of dollars of taxpayer money to keep the rail service operating.  Does this sound crazy? It is.

This sort of madness has been repeated all over the world, and it’s always the ordinary taxpayers like you, who end up paying the bills.

Roll the clock forward to the current National Government and nothing has changed except the packaging.

They can try to soft-soap it by calling it the “mixed ownership model”. But you and I and the 10,000 other New Zealanders who marched up Queen Street yesterday to fight it – know it is still privatization.

We know why privatizing our power companies is nonsense.

Generations of Kiwis worked to build up those assets and we don’t need to be told we have to buy them all over again. That’s assuming we could afford them of course.

The fact is that when sold, they will not be state owned enterprises covered by the SOE Act at all – they will simply be companies like any other – in which the taxpayer has a much reduced shareholding.

We know they make a healthy return for the taxpayer now. In fact, over the last three years the total return was around 16% – far higher than the cost of Crown capital at around 6%.

They pay good dividends –over $300m a year for the last four years. But the Government deliberately failed to show that in the Budget documents when it banked the supposed sale proceeds well before the last election.

To complete the hypocrisy, the government is now saying the loss of dividends is so low that no sane buyer would pay the money they want without driving your power prices through the roof.

National tried to buy iwi support by saying treaty rights would be protected. I doubt this, but even if true it would mean the taxpayer bears 100% of that risk including on behalf of the new private investors.

Yet the biggest porky of them all – that the government would retain majority ownership and control. Yeah right. Not when SOEs like KiwiRail are already busy flogging off major components like Hillside Workshops. Not when SOE bosses told Parliament they are free to sell off 100% of subsidiaries.

In other words, the SOEs are like a horse. The government intends selling the horse off bit by bit, leaving the taxpayer owning nothing more than the saddle.

The fact is, this is old fashioned privatization with new spin and the same old result. The people lose. The ticket clippers win (it costs up to $300 million in banker fees to sell the shares!). And the voter is told to “eat that”.

So how do these rogues get away with it?

The answer is twofold: on one hand, the news media has been a solid supporter of neo-liberalism.

Did you know, for example, that British Labour Prime Minister Tony Blair, regularly lunched with Rupert Murdoch, the far-right media boss? Tony, apparently, used to test which policies would be acceptable to Murdoch.

Thus we have a far-right media boss influencing the policies of what was supposed to be the party of the people. It’s shameful.

The second reason these rogues get away with it is because, as the Tony Blair example shows so clearly, the opposition parties, which are supposed to be the solution, too often become part of the problem.

When the right-wing party says that it’s going to cut your leg off, voters want the left-wing party to say that it’s not going to cut your leg off. Voters don’t want to be told that the left-wing party is also going to cut your leg off, but cut it off a bit lower down and give you some anesthetic.

I think that’s a major reason that nearly one million voters deserted us at the last election. It wasn’t because we failed to communicate our policies. Quite the opposite. Those voters saw that our policies – with the exception of asset sales – were mostly the same as National’s. So we can’t really be surprised at the result.

Towards a New Economy

So where to from here? Let’s be absolutely clear – New Zealand cannot cut and sell its way to National’s so-called “brighter future”.

New Zealand cannot simply milk more cows and hope that commodity prices stay up.

Nor can we pretend that mining national parks won’t destroy our precious global brand.

National has no new ideas and no credible plan. It has laundry lists of actions, many of which take us in the wrong direction.

The reason is that they still fundamentally believe that some combination of the “invisible hand” of free markets, and the “sleight of hand’ of dirty deals with casinos, dotcoms, film and media magnates, and telcos, will do the job.

The good news, if you can call it good news, is that the economic myths that drove the world into this current mess are starting to unravel. Let me quote economics writer Bernard Hickey, who regularly contributes to the New Zealand Herald:

It’s time for me to say what I’ve been thinking for months: the economic god of completely free markets and capital flows is not worth believing in any more.

I think the Global Financial Crisis …has demonstrated the failure of the economic model most New Zealand policymakers have adhered to for nearly 3 decades.

I think we need to rethink the way we run monetary policy, the way we allow foreign ownership of assets, the way we encourage savings, the way our financial institutions are regulated and [to] change the things we are aiming for.”

All around the world, this realization is sinking in: the unregulated marketplace has been a disaster, and the costs have always been borne by ordinary people.

Europe’s current economic crisis was caused by bankers who loaned money on riskier and riskier ventures until the whole structure collapsed.

Were those bankers jailed and their assets seized? Of course not. Instead of the bankers paying the bills for their reckless speculation, the ordinary taxpayers are being screwed, left, right and centre.

And you know what? Despite all the promises that the European economic austerity measures would turn this tragic situation around, the opposite is occurring.

Austerity economics does not work. It did not work in the Great Depression of the 1930s and it will not work in the Great Recession of the current decade.

When you start closing down your government services and firing your workers, those people have no money to spend. Because they have no money to spend, the local businesses suffer. So they start firing staff. And so the economy goes into deep recession, with no easy way out.

Am I the only one who thinks this is complete lunacy?

You know, these problems that we face today stem from a lack of appropriate regulation or a lack of enforcement of existing regulations.

The global financial crisis was caused by unregulated banking. Leaky building syndrome was caused by deregulating the building industry. The Pike River mining disaster has raised numerous questions about deregulation of the mining industry. Does anyone still seriously believe that big business can be safely left to regulate itself?

Yet, regulation has become a dirty word.

Do I favour regulating the lives of ordinary New Zealanders? Certainly not: I have great faith in ordinary New Zealanders.

Do I favour supporting positive businesses? You’re damned right I do. Businesses help create jobs and economic growth. I want to see a future Labour government get stuck in and do more to help the economy grow.

Do I support all businesses? No way. Businesses that let workers die unnecessarily, or abuse and exploit their workers, or steal from old people: all these business need a strong, legal response from the state.

All this requires regulation, and it’s there to protect ordinary people from becoming victims of greed.

Labour is strong on encouraging positive business and positive economic growth. And Labour is also about legislating to control negative businesses and their effects on our people and our environment.

Caught between a naïve belief in free markets and direct pressure from vested interests, National is unwilling to confront the downsides of unregulated markets.

Fortunately we’re not. And an increasing number of journalists and politicians are saying what ordinary people already know: that the economic policies of the last 30 years have mostly been an unmitigated disaster.

But you’d never know this if you listened to John Key. Like a quack doctor whose cure has failed, his response is to double the dose until the patient is dead.

Sorry, John, but let me quote Sir Winston Churchill:

“The truth is incontrovertible, malice may attack it, ignorance may deride it, but in the end; there it is.”

No matter how many politicians and economists still defend the economic policies that led us into this mess, the truth is steadily showing itself.

You know, there’s not much difference between a Wellington school teacher struggling to find an affordable home and a Northland freezing worker who’s just lost his job. Whether we earn our living by our hands or by our words, we’re all working people, whose lives have grown harder and whose world has grown steadily darker. We’re all in this together.

We all resent those who squander our tax dollars by helping out large corporations, while we struggle to pay our mortgages. We all resent those who seek to sell the very state assets that help keep us afloat. We all resent those who claim to represent us in Parliament, but who really represent the rich and the powerful, at our expense

Instead of National’s failed economic model, we need a simple, credible economic development plan that serves the interests of all New Zealanders.

One that keeps more of what we earn here in the country we love.


I believe the Labour Party is now uniquely positioned to take up the reins when this current government’s policies collapse under their own weight.

Labour has a new leader with strong values, who’s focused on reconnecting with the voters and has the courage to stand up to bullies. It’s up to us, as a Party, to share with our leader, our hopes, our fears and our dreams, to reconstruct the Party from within, to reclaim our natural constituency of decent, ordinary New Zealanders who believe in fairness and hard work.

Now it’s up to us to turn this around: a hard task, but not an impossible one.

When Labour proposed a nuclear-free policy, it was seen as an impossible dream. Yet nearly thirty years’ later, this dream is a solid reality, and it’s helped protect us from the sort of nuclear disaster that Japan has just endured.

The New Zealand Labour Party faced enormous pressure, from inside and outside New Zealand, to back down and change its anti-nuclear policy.

But we didn’t. And we don’t have to back away from creating policies that can turn us away from the economic insanity of the last three decades. New Zealanders are decent, fair-minded, hard-working people. We want a government that reflects our own uniquely Kiwi values.

It’s going to be hard, but we’re not afraid of hard work. With your help, and the help of the people of New Zealand, we can win the next election.

We can move forward to a future that rewards hard work and stops rewarding dishonesty. That gives the poorest of our citizens the chance to a decent life. That gives us all a chance to live in a nation that was once called ‘God’s own country.”

We can become God’s own country again. Thank you.





Speech by  David Cunliffe, MP for New Lynn, given to the New Lynn Women’s’ Branch, New Zealand Labour Party, 29 April 2012. Reprinted with permission.



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Money in the Banks (Part #Rua)



John Banks has dug himself further into a hole by stating yesterday,

If I had have quite specifically and quite easily answered all of those questions upfront, contrary to the legal advice, then I wouldn’t find myself in this situation where people think I’m obfuscating. I shouldn’t have taken that legal advice, I should have answered questions much more straightly.”

See: Banks’ Dotcom call: ‘I’d do it again‘ (1 May 2012)

Banks is using the excuse that he received “legal advice” which advised him not to say anything to the media (1 May),

I could have quite easily answered all of those questions up front, contrary to the legal advice.  I have never had any problem answering questions in a very straight manner…that is why the public will be surprised I took the legal advice literally, not to jeopardise any inquiry.”

See: Banks ‘regrets’ legal advice to stay silent (1 May 2012)

To understand why that excuse is about as flimsy as wet toilet paper in a sewarage pond, one has to look back at the timelime of this scandal.

TV3 broke the story of Banks failing to declare  the source of Sky City’s donation on 5  April.

See:  Banks accused of failing to declare donation (5 April 2012)

At that point there was no knowledge or mention of any other dodgy donations.

Twentytwo days later, TV3 again broke the story that Banks had received donations from web entrepreneur, Kim Dotcom, and had listed them as “anonymous”,

Kim Dotcom is the latest person to have been found to have allegedly donated money anonymously to John Banks.

It is already known that in the race to be super city mayor, Sky City donated $15,000 each to the two front runners.

Len Brown listed Sky City as a donor but Mr Banks did not.

Campbell Live was interested in that because we had heard Kim Dotcom had made a donation three times that size to the John Banks mayoralty campaign.

Campbell Live has even been told Mr Banks was so grateful that he called Dotcom to thank him for it.

An investigation found that like the Sky City donation, the Dotcom donation appears to be listed as anonymous.

The question is why?”

See: Banks knew about ‘anonymous’ Dotcom donation – reports (27 April 2012)

That TV3 report is time-stamped on the TV3 news website at 7pm. In a phone call, the following exchange takes place,

Campbell: Did you ever helicopter out there?

Banks: I… don’t remember that. I mean, I had my own helicopter or course – I was flying, myself.

Campbell: Did you ever land it at his house or go out there in a helicopter?

Banks: I don’t recall…

Campbell: You’d remember that – you’d remember that surely if you helicoptered into the Coatsville mansion. You would surely remember that?

Banks: I can’t recall whether I did or not…

Campbell: What, you can’t recall if you flew a helicopter into the Coastville Mansion of Kim Dotcom?

Banks: No, no.

See: Ibid

Now the interesting thing here is that given that phone call, which was aired after 7pm on Friday 27 April – how could John Banks have had time to consult a lawyer for legal advice?

There was no mention of any police investigation until the following day, on Saturday 28 April, when told RadioLIVE,

If and when the police want to come and see me and talk to me, I’m very happy to do so.”

And if, as he claims, he had somehow managed to consult a lawyer prior to John Campbell speaking to him on the phone on Friday 27 April, why did Banks continually state “he could not remember” instead of  “the matter is currently under Police invesigation and I have been advised by legal counsel not to make any public statements at this point”. Or even a simple “no comment”?

Because the reference to so-called “legal advice not to talk publicly” doesn’t surface until Tuesday 1 May – some  four days later. In those four days, Banks keeps insisting that “he can’t remember”, “he can’t recall”.  He makes no reference to this mysterious “legal advice” until four days later.

It is the opinion of this blogger that Banks’  did not have any legal advice when John Campbell first phoned Banks on 27 April.

It is the opinion of this blogger that Banks’ continuing claim that he “could not remember” was a weak attempt at obfuscation  and not based on any manner of  “legal advice”.

Furthermore, one has to question that if John Banks is being truthful and Kim Dotcom is lying – what would be the point of requiring “legal advice”? Legal advice for what?

It should be noted that thus far, not one claim made by Kim Dotcom has been proven to be incorrect or  lie.

On the other hand, despite Banks first claiming that he did not phone Dotcom to thank him for the $50,000 donation – he now admits to  phoning the entrepreneur to thank him for sponsoring  a  fireworks display  in 2010, estimated to cost about $500,000.

See: John Banks dined at mansion, gave advice on Dotcom residency

Interestingly, at first Banks couldn’t recall phoning Dotcom. Now he not only recalls that he did – but remembers the substance of that phone conversation?!

How does that work?

Banks himself admits to lying – on legal advice,

If I had have quite specifically and quite easily answered all of those questions upfront, contrary to the legal advice, then I wouldn’t find myself in this situation where people think I’m obfuscating.”

See: Banks’ Dotcom call: ‘I’d do it again

This blogger has never heard of  “legal advice” that advises a client to deliberately lie. Legal counsel usually advise a firm “no comment”, and say nothing further.

Furthermore,  Banks at first said “his contact with Dotcom was limited to 20 minutes conversation and he had been to Dotcom’s mansion in Coatesville only once for dinner“.

See: Banks sought split donation: Dotcom

Since then, Banks has admitted several visits to Dotcom’s Coatsville mansion; possibly two phone calls; and advocating on behalf of the entrepreneur by phoning Minister Maurice Williamson,

One, because he had been particularly generous to New Zealand; two, he was an entrepreneur who came to New Zealand to live in this home and do great things for New Zealand; three, he was a New Zealand resident; and four, I could see no reason a New Zealand resident … shouldn’t be able to buy property here.”

See: Banks: I didn’t lie, I simply forgot

Again, Dotcom’s claims are confirmed – whilst Banks’ story changes almost daily.

I leave the final comment, to the Prime Minister,

If he’s complied with the law, some people might not like it but he’s complied with the law, and you wouldn’t sack a minister for complying with the law of New Zealand.”

See:  previous Blogpost on Pansy Wong, Richard Worth, and Phil Heatley





Banks knew about ‘anonymous’ Dotcom donation – reports (27 April 2012)

Police expected to investigate Banks’ campaign donations (28 April 2012)

Banks regrets not being up-front over donations (1 May 2012)

Banks’ Dotcom call: ‘I’d do it again‘ (1 May 2012)

Banks ‘regrets’ legal advice to stay silent (1 May 2012)

John Banks: I briefed Dotcom (2 May 2012)

Banks: I didn’t lie, I simply forgot (2 May 2012)

Previous Blogposts

John Banks – Demented or Slippery as an eel?!

Key on Banks; Staunch, stupid, or stuck?

Money in the Banks

.Banks: I didn’t lie, I simply forgot


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