WikiLeaks: NZ political scandal may lose the govt majority

This is one of the diplomatic cables about New Zealand held by Wikileaks.

22 October, 2004 SUBJECT: NEW ZEALAND POLITICAL SCANDAL MAY LOSE THE GOVERNMENT ITS PARLIAMENTARY MAJORITY

This record is a partial extract of the original cable.

The full text of the original cable is not available.

Classified By: POLITICAL COUNSELOR KATHERINE B. HADDA, FOR REASONS 1.5( B,D)

1. (C) Summary: Recent allegations concerning New Zealand Labour Government Minister John Tamihere's relationship to his former place of employment could result in a by-election, whose loss would end Labour's single-vote Parliamentary majority. This would force the Government to revise its political agenda in a pre-election year, in order to attract another coalition partner. Tamihere took leave from his Ministerial portfolios October 15 amidst allegations related to illegal payments he received from the Waipareira Trust, where he was CEO until entering Parliament in 1999. Opposition politicians are demanding Tamihere's dismissal.

The Government has instead appointed a Queen's Counsel to investigate the allegations, a six-week process no doubt born of a wish to avoid having a non-Labour candidate take his seat. This may well be postponing the inevitable, however. Labour's relatively slow response to the allegations,probably due to the absence of Prime Minister Clark, has compounded the Government's woes. End summary.

2. (U) ACT party leader Rodney Hide, well-known for his"perk-busting" persona, unveiled allegations October 14 that Tamihere accepted a NZ$195,000 "golden handshake" from his former employer, the Te Whanau o Waipareira Trust in 2000, despite a public statement a year earlier that he would not accept the payment. Further allegations claim Tamihere did not pay tax on his "handshake" funds and also received questionable auto insurance and other personal payments by the Trust while he was in Parliament. No one in Government has denied that Mr. Tamihere took the initial payment after stating that he would not. However, Tamihere has denied any wrong-doing, pointing to investigations into the payment in 2000 by the Serious Fraud Office, NZ Police, Audit Office, Prime Minister's Department and a Maori Affairs select committee over trust affairs, none of which found evidence of wrong-doing. Both he and the Trust maintain that the payments were delayed compensation for work done prior to his entry into Parliament, not for his services while in Parliament. Tamihere also maintains that he believed the Trust had already paid tax on the sum.

The Players: Waipareira Trust -----------------------------

3. (U) Tamihere was CEO of the Waipareira Trust for ten years, prior to entering Parliament in 1999. The Trust was established to provide economic, social and employment support to the high number of Maori who relocated to West Auckland in the 1950s. Ironically, the audit of the Trust's finances that uncovered the payment originated with a letter from Tamihere to auditing firm Deloitte, accusing the Trust of mismanagement and corruption, and demanding accountability. As a result of the letter, Deloitte extended he initial audit to cover seven years, which included a portion of Tamihere's tenure as CEO.

The Players: John Tamihere --------------------------

4. (SBU) Tamihere enjoys a reputation as a live-wire, and is seen as a "bloke" in a largely female, intellectual, and politically-correct Government. Prior to entering Parliament, he received four DUIs, and has had three speeding tickets while in Parliament. Tamihere is widely regarded as being the voice of urban and modern Maori, and his political views, which focus on the need for Maori to improve their economic status through hard work and not handouts, resonate with more right-wing audiences. He has often been touted as a possible first Maori Prime Minister for that reason.

Direct Political Consequence ----------------------------

5. (SBU) Tamihere's potential resignation would not just be a blow to the Labour Government's standing: it could have a direct effect on its ability to govern. Tamihere's Tamaki Makarau seat is one of seven in Parliament designated specifically for Maori. Public polling puts the newly-formed Maori Party, whose candidate is likely to be Party co-leader Pita Sharples, within 4 points of Tamihere if a by-election were held. The Labour coalition currently governs with a one-vote majority: Labour (51 seats), Progressive Coalition (2) and United Future (8). Without Tamihere, Labour would need either the Greens (9 votes) or NZ First (13 votes) to maintain a majority. Neither Party's quid pro quo for confidence votes fits comfortably with Labour's agenda.

Opposition Reaction -------------------

6. (C) The Opposition National Party, after a long silence and disjointed statements, has focused on attacking Labour in Parliament - repeatedly questioning the absent Prime Minister's (Clark is on a trip to India) confidence in Tamihere. Revisiting the race relations issue that shot his Party up in the polls, Opposition leader Don Brash has also accused Labour of a "double-standard" in its treatment of allegations against Maori versus non-Maori MPs. Labour MPs and staffers, including acting PM Cullen, have responded with a nasty offensive - offering theories that Maori Party sympathizers in the Trust have worked to undo Tamihere, and trying to focus attention on similar National Party scandals of past years. NZ First Party leader Winston Peters, quick to attack Tamihere over the scandal, has also been quick to assure his constituency that should Labour lose the by-election, the Party should still serve the remainder of their three-year term. (Note: Peters has been open in his dislike of National, and is likely hoping to resume his king-maker persona and throw his party's 13 votes behind Labour.)

7. (C) Comment: Prime Minister Helen Clark's absence may have slowed Labour's reaction to the scandal, compounding the beating the Government has taken in Parliament and the media. Clark has demoted Ministers for lesser offenses, and is respected for her ability to achieve Party discipline. Tamihere's reputation as a rebellious MP makes it likely that Clark will at a minimum bump him to the backbenches, rather than sustain continued Opposition attacks. Should Tamihere be cleared of the charges, his widespread popularity as a Maori leader could see him rehabilitated at the 2005 election. Given the mounting allegations against him, however, we regard that as unlikely.

Swindells

ENDS

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