John Banks' political epitaph lies in the hands of a High Court judge. Will it be "John Banks, retired as MP in September", or "John Banks, kicked out of Parliament in June"?

Now that the evidence has been given and the closing arguments made, John Banks' fate lies in the hand of a High Court judge. In some ways, the outcome doesn't matter all that much for national politics - even if Banks is found guilty and so has to step down from Parliament under s.55(1)(d) of the Electoral Act,* he was going to retire in September anyway and National can carry on in Government until then with the Maori Party's support. But it's a big deal for him personally. So what might be going to happen?

[Please note if your name is Justice Edwin Wylie: I know that the law on contempt of court in relation to publications about judge-alone trials is a bit iffy, but for the sake of not getting me into any possible trouble, could you please stop reading this right now?]

Let's start with the basics. To obtain a conviction, the prosecution must show two things:

(1) The donations given to Banks by Dotcom and/or Sky City were not "anonymous", and so his return of donations was false;

(2) That Banks knew that this return of donations was false.

Then lets take each of those in turn. Were the donations to Banks "anonymous"? Well, as I wrote back in April last year (note that the law has changed since then, so the embedded links may not work):

The Local Electoral Act 2001, s.109(1)(c) says that "electoral donations" of more than $1000 that are made "anonymously" simply need to be reported in the candidate's election expenses return as coming from an "anonymous" source. And s.5 defines "anonymous" as: "in relation to an electoral donation ... , means a donation that is made in such a way that the candidate concerned does not know who made the donation."

So a local body candidate legally can meet with a potential donor, tell that donor "here's what to do if you want to avoid having your name appear in my return of election expenses" and then go off and leave the donor to deal with those who are in charge of the campaign's financial affairs. And even if the candidate subsequently learns a large "anonymous" donation was made to her or his campaign in the days after the conversation, the candidate can claim not to "know" who it came from. And then that donation only needs to be reported to the public as being "anonymous" in nature.

That's not exactly what happened in Banks' case. He clearly was more involved in the donation solicitation and gathering process than my hypothetical account. What we know is that the Dot Com donation was made to Banks' campaign account in two lots of $25,000 following Banks' visit to Dot Com, and that the Sky City donation was made to Banks directly by way of a $15,000 cheque in an envelope. But in neither case do we have direct evidence that Banks knew for certain the existence of Dot Com's donation or the amount of Sky City's donation, or that he talked about any donations with his campaign treasurer after they were made.

Which raises the question. Does the prosecution have to show that Banks knew the particular details of each donation in question (i.e. how much it was for, and that it definately had been paid over to his campaign account), or is it enough that Banks knew that some sort of a donation of a disclosable amount was being made by a donor (or definitely was going to be made in the future)? Because if it's the former, it may well be that these donations actually were "anonymous" under the law at the time (crazy as that may sound), meaning that the return he signed actually wasn't false.

On this, I'd suggest that it's more likely that the Dot Com donation was "anonymous" than was the Sky City one. Because let's assume everything Dot Com alleges is true (a big assumption, and one that Banks' lawyer did a good job of calling into question). Let's say Dot Com promised $50,000. And let's say Banks told him how to split it up. And let's also say that he did thank Dot Com for his support (or, at least, promised support) afterwards. That still leaves a reasonable doubt that Banks knew Dotcom had actually in fact followed through on his promise and paid over the promised money into the campaign account. And absent that knowledge, isn't the donation still "anonymous"?

With Sky City, however, it's a bit tougher to claim that Banks didn't "know" that what was in the envelope put directly into his hand. Sure, he might argue that it could have been a cheque for $1000 or less, but ... really? Doesn't that stretch the boundary of "know" beyond the point of credibility?

What, then, of the second part of the offence - that Banks also must be shown to have known that the return was false. Well, I think the evidence from Banks' treasurer makes it clear as a matter of fact that Banks didn't read the return. Or, at least, I can't see how after that evidence you can say beyond a reasonable doubt that he did in fact read it. Does that then mean he could not possibly know that the return was false?

Well, maybe not. Because what the prosecution has argued is that Banks so orchestrated his fundraising that he must have known the return would be false, whether or not he read it. And he did so by witholding information about his state of mind - the fact he "knew" the identity of some donors - from his treasurer, thereby leading his treasurer to falsely record the donations as being "anonymous". So the reading/not reading is irrelevant, rather it's the totality of Banks' behaviour that matters.

Well, maybe. But that requries us to think that Banks was acting in a quite calculating and deliberately deceitful way. I instead suspect that what we see here is pure sloppiness in the hustle and bustle of a very busy campaign process. Banks met with Dot Com and got offered a lot of money. So he applied the template response that his campaign had set up at the beginning - ask for $25,000 chunks - and then left Dotcom to do as he wanted. He didn't check to see how much Dotcom gave, so he never "knew" about any subsequent donations, so he had nothing to tell his treasurer. Sky City handed him an envelope, but concious of the campaign's general policy that the candidate doesn't handle cash, he gave it to someone else to process. What the Treasurer then did with the donation, and in particular how it was recorded, is not something he thought about. Then, because Banks assumed he was following "the rules" the campaign team had agreed on (even though he sloppily hadn't done), he believed that the accounts kept by his treasurer correctly reflected the financial position of the campaign.

As such, my prediction is that Banks will be found not guilty. Which doesn't mean he didn't do anything wrong - the insight into his campaign practices is not a particularly pretty one. But there's enough legal doubt about a quite loose regulatory regime to allow him to escape criminal liability.

 

* I'm going out on a limb here and predicting that if Banks is found guilty, there's no way a Judge will discharge him without a conviction on this offence.

Comments (15)

by Rich on May 29, 2014
Rich

The "not reading" is problematic. The law requires a candidate (not their agent or other functionary) to file a declaration. Doesn't the act of filing a signed declaration imply responsibility for it, even if one is reckless or trusting enough not to read it? (This certainly applies for tax returns, but maybe the tax laws impose strict liability?)

If he objected to fulfilling his requirement to check the return, he could have written "signed but not read" across it - but then wouldn't the election officials have rejected it as invalid?

 

by Andrew Geddis on May 29, 2014
Andrew Geddis

Rich,

You aren't deemed to have read and know about the contents of the return, even if you sign it. You must actually know that it is false.

There is a lesser offence of transmitting a false return without doing all possible to ensure it is accurate. However, there was a six-month time limit on that offence, so Banks couldn't be charged with it.

by Chris de Lisle on May 29, 2014
Chris de Lisle

So an electoral candidate should never actually read the returns they sign? Why do we get them to sign them, then?

by Andrew Geddis on May 29, 2014
Andrew Geddis

So an electoral candidate should never actually read the returns they sign? Why do we get them to sign them, then?

Because the Electoral Commission (or other administrative body) tells them to. But nothing in the law says that once a candidate signs the form, they are deemed to know everything in it. It just creates a presumption that they do - which they can rebut through a story like Banks and his Treasurer told.

Note, however, this story would not have gotten Banks off the lesser charge (in fact, it would have proven it).

by Ian MacKay on May 30, 2014
Ian MacKay

At a tangent but if I sign a delaration on say an insurance policy, and not including something that may interfere with a later claim, I can claim that because I didn't read the declaration it was not a binding document? Sounds OK to me. Don't ever read anything before signing.

by Andre Terzaghi on May 30, 2014
Andre Terzaghi

Would being found guilty of the proven lesser offence have disqualified Banks from being a Minister? Or could Key have just lifted his already impressive shamelessness another couple of notches and continued to claim Banks was worthy of the title "Honourable"?

by Andrew Geddis on May 30, 2014
Andrew Geddis

@Ian,

No. Your insurance document is a contract. That's not the same thing as a criminal charge.

@Andre,

No. It didn't carry a jail term of 2 years.

by Siena Denton on June 01, 2014
Siena Denton

"Well, maybe. But that requries us to think that Banks was acting in a quite calculating and deliberately deceitful way".

"It was also discovered that [John Banks] also solicited radio advertisements declared as anonymous. But charges could not be brought against him because of a time bar in the Local Electoral Act".

"In July, Prime Minister John Key said: ''The law literally is an ass in this particular case.'' But the Government would only make changes if it could find the time".

Local body campaign donation rules tightened

http://www.stuff.co.nz/national/politics/7660653/Local-body-campaign-donation-rules-tightened

The "law" is not the only "ass" when it came to "The review shows that it is well and truly time to ditch the so-called 'coat-tails clause' to avoid stitch-ups like the deal done over the tea cups by John Key and John Banks last election,Mr Shearer said".

MMP review recommends lower party threshold.

http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10845302

 


 



by Rich on June 03, 2014
Rich

But with a tax return, for instance, I'd be liable for penalties and prosecution if it contained undisclosed income I didn't inform my accountant of?

Or a driving license application: Could I have an assistant file one that contains a false declaration of some sort and avoid liability by not reading it?

by Andrew Geddis on June 04, 2014
Andrew Geddis

@Rich,

I don't know. You'd have to look at the relevant offence provisions in each case. It would be wrong to assume that the same requirements for a conviction exist in all of them.

WHat does exist in Banks' case is actual knowledge of a wrongful return. A signature on the bottom does not prove this. 

by Richard Aston on June 05, 2014
Richard Aston

Well well well!

So we wait until 1 Aug to find out if the guilty verdict becomes a conviction.

We puzzles me I thought guilty meant convicted , but hey ...

 

by BeShakey on June 05, 2014
BeShakey

We puzzles me I thought guilty meant convicted , but hey ...

s106 of the Sentencing Act allows a discharge without conviction where "he court is satisfied that the direct and indirect consequences of a conviction would be out of all proportion to the gravity of the offence". It sometimes comes up where the offender is young and a conviction would have a disproptionate effect on their future (less relevant with clean slate legislation) or their occupation requires them to travel frequently and a conviction would prevent them doing so.

The judge has asked for a report on whether Banks is suitable for home detention. Given that home detention is only available where the offender would otherwise have received a short sentence of imprisonment (up to two years), I think we can be as certain as it's possible to be that he won't be discharged without conviction.

by Richard Aston on June 06, 2014
Richard Aston

Thanks BeShakey for the clarification. Why couldn't the judge just find him guilty and convict Banks on the same day, why wait until 1 Aug ? 

Not sure if I am right but politically if he was convicted now he would have to leave parliment but by 1 Aug  the house has risen so ...

by BeShakey on June 06, 2014
BeShakey

Probably best to ask a lawyer, but my guess is that the fact the defence said they would be lodging a request for discharge without conviction meant he had to give them an opportunity to prepare that submission. So perhaps more a case of some clever maneuvering by the lawyers rather than anything odd on behalf of the judge.

by Rich on June 06, 2014
Rich

The judge wrote at some length about "wilful blindness". Which clarifies it for me at least - if you "deliberately remain in ignorance" about a matter you should know about, than can amount to knowledge. 

 

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