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Electoral Donations from ‘Anonymous Persons’ and the Law Thereon

06/05/2012

Whilst following the media coverage of the Kim Dotcom/John Banks electoral donations saga, I was struck by the notion – from Herr Dotcom allegedly ex-Mr Banks – that a donation of fifty thou to a candidate in a local body election would circumvent obligatory disclosure as to the donor if divied up into two tranches of twenty-five thou each.  As I say, this struck me as odd and I resolved to get my head around the legalities. Here follows the product of my researches.

The law in question is the Local Electoral Act of 2001, prefaced ‘local’ so as not to be confused with the unprefaced Electoral Act of 1993, which is concerned with parliamentary elections. Whereas the Dotcom donation – the fact of which seems not to be doubted in any quarter – was to a mayoral candidate. Auckland to be sure, but local nonetheless.

Part 5 of the Local Electoral Act deals with electoral expenses and starts in s. 104 with some definitions. Relevantly, ‘electoral donation’ is defined as the donation – ie, giving – “whether of money or the equivalent of money or of goods or services or of a combination of those things” of more than $1,000 to a candidate for use in his or her campaign.

And then s. 109 obliges a candidate to submit to the electoral officer of the relevant local body, within 55 days after the election,  a return stating the candidate’s electoral expenses and giving details of every electoral donation and its donor. This is where it starts to get a bit curious. Section 109(1)(c) says that “if an electoral donation of money or of the equivalent of money is made to the candidate anonymously and the amount of that donation exceeds $1,000”, then the return must state the amount of that donation and the fact “that it has been received anonymously”.

Two observations here.  First, since ‘electoral donation’ means any donation of more than $1,000, it is superfluous for s. 109 to specify that a declaration regarding anonymity is required ‘if the amount of that donation exceeds $1,000″. Manifestly, the obligation applies to all electoral donations as defined. Secondly, it may be asked why this requirement does not reach the full definition of electoral donation in s. 104, which extends to ‘goods or services’ or indeed a combination of goods or services with money. There is an inexplicable disconnect between the defintion of ‘electoral donation’  in s. 104 and the obligation to identify anonymous donations in s. 109.

But these oddities don’t impact on the Dotcom/Banks scenario. The amount donated, according to Dotcom, was $50,000 – in money – and so vastly above the minimum disclosure level for the anonymity declaration. What I don’t profess to understand is why it should have made any difference whether the $50,000 was paid by one cheque for the full amount or two for $25,000 each. But if Dotcom is to be believed, Banks told him that by making the two separate payments, both could be treated as having been made anonymously. Manifestly, this is not the case. It also wouldn’t have mattered if Dotcom had written fifty cheques for $1,000 each – since the definition of ‘electoral donation’ extends to just such a case by including “a series of donations made by or on behalf of any one person that aggregate more than $1,000”.

The only explanation that occurs to me is that Banks was anticipating some other unrelated, but also ‘anonymous’, donations of exactly $25,000 each. And that, whereas a Dotcom cheque for $50,000 would stand out like the proverbial and leave little room to doubt the donor’s identity, two payments of $25,000 each would join that select little group and it wouldn’t be possible to know who had given which, specifically.

This line of reasoning might strike one as fatuous yet the media has reported that Banks did indeed receive other – three’s been mentioned – supposedly anonymous donations of exactly $25,000 each.

But anyway, going back to the disclosure obligation, there is another curiosity in the statutory language. As noted above, s. 109 addresses the case where “an electoral donation … has been made anonymously”. No problem here, an appropriate use of the adverb ‘anonymously’ – the person making the donation didn’t furnish their particulars. It was an ‘anonymous’ donation. But then in the next breath, s. 109(1)(c)(ii) requires the candidate to declare that that donation “has been received anonymously”. But presumably the candidate knew who received it – either him/herself or someone acting on his/her behalf. It’s hard to fathom why the writer of these words saw fit to depart from the test stated  just a couple of lines earlier.

The curiosity doesn’t end there. Section 109(2) enjoins the candidate to submit the return “in the form prescribed in Schedule 2 or to similar effect”. Fast forward to Schedule 2. There is little prescription in the form, rather there are directions given as to the content.  And on the question of ‘anonymous’ donations, the direction is thus worded:

If a donation of a sum of more than $1,000 was received from an anonymous person, the amount of the donation must be stated and the fact that the person who made the donation is anonymous must also be stated.

It’ll be noticed that now the ‘anonymous’ test is no longer a donation ‘made anonymously’  and the declaration isn’t that the donation was ‘received anonymously’ but rather that it was made by an ‘anonymous person’. In ordinary parlance, we don’t think of people being anonymous – everyone knows who they are, except amnesiacs. Rather we think of a person acting anonymously. So why this change in the statutory language from s. 109 to Schedule 2? I don’t profess to know. Semantically, Schedule 2 is clumsily worded – the impression is created of different authorship from the section to which it relates.

It may also be noticed that whereas s. 109 seemingly does not require the ‘anonymity’ declaration as regards an electoral donation in the form of ‘goods or services’ – though I doubt this was an intentional omission – that distinction is not anyway carried through to the injunction in Schedule 2. As will be noted, it refers merely to “a sum of more than $1,000”.  Again, and curiously, there is a lack of precision in the drafting of the schedule.

These disparities in the statutory language do not bode well for any prosecution under the Local Electoral Act which might flow from the Dotcom/Banks donation saga. And under s. 134 of the Act, the penalty for the offence of wilful non-disclosure or false disclosure is not without substance – a two-year prison sentence (or a $10,000 fine), putting it on a par with the bribing of voters (see s. 125). There is also a ‘strict liability’ version where knowledge of the falsehood in the return need not be established by the prosecutor (for which the maximum penalty is a $5,000 fine).

It’s not for me to opine on whether John Banks has transgressed the Local Electoral Act vis a vis the Kim Dotcom donation. I do however think that the statutory language affords ample scope for a sharp-minded barrister to drive a coach and six through the statutory test.

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