NEW ZEALAND POLITICAL SCANDAL MAY LOSE THE

C O N F I D E N T I A L SECTION 01 OF 02 WELLINGTON 000889

SIPDIS

DEPT FOR EAP/ANP

E.O. 12958: DECL: 10/21/2014
TAGS: PGOV PREL PHUM NZ
SUBJECT: NEW ZEALAND POLITICAL SCANDAL MAY LOSE THE
GOVERNMENT ITS PARLIAMENTARY MAJORITY


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
the 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