R v Zhang
[2022] NZHC 2541
•5 October 2022
ORDER PROHIBITING PUBLICATION OF NAMES OR IDENTIFYING PARTICULARS OF C, H, W AND TWO CONNECTED PARTIES PURSUANT TO SS 200 AND 202 OF THE CRIMINAL PROCEDURE ACT 2011 UNTIL HEARING OF APPLICATION(S) FOR PERMANENT NAME SUPPRESSION. IN THE HIGH COURT OF NEW ZEALAND AUCKLAND REGISTRY
I TE KŌTI MATUA O AOTEAROA TĀMAKI MAKAURAU ROHE
CRI-2020-004-806
[2022] NZHC 2541
THE KING v
YIKUN ZHANG, SHIJIA (COLIN) ZHENG, HENGJIA (JOE) ZHENG, C, H, W and JAMI-LEE MATENGA ROSS
Hearing: 26-29 July, 1-5 August, 8-12 August, 15-17 August, 22-26 August,
29-30 August, 1 September, 5-8 September 2022
Counsel:
P Wicks KC, J Dixon KC, K Hogan, K Bannister and H Moore- Savage for the Crown
J Katz KC, B A Keown, L Lindsay and N Small for Mr Zhang P Dacre KC and W Andrews for Shijia (Colin) Zheng
R L Thomson and A Young for Hengjia (Joe) Zheng S Lowery and J Suyker for C
M Corlett KC and C Agnew-Harington (until 9 August 2022) for H
SNB Wimsett and Y Y Mortimer-Wang for W R M Mansfield KC and H C Stuart for Mr Ross
Verdicts:
5 October 2022
Reasons:
5 October 2022
REASONS FOR VERDICTS OF GAULT J
R v ZHANG [2022] NZHC 2541 [5 October 2022]
TABLE OF CONTENTS
SUMMARY [1]
JUDGE-ALONE TRIAL [6]
TRIAL PRINCIPLES [13]
Presumption of innocence [14]
Separate trials [17]
Evidence – not prejudice or sympathy [18]
Circumstantial evidence and inferences [19]Lies [20]
No previous convictions [21]
Expert evidence [22]
Cultural issues [23]
Question trail [24]
ELEMENTS OF OBTAINING BY DECEPTION [25]
Benefit [27]
Fraudulent stratagem [30]
Intention to deceive [31]
Material cause [32]
Reasonable foreseeability [33]
Claim of right [40]
Party liability [42]
ELECTORAL ACT REQUIREMENTS [49]
THE FACTS [59]
Translation [60]
The defendants [65]
Teochew Convention bid [74]
March 2017 donation to Labour Party [76]
Labour Party’s Party Donations and Loans Return [137]
Labour Party’s February 2020 enquiries [146]
June 2017 donation(s) to National Party [183] National Party’s 2017 Party Donations and Loans Return [196] September 2017 donation to Labour Party [200] Labour Party’s Party Donations and Loans Return [227] June 2018 donation(s) to National Party [228] National Party’s 2018 Party Donations and Loans Return [284] Mr Zhang’s Royal Honour [286]
Ms Zhang’s building agreement [292]
SFO interviews of Mr Colin Zheng and Mr Joe Zheng
Mr Joe Zheng’s first interview [305]
Mr Colin Zheng’s interview [309]
Mr Joe Zheng’s second interview [312]LABOUR PARTY DONATION CHARGES
Charge 1: obtaining by deception [314]
Mr Zhang
Benefit [315]
Engaged in fraudulent stratagem [329]Intent to deceive [343]
Causation [346]
Reasonable foreseeability [350]
Claim of right [351]
Party liability [353]
Mr Colin Zheng
Benefit [354]
Engaged in fraudulent stratagem [357]Intent to deceive [361]
Other elements [362]
Mr Joe Zheng
Benefit [364]
Engaged in fraudulent stratagem [367]Intent to deceive [371]
Other elements [372]
C
Benefit [374]
Engaged in fraudulent stratagem [377]Intent to deceive [393]
Other elements [394]
H
Benefit [396]
Engaged in fraudulent stratagem [399]Intent to deceive [423]
Other elements [424]
W
Benefit [426]
Engaged in fraudulent stratagem [429]Intent to deceive [455]
Other elements [456]
Charge 2: obtaining by deception – as an alternative to charge 1 [458]
Mr Zhang
Benefit [459]
Other elements [475]
Mr Colin Zheng
Benefit [477]
Other elements [480]
Mr Joe Zheng C
Benefit [482] Other elements [485] Benefit
[487]
Other elements [490] Benefit
[492]
Other elements [495] Benefit
[498]
Other elements [501]
H W
NATIONAL PARTY DONATION CHARGES
Charge 3: obtaining by deception [504]
Mr Zhang
Benefit [505]
Engaged in fraudulent stratagem [508]Intent to deceive [524]
Other elements [525]
Mr Colin Zheng
Benefit [528]
Engaged in fraudulent stratagem [529]Intent to deceive [535]
Causation [536]
Other elements [537]
Mr Ross
Benefit [539]
Engaged in fraudulent stratagem [540]
Intent to deceive [547]
Other elements [548]
Charge 4: obtaining by deception – as an alternative to charge 3 [551]
Mr Zhang [552]
Mr Colin Zheng [554]
Mr Ross [555]
Charge 5: obtaining by deception [557]
Mr Zhang
Benefit [558]
Engaged in fraudulent stratagem [561]Intent to deceive [570]
Causation [571]
Other elements [572]
Mr Colin Zheng
Benefit [574]
Engaged in fraudulent stratagem [575]
Intent to deceive [579]
Causation [580]
Other elements [581]
Mr Joe Zheng
Benefit [583]
Engaged in fraudulent stratagem [584]Intent to deceive [588]
Causation [589]
Other elements [590]
Mr Ross
Benefit [592]
Engaged in fraudulent stratagem [593]
Intent to deceive [612]
Other elements [613]
Charge 6: obtaining by deception – as an alternative to charge 5 [615]
Mr Zhang [616]
Mr Colin Zheng [617]
Mr Joe Zheng [618]
Mr Ross [691]
ELEMENTS OF SUPPLYING FALSE OR MISLEADING
INFORMATION TO THE SFO [621]
SFO ACT CHARGE
Charge 7: obstructing investigation by supplying false or misleading information [623]
SUMMARY
[1] Following investigations by the Serious Fraud Office (SFO) into political party donations to the National Party and the Labour Party, the Crown alleges that the defendants adopted a fraudulent device, trick, or stratagem to deceive by providing sham names of purported donors below the $15,000 disclosure threshold in the Electoral Act 1993, amounting to an offence of obtaining by deception under s 240(1)(a) of the Crimes Act 1961, as follows:
(a)Mr Yikun Zhang (Mr Zhang), Mr Shijia (Colin) Zheng (Mr Colin Zheng), Mr Hengjia (Joe) Zheng (Mr Joe Zheng), C, H and W1 face two alternative charges of obtaining by deception in relation to a payment of $60,000 to the Labour Party in March 2017 for the purchase of five paintings, which amounted to a donation of $34,840 after deducting the value of the paintings;
(b)Mr Jami-Lee Ross (Mr Ross), Mr Zhang and Mr Colin Zheng face two alternative charges of obtaining by deception in relation to a donation of $100,000 made to the National Party in June 2017; and
(c)Mr Ross, Mr Zhang, Mr Colin Zheng and Mr Joe Zheng face two alternative charges of obtaining by deception in relation to a donation of $100,050 made to the National Party in June 2018.
[2] In each case, the Crown case under s 240(1)(a) is based on obtaining a “benefit”. The alternative charges allege a different benefit – either the Party’s possession of the donation or the true donor’s freedom from public scrutiny.
[3] Mr Joe Zheng also faces a charge of supplying false or misleading information to the SFO under s 45(a) and (d) of the Serious Fraud Office Act 1990 (SFO Act).
[4]Today I returned the following verdicts:
1 Where the defendants and others of Chinese origin use anglicised names with surname last, I do the same for consistency and meaning no disrespect.
Charge Description Verdict Charge 1 March 2017 donation to Labour Party – benefit to Party Mr Zhang Not guilty Mr Colin Zheng Not guilty Mr Joe Zheng Not guilty C Not guilty H Not guilty W Not guilty Charge 2 March 2017 donation to Labour Party – benefit to donor Mr Zhang Not guilty Mr Colin Zheng Not guilty Mr Joe Zheng Not guilty C Not guilty H Not guilty W Not guilty Charge 3 June 2017 donation(s) to National Party – benefit to Party Mr Zhang Not guilty Mr Colin Zheng Guilty Mr Ross Not guilty Charge 4 June 2017 donation(s) to National Party – benefit to donor(s) Mr Zhang Not guilty Mr Colin Zheng No verdict Mr Ross Not guilty Charge 5 June 2018 donation(s) to National Party – benefit to Party Mr Zhang Guilty Mr Colin Zheng Guilty Mr Joe Zheng Guilty Mr Ross Not guilty
Charge Description Verdict Charge 6 June 2018 donation(s) to National Party – benefit to donor Mr Zhang No verdict Mr Colin Zheng No verdict Mr Joe Zheng No verdict Mr Ross Not guilty Charge 7 Obstructing investigation by supplying false or misleading information Mr Joe Zheng Guilty
[5]These are my reasons for returning those verdicts.
JUDGE-ALONE TRIAL
[6] On 1 July 2022, I ordered that the defendants be tried before a Judge without a jury under s 102(2) of the Criminal Procedure Act 2011 given the combination of trial duration, complexity, imposition on jurors and the high likelihood that jurors would not be able to perform their duties for the duration of a long winter trial in the COVID-19 environment.2
[7] In R v Connell, the Court of Appeal stated that a Judge hearing a criminal trial without a jury is required to deliver:3
... a statement of the ingredients of each charge and any other particularly relevant rules of law or practice; a concise account of the facts; and a plain statement of the Judge's essential reasons for finding as he does. There should be enough to show that he has considered the main issues raised at the trial and to make clear in simple terms why he finds that the prosecution has proved or failed to prove the necessary ingredients beyond reasonable doubt. When
2 R v Ross [2022] NZHC 1560. Even without a jury, there were at times over 50 persons in court during the trial given the number of defendants, counsel and media. We had to adjourn for two days due to a witness being unwell with COVID-like symptoms, and two of the defendants had to participate by VMR for approximately a week early in the trial due to COVID-19 isolation requirements. At the same time as this trial, other criminal trials in Auckland of significantly shorter duration were at risk due to jurors having to be discharged for COVID-19 related reasons
– one trial completed with only nine jurors (with consent) and one with 10 jurors. One jury was discharged for COVID-19 related reasons in September.
3 R v Connell [1985] 2 NZLR 233 (CA) at 237-238.
the credibility of witnesses is involved and key evidence is definitely accepted or definitely rejected, it will almost always be advisable to say so explicitly.
[8]In R v Eide, the Court of Appeal confirmed the principles stated in Connell
but made the following observations in respect of fraud prosecutions:4
The problems with short-form judgments are particularly acute in fraud prosecutions. The parties (that is, the prosecutor and accused) are obviously entitled to know the key elements of the Judge’s reasoning. In a case of any complexity, this will not be possible unless the Judge provides an adequate survey of the facts. As well, in this context a Judge is addressing an audience which is wider than the prosecutor and accused. If the verdict is guilty, the Judge should explain clearly the features of the particular scheme which he or she finds to be dishonest. There is a legitimate public interest in having the details of such a scheme laid out in comprehensible form. Similar considerations apply if the verdict is not guilty. Further, some regard should be had to how the case will be addressed on appeal. A judgment which is so concise that some of the key facts in the case are required to be reconstructed by this Court on appeal is too concise.
[9]In Wenzel v R, the Court of Appeal added:5
… where there are multiple counts in an indictment, the critical factual and legal elements of each count in the indictment must be separately considered and conclusions reached. This does not mean that counts having common factual and legal elements may not be grouped for convenience, but separate consideration is reached where factual or legal elements are different.
[10]As the Supreme Court said more recently in Sena v New Zealand Police:6
Connell and Eide indicate the kind of reasons which judges should provide. They should show an engagement with the case, identify the critical issues in the case, explain how and why those issues are resolved, and generally provide a rational and considered basis for the conclusion reached. Reasoning which consists of a conclusory credibility preference is unlikely to suffice.
[11] In this case, involving s 240 of the Crimes Act in the novel context of political party donations allegedly to avoid the public disclosure threshold, it is particularly appropriate to give full reasons to explain the verdicts reached. However, to do so it is neither feasible nor necessary to set out in full or to exhaustively review counsels’ extensive submissions in these reasons. I have carefully considered the relevant evidence and counsels’ addresses as they relate to that evidence and the charges.
4 R v Eide [2005] 2 NZLR 504 (CA) at [21].
5 Wenzel v R [2010] NZCA 501.
6 Sena v New Zealand Police [2019] NZSC 55, [2019] 1 NZLR 575 at [36]; the leading case since s 106(2) of the Criminal Procedure Act 2011 also required reasons.
In compliance with the above authorities, I address the elements of each charge, the principal evidence that bears directly on those elements, my conclusions in relation to those elements and the reasons for those conclusions.
[12] Before doing so, I address a number of legal matters that are relevant. I then set out in some detail the facts that are largely uncontested and that provide the basis for my later analysis and inferences.
TRIAL PRINCIPLES
[13] As this is a Judge-alone trial, I remind myself of a number of matters on which a jury would be directed. They may be fundamental, but as the finder of fact in a criminal trial, it is important I bear them in mind.
Presumption of innocence
[14] The starting point is the presumption of innocence. The onus is on the Crown. The Crown must prove that the defendant whose case I am considering at the time is guilty beyond reasonable doubt. The Crown must prove each essential element of each charge against each defendant beyond reasonable doubt before I may bring in a verdict of guilty on that charge against that defendant.7
[15] Proof beyond reasonable doubt is a very high standard of proof, which the Crown will meet only if I am sure that the defendant is guilty. It is not enough for the Crown to persuade me that the defendant is probably guilty or even that it is very likely that he or she is guilty. A reasonable doubt is an honest and reasonable uncertainty left in my mind about the guilt of the defendant after I have given careful and impartial consideration to all of the evidence.8
[16] The presumption of innocence means that the defendant does not have to give evidence or call any evidence and does not have to establish his or her innocence.
7 It does not, however, require proof beyond reasonable doubt of every fact which may be relevant to proof of each essential element: R v Puttick (1985) 1 CRNZ 644 (CA) at 647; Thomas v R [1972] NZLR 34 (CA); and Milner v R [2014] NZCA 366 at [15].
8 R v Wanhalla [2007] 2 NZLR 573 (CA); and R v Hansen [2007] NZSC 7, [2007] 3 NZLR 1 at [30].
The defendants elected not to give evidence, although some elected to call evidence. This does not alter the onus of proof that rests on the Crown.
Separate trials
[17] I remind myself that there are separate trials that are being held together for convenience. The case against each defendant is limited to the evidence admissible against that defendant, not the totality of the evidence. That admissible evidence includes hearsay statements by other members of a joint enterprise admitted under s 22A of the Evidence Act 2006.9 The weight to be given to such admissible evidence is a separate matter.
Evidence – not prejudice or sympathy
[18] I also remind myself that I must reach my decisions on the evidence.10 This case has attracted a large amount of media interest. I remind myself to put all feelings of sympathy for or prejudice against any party associated with or affected by this case to one side.
Circumstantial evidence and inferences
[19]In relation to circumstantial evidence and inferences, I bear in mind:
(a)That I need to identify the factual evidence that I think is reliable before I can go on to say what conclusion might follow from those facts.
(b)Whether the conclusion I am being invited to reach based on that evidence is a safe, logical and rational conclusion – not speculation or guesswork.
9 Ruling (No. 1) dated 30 August 2022; R v Ross [2022] NZHC 1185 and R v Ross [2022] NZHC 1186.
10 Some of the evidence was given by AVL and I treat that no differently from the evidence given in person.
(c)I must be satisfied beyond reasonable doubt before drawing an inference the Crown asks me to draw on an essential element of the charge. If there is a reasonable doubt, it must go to the defendant.
Lies
[20] If I am satisfied that a defendant has lied about a matter, that is something I can take into account like other evidence. But I remind myself that it is important not to think that just because a defendant may have lied on a particular issue or issues, he or she is necessarily guilty of the charge. I accept that people can lie for reasons other than because they are guilty. Ultimately, it is for me as to the weight I place on the lie. The fact a defendant may have lied is just one piece of evidence to consider in deciding whether the Crown has proved the relevant elements of the particular offence against the defendant beyond reasonable doubt.
No previous convictions
[21] I was told that several of the defendants have no previous convictions. While evidence of previous good character is not in itself a defence, it is a factor I bear in mind when I am assessing the relevant evidence.11
Expert evidence
[22] In assessing expert opinions, I have regard to the qualifications and experience of the witness when deciding whether to accept and how much weight or importance to give to any of the opinions.
Cultural issues
[23] Six of the defendants are of Chinese origin. As the Supreme Court said in Deng v Zheng, a recent civil proceeding, cases in which one or more of the parties have a cultural background which differs from that of the Judge are common in New Zealand courts but must be approached with caution. The key is to recognise that some of the usual rules of thumb Judges use to assess credibility may have no or
11 I also draw no adverse inference as to whether any other defendant might have any previous conviction.
limited utility. Assuming, without case-specific evidence, that the parties have behaved in ways said to be characteristic of that ethnicity or culture is as inappropriate as assuming that they will behave according to Western norms of behaviour.12 I received some evidence on cultural issues, to which I will refer later in my decision.
Question trail
[24] Prior to closing addresses, I provided draft question trails to counsel identifying what I considered to be the elements of each charge that the Crown had to prove. Counsel had input into the elements and I have proceeded accordingly.
ELEMENTS OF OBTAINING BY DECEPTION
[25]Sections 240 and 241 of the Crimes Act 1961 relevantly provide:
240Obtaining by deception or causing loss by deception
(1)Everyone is guilty of obtaining by deception or causing loss by deception who, by any deception and without claim of right,—
(a)obtains ownership or possession of, or control over, any property, or any privilege, service, pecuniary advantage, benefit, or valuable consideration, directly or indirectly; or
…
…
(2)In this section, deception means—
…
(c) a fraudulent device, trick, or stratagem used with intent to deceive any person.
241Punishment of obtaining by deception or causing loss by deception
Every one who is guilty of obtaining by deception or causing loss by deception is liable as follows:
(a)if the loss caused or the value of what is obtained or sought to be obtained exceeds $1,000, to imprisonment for a term not exceeding 7 years:
12 Deng v Zheng [2022] NZSC 76 at [78]-[84].
(b)if the loss caused or the value of what is obtained or sought to be obtained exceeds $500 but does not exceed $1,000, to imprisonment for a term not exceeding 1 year:
(c)if the loss caused or the value of what is obtained or sought to be obtained does not exceed $500, to imprisonment for a term not exceeding 3 months.
[26] As I have said, the Crown case is based on obtaining a “benefit”. Except for a dispute as to whether the benefit must be reasonably foreseeable, it is common ground that the relevant elements of the offence that the Crown must prove are:
(a)obtaining or retaining a benefit, directly or indirectly;
(b)deception – engaging in a fraudulent device, trick, or stratagem (stratagem);
(c)the stratagem was intended to deceive;
(d)the stratagem was a material cause of the benefit; and
(e)the benefit was obtained without claim of right.
Benefit
[27] Obtaining a benefit means obtaining or retaining a benefit for themselves or for any other person.13
[28] It was submitted by some defence counsel that as a matter of law, an offence against s 240 cannot be committed where the benefit is obtained or retained for the person who was allegedly deceived. This issue is raised in relation to charges 1, 3 and 5 where the alleged benefit is the political party’s possession of the donation. I will deal with this in relation to those charges below.14
13 Crimes Act 1961, s 217.
14 See [317]-[318], [506] and [559] below.
[29] It was also submitted that freedom from public scrutiny is not a benefit within the meaning of s 240. This issue is raised in relation to charges 2, 4 and 6 and I deal with it below.15
Fraudulent stratagem
[30] The stratagem must be fraudulent. Acting fraudulently requires a defendant to act deliberately and with knowledge that he or she is acting in breach of his or her legal obligation.16 This requires a defendant to act dishonestly, according to the basic notion of dishonesty; that is, knowing that he or she was not entitled to act in the way he or she did.17
Intention to deceive
[31] An intention to deceive requires that the deception is practised in order to deceive the affected party. Purposeful intent is necessary and must exist at the time of the deception.18
Material cause
[32] The deception must have played a material part in the acquisition of the benefit.19
Reasonable foreseeability
[33] There is a dispute as to whether the benefit must be reasonably foreseeable. Counsel for Mr Zhang submitted the Crown must prove this, based in part on a Crown submission during a pre-trial application. The Crown acknowledged that it had previously filed a submission which suggested that reasonable foreseeability is an element of the charge but submitted it was not correct and was not relied on by the Court at the time.
15 See [459]-[471] below.
16 R v Coombridge [1976] 2 NZLR 381 (CA) at 387.
17 R v Firth [1998] 1 NZLR 513 (CA) at 519.
18 R v Morley [2009] NZCA 618, [2010] 2 NZLR 608 at [53].
19 O’Brien v R [2019] NZCA 83 at [75].
[34]Counsel for Mr Zhang relied on R v Morley where the Court of Appeal said:20
[52] In relation to each of the three offences of obtaining by deception the offender will be aware of the result or outcome of his deception. Of necessity, he or she will have obtained something of value, obtained credit or secured the performance of a physical act in relation to a pecuniary document. But should this awareness be termed an intention? We do not think so. The defined outcome is part of the actus reus and factual in nature. The occurrence of the outcome must be established by the Crown as a factual element of the offence.
[53] Turning to s 240(1)(d), the mental elements of the offence are clearly defined. First, proof of an intent to deceive is essential. An intention to deceive requires that the deception is practised in order to deceive the affected party. Purposeful intent is necessary and must exist at the time of the deception. Secondly, the offender must, in the case of a false representation, have knowledge of, or reckless indifference as to, the material particular which renders the representation false. To imply an additional requirement that the offender must intend to cause the loss in question (or be reckless as to its occurrence) would be to read in or imply a further mental element which is not indicated by the wording of the section itself.
[54] We accept, however, that there may be circumstances where loss arising from a deliberate deception is unexpected and could not reasonably have been foreseen. To impose criminal responsibility in such circumstances would not be consistent with principle. We consider that the deception must be such, objectively viewed, as to have been likely to cause at least some loss at a level which is more than trivial: see by analogy R v Lee [2006] 3 NZLR 42 (CA) at 79.
[35] Acknowledging that Morley concerned causing loss by deception under s 240(1)(d), it was submitted that a different approach is not warranted in relation to a benefit under s 240(1)(a). Counsel also relied on O’Brien v R,21 submitting that the Court of Appeal’s statement in that case that it saw no particular reason to depart from the approach taken in Morley implicitly recognises that Morley’s reasonable foreseeability analysis applies to charges under s 240(1)(a) in appropriate cases.
[36] Those cases concerned whether the Crown needs to prove an intention to cause the loss or benefit respectively. In Morley, the Court addressed the omission of the words “directly or indirectly” in s 240(1)(d). That is evident from an earlier part of the Court’s judgment.22 The Court declined to read in a further mental element. It did not address reasonable foreseeability in relation to a benefit and therefore is not authority requiring reasonable foreseeability in a case under s 240(1)(a).
20 R v Morley [2009] NZCA 618, [2010] 2 NZLR 608.
21 O’Brien v R [2019] NZCA 83 at [75].
22 At [33].
I acknowledge, however, that Morley was not concerned with a benefit obtained by a third party and that the observation in the first two sentences of [52] of the Court’s judgment, set out above, does not necessarily apply in that context.
[37] Although O’Brien did involve a third party benefit, it concerned whether intention for the third party to benefit within the applicable value range was required. The Court considered that the wording of ss 240 and 241 of the Crimes Act are inconsistent with the addition of a further requirement of intention as to value range but it was unnecessary to come to a final view given the facts. The Court did not address reasonable foreseeability.
[38] I accept, by analogy with Morley, there may be circumstances where a benefit arising to a third party from a deliberate deception is unexpected and could not reasonably have been foreseen such that the deception must have caused the benefit in circumstances where, viewed objectively, some benefit was likely to occur. However, as the Crown submitted, it is only because of the absence of the words “directly or indirectly” in s 240(1)(d) that the Court in Morley introduced reasonable foreseeability as a consideration. By contrast, the words “directly or indirectly” appear in s 240(1)(a).
[39] In any event, it is unnecessary to determine in the abstract whether reasonable foreseeability might be a separate element of the offence. The defence submissions here raise the same grounds as those set out above challenging the benefit itself,23 which I will deal with below.
Claim of right
[40] Claim of right, in relation to any act, means a belief at the time of the act in a proprietary or possessory right in property in relation to which the offence is alleged to have been committed, although that belief may be based on ignorance or mistake of fact or of any matter of law other than the enactment against which the offence is alleged to have been committed.24
23 At [28]-[29] above.
24 Crimes Act 1961, s 2.
[41] The enquiry concerns the defendant’s belief. An issue arises, however, insofar as the benefit is obtained by a third party since the claim of right definition refers to a belief “in a proprietary or possessory right in property in relation to which the offence is alleged to have been committed”. The Crown submitted this means a claim of right can only arise where the defendant believes he or she has a property right. However, I do not preclude a claim of right where the defendant believes the third party obtaining the benefit has a property right, as Ms Mortimer-Wang submitted.25
Party liability
Section 66 of the Crimes Act 1961 provides:
66 Parties to offences
(1)Every one is a party to and guilty of an offence who—
(a)Actually commits the offence; or
(b)Does or omits an act for the purpose of aiding any person to commit the offence; or
(c)Abets any person in the commission of the offence; or
(d)Incites, counsels, or procures any person to commit the offence.
(2)Where 2 or more persons form a common intention to prosecute any unlawful purpose, and to assist each other therein, each of them is a party to every offence committed by any one of them in the prosecution of the common purpose if the commission of that offence was known to be a probable consequence of the prosecution of the common purpose.
[43] The Crown’s primary case is that all defendants actually committed the offence under s 66(1)(a) given that a benefit under s 240 can be obtained or retained for oneself or any other person.
[44] In the alternative, the Crown relies on all remaining limbs of s 66. In the first alternative, if one or more defendants but not all have committed the offence, the
25 Simon France (ed) Adams on Criminal Law at [CA2.04.02]; see also R v Jeffrey [2002] QCA 429 and Martincic v State of Western Australia [2019] WASCA 134 at [54].
Crown says the other defendants knowingly and intentionally aided, abetted or incited
– meaning organised, helped or encouraged – an offender to commit the offence.26
[45] The Supreme Court in Ahsin v R explained the elements the Crown must prove beyond reasonable doubt to convict a defendant under s 66(1):27
For the conviction of a person as a party to an offence under s 66(1)(b), proof is required of an action by that person that aids another to commit the offence. Such action must be deliberately taken, with the intention that the conduct will aid the principal offender in his or her criminal actions, the essential aspects of which must be known to the assisting person. What is essential includes both physical and mental aspects of that person’s conduct, that is, the actions to be taken and the intention with which they are to be done. Section 66(1)(c) and (d) have the same requirements, but with reference to abetting or inciting, and counselling or procuring, rather than to aiding. A particular feature of s 66(1) is that it concerns conduct providing assistance or encouragement that may be complete prior to commission of the crime for which it is provided.
[46] In the further alternative under s 66(2), if one or more defendants but not all have committed the offence, the Crown says the other defendants formed a common intention with at least one offender to prosecute an unlawful purpose, and to assist each other therein, namely to not disclose the full amount of the donation and the identity of the actual donor, an offence under the Electoral Act 1993, and the commission of the first mentioned offence was known to be a probable consequence of the prosecution of the common purpose.
[47] The Supreme Court in Ahsin also described what the Crown must prove under s 66(2):28
(a)the offence to which the defendant is alleged to be a party was committed by a principal offender; and
(b)there was a shared understanding or agreement to carry out something that was unlawful; and
26 Ahsin v R [2014] NZSC 153, [2015] 1 NZLR 493 at [82]-[83].
27 At [82].
28 At [102].
(c)the persons accused of being a party to that agreement had all agreed to help each other and participate to achieve their common unlawful goal; and
(d)the offence was committed by the principal in the course of pursuing the common purpose; and
(e)the defendant intended that the offence that eventuated be committed, or knew that the offence was a probable consequence of carrying out the common purpose. This requires foresight of both the physical and mental elements of the essential facts of the offence.
[48] In this context, probable consequence means a real possibility or something that could well happen.29
ELECTORAL ACT REQUIREMENTS30
[49] The importance of our electoral system in facilitating participation in parliamentary democracy is reflected in the Electoral Act 1993. To protect the integrity of our electoral system, among other things the Electoral Act 1993 regulates political donations, including candidate donations and party donations. Relevantly, “party donation” means a donation (whether of money or of the equivalent of money or of goods or services or of a combination of those things) that is made to a party, or to a person or body of persons on behalf of the party who are involved in the administration of the affairs of the party.31 This definition includes, where goods or services are provided by a party under a contract or arrangement at a value that is more than their reasonable market value, the amount of the difference between that value and the reasonable market value of those goods or services.32
29 Ahsin v R [2014] NZSC 153, [2015] 1 NZLR 493 at [100]-[102]; and R v Gush [1980] 2 NZLR
92 (CA) at 94 per Richmond P.
30 I mention these requirements insofar as they are relevant to the criminal charges. This is not an inquiry into political donations or the current law.
31 Electoral Act 1993, s 207(2).
32 Section 207(2) definition at (a)(ii).
[50] Every person to whom a party donation is given or sent must, within 10 working days after receiving the donation, either transmit the donation to the party secretary or deposit the donation into a bank account nominated by the party secretary.33
[51] For every party donation greater than $30,000 (including when aggregated with previous donations in the last 12 months), the party secretary must file a return with the Electoral Commission within 10 working days of receipt of the donation with details including the name and address of the donor, the amount of the donation (or aggregated donations), dates and whether it is made up of contributions (and if so, details of contributions of more than $15,000, also aggregated).34
[52] For every party donation greater than $15,000 (including when aggregated with all other donations made by or on behalf of the same donor during the calendar year), the party secretary must disclose details of the donation in an annual return to the Electoral Commission, due by 30 April of the following year.35 Again, the details include the name and address of the donor, the amount of the donation (or aggregated donations), dates and whether it is made up of contributions (and if so, details of contributions of more than $15,000, also aggregated). The annual return must also include donations exceeding $30,000 disclosed during the year.
[53] There are also obligations in relation to donations funded from “contributions” by another person.36 For example, this may occur where a person collects money in a whip-round at an event. Donors must, at the time of making a donation, disclose if the donation is funded from contributions and details of contributions above $1,500.37 A donor who fails to comply with this obligation with the intention of concealing the identity of any or all of the contributors commits an offence and is liable on conviction to a fine not exceeding $40,000.38
33 Section 207B(2).
34 Section 210C. Contributions are explained below.
35 Section 210.
36 Contribution and contributor are defined in s 207(2).
37 Section 207C.
38 Section 207D.
[54] In addition, there are obligations on “transmitters”. A “transmitter” means a person to whom a donor gives or sends a donation for transmittal to a candidate or party.39 When a “transmitter” transmits a donation to a candidate or party secretary on behalf of the donor, the transmitter must disclose that fact, the name and address of the donor, whether the donation includes contributions and, if so, all information disclosed by the donor as required in relation to contributors.40 A transmitter who fails to comply with this obligation with the intention of concealing the identity of the donor or any or all of the contributors commits an offence and is liable on conviction to a fine not exceeding $40,000.41
[55] There are offences in relation to splitting party donations or contributions to party donations, but they only apply to splitting between bodies corporate.42
[56] There are also specific obligations in relation to “anonymous” donations.43 In relation to a party donation, “anonymous” means a donation that is made in such a way that the party secretary who receives the donation does not know the identity of the donor and could not, in the circumstances, reasonably be expected to know the identity of the donor.44 If an anonymous party donation is received by a party secretary, the party secretary must, within 20 working days, pay to the Electoral Commission the amount of the donation less $1,500.45 An agreement, arrangement, or understanding that has the effect of circumventing this obligation is a corrupt practice (if wilful) or an illegal practice, and a contravention is an illegal practice.46 However, as Ms Temel from the Electoral Commission acknowledged, it is not an anonymous donation if the identity of the donor is clear to the party secretary even if the party secretary has been misled as to the identity of the true donor.
39 Section 207(2) definition.
40 Section 207E.
41 Section 207F.
42 Section 207LA.
43 There are also specific obligations in relation to “overseas donations” (from non-residents) but they are not relevant in this case.
44 Section 207(2) definition.
45 Section 207I (amended to reduce this threshold from 1 January 2020 by s 7 of the Electoral Amendment Act 2019). If a candidate, list candidate, or any person involved in the administration of the affairs of a party knows the identity of the donor of an anonymous party donation exceeding
$1,500, that person must disclose the identity of the donor to the party secretary: s 207G(2). A person who fails to comply with this obligation with the intention of concealing the identity of the donor commits an offence and is liable on conviction to a fine not exceeding $40,000: s 207H.
46 Section 207J.
[57] A party secretary must keep proper records of all party donations received by him or her.47
[58] Finally, the Electoral Commission must make available for public inspection a copy of annual and other returns for a public inspection period and may publish the returns, for example on its website.48
THE FACTS
[59] As indicated, before turning to the specific charges, I set out in some detail the facts that were largely accepted and that provide the basis for my later analysis and inferences. I say largely accepted. A feature of this case is that the SFO obtained millions of records from seized electronic devices including many communications in a language other than English. Many were communications sent via WeChat audio message in Mandarin, Cantonese and/or Teochew dialect. Where the spoken or written communications were not in English, the following factual narrative is based on translations.49
Translation
[60] At this stage, I address a threshold challenge to the translations relied on by the Crown. The SFO obtained translations from two translators, Mr York Wei and Ms Dongmei Chen. Both are qualified experts in Mandarin and Cantonese; Ms Chen is also recognised to translate Teochew. Both gave evidence, but did not specifically identify all the records they had been asked to translate or all the translations they provided. Instead, Mr Taylor, a principal investigator at the SFO, provided a prosecution chronology that he said included the applicable translation with the specific record. This meant the link between an original record and its translation was reliant on Mr Taylor. Although the translators did not confirm the contents of the prosecution chronology, Mr Taylor’s evidence indicated that he provided records for translation to the translators, they provided translations in Word documents and he incorporated their contents into the prosecution chronology. The prosecution
47 Section 207N(1).
48 Section 210F.
49 Given the informal and shorthand nature of many of the messages, spelling errors have not been marked.
chronology identified the original record and the Word document from which the translated entries were obtained (by SFO number). There was a clear link between the original record and the applicable translation even though the SFO translators did not themselves make the link in every case. Also, having given notice of it, the Crown’s translation is presumed to be an accurate translation in the absence of evidence to the contrary.50 I consider the translations in the prosecution chronology are admissible.
[61] I will deal with issues of weight in relation to specific translations below but make some observations at this stage. The SFO’s translators were criticised for not following a rigorous or transparent process of recording the information relied on or assumptions adopted. Mr Wei assisted the SFO through much of the investigation, including interpreting at interviews as well as preparing translations, and his independence was challenged given instances where he suggested that, or asked whether, a translation would be unhelpful to the SFO’s case. In addition, the SFO’s translators’ practice, unlike Dr Huiling Xu who gave translation evidence for Mr Zhang, was not to prepare a written transcript of each audio file in its original language before translating – at least not until specific translations were disputed. As to this last point, while the practice was criticised, ultimately the disputed matters were issues of translation not transcription.
[62] A party is not obliged to engage a ‘consulting’ expert in order to avoid ‘contamination’ of the expert who will give evidence. That would generally involve unnecessary costly duplication. However, expert witnesses are required to state the facts and assumptions on which their opinions are based.51 In some instances, the SFO translators took into account the factual context of the communications. Where an expert’s translation was based on such factual context, the assumed facts needed to be stated. That is particularly important where the expert has had a wider involvement in the investigation which might affect the expert’s independence.
[63] Dr Xu is a well-qualified expert in Mandarin, Cantonese and Teochew (and a native of the Teochew region). She considered that factual context is irrelevant to
50 Evidence Act 2006, s 135.
51 Code of conduct for expert witnesses, High Court Rules 2016, Sch 4, which is also applicable in criminal proceedings: Balfour v R [2013] NZCA 429 at [50].
translation. She limited her consideration of context to literal context. This different approach to context ultimately accounted for most of the translation disputes. In any event, I need to decide whether to accept and how much weight or importance to give to the respective expert opinions. Ultimately, the specific translation disputes reduced to a handful of communications. In each case, I include the alternative translations in the factual narrative before making a determination.
[64]I am satisfied that the evidence establishes the following facts.
The defendants
[65] Mr Zhang is a wealthy businessman with interests in the property/construction sector. He is originally from the Teochew (or Chao Shan) region of China, in the East of Guangdong province. He moved to New Zealand around 2000. He speaks little English.
[66] Around 2014, Mr Zhang founded the Chao Shan General Association (Association), an association of people in New Zealand from the Teochew region. Mr Zhang was the first Chairman of the Association until December 2017.
[67] Mr Colin Zheng is also from the Teochew region. He came to New Zealand in 2001 and attended high school in Hamilton before obtaining degrees at New Zealand universities. He is a New Zealand citizen. He is involved in the property/construction sector with a major shareholding in ANCO Properties Development Ltd (ANCO Properties) and ANCO Construction Ltd (through ANCO International Ltd). He is also a shareholder in KCC Construction Ltd (through ANCO Construction Ltd) together with Mr Zhang. They were shareholders together (via intermediary companies) in HLG Holding Ltd (previously HLG Construction Ltd). Mr Colin Zheng succeeded Mr Zhang as Chairman of the Association in December 2017. He is a Justice of the Peace.
[68] Mr Joe Zheng is Mr Colin Zheng’s twin brother. He also came to New Zealand in 2001 and attended high school in Hamilton before studying at university. He works with Mr Colin Zheng at ANCO Properties. He is not a shareholder or director of the companies. He is not a member of the Association but attends some of its events.
[69]C is [REDACTED.]
[70]H is [REDACTED.]
[71]W is [REDACTED.]
[72] Mr Ross was elected a councillor in the Howick Ward of the Manukau City Council in 2004, aged 18. In 2010, he was elected to the Auckland Council when the local councils amalgamated. In March 2011, following a by-election in the Botany Electorate, he became a National Party Member of Parliament, aged 25. In 2013, he became Junior Whip, and Senior Whip in May 2017, when he also joined the National Party Board. In 2018, he joined the Front Bench of the National Party following the election of Hon. Simon Bridges as Leader. Mr Ross had supported Mr Bridges in his National Party leadership campaigns in 2016 (seeking the role of Deputy Leader) and again in early 2018 even though Mr Ross’ then wife, Ms Schwaner, said that in 2016 he felt let down by Mr Bridges when he was not made a minister.
[73] Mr Ross formed the Botany Business Club to engage with business leaders in the area. He became friendly with Mr Colin Zheng, who introduced him to Mr Zhang. Making connections with the Chinese community in his electorate was an important part of Mr Ross’ role, as it was for other politicians in their electorates or catchments. These appeared to be mutually beneficial relationships.
Teochew Convention bid
[74] Mr Zhang played a leading role in the Association’s bid to host a 2019 international convention of Teochew associations in New Zealand (the 2019 Teochew Convention). There was cross-party support for the Association’s bid. Its August 2015 application included letters of support provided by the Prime Minister (Rt. Hon. John Key), President of the National Party (Mr Goodfellow), Leader of the Opposition (Hon. Andrew Little), Hon. Phil Goff (then MP), Dr Jian Yang MP, mayor of Auckland (Mr Len Brown), Tourism New Zealand and Auckland Tourism, Events and Economic Development.
[75] In early 2017, the Association was preparing to present its bid for the 2019 Teochew Convention at a meeting in Jakarta, Indonesia. This involved obtaining updated letters of support including from Mr Goff (then mayor of Auckland) and H [REDACTED]. In April 2017, a delegation from the Association, including Mr Zhang and Mr Colin Zheng, together with H, travelled to Jakarta, Indonesia to present the bid. The bid was supported by the New Zealand Government and the New Zealand Ambassador to Indonesia, Dr Trevor Matheson, was involved in the presentation. Videos in support had been recorded by the Prime Minister (Rt. Hon. John Key) and mayor of Auckland (Hon. Phil Goff CNZM). The Association’s bid was successful.52
March 2017 donation to Labour Party
[76] From around 2016, the Labour Party was looking to reconnect with business and ethnic communities including the Chinese community. H provided the party with a good opportunity to do so. He [REDACTED] remained interested in campaigning and fundraising in the Chinese community. In July 2016, for example, he met with Mr Andrew Kirton, the Labour Party General Secretary, and they exchanged emails about an invitation from Mr Zhang to attend an Association event which H had asked W to forward to Mr Kirton. Also, under Mr Nigel Haworth’s Presidency of the Labour Party from 2015, the party actively targeted high net worth potential donors. These included Mr Zhang. Mr Kirton was keen to attend events at the invitation of Mr Zhang. In September 2016, they were both on the VIP table guest list for a fundraiser for Mr Goff’s mayoral campaign.
[77] On 24 February 2017, H discussed fundraising among the Chinese community with Mr Chalmers, a Labour Party campaigner. This included reference to paintings forming the basis of a good auction or purchase.
52 In October 2017, a delegation attended the 2017 Teochew Convention in Indonesia. That delegation included Mr Zhang, Mr Colin Zheng and C, together with H. The 2017 Teochew Convention included a handover ceremony for New Zealand to host the 2019 Teochew Convention.
[78] On 14 March 2017, following a telephone call the previous Saturday, H agreed to purchase five paintings for $13,600 from the 4 Art Sake gallery in Ōhope. H asked W to arrange payment. W did so on 15 March 2017, arranging for payment to be made from a joint bank account in the names of Ms Yingrui Zhang and Ms Gaoyun (Ivy) Yan.53 W also asked the gallery to address the invoice/receipt to Ms Yingrui Zhang at an [REDACTED] address, which was the home address of H. The five parcels were collected by courier the same day and were expected to arrive at the home address the next day.
[79]Also on 15 March 2017, W messaged Mr Zhang:
These are the several paintings that [REDACTED] has selected carefully from the Artists’ Gallery, who has asked me to send them to you first for your appreciation [grin]
[80]Mr Zhang replied “/::)/::)/::)”
[81] The same day, H exchanged messages with Mr Kirton (who was also the Labour Party’s 2017 election Campaign Manager):
H:Planning for a fundraiser (likely a silent auction) on Sat 1 April – are you available?
Mr Kirton: I’m in Christchurch – perhaps Nigel can go
[82]On 19 March 2017, W sent another message to Mr Zhang:
SFO translation (Mr Wei)
… And … well, [REDACTED]
[H] has bought a few high-end paintings and asks me to show you first. Have a look, and in due course … if there are any of them that you like, and then we’ll discuss how best to run it. And I will give you a call tomorrow for
details…
Dr Xu’s translation
… Well, [REDACTED] [H] had bought a few very expensive paintings and asked me to give them to you to have a look first. You may like to keep a few to yourself and see if you like any of them, and we will think how to do this. I will give you a call tomorrow…
53 Ms Yingrui Zhang was a Labour Party volunteer and has worked for the Labour Party. Ms Yan was also a Labour Party volunteer [REDACTED]. Ms Yingrui Zhang and Ms Yan had opened the bank account for Labour Party volunteers and events in December 2016 at the request of H or W [REDACTED]. W forwarded 4 Art Sake’s bank details to Ms Yan although Ms Yan said she could not remember making this payment.
[83]Two parts of the translation were disputed:
(a)“high-end” versus “very expensive” paintings (translating “gaodang”);54 and
(b)“how best to run it” (implying a complicated scheme) versus “how to do this” (translating “caozuo”).
[84] Taking into account my earlier observations about the approach of the translators, in relation to the first issue I consider that in context there is no material difference. In relation to the second issue, I accept the fundraising context and that W likely had a silent auction in mind but I am not sure the complicated scheme implication is necessary even with the SFO translation. I accept Dr Xu’s translation.
[85]On 22 March 2017, W sent Mr Zhang a message regarding a proposed meeting:
Home meeting at Yikun's : Time : 24th March Friday night 7:30 Venue:[REDACTED] Theme: Painting and mayor’s support letter
[86]Mr Zhang replied:
/::)/::)/::)
[87] On 23 March 2017, W sent to H a letter dated 1 March 2017 signed by Mr Goff congratulating the Association on its second anniversary celebrations and welcoming its bid for the 2019 Teochew Convention.
[88] The same afternoon, H received an email from a staff member headed “Diary test”, including an entry for Friday 24 March 2017 from 7:00 pm – 8:30 pm stating:
Yikun Zhang meeting re “painting” matter jointly with [W]. Remuera venue.
54 In the Chinese language’s phonetic system called Pinyin, a system using Roman characters.
[89]That evening, W messaged Mr Zhang stating:
[H] says Yumcha / drinking tea will suffice [Pleasant]55
[90] On 24 March 2017, at 8:00 pm, W sent to Mr Zhang by WeChat a document relating to the 2019 Teochew Convention. At 8:31 pm, Mr Zhang’s wife added W on WeChat. At 10:31 pm, H messaged his wife saying “I’ll catch a ride with [W]”.
[91]On 25 March 2017, H exchanged messages with Mr Kirton:
H:Hi AK: a tech question: if funds raised via silent auction + at fair market value then no need to declare, right? Cheers [REDACTED]
Mr Kirton:That’s right. Fair market value is hard to determine so as long as it isn’t $15000 higher than what fair market value would be then we don’t need to declare names.
H:Great. Will keep you posted! Re 1 April Sat – free to attend a dinner session with key community leaders at Yikun’s home, as planned? (We’ll get fundraising done before that day)56
[92]That same morning, W and Mr Colin Zheng exchanged messages:
W:Last night you said 73 people have replied to confirm their attendances. If you have a rough list of the names, you can send it to me when you have time, so I can get it ready to be reported up. Since we are going to Wellington on Monday, I am worried that it will be a bit too late when we come back on Tuesday or Wednesday. I need to give the Party a heads up, so that they know this … and … and know the scheduled dates. So as per last night, we … a general schedule, which I will draft that first.
Mr Colin Zheng: Ok, roger that. I will gather them and send over asap.
W:Thank you Colin. I will send you the account number as soon as I receive it. In due course you can check which NZ account to go through is better, because I am also discussing this matter with [REDACTED] [H]
55 Such descriptions refer to emojis.
56 The dinner was subsequently scheduled for Friday 7 April 2017.
Mr Colin Zheng: SFO translation (Mr Wei)
Ok, no problem. In due course, will see whether to divide [up the money] to go through [in several batches OR several people OR several accounts], or to check if there is a way to remit from China directly, or whatever. Anyway, you guys should get the account numbers ready, and let’s communicate about how to
transfer is better.
Dr Xu’s translation
OK. See if it is better to transfer in batches or if to see if there are ways to transfer the money directly from China. Anyway, you have the accounts ready, and we can communicate / discuss which is a better way to transfer the money. Thank you
[93] In relation to the disputed part of the translation, Dr Xu translated “batches” but accepted it could mean divide the money into several sums. Mr Wei essentially accepted that the reference to “batches” was more appropriate. I accept Dr Xu’s translation.
[94] On 26 March 2017, H messaged Mr Kirton to get details of the Labour Party bank account, which Mr Kirton provided.
[95]Later the same day, W and Mr Colin Zheng exchanged messages:
W:Colin, what’s your mobile number? When it’s convenient for you, I will call you about the painting [shake hand]
W: [REDACTED] [happy]
W: I will call you when it’s convenient for you [shake hand] W: Bank account is: NZ Labour 02-0568-0048605-00
Mr Colin Zheng: Received, thanks.
Mr Colin Zheng: Will notify by Wechat once remitted. W: Ok, put down reference: 1 April Colin
W: [thumb up] [thumb up] [shake hand] [shake hand] Mr Colin Zheng: Ok, roger [shake hand] [shake hand]
[96]On 27 March 2017, Mr Colin Zheng and Mr Joe Zheng exchanged messages:
Mr Colin Zheng: Joe, when you have time, send me your account number. Chairman wants to transfer money to an account, which will be transferred to the Labor Party when the time comes. I will transfer it to your account (later).
Mr Joe Zheng: Ok
Mr Joe Zheng: Do you need the ASB one or ANZ one? Mr Joe Zheng: 12-3233-0619617-00 ASB
Mr Colin Zheng: [OK]
[97]On 28 March 2017, Mr Colin Zheng messaged Mr Zhang (and C):
A/C No.:12-3233-0619617-00 A/C Name: zheng hengjia Bank: ASB President, this is my younger brother’s account number
[98] Soon after, Mr Zhang forwarded the same message to his younger sister, Ms Shaona Zhang (Ms Zhang).
[99]Mr Zhang also messaged Ms Zhang:
Get in contact, get in contact [not sure with whom] Transfer sixty thousand, sixty thousand NZD. My bank in China is Jiaotong Bank [Bank of Communications]. Give me their account and the exchange rate.
[100] After communicating with IE Money (a New Zealand registered financial service provider and currency remitter), Ms Zhang provided Mr Zhang with the exchange rate and said:
Hello, please transfer RMB into the following nominated account [the IE Money account]
300,300
Elder brother, don’t need to write anything in the summary. After remitting, send me a screenshot of the remittance slip
[101] Mr Zhang sent Ms Zhang a screenshot of the remittance showing him as depositor, which Ms Zhang forwarded to IE Money.
[102] Ms Zhang also exchanged messages with Mr Colin Zheng to obtain identification details for the payee Mr Joe Zheng, which Ms Zhang forwarded to IE Money.
[103] That same day, CNY300,300 was transferred into $60,000 from a bank account in China57 via IE Money and received into Mr Joe Zheng’s New Zealand bank account the next day, 29 March 2017, with the reference “SHAONAZHANG”.58
[104] Also on 29 March 2017, Mr Colin Zheng and Mr Joe Zheng exchanged messages:
Mr Colin Zheng: Bank account is: NZ Labour 02-0568-0048605-00 Okay, write REFERENCE: 1 April COLIN
Mr Joe Zheng: Okay, no problem. The money has not been received yet.
Will transfer it once the money is received.
Mr Colin Zheng: When the money arrives, transfer it to this account. Check it when you have time.
Mr Joe Zheng: OK
[105] Later that day, Mr Colin Zheng messaged Ms Zhang that the money had been received. That same day, soon after Mr Joe Zheng received the $60,000 into his account, $60,000 was transferred from his account to the Labour Party’s bank account. Mr Joe Zheng’s bank details stated “NZ labour1april colin” and the Labour Party’s bank details recorded the payment from “MR H ZHENG” as “NZ labour 1april colin”.
[106] Later that afternoon, Mr Joe Zheng sent Mr Colin Zheng confirmation of the payment, and Mr Colin Zheng messaged Mr Zhang (and C) that the money for the Labour Party had been transferred over. Mr Colin Zheng also stated that he had already advised W.
[107] Mr Kirton acknowledged that Ms Judi Ferguson, the Labour Party’s Finance Administrator,59 would have noticed the payment come into the Labour Party’s bank
57 Mr Zhang accepts this was his bank account.
58 The IE Money application stated the source of funds was “Family” and the purpose of trading was “Living cost”.
59 Ms Ferguson also described herself as the Labour Party’s Head of Finance.
account and alerted him within a few days as they were cognisant of the Electoral Act requirements. Ms Ferguson said she thought she asked Mr Kirton about this payment and they connected it with the Auckland art auction. She also said she thought she contacted W requesting names of purchasers and amounts, and that she “questioned how we got one lump sum for five items that had been auctioned”.
[108]On 30 March 2017, W exchanged messages with Mr Zhang:
W:Home meeting at Yikun's : Time : 7th April Friday night 7:00 Address:[REDACTED] Theme: Labor Party President Prof Nigel Haworth and his wife, Labor Party General Secretary Andrew Kirton , [REDACTED] [H] , supporting your [plural] application for the hosting of the 2019 Teochew International Federation Annual Conference.
W:I will attend too [happy]. I will send you the letter shortly, and then remind the mayor
Mr Zhang: /::)/::)/::)/::)
[109]On 31 March 2017, W and Mr Colin Zheng exchanged messages:
W:The second matter is … well … I will talk to you by a phone call, because it’s about the invoices.
…
W:I will be calling you on the landline now, regarding the invoices.
W: SFO translation (Mr Wei)
5 people’s names, addresses, and amount – spreadsheet, send to me
[REDACTED]
Dr Xu’s translation
Send the list of names, addresses of five people, and the sums to me.
[REDACTED]
Mr Colin Zheng: When I have (the information), I will send it ASAP.
[110] W’s reference to “invoices” likely meant receipts. There was a five minute interval between W’s second message stating “I will be calling you on the landline now” and her next message so there may have been a call in between.
[111] The disputed part of the translation is essentially the use of “spreadsheet” or “list” (translating “biao ge”). In context, there is no material difference. I accept Dr Xu’s translation with “list”. In any event, the list sent was a spreadsheet.60
[112]Two minutes after W’s last message above, Mr Colin Zheng messaged C:
This is one matter, [C]. Another matter is, the president has a donation over here which is for the National Party. Five names need to be provided over here, as the sum is rather large, sixty thousand dollars. This is my thinking. My younger brother’s name is counted as one, you [C’s] name is counted as one. In addition, you may need to think of two names. See if you are able to communicate properly with them. I will find one more on my end. You see whether this will work. Need five people. Names and addresses
[113] Later the same day, 31 March 2017, Mr Colin Zheng and C exchanged messages:
Mr Colin Zheng: [C], how is it? Are you able to find another name? I am planning to send the name list to them now.
C: Hongni CHEN
C:Elder brother, my apology. He/She was busy today…(yesterday). Hongni CHEN has spoken with me and it is okay. No problem. He/She will (send over) other information later.
Mr Colin Zheng: No problem, [C]. His/Her address may be required too. Mr Colin Zheng: Thank you. Let me find another two.
C:You hold on a sec. I will ask Qiuqiang XU. The president did mention Qiuqiang XU. I will call him. You give me a sec.
Mr Colin Zheng: [OK][OK]
C: SFO translation (Ms Chen)
It was the president who called me just now, to get me to ask Qiang. I called him. He is a very straight forward person. He was saying he would need to think about it. He did not respond and said he would get back to me tonight. When do you need to lodge
it, elder brother
Dr Xu’s translation
Just now the president called to ask me to talk to A Qiang. I just called him [ie A Qiang]. He is a very straight forward person. He said he needed to give more thoughts to it. He didn’t give an answer. He said he would reply by this evening. Is it
too late or not? When do you need to submit?
60 See [118] and [122] below.
C: [REDACTED]
C: The address of Hongni CHEN
C: [REDACTED]
C: My address
Mr Colin Zheng: [C], there is no rush. Tomorrow is fine too. Explain a bit to Elder Brother Qiang. He is probably not sure about the situation. Explain it to him.
C:I have spoken to him over the phone for ten minutes. He said he understood it all. And then he said…anyway, he was saying he was uneasy about it. He told me. -Sign-
C:I will give him some time and see what he will say tonight. It is okay.
Mr Colin Zheng: Thank you for your work. The things in the association…Gee, anyway, thank you.
[114] The two translations above are not materially different on their face since Ms Chen accepted that the phrase “He is a very straight forward person” is the correct translation. However, she considered that “straight forward” person referred to “integrity” whereas Dr Xu considered that it means “blunt” or does “not beat around the bush”.
[115] The person referred to in the messages, Qiuqiang XU or Qiang, is Mr Thu Cuong Tu. Mr Tu gave evidence that C called him and asked to use his name for something – he did not recall being told this related to a painting. He never purchased any artwork through the Association. Mr Tu did not know C well and was initially hesitant but in a second conversation that evening said to C “yes do it” without asking what it was for. His evidence suggested his initial hesitancy was based on receiving an unusual request from someone he did not know well rather than hesitancy because he was a person of integrity concerned that he was being asked to do something illegal. The context of the exchange of messages may suggest the latter, and I will address this in relation to each of the participants below.
[116] In relation to the other name proposed in C’s message above, Ms Hongni Chen, she said that C called her and said he was going to use her name for a donation, but did not tell her the details. Although she did not recall it, she sent him a message with her address. She said that she never purchased any art at an auction for the Labour Party.
[117] On the afternoon of 1 April 2017, the Association held an event. This was attended by Mr Little (then Leader of the Labour Party) and H, who indicated their support for the Association’s bid for the 2019 Teochew Convention. The event was covered in the Chinese media.
[118] On 3 April 2017, Mr Colin Zheng sent Mr Joe Zheng a message with a picture of a computer screen showing a list of five names, amounts and addresses in a spreadsheet. The details were:
1 [C] $16,000 [REDACTED] 2 Zhang David $8,000 23A Malone road. Mount Wellington 3 Tu The Cuong $12,000 [REDACTED] 4 Chen Hongni $14,000 [REDACTED] 5 Zheng Hengjia $10,000 1 Shelby lane. Flat bush
[119]Mr Joe Zheng replied “OK”.
[120] Mr David Zhang knew Mr Colin Zheng and Mr Joe Zheng as ANCO was a client of the scaffolding business he and his wife owned. He said he did not recall a conversation about using his name for a donation in 2017, he had never bought a painting at an auction and he would not donate to the Labour Party.
[121] At about the same time as Mr Colin Zheng sent the list to his brother, he also sent C a message with a picture showing the same spreadsheet information. Mr Colin Zheng then exchanged messages with C as follows:
Mr Colin Zheng: [C], keep a record. That donation for the Labour Party, just a record will be fine.
C: Thanks bro [solute] [solute] [solute]61 Mr Colin Zheng: Thank you, [C] [happy] [happy]
61 The translator means emoji salute.
[122] Very soon after Mr Colin Zheng messaged these pictures of the spreadsheet information, he emailed the spreadsheet to W under the subject “Name list for donation from Colin”. The same day, W forwarded the email to H. W also sent Mr Colin Zheng a message stating “The list has been received”.
[123]Also that afternoon, H messaged Mr Kirton:
Info re the silence auction in your inbox from [W’s] private email.62 Could you ask Fraser House to issue receipts accordingly pls
[124] Later on 3 April 2017, Mr Zhang sent to Ms Zhang and about 10 others various pictures including of five paintings on the wall of his home, indicating they had been moved from H’s home address.
[125] On 5 April 2017, W forwarded the email with the spreadsheet list to Mr Kirton, saying “Please find the attached name list for the donors” and requesting receipts to be brought to the Friday dinner at Mr Zhang’s.
[126]However, on 7 April 2017, H exchanged messages with Mr Kirton:
H: Got all the info re silent auction? Need to issue receipts etc
Would be nice to be attached with a thank-you letter (as we did before)
Mr Kirton:I got the receipt details which Judi will do on Monday as she is away at the moment.
Yes okay
H: Great!
Mr Kirton:We need receipts from the art purchased by you in order to reimburse and close the loop
H:May give me all hard copies on Tue and I’ll deliver Yes
[127] The same morning, W emailed Mr Kirton, copying H, using the subject “Receipt of Paintings--1st April Fundraiser”. She attached the 4 Art Sake
62 [REDACTED]
invoice/receipt and requested payment (reimbursement) to the Ivy Joint Account (the joint account of Ms Yingrui Zhang and Ms Yan referred to above).
[128] Later that day, W sent Mr Colin Zheng a letter of support for the Association’s bid for the 2019 Teochew Convention signed by Mr Goff. This appears to be an updated version of the letter signed by Mr Goff dated 1 March 2017 which W had sent to H on 23 March 2017.
[129] Also on Friday 7 April 2017, Mr Zhang hosted a dinner attended by H and his wife, Professor Nigel Haworth and his partner, Mr Kirton and Ms Ping Chen (the Association’s honorary counsel). Ms Ping Chen said she thought that C was also there. Photographs were taken of some of the guests in front of the five paintings, but Mr Haworth and Mr Kirton said they did not recall any discussion about the donation or purchase of paintings at the dinner.
[130] On 10 April 2017, Mr Kirton replied to W’s 7 April email requesting payment, copying H, saying “Thanks, will do”. Mr Kirton said in evidence he understood the bank account for payment was operated by H, W or perhaps the Party’s [REDACTED], and was satisfied it was a legitimate request.
[131] The same day, Mr Kirton forwarded W’s email of 5 April 2017 with the spreadsheet name list to Ms Ferguson, asking her to produce receipts. Mr Kirton’s email to Ms Ferguson also said “My understanding is the item that sold for $16k was worth more than $1k therefore we do not need to record name/address in the 2017 return”. He said in evidence he believed this understanding would have been based on the other correspondence referring to the value of the artworks.
[132]Also on 10 April 2017, H replied to Mr Kirton’s email reply to W, stating:63
There were 5 purchased. We’ve saved one from the purchase as it is not that valuable so replaced with one from my own study. [smile emoji]
63 At [130] above.
[133] Ms Ferguson printed receipts for Mr Kirton to sign. The receipt date was recorded as 1 April 2017 (the date stated in the bank account reference) even though the payment was received in the Labour Party bank account on 29 March 2017. It is unclear whether the receipts were signed or sent. Ms Hongni Chen, Mr Tu and Mr David Zhang all said they did not receive a receipt from the Labour Party.
[134] Ms Ferguson also prepared a further spreadsheet with additional information about the event:
Event Silent Art Auction Organiser [REDACTED] [H] Date Mar-17
5 Art Works purchased 13,600.00
Average cost 2720
1 [C] $16,000 [REDACTED] 2700 2 Zhang David $8,000 32A Malone road, Mount Wellington 2700 3 Tu The Cuong $12,000 [REDACTED] 2700 4 Chen Hongni $14,000 [REDACTED] 2700 5 Zheng Hengjia $10,000 1 Shelby lane.Flat bush 2700 Mr H Zheng $60,000 Banked to 00 account 29/3/17 cost of artworks $13,600 13500 $46,400 donation
[135] On 12 April 2017, Ms Ferguson emailed W stating that the $13,600 for the paintings would be paid into the account specified that day. The following day, W replied stating “Payment for the paintings $13,600 received”.
[136] There was no disclosure by the Labour Party of any donation above $30,000 relating to the $60,000 payment by 12 April 2017 (10 working days after receipt). Ms Ferguson said she was told that one person made the deposit, but was collecting money from the others.
Labour Party’s Party Donations and Loans Return
[137] On 27 April 2018, in preparation for the Labour Party’s Party Donations and Loans Return for the year ending 31 December 2017 which was due by 30 April 2018, Mr Kirton exchanged messages with H:
Mr Kirton:Hi [H] we are trying to get the purchase prices of the artworks you bought from Wakatane for your auction. We need this for
our donation return. The total price was $13,600 and the 5 artworks sold for $16k, $14k, $12k, $10k and $8k.
H:Not all from Wakatane. I donated some which were more expensive. Do you need names of purchasers or donors?
I can talk now Mr Kirton: Can we talk at 3?
H: The purchasers have already given their names
Mr Kirton:Yes we just need to record the difference between what the art cost you and what each piece sold for
H: Sorry I was on the phone
Will the difference land us more enquirers?
Not all (five) were from Whaketane. The 2 donated by me were way more expensive than the price you listed.
Mr Kirton:No as the difference is less than $15k no one’s name is published. If you donated art then your name can be recorded.
H: That should be fine.
Will the difference be a bad look on us/purchasers?
Mr Kirton: No.
So if you bought a painting for $8k and it sold for $20k then we record a donation from the purchase of $12k BUT it is not publicly disclosed (as long as it is less than $15k).
So the purchaser’s name is not made public but the law say we internally need a record of their name
H: Internally. Sure. You have their names plus mine if necessary.
I donated two pieces of artworks.
Mr Kirton: Okay. What was the value of the artwork you donated?
H: 5k & 12k – roughly. Will need to check with [REDACTED] Mr Kirton: Okay and was it 3 other pieces for $13600?
[138]On 30 April 2018, Mr Kirton exchanged further messages with H:
Mr Kirton:Hi [H] we need to get this to the auditors this morning. Is the following correct? Auction item 1: donated by [H], worth
$12k, sold for $16k, donation from purchaser = $4k (not public) Auction item 2: donated by [H], worth $5k, sold for
$14k, donation from purchaser = $11k, (not public) Auction item 3: purchased by [H] for $4500, sold for $12k, donation
from purchaser = $7500 (not public) Auction item 4: purchased by [H] for $4500, sold for $10k, donation from purchaser $5500 (not public) Auction item 5: purchased by
[H] for $4600, sold for $$8k, donation from purchaser $3400, (not public) The two artworks donated by you ($12k and $5k) will have to be recorded as they exceed the $15k disclosure limit. Your name will appear in the return (along with all the other donors) as giving $17k to the party. All okay?
Judi has just told me the invoice of the paintings is for 5 painting.
H: So my name will appear as “donor of artworks”? Mr Kirton: No – just “donor”
You can’t tell if you donated goods or cash in the public return H: Only two from me
Mr Kirton:Our auditors are asking about the invoice with 5 paintings listed on it. Were 7 sold at the auction including the two that you donated or 5?
If we still have two paintings left over then that would make sense
H: 2 of 5
Mr Kirton: Okay I understand now. Two paintings left over.
You keep them for a future auction before 2020 election!
H: I mean sold 5 but 2 from me
Mr Kirton:Okay – 5 paintings bought from art gallery for $13600, plus two donated from you, means 7 paintings. 5 were sold leaving 2 left, right?
…
[139] Mr Kirton said his understanding would have been based on further conversations he had with Ms Ferguson as well as his earlier communications with H regarding the silent auction, but he did not know where the detail came from. While Mr Kirton said he had received an assurance that $17,000 reflected the reasonable market value of the two paintings H had donated, the evidence does not go that far. H had only given his rough estimate. Also, ascribing the $12,000 and $5,000 values to the larger payees was an assumption.
[140]Soon after the above messages with H, Mr Kirton emailed Ms Ferguson:
He purchased x5 artworks for a total of the figure you have - $13,600. They were of similar value which is why I assume they are not itemised on the invoice. So we can say they are worth $2720 each.
item 1:
Donated by [H], worth $12k, sold at auction for $16k, record donation from purchaser of $4k and [H] of $12k
item 2:
Donated by [H], worth $5k, sold at auction for $14k, record donation from purchaser of $9k, and [H] of $5k
item 3:
Purchased by [H], worth $2720k, sold at auction for $12k, record donation from purchaser of $9280k,
item 4:
Purchased by [H], worth $2720k, sold at auction for $10k, record donation from purchaser of $7280k,
item 5:
Purchased by [H], worth $2720k, sold at auction for $8k, record donation from purchaser of $5280k,
[H] donated two, valued at $5k and $12k. That means he needs to be listed as a donor for $17k.
He has two paintings left worth $2720 each. Hoping my maths is correct.
AK
[141]Soon after, Mr Kirton messaged H again:
Oh right I’ve read your message again. That’s good, have now sent to auditor for their sign off.
[142] That same day, the Labour Party filed its Party Donations and Loans Return for the year ending 31 December 2017 signed by Mr Kirton (Labour Party Return). There was no disclosure of Mr Zhang’s donation in the Labour Party Return. The Labour Party Return relevantly disclosed the following donations:
Intent to deceive
[588] For essentially the same reasons as stated above, I am sure Mr Joe Zheng’s conduct involved an intention to deceive.
Causation
[589] Having already said I am sure that Mr Joe Zheng was involved in concealing this donation, I do not accept that he was ambivalent as to whether the donation was disclosed publicly. As Mr Joe Zheng acted on his twin brother’s instructions, I am sure that in the absence of the stratagem the donation would not have occurred. I also
221 At [247](c) above.
222 See [30] above.
consider the deception played a material part in the acquisition of the benefit for the further reasons already stated in relation to Mr Zhang.223
Other elements
[590] If it is necessary, I am sure the benefit was reasonably foreseeable. I am also sure there was no claim of right, essentially for the same reasons as already set out.
[591]Accordingly, I find Mr Joe Zheng guilty on charge 5.
Mr Ross
Benefit
[592] As already stated, I am sure the National Party obtained a benefit of a donation of $100,050. It received $100,050 by way of donation between 1 and 11 June 2018.
Engaged in fraudulent stratagem
[593] I have already set out the background to this donation and my findings in relation to the existence of the stratagem. Further background is Mr Ross’ sense of betrayal by Mr Bridges.
[594] There is no doubt that Mr Ross was aware from Mr Bridges on 21 May 2018 that Mr Zhang and Mr Colin Zheng told Mr Bridges that evening that they wanted to donate $100,000 to the National Party (albeit Mr Bridges did not know where the
$100,000 was to come from specifically).224 There is also no doubt that Mr Ross heard
the money had come in as he reported to Mr Bridges on 25 June 2018.225 There is also no doubt Mr Ross received the list of eight separate donors and amounts totalling
$100,050 from Mr Colin Zheng and that he passed that information to Ms Mikoz.226
The issue is whether Mr Ross knew at the time that a donation from Mr Zhang and/or Mr Colin Zheng had been falsely split up.
223 At [571] above.
224 At [238] above.
225 At [255] above.
226 At [257] and [260] above
[595] In relation to this donation as well, the contemporaneous documents do not show that Mr Ross knew that Mr Zhang and/or Mr Colin Zheng personally were donating $100,050 to the National Party or that Mr Ross knew of the donation splitting. The Crown particularly relies on what it says are Mr Ross’ admissions later in 2018. In doing so, the Crown acknowledged that Mr Ross was significantly upset by what he saw as a betrayal by Mr Bridges and that he tried to end Mr Bridges’ leadership of the National Party. The Crown also accepted that Mr Ross suffered a breakdown on or around 27 September 2018. However, the Crown does not accept that everything Mr Ross said and did at that time should be discounted or ignored. It relies on Mr Bridges’ evidence that Mr Ross remained highly functioning in the period leading up to October 2018, Mr Ross’ controlled demeanour in his press conferences and police interview, his statement that a medical practitioner had confirmed he was fit to work and his statement that he was fit to make decisions. The Crown also says that it is terribly bad luck and an extraordinary coincidence, if Mr Ross did not know that Mr Zhang was the true donor, that it turned out he had directed the transfer and via Mr Colin Zheng and Mr Joe Zheng had arranged for the money to be paid into the accounts of sham donors who then transferred it to the National Party.
[596] In relation to the medical evidence, the Crown says that both psychiatrists accepted that a person with adjustment disorder acting impulsively or irrationally may say things that are true that are admissions against their interest and, in acting to achieve a particular outcome without thinking of the consequences, may say something they did or knew about. The Crown says the medical evidence does not undermine the credibility and reliability of the statements made by Mr Ross that the Crown relies on as admissions as to his knowledge and conduct.
[597] I first address what the Crown says are Mr Ross’ admissions. First, the Crown points to Mr Ross’ recorded conversation with Mr Bridges on 25 June 2018.227 I do not consider that amounts to a relevant admission. Although Mr Ross said the
$100,000 donation was “now in”, I do not necessarily infer he meant that it was a donation from Mr Zhang and/or Mr Colin Zheng personally. Indeed, he went on to
227 At [255] above.
say “it meets the requirements where it’s under the particular disclosure level because they’re a big association and there’s multiple people and multiple people make donations”. The Crown says that statement is untrue based on Mr Ross’ later admissions. But it is not itself an admission that Mr Ross knew the donation had been split up.
[598] Secondly, there are Mr Ross’ recorded conversations with Mr Bridges on 27 September 2018.228 In these conversations, Mr Ross alleged that he had to go and collect the $100,000 donation that had not been declared properly or handled in accordance with the Electoral Act. But in these conversations Mr Ross did not specifically admit that he knew it was unlawful at the time.
[599] Thirdly, and more explicitly, in Mr Ross’ media statement on 16 October 2018, he said that “A $100,000 donation was collected. It was split in smaller donations that were below the $15,000 declaration threshold, and the full $100,000 donation has not been disclosed to the Electoral Commission”.229 In the course of making allegations about what Mr Bridges asked him to do, he admitted he knew it was unlawful. In Mr Ross’ voluntary police interview on 17 October 2018, he repeated his statements that the donation was split, and that he knew the Leader had asked him to carry out an unlawful act.230 There is no doubt that in these statements Mr Ross was referring to Mr Zhang as the donor and Mr Colin Zheng as his agent.
[600] Mr Mansfield KC, for Mr Ross, submitted these admissions are wholly unreliable given Mr Ross was seeking to cause Mr Bridges as much political damage as he could and the most compelling way to do that was to implicate himself whether or not it was true. Mr Mansfield submitted that Mr Ross was acutely unwell as a result of mental illness at the time and did not care about the harm he was causing to himself by making this false statement – he did not consider he would be alive to see any political harm fall on himself; and his statements on 16 October 2018 are inconsistent with statements he later made to the police and media on 17 October 2018.
228 At [268] and [269] above.
229 At [276] above.
230 At [277] above.
Mr Mansfield also relied on internal inconsistencies between Mr Ross’ various statements, submitting that Mr Ross was lying.
[601] I deal with the medical evidence and Mr Ross’ desire to harm Mr Bridges before addressing inconsistencies. In relation to the medical evidence, I accept that despite an adjustment disorder a person may say things that are true including admissions as to his or her own acts or knowledge. But it is also possible that a person suffering acutely from such a disorder would lie. I accept the expert medical evidence that Mr Ross’ statements to media and police on 16 and 17 October 2018 were strongly influenced by his underlying mental disturbance and, in particular, his belief at the time that he would commit suicide in the wake of his revelations. That expert evidence is consistent with the earlier concerns expressed by Ms Schwaner and police, and with Mr Ross’ actions after the statements.
[602] The timeline of Mr Ross’ deteriorating mental health is not clear, but he had previously suffered from poor mental health at pinch-points over the years. His communications in March 2018 indicate a strong sense of betrayal. Mr Mansfield characterised Mr Ross’ 11 March 2018 “suck it up” or “go kamikaze” message to Mr Bridges as his first lie. Mr Ross was also facing other personal strains. By mid-May 2018, he was secretly recording conversations.231 In June 2018, he recorded a conversation with Mr Bridges.232 Mr Dacre KC suggested that Mr Ross may have sought the split so he could later accuse Mr Bridges of orchestrating the donation, but the evidence does not allow that inference. However, at least by August 2018 when he leaked Mr Bridges’ travel expenses, Mr Ross was clearly motivated to destroy Mr Bridges’ political standing.233 Mr Ross was referred to a consultant psychiatrist on 8 September 2018.234 While 27 September 2018 was significant in terms of Mr Ross’ deteriorating mental health, I do not accept that he was functioning well until then. His earlier behaviour and Dr Clarkson’s assessment on 8 September 2018 indicate otherwise.
231 At [236] above.
232 At [255] above.
233 At [262] above.
234 At [264] above.
[603] In any event, by 16 October 2018, Mr Ross’ predominant focus was on harming Mr Bridges, making allegations he knew to be false without caring whether he also caused harm to himself. He knew his political career was over and it seems he did not expect to remain around to suffer personal consequences. If he appeared highly functioning or controlled, that was a veneer.
[604] It is relevant to the reliability of Mr Ross’ admissions that his statements about the donation(s) were false in other respects. His admissions were made in the very context of making false allegations about what Mr Bridges asked him to do. He said that, knowing that the Leader had asked him to carry out an unlawful act, he had the presence of mind to record the conversation (on 25 June 2018). Attributing his recording to Mr Bridges’ request was false. Indeed, attributing his recording to Mr Bridges’ request makes little sense given that in the preceding conversation of 21 May 2018, Mr Ross had asserted the donation met “the requirements where it’s under the particular disclosure level because they’re a big association and there’s multiple people and multiple people make donations”. That is inconsistent with his admission. It seems an unlikely statement if he knew it was false but was seeking to implicate Mr Bridges.
[605] It is also relevant that Mr Ross’ statements on 16 and 17 October 2018 included other false statements for effect. On 16 October 2018, he stated that a doctor had said he was fit to make decisions. Indeed, in his media statement on 17 October 2018, he said his doctor had advised Ms Bennett that he was fit to work. Those statements were false. He also denied being the source of the travel expenses leak, which was false.
[606] I turn to the claimed internal inconsistencies between Mr Ross’ statements on 16 and 17 October 2018. I accept that in Mr Ross’ police interview, he softened his allegations against Mr Bridges by saying “I don’t believe” the donation has been properly disclosed and “I feel as though” the Electoral Act was broken, but I do not consider this change of tone is significant. But Mr Ross did back down in relation to his own knowledge. As indicated, in his 16 October 2018 media statement, in the course of making allegations about what Mr Bridges asked him to do, he admitted he knew it was unlawful. In his 17 October 2018 police statement, he repeated his
statement that he knew the Leader had asked him to carry out an unlawful act. But in his subsequent media interview, when asked if he knew at the time that he was involved in a scheme (that the donation not be disclosed), he said no – but acknowledged that he felt “uncomfortable” about what was happening. I accept there is an element of inconsistency here. Mr Ross also said he did not know how the
$100,000 went from an individual, or it may have been different individuals, to come to the National Party because he was not involved in that. That may have been referring only to the funds flow but might also acknowledge that there was more than one true donor. An added inconsistency is that Mr Ross’ allegation that Mr Zhang was the donor and Mr Colin Zheng was merely his agent does not easily reconcile with the true position regarding the provenance of the donation. Also, Mr Colin Zheng was not just an agent / interpreter. He was interested in becoming a National Party Member of Parliament.
[607] Together, Mr Ross’ mental health, his drive to harm Mr Bridges and these inconsistences undermine the reliability of Mr Ross’ admissions. Even so, the Crown says that it is an extraordinary coincidence, if Mr Ross did not know that Mr Zhang was the true donor, that it turned out that Mr Zhang directed the transfer to New Zealand and via Mr Colin Zheng and Mr Joe Zheng arranged the splitting. There is force in that submission. I also take into account Mr Colin Zheng’s statements to the SFO about Mr Ross’ involvement in the 2017 National Party donation even though I have doubted whether Mr Ross asked Mr Colin Zheng to split that donation.
[608] However, as Mr Mansfield submitted, when Mr Ross was asked by a reporter on 17 October 2018 how he knew the donors were not those from whom the funds had been transferred, he attributed this to Mr Hamilton’s questioning of the identity of the names. Mr Ross’ exchange with Mr Hamilton occurred on 12 September 2018.235 Mr Ross did not then obtain and provide the full names and details sought. While Mr Ross must have known that the donation was arranged by Mr Zhang and Mr Colin Zheng, I cannot rule out the possibility that this exchange with Mr Hamilton caused Mr Ross to suspect (and possibly take steps to learn) that the donation had been split up. I cannot rule out the possibility that earlier, when he heard the money had come
235 At [265]-[266] above.
in and saw the list of eight separate amounts (totalling $100,050), he understood that reflected donations by associates rather than concealing a donation from Mr Zhang (or Mr Colin Zheng) personally.
[609] Also, given Mr Ross’ sense of betrayal and the mental health evidence, I cannot rule out the possibility that on 16 and 17 October 2018 Mr Ross was so driven by a desire to take down Mr Bridges that he lied in the most compelling way he could imagine, that is by falsely stating he had carried out Mr Bridges’ instructions.
[610] For these reasons, I am not sure that Mr Ross engaged in a fraudulent device, trick, or stratagem.
[611]Accordingly, I find Mr Ross not guilty on charge 5.
Intent to deceive
[612] For essentially the same reasons, I am not sure that Mr Ross intended to deceive.
Other elements
[613] If it had been necessary, I would have been sure the stratagem was a material cause of the benefit, that the benefit was reasonably foreseeable and there was no claim of right, essentially for the same reasons as already set out.
[614] Given my other conclusions, it is unnecessary and would be artificial and unhelpful to address alternative party liability under s 66.
Charge 6: obtaining by deception – as an alternative to charge 5
[615]Charge 6 is:
That JAMI-LEE MATENGA ROSS, YIKUN ZHANG, HENGJIA ZHENG
and SHIJIA ZHENG, between 13 May 2018 and 1 May 2019 at Auckland, by deception and without claim of right, directly or indirectly, obtained possession of, or control over, any property, or any pecuniary advantage or benefit.
Particulars of the deception:
With intent to deceive the National Party Secretary and/or the Electoral Commission, the defendants adopted a fraudulent device, trick, or stratagem whereby a $100,050 donation made to the National Party between 1 June 2018 and 8 June 2018 (“the 2018 Donation”) was split into sums of money less than $15,000, and transferred into the bank accounts of eight different people, before being paid to, and retained by, the National Party.
Particulars of the benefit:
The true donor of the 2018 Donation obtained freedom from any public scrutiny regarding the 2018 Donation, in circumstances where the amount of the 2018 Donation and the identity of the true donor should have been disclosed in the National Party’s Annual Return of Party Donations.
Mr Zhang
[616] Having found Mr Zhang guilty on charge 5, it is unnecessary to consider this charge in relation to him.
Mr Colin Zheng
[617] Having found Mr Colin Zheng guilty on charge 5, it is unnecessary to consider this charge in relation to him.
Mr Joe Zheng
[618] Having found Mr Joe Zheng guilty on charge 5, it is unnecessary to consider this charge in relation to him.
Mr Ross
[619] Given that in relation to this 2018 donation to the National Party I am not sure Mr Ross engaged in a fraudulent device, trick, or stratagem, or intended to deceive, it is unnecessary to consider whether freedom from public scrutiny can be a benefit of value as discussed earlier.236
[620]For the same reasons as charge 5, I find Mr Ross not guilty on charge 6.
236 At [459]-[471] above.
ELEMENTS OF SUPPLYING FALSE OR MISLEADING INFORMATION TO THE SFO
[621]Section 45 of the SFO Act relevantly provides:
45 Offence to obstruct investigation, etc
Every person commits an offence, and is liable on conviction ... ,—
(a)In the case of an individual, to imprisonment for a term not exceeding 12 months or to a fine not exceeding $15,000:
… who,—
…
(d) In the course of complying with any requirement imposed pursuant to section 5 or section 9 of this Act, gives an answer to any question, or supplies any information, or produces any document, or provides any explanation, knowing that it is false or misleading in a material particular or being reckless as to whether it is so false or misleading.
[622]The relevant elements of the offence that the Crown must prove are that:
(a)in the course of complying with any requirement imposed pursuant to s 9 of the SFO Act;
(b)the defendant supplied information that was false or misleading in a material particular;
(c)knowing that it was false or misleading in a material particular or being reckless as to whether it was so false or misleading.
SFO ACT CHARGE
Charge 7: obstructing investigation by supplying false or misleading information
[623]Charge 7 is:
That HENGJIA ZHENG between 2 December 2019 and 16 January 2020, in the course of complying with a requirement pursuant to s 9 of the Serious Fraud Office Act 1990, supplied information knowing that it was false or misleading in a material particular.
Particulars:
During his interviews with the Serious Fraud Office on 3 December 2019 and/or 15 January 2020, Hengjia Zheng advised:
(a)That the money paid from Shaona Zhang’s bank account into his bank account on 31 May 2018 was a deposit to Anco Property Development for building a house on the North Shore, when in fact, the money originated from Yijun Zhang and was intended to be used to pay a $100,000 donation to the National Party through transmitters.
(b)That around the time the money was transferred into his account, he drafted a building quotation contract for Anco Property Development to build a house on Shaona Zhang’s land (“the Contract”), and that he and Shaona Zhang signed it, when in fact:
(i)the Contract was only created and signed in August 2019;
(ii)the specifications on the Contract had been copied from an unrelated quote; and
(iii)the date of the signatures of the Contract were backdated to 21 May 2018.
(c)That the Contract was lost, and when he discovered this in approximately August 2019, he created, signed and backdated another contract on Colin Zheng’s instructions, when in fact:
(i)the Contract was only created and signed in August 2019; and
(ii)a contract for Anco Property Development to build a house on Shaona Zhang’s land drafted around the time that Shaona Zhang paid the money into Joe Zheng’s account never existed.
[624] There is no doubt that Mr Joe Zheng was required by s 9 of the SFO Act to attend SFO interviews on 3 December 2019 and 15 January 2020.237 Nor is there any doubt that he supplied information to the SFO in the course of complying with that requirement. I accept that the first SFO interview in particular was confusing for Mr Joe Zheng. As well as the fact that English is not his first language, there was initial confusion between the 2017 and 2018 donations. Even so, I am sure that considering the two interviews overall he told the SFO that:238
237 At [305] above.
238 At [305]-[308] and [312]-[313] above.
(a)the money paid from Ms Zhang’s bank account into his bank account on 31 May 2018 was a deposit to ANCO Properties for building a house on the North Shore;
(b)around the time the money was transferred into his account, he drafted a building quotation contract for ANCO Properties to build a house on Ms Zhang’s land, and it was signed;
(c)that building quotation contract was lost, and when he discovered this in approximately August 2019, he created, signed and backdated another contract with the same amount on Mr Colin Zheng’s instructions.
[625]I am also sure that this information was false in material respects:
(a)the money paid from Ms Zhang’s bank account into his bank account on 31 May 2018 was the proceeds of the sale of wine by HLG for CNY494,050 transferred into $108,463.23;239
(b)the building quotation contract was created on 16 August 2019, signed on 26 August 2019 and backdated 21 May 2018,240 and there was no earlier building quotation contract for a house on Ms Zhang’s land created or signed in May 2018;
(c)there was no earlier building quotation contract to lose so the August 2019 document was not a replacement.
[626] The key issue is whether Mr Joe Zheng knew the information he supplied was false or misleading in a material particular or was reckless as to whether it was so false or misleading.
239 At [233] and [244] above.
240 At [297] and [300] above.
[627] I accept that the first interview proceeded without the benefit of the building quotation contract document and that Mr Joe Zheng did not specifically say that he had signed it around the time the money had been received in May 2018.
[628] Having been advised of a building quotation contract, the SFO found the document created in August 2019 after the first interview on 3 December 2019. At the second interview on 15 January 2020, the SFO asked if Mr Joe Zheng stood by his statements in the first interview, which he confirmed, before the SFO showed him the contract and asked when it was created. Mr Joe Zheng said he thought around May 2018 although he then proceeded to talk about discussions that appear to have occurred in August 2019. He acknowledged that he had copied the specifications from another document. Mr Taylor asked Mr Joe Zheng to “come clean”. Mr Joe Zheng then said they did have a contract in May 2018 but he was unable to find it when Colin asked about it and believes he had lost it. He said Colin told him to create another one with the same purchase price. After continued discussion, Mr Taylor accused Mr Joe Zheng of lying. Mr Joe Zheng maintained that Colin asked for the contract, he was unable to find it and was told to create another one. He said he was asked to sign and backdate it to reflect the original. When asked why Colin wanted it backdated, he said that they didn’t have the original as no one could find it and he was not sure whether it was signed. But when it was put to him that in May 2018 there was no contract, he maintained there was a contract, definitely.
[629] Even allowing for possible confusion at times during the interviews between when the money was received in May 2018 and when the contract was signed in August 2019, I am sure that, against the background of Mr Joe Zheng’s earlier statement that the money paid from Ms Zhang’s bank account into his bank account on 31 May 2018 was a deposit to ANCO Properties for building a house on the North Shore rather than money for the National Party donation, he maintained in his second interview that there was a contract in May 2018 and the August 2019 contract was a replacement.
[630] I am sure Mr Joe Zheng must have known that was false, even accepting that he followed his brother’s instructions and allowing for memory lapse. Taking the following facts together, I am sure there was no earlier contract. There were no
communications or documents relating to preparatory work for building on Ms Zhang’s property on the North Shore until mid-2019, which was consistent with the contract document created and signed in August 2019. No contract document created in May 2018 was identified despite the SFO’s extensive review of electronic devices. The 2019 contract document was backdated.241 There was no good reason to do so. The specifications in the 2019 contract were copied from another contract only created in July 2019.242 The deposit amount of $108,463.23 in the August 2019 contract document exactly matched the NZD amount of the wine proceeds,243 even though the original contract was said to be dated 21 May 2018; 10 days before the wine proceeds were transferred into that NZD amount on 31 May 2018. Thus, even if there had been an original contract document, it would not have contained the same deposit amount to explain the transfer 10 days later. A house deposit to ANCO Properties should not be paid into a personal bank account. The wine proceeds were used for the National Party donation,244 and I do not accept the exact same amount of
$108,463.23 was inserted as the deposit amount in the August 2019 contract by mistake. Finally, the surplus was used to buy cognac.245
[631] For these reasons, I am sure that Mr Joe Zheng supplied information to the SFO knowing that it was false or misleading in a material particular.
[632]Accordingly, I find Mr Joe Zheng guilty on charge 7.
Gault J
241 At [625](b) and [628] above.
242 At [297] above.
243 At [297] and [625](a) above.
244 At [565] above.
245 At [565] above.
Solicitors / Counsel:
Mr P Wicks KC, Mr J Dixon KC and Ms K Hogan, Barristers, Auckland Ms K Bannister and Ms H Moore-Savage, Serious Fraud Office, Auckland Mr J Katz KC, Ms L Lindsay and Ms N Small, Barristers, Auckland
Mr D Courtney (Mr Zhang’s instructing solicitor), Courtney & Co, Auckland
Mr B A Keown, Ms Z Farquhar and Mr D Scholes (for Mr Zhang), Bell Gully, Auckland Mr P Dacre KC and Ms W Andrews, Barristers, Auckland
Ms R L Thomson and Mr A Young, Barristers, Auckland
Ms J Pidgeon (Mr H Zheng and Mr S Zheng’s instructing solicitor), Pidgeon Judd Ltd, Auckland Mr S Lowery and Mr J Suyker, Barristers, Auckland
Mr X Zhang (C’s instructing solicitor), Zhang Law, Auckland Mr M Corlett KC, Barrister, Auckland
Mr S McArley (H’s instructing solicitor), Solicitor, Auckland
Mr SNB Wimsett and Ms Y Y Mortimer-Wang, Barristers, Auckland Mr R M Mansfield KC and Ms H C Stuart, Barristers, Auckland
Mr C Hocquard (Mr Ross’s instructing solicitor), Dominion Law, Auckland
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