John Key's assets: How blind is the blind trust?

When politicians throw mud, does some of it stick? Or is it counter-productive and do voters treat it with contempt?

From the evidence of past mud-slinging, it doesn't pay and it usually ends up all over the throwers.

In the 2002 election, National focused its campaign almost entirely on Helen Clark and said she couldn't be trusted. Clark ignored the attacks and National suffered a catastrophic defeat.

In 2008 Labour, apparently having learned nothing from this, set out to discredit National's new leader John Key. The then party president, Mike Williams, went to Australia to seek evidence Key had been involved in an international scam known as the H-Fund. It was whispered that it was Labour's H-Bomb.

It was a debacle. Williams returned with nothing and when news of his trip leaked Labour was accused of muck raking and almost certainly lost votes because of it.

Labour has been on Key's case since he became National's leader, recognising the threat he posed and looking for something to pin on him.

The reasoning is that sometime, somehow, he must have broken the rules. Key is a wealthy man, he was a financial high roller before he came into politics, he played the markets and he made millions.

They tried to stick the tag "Trader John" on him, which was supposed to create a sinister impression that because he had been a currency trader he was a risk-taker who couldn't be trusted to run a country.

They picked over his shares and examined company records. They managed to trip him up once, with the help of the media, over TransRail shares he was holding when there was a political issue with the company.

The issue then was conflict of interest, as it is with the current row over Key's shares in a vineyard and the blind trust that holds his assets.

The story was that he held shares in Highwater Vineyard in Central Otago. He was one of 11 shareholders and five of the others were supermarket owners. The Government is working on liquor law reform.

The perception being created was that because of this Key could, or might, influence liquor law reform to benefit himself or the other shareholders.

Labour's plan was easy to work out when Pete Hodgson asked Justice Minister Simon Power in Parliament what advice he received from the prime minister before he (Power) said the government wasn't going to raise excise tax on alcohol.

That didn't go anywhere but, again, the perception was being created that Key had meddled in liquor law reform.

This is obviously ludicrous but that doesn't matter in politics. Most people probably don't have the time or the inclination to carefully study what is going on, or to play back TV news in an attempt to understand what has been said. They might end up with a vague impression that Key has been "up to something" -- although they don't know what the "something" is.

When that happens, a dubious objective has been achieved.

Hodgson has switched his attention to the blind trust into which Key put his assets after he became prime minister. That is in line with the Cabinet Manual's advice to ministers so they avoid even the perception of conflict of interest.

Key can't know what is happening to his assets in the blind trust, but Hodgson discovered what he described as a parallel company, Whitechapel Ltd, which held the same assets.

Whitechapel is open to scrutiny through the company register and Hodgson argues that Key therefore has access to his assets.

Key  refutes this and on Friday released a letter from the lawyers who set up his blind trust to prove his point.

The letter says Whitechapel is owned by the law firm, Taylor Grant Tesiram, and is a trustee company that holds legal title to the assets.

Key's assets were sold to Whitechapel and he has no control over them. "We have not reported to you on whether or not the trust has entered into any transactions to acquire or dispose of property and we have not provided you with any reports to tell you whether Aldgate Trust (the blind trust) continues to hold any particular assets," Pravir Tesiram said in his letter to Key.

"You have no interest and have no influence or control over the shares."

Whitechapel is apparently used by the law firm to hold numerous assets, not just Key's.

"The fact that a Companies' Office search shows that Whitechapel Ltd is registered as the owner of shares in other companies cannot of itself establish that they are shares in which you have an interest," said Tesiram.

That seems clear enough. Not only does Key have no ability to influence what happens to his assets, he doesn't even know what they are. He says he "doesn't have a clue" whether he still owns the vineyard shares.

Hodgson doesn't give up easily. His response to the Tesiram letter was to say it gave answers to the wrong questions:

"The central question remains. How can John Key prove that he could not see into his own blind trust through viewing Whitechapel Ltd?"

Hodgson obviously considers the letter is open to interpretation. He says the lawyers' description of Key's blind trust suggests they have a different view of what is meant by "blind trust" than does the Cabinet Manuel. The Cabinet Manual simply says: "Ministers with complicated or extensive shareholdings may wish to consider placing their investments in a blind trust as a precaution against unintended conflicts of interests."

Key says that when he became prime minister, he instructed Taylor Grant Tesiram to set up a blind trust and put his assets into it. He doesn't seem to have thought any more about it until he had some mud thrown at him.

As Hodgson is challenging the advice given to Key in the letter, this isn't over yet. Wait for question time in Parliament this week.