Prime minister defends embattled John Banks

UPDATE / 10.30am: NZ First leader Winston Peters is calling on John Banks's anonymous donations to be investigated by the Serious Fraud Office.

He told Radio New Zealand: "Mr Banks has a big problem, in that you've got someone like Kim Dotcom who you could not possibly, surely - given his character and size - forget, and he has forgotten him."

Mr Banks declared almost $950,000 of campaign donations for his failed Super City mayoral bid - of which $520,000 was anonymous. 

Mr Peters stood down as a minister in 2008 while his party was being investigated over electoral donations.

He told RNZ this morning the threshold for the SFO investigating alleged fraud is $500,000. However, the SFO's website says it prioritises cases involving losses of at least $2 million, involving multiple victims, usually investors. Anyone can make a complaint - but the SFO confirms one has not yet been made over Banks's mayoral campaign donations. 

This morning, Mr Peters accused Prime Minister John Key, who railed for Mr Peters to be stood down in 2008, of double-standards. 

"It's Mr Key who has certain principles - if you don't like them then he's got others." 

"Well, there's quite a wide definition of ethics," says Prime Minister John Key, defending minister John Banks against accusations of dodging the requirements of electoral law.

It was hardly the most ringing of endorsements.  

Mr Key last night refused to be drawn on the issue of whether Mr Banks had behaved ethically in his treatment of campaign donations in his previous role as Auckland mayor.

However, he says Mr Banks "retains my confidence as a minister".

Mr Key's defence of Mr Banks rests on legal rather than ethical grounds.  

Essentially, he says Mr Banks has broken no law, that the law he has not broken is a bit too loose, and that he accepts Mr Banks' word that no law has been broken.

But he also says: "I'm no lawyer."  

Mr Banks, who leads the Act Party, is under fire for donations he received as mayor of Auckland before becoming MP for Epsom. 

A  $15,000 donation came from Sky City – which made a donation of the same size to the man who eventually beat him for the mayoralty, Len Brown – along with a $50,000 donation from internet tycoon Kim Dotcom.

The Kim Dotcom allegations are that Mr Banks knew where the donations came and that he asked for it to be split into two $25,000 "anonymous" donations to get around the electoral rules.

The denials have focused mostly on the Kim Dotcom donations and have, until yesterday afternoon, been unusually vague.

Mr Banks was quizzed about the issue on a television interview programme at the weekend but refused to engage with the issue.

Mr Key has not spoken directly with Mr Banks but says his staff has done so and "I accept Mr Banks at his word".

The prime minister's defence came just 20 minutes after the Act Party leader put out a statement which was a much more clear defence than he had managed since the issue arose on the weekend.

Mr Banks says the amounts had been deposited anonymously into his campaign bank accounts by Kim Dotcom employees.

"I was not aware that Mr Dotcom had made this donation to my campaign. I did not call him to thank him as the donation was made anonymously," he says.

"I can confirm that I had contact with Mr Dotcom on other matters, including thanking him for the generous $500,000 donation that he made to the ratepayers of Auckland for the 2010 New Year's Eve fireworks display.

"However, I never called and thanked him for any donation to my mayoral campaign."