In 2005, Labour Party President and chief-fundraiser Mike Williams was gloating in the media about Labour's new billionaire financial friend Owen Glenn. Three years later he was handing in his resignation due to his public deception about a political loan from Glenn. Not only has the ‘Glenngate’ scandal raised some fascinating issues about Labour and political finance but also about Mike Williams’ role in helping keep Labour operating as a ‘corporate party’. [Read more below]
The political nature of Mike Williams
Mike Williams is the Labour Party’s third millionaire president in a row. He’s very much the epitome of the modern Third Way Labour Party: ex-worker turned wealthy businessman, a secretive and backroom strategist, close to power, immersed in the various government quangos, and without any strongly apparent leftwing politics. Williams himself says that he ‘was always interested in capitalism’ and determined to be a business owner rather than be a worker. Ironically, the worker-turned-businessman is now the head of what used to be some kind of workers party.
According to a 2001 profile of the president, ‘Mike Williams remains the least visible Labour president in a generation’. This is because Williams has pushed his presidential role further into being a corporate fundraising job. The party president of the Labour Party is now essentially a liaison or representative of business within the party structure. His job isn’t to visit workplaces or seek the views of workers and party members – instead it’s to visit CEOs and corporate boardrooms. Essentially he’s a conduit for business interests within the Labour Party.
The champion of business interests
In his role as Labour’s chief fundraiser, Mike Williams has been the liaison with Owen Glenn. It was Williams who passed onto the Prime Minister Owen Glenn’s request to be appointed as the New Zealand Honorary Consul to Monaco. He did so around the time that Glenn had made donations to the party.
Not surprisingly, the opposition National Party has questioned the propriety of Williams' involvement in putting forward Labour Party donors for such government appointments. Bill English asked:
Why would the appointment of a diplomatic representative of New Zealand be a matter discussed with Labour's chief fund-raiser, Mike Williams, unless it is connected to a donation of half a million dollars from Owen Glenn and a concealed interest-free loan of $100,000 - or is Mr Williams consulted on all diplomatic appointments?
That Williams is a direct conduit into politics for the requests and demands of businesspeople is undeniable. According to one newspaper report about political fundraising, Williams ‘says he is prepared to take up issues with Cabinet ministers on behalf of business’ (NZ Herald, 4 June 2005). Another report said, ‘Williams also says that his practice is to ask business donors about any problems they have, and then report “general concerns of the business community to Labour’s caucus”’ (Vaughan, 2003: p.6). Apparently Williams’ methods are quite formalised: ‘He takes notes in a big red exercise book, goes through them once a month and reports themes - or any "common bitch" - to Labour's caucus’ (NZ Herald, 4 June 2005).
There are other examples that suggest that the party president is a rather tireless worker within government circles for the individual interests of wealthy business donors. For example, according to Owen Glenn, the super-yacht builder Bill Lloyd was assisted by the political interventions of Williams a few years ago. Lloyd had been provided with government Defence land at Hobsonville on which to build luxury boats, but the controversial business handout turned sour, at which point Williams helped out. According to Glenn, speaking to Unlimited magazine in 2005, ‘Lloyd had been “badly dealt by” in the matter. “…but it’s all been resolved through the good services of Mike Williams, the President of the Labour Party, who’s done a mammoth job”’.
Business visits and deals
Mike Williams also does a mammoth job in cultivating Labour’s links with business. In the past, Labour presidents would apparently visit 60-70 prospective business donors, but upon taking on the job Williams proclaimed that, ‘It's a numbers game. I've expanded corporate fundraising from about 60 targets to 400. I will do 400 visits this year and I will do 800 next’. By 2008 he was saying, ‘I ask about 1000 people directly for money every year’.
Another part of Williams’ liaison with business leaders is to facilitate their access to Labour politicians, and then hit them up for a financial contribution. Williams has said that ‘donors would be put in touch with ministers and then "touched" for donations’ (Murphy, 1990). Following the meetings, Williams also sends a thank-you letter that invites a gift to be sent to Labour's general secretary, Mike Smith.
According to another article, Williams apparently has no qualms with this process: ‘I do not think there is anything wrong with touching a company which has seen a minister. Most of them do not even end up giving anything’ (quoted in Murphy, 1990b). The former General Secretary of the Labour Party Rob Allen has also stated that donors expect to be rewarded with access to politicians: 'Corporates would, I think, expect if they play what they believe to be a civic part in the process and they give a donation… they'd expect to be able to talk quite quickly with a minister, have access and be heard' (quoted in Espiner, 22 Apr 2001: p.C1).
So although Labour has claimed to impose a clear division between party fundraisers and MPs, in practice the parliamentary wing of Labour is well acquainted with its business donors and their public policy demands.
Williams' professional background
Williams joined the Labour Party at age 17. He went to school with friends Paul Holmes (the broadcaster) and David Butcher (the future Cabinet Minister in the Fourth Labour Government). After finishing school, Williams went to the UK, where he worked in a nuts and bolts factory, but was soon lured back to New Zealand by Butcher in order to run his 1978 campaign to be an MP.
After a spell as a history and English teacher, Williams then became an education officer for the Labour Party head office, then a marginal seats organiser and eventually the party’s Director of Fundraising. Williams became an employee of the Labour Party at a time when rebuilding the party, and professionalising it was a new priority. In 1981 he instituted the ‘Victory for Labour’ (VFL) programme, utilising the new system of automatic bank transfer payments – and at its height the VFL had 7000 members making monthly contributions (Gustafson, 1989: p.210). Together with then party president Jim Anderton, Williams cultivated closer ties with business as part of the party’s professionalisation. Williams, as the party’s chief fundraiser, set up the first ‘scheme to arrange meetings between potential big business donors and senior party figures’ (Murphy, 1990b).
In the early 1980s Williams initiated the use of computer databases for direct mail campaigns. After the 1984 election he then went to Australia to work for the Labor Party for three years, where he acquired the latest knowledge and skills in terms of telephone marketing.
On return to New Zealand, Williams cashed in on his party political experience to create two successful market-research and direct-marketing businesses: Insight Data (direct-mail and marketing) and UMR Insight (then, ‘Insight Research, a market research company). Becoming a business owner was apparently always something that Williams intended to do. He told one interviewer, ‘I was always interested in capitalism… I didn't intend to spend my life on a teacher's salary’ (Watkin, 1 Dec 2001). Williams also admitted that what he calls his ‘urge to make a quid’ reshaped his politics: ‘Yes it has. It means I'm strongly aware of what the engine of jobs and government money is’ (Watkin, 1 Dec 2001).
The Labour Party President’s record as an employer is not good, however. According to one news report there were two major complaints from his workers:
- ‘In the early 90s, long-term part-time staff complained that they weren't receiving holiday pay’ – to which Williams counters that ‘holiday pay was included in their hourly rate’ (Watkin, 1 Dec 2001)
- ‘when staff arrived each day they would be given either mail-out or better-paid telephone work. One staff member recalled "the brown boys" were always sent to the mailroom’ (Watkin, 1 Dec 2001)
The party presidency
Williams sold UMR Insight in 1994, and then Insight Data in 1997. And although he hadn't been active in the Labour Party since about 1984, he became active at a time that the party was about to re-enter government. The millionaire famously offered to run Labour’s 1999 election campaign for free. But he caused friction in the party by producing a large bill for he party after the election:
While Williams said publicly he was doing the job for free, there was a five-figure expenses bill. "They shouldn't have been [surprised]," he says. Expenses had consistently been $3000-4000 a month (Watkin, 1 Dec 2001)
Then Williams eyed up taking on the Labour Party presidency from incumbent Bob Harvey. Williams had joined the Engineers' Union in 1999, and ran on their ticket. As he later commented, ‘It doesn't hurt to be a member of your biggest affiliate’.
Just as Bob Harvey had become party president in 1999 largely due to his fundraising skills, Williams sold his candidacy on the basis of his fundraising skills together with his low political profile and managerial nature – he said he wanted to run the party more like a business. One article in 2001 said:
Williams says he has three tasks: administer a voluntary organisation; be an honest broker holding the party together; raise money and establish links with the corporate sector. It's a to-do list a million miles from Bob Harvey, who tried to use his presidency to raise ideas, visions and be a marketer; he said he was nothing more than an ATM for the party, endlessly fundraising. As he notes now, "I haven't seen Mike in a bigger role than that either." (Watkin, 1 Dec 2001)
Williams’ Quango appointments
As if Williams’ presidential job isn’t full time enough already, he also finds time to serve on an array of government quangos. The party president has been appointed by the Labour Government to the following positions:
• a director of Transit (the government roading authority)
• a director of Ontrack (the Crown company that owns and manages railway infrastructure)
• a director of and Genesis Energy (a state-owned electricity generator)
• a member of the board of the Auckland Regional Transport Authority
• a member of the Crown research Institute of Geological & Nuclear Sciences (a Crown research Institute)
Some critics have suggested that Williams’ appointment to these positions is related to his corporate fundraising role. One critic has even raised the possibility that Williams might use his influential positions on these powerful boards ‘to do favours for other donors in the way that he did favours for Owen Glenn’ (Young, 22 February 2008). Certainly the appointments present further opportunities to Williams to mix in business circles and the political elite. According to one commentator, ‘They get the ear of important people and easy access into powerful circles’ (Lill, 13 August 2004). Furthermore, the positions are well paid, and therefore these political appointments obviously subsidise or supplement Williams’ presidential salary.
The Interest-free loan to Labour
In the same year that the Governement gave Owen Glenn the Order of Merit honour, he also agreed to loan the Labour Party $100,000 so that the party could start a professional fund-raising operation. The money was lent to the party in November 2006 and repaid by the end of 2007.
Ex-Alliance party fundraiser, Matt McCarten, writing in the Herald offered this explanation for why Labour might have negotiated a loan rather than a straight donation from Glenn:
What I think has happened is that, given Glenn's high-profile donation at the previous election, there would have been a reluctance to be seen to be making another large public donation. The electoral laws require all donations to be declared, but a loophole allows someone to make a so-called interest-free loan with no settlement date without declaring it. What any fool can see is that these are, in fact, donations and are paid as loans to avoid disclosure.
Donations can indeed be disguised as loans. In this situation, ‘The party stands to benefit from below-market interest rates. Moreover, if the party proves unable to repay the loan it may be possible for the donor to write off the loan at a later stage as a business loss’ (Pinto-Duschinsky, 1998). This occurred in New Zealand during the 1950s, when trade unions were restricted in the donations they could make to political parties. According to political scientist RS Milne, unions therefore would often ‘make a contribution to the Labour Party in the disguise of a "loan", which was not repaid and was later written off’ (Milne, 1966: p.105).
Glenn’s loan, negotiated by Mike Williams, was made to Labour at a 0% interest rate, which effectively meant that Glenn was forgoing an interest payment of at least $7,500. Both the Electoral Act 1993 and the Electoral Finance Act clearly stated that such foregone interest qualifies as a donation. (Of course, only donations over $10,000 are required to be declared to the Electoral Commission).
Yet in December 2007 when the government award to Glenn was announced, Williams sought to calm critics’ fears by repeatedly stating that the Labour Party had not received any further donations from Glenn since 2005. He chose to keep quiet on the interest free donation when many people were interested to know if Glenn’s government honour was connected to any largesse provided to the party of government.
Many critics felt that ‘it was highly unethical for Labour to give him a honour without revealing the interest free loan he had made to them’. After all, at the very time when they were voting to give him an honour, the Labour Party was the secret recipients of an interest free loan.
The reason that Glenngate became such an ongoing and significant political finance scandal was in large part due to Mike Williams. Despite being centrally involved in political finance in his job as president, Williams blundered his way through the whole affair. Asked why Labour had not declared the loan, Williams said ‘It didn't enter my head, because we do have these interest-free loans and they're never classified as donations.’ Furthermore:
an interest free loan is not a donation under any electoral act, it's an interest free loan and we have a lot of them, mainly from rich branches of the Labour Party. It never entered my head to treat it as a donation and it shouldn't be treated as a donation
That Williams can get this basic political finance issue so wrong calls into question the competency of Williams and the ability of Labour to properly fulfill their electoral law obligations. As the National Party quite legitimately asked, ‘If Mike Williams can get the old law so wrong, what else has he got wrong? How can the public have any faith Labour will get it right under its draconian Electoral Finance Act.’
Furthermore, how many other donations does the Labour Party fail to declare? In terms of loans, Williams admits, ‘we get lots of them’, yet none are every declared.
Williams denial of the Glenn loan donation eventually caused him to privately offer his resignation to the Prime Minister. This was refused, but the fact that it occurred illustrated how seriously Labour took the scandal. Also, the fact that this private resignation was leaked to the media raised the issue of the internal disagreement within the leadership of Labour.
The fact that Williams offered his resignation to the leader of the parliamentary wing of the Labour Party is also informative. Strictly speaking the Labour Party has two wings: the parliamentary wing of which Clark is the leader and the extra-parliamentary wing of which Williams is the leader. The two are supposed to be separate, and Helen Clark is certainly in no position to accept or refuse a party president’s resignation. The Labour Party constitution is clear: the President’s resignation can only be submitted to and accepted by the General Secretary. Of course such a rule is really just a hang-over from the past before the Labour Party organisation became an empty shell and the president became subservient to the parliamentary leader who effectively controls virtually every element of the party.
Interestingly, Williams still says he would continue to accept money from Glenn, if it was offered.