3 May 2016

I told McClay about lawyer, says Key

6:29 pm on 3 May 2016

Prime Minister John Key is adamant he told one of his ministers that a man he was referring on to him with queries about trust rules, was his own personal lawyer.

Prime Minister John Key

Prime Minister John Key Photo: RNZ/ Jane Patterson

In 2014 John Key's long-time lawyer Ken Whitney wrote to the then Revenue Minister Todd McClay claiming Mr Key had advised him the government had no plans to change the foreign trust regime in New Zealand.

Mr Key said that was a misrepresentation of their conversation, and that what he actually told Mr Whitney was that he did not know anything about it, and suggested he contact Mr McClay.

A meeting between Mr Whitney, seven other trust lawyers and Mr McClay was held soon after the prime minister referred Mr Whitney to the minister's office.

Mr McClay said he could not say for sure that he knew about the connection at the time of that meeting.

"There was no conversation with all of the people in the room around who they represented, certainly the Prime Minister did raise with me that a lawyer had been in touch with him, and he told him to email him, and once he'd received an email it was passed on, it was actioned as is actually quite customary.

"I mean you need to have this in context, as a Minister of Revenue I met with a lot of different groups that had interest and actually always, where it was possible, decided that I should meet with them."

He said it only became "absolutely clear" to him that Mr Whitney was the prime minister's lawyer when it appeared in the media last week.

But he said he would not have responded any differently to the matters raised by the group of lawyers, whether he knew of Mr Whitney's connection to Mr Key, or not.

"I didn't feel any pressure to meet with them or any pressure to make any decision as a result of who the industry represents."

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Todd McClay Photo: RNZ / Alexander Robertson

Mr Key was insistent he made clear to McClay the connection between himself and Mr Whitney, when he alerted his minister to the approach from his lawyer about the trust rules regime.

"I've seen his comments, what he basically said was he couldn't absolutely recall but it was two years ago but I absolutely told him - 100 percent.

"It's a few years with an oral conversation that lasted a few seconds but I definitely told him."

Mr McClay said the decision that the IRD would not carry out a review of trust rules about five months after the meeting with the lawyers was because he was told by officials there was "no tax risk" to New Zealand and that the work programme had become much busier than it had been before.

Mr Key said Mr Whitney had misrepresented him when he wrote to Mr McClay, claiming Mr Key had advised him the government had "no plans to change the status of the foreign trust regime in New Zealand".

Mr Key said he had simply told his lawyer to speak to the minister.

"He is absolutely confident my version of events is correct and that's what he attempted to write in the email and maybe the email was sloppily written if that was the case.

"But that was absolutely right, and in the end, you know, sometimes people write things in a way which is sometimes shorthand."

Mr Whitney runs the Antipodes Trust Group, which manages foreign trusts.

Opposition parties cast doubt on Key's claims

Labour leader Andrew Little said that from the outside, it still looked like the prime minister had pressured the revenue minister to drop the trust review.

"This guy's a trained lawyer, he knows about language," he said.

"I think the real question is the prime minister now having admitted he had a conversation with his adviser or his lawyer and with the Minister of Revenue and the result of that seems to be Inland Revenue backed off its review."

Green Party co-leader James Shaw said Mr Key was changing his story from day to day.

"The prime minister said that he had informed Inland Revenue Minister Todd McClay about the approach from Ken Whitney, and previously the prime minister has said he had no involvement at all after the conversation with Whitney," Mr Shaw said.

Mr Whitney has not responded to RNZ's requests for an interview.

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