Integrity Briefing: Government decisions favour political donor’s business

Jul 09, 2025

The integrity of a democracy rests on the principle that government decisions are made impartially, in the public interest, and free from the distorting influence of private financial interests. A challenge to this notion is reported today by RNZ’s investigative journalist Farah Hancock, in a story about a company that has made a large donation to the New Zealand First party and then received what looks like special treatment from that party in government – see: New KiwiRail director Scott O’Donnell linked to NZ First donation, government loan.

All of this revolves around a $20,000 donation made last year to NZ First by Dynes Transport Tapanui Ltd. Following this, Shane Jones awarded the company $8.2m in funding from his Regional Infrastructure Fund, and Winston Peters appointed one of the company’s directors to the board of KiwiRail.

I’m quoted in the RNZ story, saying: “It’s definitely this type of relationship that leads to, at the very least, a perception of a quid-pro-quo arrangement whereby donations give the donors special treatment in government.” And amongst other points, I quoted arguing for reform to integrity systems relating to donations: “We might even need to start talking about cooling off periods whereby, when companies make donations to political parties, especially those in government, they shouldn’t be eligible for government contracts or funding for a period of time.”

This case study illustrates the systemic integrity risks — cronyism, conflicts of interest, and the potential for policy capture — that The Integrity Institute was established to investigate and advocate against. It underscores the urgent need for reforms to New Zealand’s political finance laws, the governance of discretionary funds, and the management of conflicts of interest to safeguard public trust.

The Story of a donation and then favourable government treatment

In July 2024, Dynes Transport (Tapanui) Ltd, a South Island freight and logistics company, donated NZ$20,000 to the New Zealand First party. At the time, New Zealand First had recently returned to government as a coalition partner, with its leader Winston Peters serving as Deputy Prime Minister and other NZ First MPs in key roles. The donation is officially recorded in the party’s 2024 annual return, among several large contributions from companies to NZ First. Such donations are legal, but they come under scrutiny when the donor soon stands to benefit from government decisions.

Dynes Transport then applied for Fast Track Approval to build an “inland port” in Mosgiel. This application was rejected, perhaps because there was so much public attention being paid to whether such donors would get Fast Track deals. But instead of getting approval, NZ First’s Shane Jones, as Regional Development Minister, announced in May that a government loan of up to $8.2 million was being made to Dynes Transport to support the Mosgiel freight hub project.

The money comes from the Regional Infrastructure Fund (RIF), which is the direct successor to the controversial Provincial Growth Fund (PGF), which was widely criticised during the 2017-2020 government as a “slush fund” used to reward political supporters and fund pet projects. This new funding is administered by Kānoa (the government’s regional investment unit) and will pay for a three-track rail siding linking the Mosgiel hub to Port Chalmers. Essentially, the government became a co-investor in the Dynes/Port Otago project.

This sequence of events is pivotal. Having been rejected from the more structured, multi-minister Fast-track process, the political donor’s project successfully secured millions in government backing from a discretionary fund controlled by a single minister from the party they had funded. The RIF appears to have been used as a “side door” to obtain a favourable government decision that was not achievable through the front door. The lesson is that when one door of government approval closes, a political donation may help open another, less transparent one

This RIF decision was made in the full knowledge of a competing, larger-scale, privately-funded alternative – an “inland port” proposed by construction firm Calder Stewart, at nearby Milburn, projected to cost $3bn. Clutha District’s Mayor publicly expressed frustration that the government announced support for the Mosgiel project “out of the blue” despite knowing a rival project was “in the pipeline”.

The decision to award the RIF loan appears to contradict fundamental public finance principles and value for money. Public funds are most defensibly used to correct a clear market failure or to provide a public good that the private sector cannot or will not deliver. The emergence of the fully-funded Calder Stewart proposal demonstrated that there was no market failure; the private sector was willing and able to build an inland port in the region without government funding.

Minister Jones’ decision was therefore not one of necessity, but of choice: a decision to use public money to subsidise one commercial player over another. Given that the subsidised player was a known political donor to the Minister’s party, this choice is laden with the perception of bias and preferential treatment.

The optics were unavoidable: within a year of Dynes Transport’s $20k donation, a NZ First minister approved millions in public funding for the Dynes joint venture. This sequence rang alarm bells for observers concerned about pay-to-play politics. As I told RNZ, even if no quid pro quo was intended, the perception of preferential treatment for a donor can erode public trust.

Appointment to the KiwiRail board

The saga took another twist last week when Winston Peters (as Minister for Rail) announced the appointment of Dynes Transport’s Chairman, Scott O’Donnell, to the board of KiwiRail, the state-owned rail operator. In an attempt to manage the obvious conflict of interest, Peters announced that O’Donnell would step down as chair of Dynes. However, he would remain as a director of the company.

Scott O’Donnell is also one of the owners of Dynes Transport, through his family ownership of Dynes’ parent company, H.W. Richardson Group (HWR), a large trucking and logistics conglomerate. This company is one of New Zealand’s largest private companies, aggregating 49 businesses, including the Allied petrol stations (with 20% of market share in the country).

It’s owned by the Richardson Family, who O’Donnell has married into – who is listed in the latest NBR Rich List as being worth $600m (up $100m since last year), employing 2500 staff, and with an annual turnover of about $2bn. In this year’s Rich List, O’Donnell is interviewed complaining about too much government regulation and “red tape”, saying: “The standard answer to business has been ‘no’, not ‘how can we get it done?’”

Alongside being a director of Dynes Transport, O’Donnell also continues to be a director of H.W. Richardson Group (HWR). This now means a KiwiRail board member will simultaneously sit on two boards of major trucking and logistics firms – a clear potential conflict of interest. KiwiRail and Dynes are not adversaries per se (in fact, they appear to be partners in the Mosgiel hub project), but their interests won’t always align.

A leader in the trucking sector (which competes with rail for freight business) is now helping oversee the national rail company, shortly after his firm benefited from a government investment orchestrated by his political allies. After all, KiwiRail owns and operates New Zealand’s national rail network and is a direct commercial partner in the Mosgiel inland port project. The very purpose of the $8.2 million RIF loan was to fund a rail siding to be built and operated in conjunction with KiwiRail. The success and profitability of the Dynes/Port Otago venture are therefore inextricably dependent on the future strategic decisions, investment priorities, and track access pricing set by the KiwiRail board.

This appointment therefore places O’Donnell in a position of dual loyalty. He has a fiduciary duty to act in the best interests of the HWR/Dynes group, while simultaneously acquiring a fiduciary duty to act in the best interests of the state-owned KiwiRail. These interests are not aligned; they are in direct and perpetual conflict. HWR/Dynes, as a major freight customer and partner, will naturally seek the most favourable terms possible from KiwiRail. KiwiRail, as a commercial SOE, has a duty to the Crown to maximise its own returns. One individual can't serve both masters faithfully. This deep entanglement with the public sphere makes their political engagement a matter of significant public interest.

The situation has shades of cronyism, even if O’Donnell is highly qualified. It raises the question: would such an appointment have occurred if Dynes Transport were not a notable donor and stakeholder in a government-backed project?

To avoid perceptions of a “revolving door” patronage system, I told RNZ that governments should consider cooling-off periods or stricter vetting for appointments where the candidate has recent financial ties or donations to the appointing party. Otherwise, each appointment chips away at the public’s faith that merit, not political loyalty, is the primary criterion.

It has to be pointed out that Winston Peters has announced that a “conflict-of-interest management plan” has been established with Treasury and the new KiwiRail Chair, Sue Tindal. The core of this plan is that O’Donnell will “recuse himself from KiwiRail activities in this part of New Zealand,” specified as being “primarily south of Oamaru”. This management plan is substantively meaningless and fails the most basic tests of propriety. It certainly does nothing to resolve the underlying conflict of fiduciary duty while allowing the conflicted director to participate in the vast majority of strategic discussions that will materially affect his private interests.

The Cabinet Manual clearly states that where a conflict is “significant and pervasive,” the only appropriate remedies are divestment of the interest or resignation from the conflicting position. The conflict here is undeniably significant and pervasive, yet the Government has chosen a weak, unworkable, and purely cosmetic solution.

New Zealand has no shortage of highly experienced, non-conflicted transport and logistics experts. The selection of this specific, deeply conflicted individual, by the leader of the political party that received the donation and whose deputy awarded the loan, has all the hallmarks of political patronage. It creates a closed loop of political and commercial interest that excludes public accountability and fair competition. It sends a corrosive message that positions on the boards of our vital state-owned enterprises are not awarded on merit alone, but can be influenced by political connections and financial contributions.

A System under strain

When the individual events in this case — the donation, the failed application, the discretionary loan, and the board appointment — are viewed not in isolation but as a connected sequence, they paint a stark picture of a public integrity system under significant strain. Their cumulative effect creates an overwhelming appearance of a quid pro quo arrangement that undermines core principles of good governance.

Recently, the Auditor-General has released his report on such conflicts of interest relating to the Fast Track Approvals Act. Reporting on this today, RNZ’s Farah Hancock says that the Auditor-General was careful to draw a distinction between government decisions that confer a “generalised benefit” on a wide group (e.g., a tax change for an entire industry) and those decisions that provide a “tangibly benefit” to a specific party donor.

In terms of this, the Dynes Transport news is a textbook example of a government decision conferring a direct and “tangible benefit” on a political donor, precisely the scenario the Auditor-General warned creates significant risks to public integrity. He recommends that systemic reform in this regard, especially so that donations to parties are classed as possible conflicts of interest for Cabinet decisions.

In general, there needs to be an overhaul of the conflict-of-interest management procedures, which are increasingly found to be wanting. The current regime relies too heavily on ministerial self-policing and allows for weak “management plans” that are performative rather than substantive.

In terms of political appointments, or “cronyism”, it looks increasingly like New Zealand needs some kind of “Independent Ethics Commissioner” – perhaps formed as a new, independent Officer of Parliament with the statutory power to review, approve, or veto all ministerial and SOE board-level conflict of interest management plans. This would remove the final judgment from the hands of political actors and their officials and place it with an impartial expert body.

Similarly, a Statutory Appointments Commission could be given responsibility for managing all appointments to the boards of SOEs and other Crown Entities. This commission would conduct open recruitment processes, vet all candidates for expertise and conflicts, and provide the responsible minister with a pre-approved, non-conflicted shortlist. The minister’s choice would be limited to candidates on this list, ensuring a baseline of merit and integrity for all appointments.

More significantly, New Zealand needs to reform its political donation rules fundamentally. And, as RNZ reports me arguing, a “cooling off” period could be instituted. This would establish mandatory waiting periods between political donations and eligibility for government contracts or funding.

Conclusions: Doubts about the Government decisions remain

The case of Dynes Transport’s donation, the inland port funding, and the KiwiRail board appointment illustrates the thin line between legitimate political patronage and problematic conflicts of interest. New Zealand’s systems rely heavily on trust, which now seems to be an out-of-date notion.

The onus is on politicians to demonstrate that decisions are above board – through open processes, clear explanations, and independent oversight when needed. In this case, perhaps everything was done by the book; yet the perception of a donor getting a helpful nudge and an inside seat remains potent.

It is encouraging that the Auditor-General and others are calling for stronger guidance and possibly reform. Whether through tighter rules in the Cabinet Manual, lower donation thresholds, or greater disclosure, the goal is to “protect against the perception of undue influence”.

The Dynes Transport case illustrates the challenges New Zealand faces in maintaining public confidence in government decision-making processes. While no illegality has been established, the pattern of donation, funding, and appointment creates an appearance of impropriety that undermines trust in democratic institutions.

As New Zealand grapples with major infrastructure needs and economic development challenges, it is crucial that decision-making processes are not only proper but are seen to be proper. The integrity of our democratic institutions depends on addressing these systemic weaknesses before they further erode public trust.

The Integrity Institute calls for immediate action to close the party donation loophole and establish clearer guidelines for managing the intersection of political funding, government contracts, and public appointments. Only through such reforms can New Zealand reverse its decline in integrity and rising perceptions of corruption.

Dr Bryce Edwards

Director of The Integrity Institute

Integrity Briefing: Government decisions favour political donor’s business

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