The New Zealand First donation scandal has been blown wide open, with Prime Minister Helen Clark saying she knew about the donation from Owen Glenn.
Clark has confirmed businessman Glenn told her in February he had donated $100,000 to New Zealand First. She then asked Winston Peters about the matter but he told her his party had not received any money from Glenn.
On Wednesday National accused Clark of knowing about New Zealand First's funding issues. She has now confirmed she has known for at least six months that there were two sides to the story.
Clark has previously said she has had to take Peters at his word on the matter.
Peters and Glenn have given different versions of events relating to the donation.
Peters has always maintained he had no knowledge of the donation made to his lawyer Brian Henry in 2006 to help pay his legal costs, until Henry advised him of it last month.
But on Wednesday, in a letter to the privileges committee, Glenn said Peters personally solicited the donation and then thanked him for it.
Off the back of that revelation National Party leader John Key closed the door on Peters holding a Cabinet post in a government led by him.
He said unless Peters can offer a credible explanation over why Glenn holds a different position to him over the $100,000 donation he would not have a place in his government.
ONE News political reporter Jessica Mutch says by saying he will not work with Peters, Key has changed the political landscape.
While effectively giving Clark a coalition partner, it also means she has to absorb any fallout from Peters over the donation issue.
