The New Zealand First Foundation arrangement with the New Zealand First Party "is completely unprecedented," law expert Professor Andrew Geddis told Checkpoint.
New Zealand First Leader Winston Peters says his party has been exonerated of any electoral law breaches by the Serious Fraud Office.
Two people have been charged with obtaining by deception following an investigation into the New Zealand First Foundation.
The defendants have interim name suppression, so cannot be named or identified. But Mr Peters says all New Zealand First Ministers, sitting members, candidate, current members and party employees have been cleared.
New Zealand First has instructed its lawyers to take legal action against the SFO, seeking declarations the agency has abused its statutory powers.
"The NZ First Party has tried to draw a distinction... between its foundation and the National Party, which has a foundation as well. But the National Party foundation is run completely in line with electoral law, and is simply a way of gaining long term donations which are then invested," Professor Geddis said.
"This was a foundation where people would put money into the [NZ First] foundation rather than give it directly to the party. Because it was put into the foundation it wasn't being declared to the Electoral Commission as the law required, and then the money was being spent on New Zealand First Party activities rather than the party spending its own money.
"So it was like a shadow parallel funding structure that paid no attention to electoral law, even though it ought to have.
"It's very hard to say how these two things can be separate, when it was the New Zealand First Party that decided it wanted to set this thing up, and the NZ First Party benefited from the NZ First Foundation paying all its bills," Professor Geddis told Checkpoint.
"So I don't care what technical legalities you throw at it, if it walks like a duck and quacks like a duck it's probably a duck."
In response to Peters' warning the case cannot be discussed as it is sub judice, Professor Geddis said:
"We can't talk about the people who has been charged, we can't speculate on that because there's name suppression, but in terms of discussing the outline of the case, discussing the background facts and so on, those are all in the public record.
"Sub judice is something people throw around when they don't want to talk about an issue. It doesn't mean you can't talk about anything to do with the case."