WELLINGTON (AFP) - New Zealand Foreign Minister Winston Peters has agreed to temporarily stand down during a fraud investigation into political donations to his political party, Prime Minister Helen Clark said Friday. Clark said she would take over Peters' portfolios of foreign affairs, racing and associate senior citizens during the Serious Fraud Squad (SFO) investigation. "Mr Peters has offered to step aside. Obviously I've accepted that offer and I in the meantime assume the portfolios he holds," Clark told reporters in Auckland. "It is to be hoped that the SFO will address there matters expeditiously." Peters was offering his total cooperation to the SFO and his lawyers would meet investigators on Saturday, she added. She confirmed the 63-year-old political veteran would be reinstated if his party was cleared by the investigation. The SFO said Thursday it would launch an investigation into whether funds donated to Peters' populist New Zealand First party were used as intended. Earlier Friday Peters was defiant, saying he would provide proof to Clark to show suggestions that donations had been misused were "vile, malevolent, malicious and wrong". The announcement of the fraud investigation followed weeks of controversy surrounding Peters over large donations from business benefactors. Clark appointed Peters foreign minister in 2005 in return for support from his party for her minority Labour Party government but she has been under pressure to suspend him until questions over the donations are answered. SFO director Grant Liddell said the inquiry would focus on a donation from property millionaire Sir Robert Jones of 25,000 Nz dollars (17,650 US), and a number of donations for just under 10,000 dollars from the wealthy Vela family. The controversy comes ahead of elections due by mid-November at the latest. Clark's Labour Party is trailing the main opposition National Party by between 11 to 13 points in recent polls. Controversy surrounded donations to Peters' party before the Serious Fraud Office announcement, in particular a claim by Peters he was unaware of a 100,000-dollar donation from expatriate New Zealand businessman Owen Glenn. Glenn this week contradicted Peters' assertion, saying the politician had personally asked him for a donation and thanked him for it later. The veteran politician, who first entered parliament in 1978, is a controversial figure in the government for his outspoken attacks on Asian immigration before becoming foreign minister, and for his confrontational style with the media.