The Times reports today:
“THE business that gave the largest financial gift to the Liberal Democrats was entirely fraudulent and had never traded, a High Court judge ruled yesterday.”
and:
“The Electoral Commission, which polices political donations, said last night that it will study the judgment in detail. It has the power to ask the courts to force parties to surrender gifts. Under election law, corporate donations may be accepted only from companies “carrying on business” in Britain.”
Rather hilariously, Iain Dale interprets this as “LibDems Stare Bankruptcy in the face.” Two things on that.
1) If we were forced to repay all of the donations, that would require each Lib Dem member to fork out about £30 to get the party out of a hole. I’d open my chequebook now. The major party donors would do the same, I’m sure.
2) Our party is the only one of the big three that ended its last reporting period solvent. Unlike Labour and the Conservatives, we don’t have eye-watering debts beyond our wildest dreams. We can find £2.5m in extreme circumstances.
Mind you, like Jock Coats, if it does come to the membership having to fork out money to dig the party out of a hole, I’d only do so under the expectation that heads roll at Cowley Street.
I was working at party HQ in Cowley Street at the time the money was accepted, and from my experience the decision to accept it, and indeed the existence of the donation at all, was confined to a small circle of people. The first I personally ever knew of this donation was the Times’ very first splash on the story back in September last year. Those who took the money would, at the very least, have to give the sort of full and frank account of their actions that they have so far been able to escape by virtue of the fact that the money has not had to be repaid.
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21 Comments
Sorry Rob but if as a member I was forced to pay up I’d be looking for people to join me in a negligence action against those who accepted the money.
IMO *THEY* are the people who should be expected to pay up – regardless of personal consequences – before the members who had no part in the decision are once again tapped for a donation.
I think it might turn out to be important that the judge acknowledged that Brown was deliberately trying to obfuscate the fact that he was not trading in the UK. Certainly you can hand back a donation within the 30 days if you cannot reach a conclusion as to whether or not he was trading, but if he was trying to make it look like he was as seems to be the implication, how is one to prove otherwise except with a long and detailed investigation such as has now happened over the past twelve months.
I think, personally, that the EC would be wise not to order it surrendered, but that the party would be wise to do so voluntarily in response to any civil suit. Ordering something be surrendered eighteen months later sets a precedent that I am sure no party wants to see. None of us can operate with that level of uncertainty, implying that there is no limit on how long after the EC can decide something was not a legitemate donation.
Guido mentions money laundering regulations as well. I don’t see how this can apply to a political party. We are not members of the Law Society or the Financial Services Authority are we? If you give me a cheque person to person it’s not my responsibility to run the money laundering checks is it? That would be bonkers.
We were stupid to take the donation, especially with the party position on the size of donations… to add insult to injury it was poorly spent…
If it comes to it, I would donate £30, but I would definitely want to see heads roll at Cowley Street…
I think this hilights the need for far more transparency in the running of the party. Cowley Street seems to keep too much too close to its chest, especially if it thinks it might be controversial with the membership.
I take it that we can assume the Conservatives will be repaying any and all donations from/raised by their own convicted fraudsters starting with Lord Archer, Jonathan Aitkin and Neil Hammilton…
If the company was “fraudulent” wouldn’t that make the Lib Dems the victim of a fraud as well?
The arguments about money laundering are (in the abscence of any evidence that this would be repaid) oblox in my not very qualified opinion.
hyelmorgan I believe you may be right there. We were obviously frauded into taking this donation as the checks that were carried out failed to show anything irregular. This guy was clearly out to decieve a lot of people our party included.
So Tristan, how do you think it was spent?
And given the timing of the donation – in the middle of the campaign period with little in the way of lead times and next to no time to use it for a planned strategy of how to spend that amount, what would you have done that was different? And seeing that the donor (whatever we know about him now) made some specific requests as to how “his” money should be spent (specifically on billboards), how would you have avoided those requests?
“And seeing that the donor (whatever we know about him now) made some specific requests as to how “his” money should be spent (specifically on billboards), how would you have avoided those requests?”
The money could – and should – have been refused than your indignation could have been avoided along with the damaging headlines, newspaper articles and risk of us being forced to hand it back and ask the members to fund that return.
I think it would be sensible to avoid jumping to too many conclusions at this point, particularly on the basis of a report in The Times.
Last I heard they hadn’t offered to pay back the share of the money they received for advertisments in the campaign!
There is a legitimate debate to be had about whether or not donations over a certain limit should be accepted, or whether there should be an enhanced process for dealing with them within the party, but it is worth noting that the Electoral Commission have already investigated this donation once and concluded that the party had carried out normal checks and had acted in good faith.
If the party was an unwitting participant in someone elses fraudulant behaviour that was sophistiacted enough to fool the EC investigation it is probably unfair to have expected those responsible to have realised this at the time.
Heads should roll?
Perhaps Reg Clark should be asked to resign…
If the Party decides it ought to pay the money back I will put my hand in my pocket and pay up. And more than thirty quid too.
Yes, a fair amount of bunkum in the Times piece.
AFAIK this donation waschecked out pretty extensively, but it would be impractical to commission a firm of forensic accountants to sniff out every donation, nor could a reasonable person be expected to do so.
As it happens, the guy responsible for accepting the donation is no longer in position in any case.
Iain Dale needs to go and lie down in a darkened room. He’s really getting carried away at the moment.
But, on a more serious note, frankly someone is going to have to take the hit at Cowley St. for this. I too would help the party out but I would be asking a lot of questions.
A hard lesson to learn but one which reminds us why we should stick to our core values on not being overreliant on wealthy individuals.
Reg Clark was hardly the only person involved in accepting this donation, even if he did behave appallingly afterwards!
Shouldn’t Reg’s swift resignation as Treasurer perhaps be taken as something that should have perhaps warned the party that something was up?
I accept the arguements by most in defence of this donation however it hardly seems unreasonable that given the dreadful drip drip of bad publicity that continues – despite assurances that everything was above board – for someone in Cowley Street or on the FFAC or FE to accept some kind or responsibility.
James Graham’s recent article in Liberator on the failure of the party more wiedly to make sure that there is accountability in working of the party seems very timely indeed.
Not sure I understand this “heads must roll” mentality. It almost seems that some people won’t be satisfied unless there’s a sacrificial lamb …?
From what I can make out, there was some questionable behaviour from one person (now gone), which didn’t impinge directly on the matter at hand, and the rest was, well, really just rather unfortunate. Albeit that it still looks more likely than not that the party won’t have to pay the money back.
From a professional perspective, I see lots of financial due diligence (for which organisations pay tens of thousands in fees to accounting & law firms) and even that fails to pick up plenty of issues.
Sometimes it isn’t a case of “someone must be at fault”. Sometimes shit happens.
The crazy thing about this disreputable episode is that the money was spent on things that had little or not impact on how many people voted Liberal Democrat – the best that can be said about the billbaords and newspaper ads is that they made LD activists feel good. By and large they were a huge waste of money.
The disgraceful thing is that no-one has come clean and explained to the party who made the decisions to take this money. No-one has been made accountable for this huge mistake. The comments abuot “Cowley Street” may be wide of the mark since it all happened during the run-up to the election campaign and during hte campaign itself when responsibility may have lain elsewhere.
Tony Greaves
As Duncan points out above (a) the donor wanted it spent in particular ways and (b) it arrived very late in the planning process. I think your right that it didn’t acheive very much but I think the intent as to how it was spent was decent (partly coz I can’t see the parties senior campaigners thinking “ah £2million – lets spend it in the least useful way we can!)
There is an issue worth discussing as to whether we should take donations with conditions as to how they are spent – personally if someone (of unimpeachabl integrity) offered us £1 million for billboard adverts again I’d put a lot of effort into talking them into something else but if they were adamant I’d take it as at worst it would have a benign effect.
Is asking for someone to take some responsibilty the same as asking for a sacrificial lamb?
In my knowledge the money was spent on:
Billboards
National press ads
Regional press ads
11 million 8 page newspapers delivered with local papers across the country.
I played a small part in the first three and was 100% responsible for the 4th bit of spending.
At the time I (and some other staff) made a few comments like “we are sure the source of this money is OK”. I was reassured that all necessary checks had been made (and I totally trust the source of that reassurance).
I can’t understand the mentality that says because we had the wool pulled over our eyes by a fraudster that someone in the party’s head should roll.
The party took the money in good faith. Maybe our due diligence could have been a bit better, but given that the fact the company was acting fraudulently had to be proved through a court I’m not sure how effective any due diligence could have been.
As for repaying the money, as I understand it if the party was to be asked to do this it would have to do it immediately, thus tipping the party into bankruptcy. In addition, from a political point of view, if some of the suggestions above about those who accepted the donation being penalised for it are acted on, we could potentially have by-elections caused by personal bankruptcy – which we then couldn’t fight because we’d have no money.
As is mentioned, our financial situation is better than that of the Tories or Labour. If we could be pushed under financially because of a dodgy donation, then what hope would they have? It’s for this reason that I really don’t see anything coming of this, even if they might like the prospect.
Until this time, no party has ever taken money from what then emerged was a fraudelent source. The only near misses were Asil Nadir and Robert maxwell. However, the money was given whilst the companies they donated from were legally trading.
The fact this company was not trading, as the courts have ruled, is a serious problem for us.
I believe we should pay up, although I accept that the sum concerned is so significant that we may well struggle to do so. If we need to go into liquidation then so be it. However, the aprty muist resolve this now and not let this mess drag on. The longer this drags on the more our opponents will attack us for our utter lack of probity, having campaigned so hard against these types of things for years.
I am already hearing on door steps that we are “as bad as the rest”.